Finding Text
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program Title: Housing Voucher Cluster
Assistance Listing Numbers: 14.871 and 14.879
Federal Award Identification Number and Year: FL080; 2023
Award Period: October 1, 2022 to September 30, 2023
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: During the testing of the Housing Voucher Cluster tenant files, certain special provision compliance deficiencies were noted as summarized below:
Number of Instances -- Finding
17 -- The rent reasonableness was not performed prior to the effective date.
5 -- The tenant file did not document completion of rent determination showing 3 comparable for units located in the same area, with similar amenities, size and condition.
5 -- The approved rent determination form was not completed to ensure that it was properly entered into the Yardi system by agreeing it to the rent amount on the HUD 50058.
13 -- The PBV agreement establishing the contract rent for 1 bedroom size units could not be provided.
Questioned Costs: Undeterminable; estimated to be over $25,000
Context: During our testing, we reviewed 120 tenant files that required rent reasonableness determinations; 35 tenant files contained errors as noted above with multiple tenant files containing more than one error.
Cause: The Authority failed to determine the reasonableness of the rent being charged before the effective date of the HAP amount or failed to properly maintain the applicable forms to support the rent reasonableness performed.
Effect: The Authority is not in compliance with federal regulations regarding the determination of reasonable rent. Inaccurate data could cause Authority to be paying an unfair rent to a landlord.
Repeat Finding: This is a repeat finding from previous years. The finding numbers are 2017-003, 2018-003, 2019-003, 2020-003, 2021-003, and 2022-003.
Recommendation: We recommend that the Authority designate an individual to review tenant files to determine if a rent reasonableness has been performed and was completed in a timely manner. We recommend the Authority to hire outside consultants to assist with reasonable rent determinations or increase staffing in this area.
Views of Responsible Officials: There is no disagreement with the audit finding.