Finding Text
U.S. Department of Housing and Urban Development
Continuum of Care – Assistance #14.267
#2023-005 – Major Federal Award Finding – Special Tests and Provisions
Nature of Finding: Compliance Finding Special Tests and Provisions and Significant Deficiency in Internal Controls over Compliance
This is a repeat of prior year finding #2022-005.
Criteria/Condition: Per 24 CFR 578.49, rent paid must be reasonable in relation to rents being charged in the area for comparable space. The Organization did not have controls in place to verify that rent paid is reasonable in relation to rents being charged in the area for comparable space.
Cause/Context: Controls were not in place to ensure rent reasonableness. For the rent payments tested, we noted that management's conclusions for rent reasonableness was not documented.
Effect: A lack of controls could result in questioned costs and an inappropriate amount of rent payments being charged to the federal program.
Recommendation: We recommend management establish procedures and controls to require that evidence of review for rent reasonableness be maintained, and that the related conclusions are documented.
Views of Responsible Officials and Planned Corrective Actions:
The Organization will implement the following changes in its accounting procedures:
For each client in the HEAL program, where the Organization pays rent for the client, a rent reasonableness form will be completed by the HEAL program staff and approved by the HEAL Program Director and Senior Director. The form will be saved in the client’s file within the Bizstream client management program. The rent reasonableness form will also be submitted to the finance department prior to, or along with, a request for the client’s first rent payment.