Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Name: Housing Voucher Cluster
Assistance Listing Numbers: 14.871/14.879
Federal Award Identification Number and Year: SC911VO - 2023
Award Period: July 1, 2022 – June 30, 2023
Compliance Requirement: Special Tests and Provisions – Reasonable Rent
Type of Finding:
Material Weakness in Internal Control over Compliance
Material Noncompliance (Modified Opinion)
Criteria or specific requirement: The PHA must determine that the rent to owner is reasonable at the time of initial leasing. Also, the PHA must determine reasonable rent during the term of the contract: (a) before any increase in the rent to owner, and (b) at the HAP contract anniversary if there is a five percent decrease in the published Fair Market Rent in effect 60 days before the HAP contract anniversary. The PHA must maintain records to document the basis for the determination that rent to owner is a reasonable rent (initially and during the term of the HAP contract) (24 CFR sections 982.4, 982.54(d)(15), 982.158(f)(7), and 982.507).
Condition: The Authority did not perform rent reasonableness procedures in accordance with program compliance requirements.
Questioned costs: Unable to determine.
Context: During the testing of the Housing Choice Voucher Program tenant files, certain special provision compliance deficiencies were noted in 8 out of 25 new tenant files and 6 out of 40 contract rent change files as summarized below:
8 instances where the rent reasonableness for a new tenant was not performed prior to the effective date.
2 instances where the rent reasonableness determination form for a new tenant was unable to be provided for review.
5 instances where the rent reasonableness for a rent change was not performed prior to the effective date.
1 instance where a rent reasonableness review for a rent change was not performed.
Cause: The Authority failed to determine the rent reasonable before the tenants’ effective date and/or failed to contain proper documentation of the information performed.
Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. HAP payments could be based on unreasonable rents.
Repeat Finding: Yes, see finding 2022-004.
Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed.
Views of responsible officials: There is no disagreement with the audit finding.