oversight

Travelers and Immigrants Aid/Chicago Connections, Supportive Housing Program Grant, Chicago, Illinois

Published by the Department of Housing and Urban Development, Office of Inspector General on 2001-06-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

       AUDIT REPORT




  TRAVELERS AND IMMIGRANTS AID/
      CHICAGO CONNECTIONS

SUPPORTIVE HOUSING PROGRAM GRANT

        CHICAGO, ILLINOIS

            2001-CH-1008

           JUNE 19, 2001

       OFFICE OF AUDIT, MIDWEST
           CHICAGO, ILLINOIS




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                                                                 Issue Date
                                                                          June 19, 2001
                                                                Audit Case Number
                                                                         2001-CH-1008




TO:            Victor Thornton, Director, Community Planning and Development, Illinois
               State Office, 5AD

               /signed/
FROM:          Dale L. Chouteau, District Inspector General for Audit, Midwest, 5AGA

SUBJECT:       Travelers and Immigrants Aid/Chicago Connections
               Supportive Housing Program Grant
               Chicago, Illinois

We completed an audit of the Supportive Housing Program Grant awarded to Travelers and
Immigrants Aid/Chicago Connections (“Travelers”) in 1997. The audit was conducted in response
to an anonymous complaint alleging that food coupons, Chicago Transit Authority fare tokens and
corporate credit cards used in connection with a Travelers’ supportive housing grant program were
misused. The objectives of the audit were to determine whether: (1) there was any basis to
substantiate the allegations; (2) the expenses incurred and paid by Travelers were eligible and
properly supported; and (3) adequate internal controls were implemented for the Supportive
Housing Grant Program.

We determined that $529 in cash was stolen in May or June 1998 from a metal lockbox used by the
NextStep Program, one of Travelers’ supportive services. Travelers could not attribute this theft to
any particular employee, and we were unable to establish how many employees may have had
access to the cash. Written control procedures were in effect but Travelers could not locate an
internal incident report to document the theft. There was no basis to support the allegations
concerning misuse of the food coupons and other items.

We also found that Travelers charged HUD $20,491 in unallowable expenses. Of this total,
$11,441 in expenses were unsupported, and $9,050 were ineligible expenses under the grant
agreement. The unsupported expenses were due to the possible misfiling of supporting
documentation. The ineligible expenses were due to: (1) a lack of detailed review of expenses by
accounting personnel; (2) clerical errors in allocating expenses; and (3) conflicting information
between the accounting and payroll systems. In general, internal accounting controls were followed.




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Management Memorandum



Within 60 days, please provide us, for each recommendation made in this report, a status report on:
(1) the corrective action taken; (2) the proposed corrective action and the date to be completed; or
(3) why action is considered unnecessary. Also, please furnish us copies of any correspondence or
directives issued because of the audit.

Should you or your staff have any questions, please contact me at (312) 353-7832 or Ronald Huritz,
Assistant District Inspector General for Audit, at (312) 353-6236, extension 2675.




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Executive Summary
We completed an audit of the Supportive Housing Program Grant awarded to Travelers and
Immigrants Aid/Chicago Connections in 1997. The audit was conducted in response to an
anonymous complaint alleging that food coupons, Chicago Transit Authority fare tokens and
corporate credit cards used in connection with a Travelers’ supportive housing grant program
were misused. The objectives of the audit were to determine whether: (1) there was any basis to
substantiate the allegations; (2) the expenses incurred and paid by Travelers were eligible and
properly supported; and (3) adequate internal controls were implemented for the Supportive
Housing Grant Program.

We determined that $529 in cash was stolen in May or June 1998 from a metal lockbox used by the
NextStep Program, one of Travelers’ supportive services. Travelers could not attribute this theft to
any particular employee, and we were unable to establish how many employees may have had
access to the cash. Written control procedures were in effect but Travelers could not locate an
internal incident report to document the theft. There was no basis to support the allegations
concerning misuse of the food coupons and other items.

We also found that Travelers charged HUD $20,491 in unallowable expenses. As a result,
Travelers failed to disburse a portion of the grant funds as prescribed in HUD’s grant agreement
and other regulations. Additionally, HUD could not be assured that Travelers was accurately
reporting its expenses.



HUD Was Charged For                   Travelers and Immigrants Aid/Chicago Connections
Unsupported And Ineligible            (“Travelers”) charged HUD $20,491 in unallowable
Expenses                              expenses.    Of this total, $11,441 in expenses were
                                      unsupported, and $9,050 were ineligible expenses under the
                                      grant agreement.

                                      The unsupported charges related to the Salary and Office
                                      Supplies expense category. The grant agreement allowed
                                      Travelers to charge 25 percent of the former program
                                      director’s salary to the HUD-funded NextStep program.
                                      Instead, Travelers charged 75 percent of his salary to the
                                      program.       Travelers was unable to provide any
                                      documentation to support the 75 percent salary allocation.
                                      As a result, HUD was charged at least $10,920 in excess
                                      salary expense. In addition, no documentation could be
                                      found to support two purchases of office supplies totaling
                                      $521.

                                      The ineligible expenses of $9,050 related to the Vacation
                                      ($460), Communication ($104) and Client Support ($8,486)
                                      categories. Travelers incorrectly charged HUD for: vacation
                                      pay of an employee not assigned to the NextStep program;

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Executive Summary


                    telephone charges for telephone numbers not belonging to
                    NextStep; and meals for non-NextStep clients. These
                    incorrect charges were attributable to timing differences
                    between Travelers’ accounting and payroll systems, and
                    other clerical errors. As a result of the unsupported and
                    ineligible expenses, HUD funds may have been used for
                    activities and programs not related to the Supportive Housing
                    Grant Agreement, and a default may have been committed
                    under its terms.

 Recommendations    We recommended that the Director, Community Planning
                    and Development, Illinois State Office, assures that
                    Travelers: (1) furnishes HUD with documentation to support
                    the $11,441 in unsupported expenses or repays HUD for the
                    unsupported amount; (2) repays HUD $9,050 for the
                    ineligible expenses charged to the NextStep Program; and (3)
                    strengthens the controls over its monitoring of financial data
                    contained in both the accounting and payroll systems to
                    ensure the accuracy of payroll and other expenses charged to
                    HUD.

                    We presented our report to Travelers and to the Director of
                    HUD’s Community Planning and Development Division,
                    Illinois State Office. We held an exit conference with the
                    Executive Officer of Travelers on May 7, 2001. Travelers
                    provided a written response to our finding and
                    recommendations. Their response acknowledged that
                    misfiling of some payment documents may have resulted in
                    the unsupported items. However, they disagreed with our
                    finding with respect to the unsupported payroll allocation.
                    We included excerpts of the response in the finding.
                    Appendix B contains the entire text of the response.




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Table of Contents

Management Memorandum                                              i



Executive Summary                                                iii



Introduction                                                      1


Findings

1      HUD Was Charged For Unsupported and Ineligible Expenses    3



Management Controls                                               7


Follow Up On Prior Audits                                        9


Appendices
    A Schedule of Questioned Costs                               11
    B Auditee Comments                                           13

    C Distribution                                               17




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Introduction
The Travelers Aid organization was founded in 1888 to assist individuals who were new
residents in Chicago. In 1968, the organization merged with the Immigrant Protection League,
becoming Travelers and Immigrants Aid. In 1995, the organization underwent a name change
and became known as Heartland Alliance for Human Needs and Human Rights, an anti-poverty,
human rights non-profit organization. Heartland Alliance is the parent organization for Travelers
and Immigrants Aid/Chicago Connections, Chicago Health Outreach, and Century Place
Development Corporation.

Travelers and Immigrants Aid/Chicago Connections (“Travelers”) provides social, legal,
rehabilitation, and educational services which fall into the following areas: services for homeless
people and those at risk of becoming homeless, youth and residential services, HIV/AIDS
services, and services for women and families.

In March 1997, HUD awarded Travelers a Supportive Housing Program grant totaling
$1,377,992 for the NextStep project. The purpose of the grant was to provide transitional
housing and independent living skill development for the homeless afflicted with HIV/AIDS.
The NextStep project was administered by Rafael Center, a program under the direction of
Travelers. Rafael Center is located at 4750 North Sheridan Road, Chicago, Illinois. The
residence used for the NextStep program is located at 4635–4637 North Racine Avenue,
Chicago, Illinois.

The President of Heartland Alliance for Human Needs and Human Rights is Sid Mohn. The
Executive Officer of Travelers, who is also a Vice-president of Heartland Alliance, is Linda
Traeger. Travelers’ accounting records are located at its administrative headquarters, 208 South
LaSalle Street, Suite 1818, Chicago, Illinois.


Audit Objectives                      Our audit objectives were to determine whether: (1) there
                                      was any basis to substantiate allegations made by a
                                      complainant concerning misuse of Travelers’ program
                                      resources, (2) expenses incurred and paid by Travelers were
                                      eligible and properly supported, and (3) adequate internal
                                      controls were implemented for the Supportive Housing
                                      Grant Program.

Audit Scope and                       We performed our audit from June 2000 through February
Methodology                           2001 in accordance with generally accepted government
                                      auditing standards for performance audits. The audit covered
                                      the Supportive Housing Program Grant activities for the
                                      period April 1997 through March 2000.

                                      We obtained an understanding of the NextStep program by
                                      reviewing pertinent financial and operational documents
                                      and by interviewing 15 members of Travelers’ staff. We

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Introduction


               analyzed case management files of 39 NextStep clients to
               determine whether Travelers followed its procedures in
               processing clients through the NextStep program.

               We reviewed personnel files for 23 of 25 NextStep
               employees to determine whether payroll expenses charged to
               HUD for these employees were properly supported and
               eligible.

               We reviewed Travelers’ Account Detail ledger, HUD’s
               Line of Credit Control System showing grant drawdowns,
               and other pertinent documents and records to trace
               expenses incurred to the funds drawn, and to determine the
               population size of the expenses incurred for the NextStep
               project during the grant period.

               To determine whether expenses charged to HUD for the
               grant period were eligible and properly supported, and that
               Travelers followed its internal controls in processing the
               expenses, we analyzed a sample of 226 expense items listed
               in Travelers’ Account Detail ledger.         This sample
               represented approximately 14 percent of the total grant
               awarded.

               We provided a copy of this report to the President of
               Heartland Alliance and to the Executive Officer of
               Travelers.




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                                                                                           Finding 1


           HUD Was Charged For Unsupported and
                   Ineligible Expenses
 Travelers and Immigrants Aid/Chicago Connections (“Travelers”) charged HUD $20,491 in
 unallowable expenses. Of this total, $11,441 in expenses were unsupported, and $9,050 were
 ineligible expenses under the grant agreement. The unsupported expenses were primarily due to the
 possible misfiling of the supporting documentation. The ineligible expenses were due to: (1) a lack
 of detailed eligibility review of the expenses by Accounting personnel; (2) clerical errors in
 allocating expenses; and (3) conflicting information between the accounting and payroll systems.
 As a result, Travelers failed to disburse a portion of the grant funds as prescribed in HUD’s grant
 agreement and other regulations. Additionally, HUD could not be assured that Travelers was
 accurately reporting its expenses.


 Grant Agreement and                   The 1996 Supportive Housing Grant Agreement, executed
 Application                           March 27, 1997, stated that the agreement was made
                                       between HUD and Travelers and Immigrants Aid/Chicago
                                       Connections to assist the Travelers’ initiative known as
                                       Rafael Center–NextStep Project. The agreement stated that
                                       no change could be made to the project, or to any right,
                                       benefit, or advantage of the grantee without prior written
                                       approval from HUD. If Travelers used the grant funds for
                                       purposes other than authorized by the grant agreement, such
                                       action would be considered a default.

                                       The purpose of the $1,377,992 grant was to enable the
                                       NextStep project to provide transitional housing and
                                       independent living skill development for homeless persons
                                       afflicted with HIV/AIDS.

Criteria                               Office of Management and Budget Circular A-110, Subpart
                                       C.53(b) – Retention and Access Requirements for Records,
                                       states financial records, supporting documents, statistical
                                       records, and all other records pertinent to the award, shall be
                                       retained for a period of three years from the date of
                                       submission of the final expenditure report or, for awards that
                                       are renewed quarterly or annually, from the date of
                                       submission of quarterly or annual financial reports, as
                                       authorized by the federal awarding agency.

                                       24 CFR Part 583.300(g)–Records and Reports, requires the
                                       grantee to maintain records and prepare reports HUD may
                                       require within the required time frame.

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Finding 1


                           24 CFR Part 583.405(b) - Documentation of other changes,
                           requires the grantee to fully document any changes to an
                           approved program that do not necessitate a prior HUD
                           approval.

Some Expenses Charged To   Travelers could not properly support $11,441 in expenses
HUD Were Unsupported       charged to HUD for the NextStep project. The unsupported
                           expenses were related to the Salary and Office Supplies
                           expense category.

                           Travelers charged HUD an excess of $10,920 in salary
                           expense for the former NextStep program director.
                           According to the budget approved by HUD, Travelers was
                           allowed to charge 25 percent of the program director’s salary
                           to the NextStep program. In testing a sample of salary
                           expenses, we determined from the employee’s earnings
                           statements and payroll allocation records that Travelers
                           increased the amount of his salary charged to the NextStep
                           cost center to 75 percent from the allowable 25 percent.
                           Travelers’ Account Detail listing showed that the increased
                           charge began on August 31, 1999, and continued for at least
                           10 pay periods until the end of the Supportive Housing
                           Grant.

                           Travelers verbally advised us that it increased its allocation
                           of the former director’s salary to the NextStep cost center
                           due to his increased time spent on NextStep activities.
                           However, Travelers was unable to provide any written
                           documentation to support the 75 percent allocation. HUD’s
                           Community Planning and Development representative was
                           not informed by Travelers of the increased allocation.
                           Additionally, Travelers was unable to provide purchase
                           orders, standard payment forms, invoices or cancelled checks
                           to support $521 in Office Supplies charged to HUD during
                           the grant period.

Some Expenses Charged To   Travelers charged HUD for $9,050 in ineligible expenses.
HUD Were Ineligible        The ineligible expenses were comprised of the following:

                                   Accounts           1997    1998    1999    2000     TOTAL
                           Vacation                      $0    $460      $0       $0     $460
                           Communication                 $0      $0    $104       $0     $104
                           Client Support - Food         $0      $0      $0   $8,316    $8,316
                           Client Support - Medical    $170      $0      $0       $0     $170
                           TOTAL                       $170    $460    $104   $8,316    $9,050




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                                                                  Finding 1


                   Travelers charged HUD $170 for medical prescriptions for
                   five individuals who were not clients of the NextStep
                   program during the grant period.            Because expense
                   allocations were made by individual program areas rather
                   than as a centralized function, Travelers’ Accounting
                   Division did not re-verify the allocation of medical expenses
                   to ensure the eligibility of the clients.

                   Travelers incorrectly charged HUD $460 in expenses under
                   the Vacation account. This amount was charged for an
                   employee who, based on our review of her personnel file
                   and supporting documentation, was not employed at
                   NextStep. Travelers could not provide a reason for this
                   charge that we determined belonged to a cost center other
                   than NextStep. The accounting and Automated Data
                   Processing payroll systems were not linked, and records
                   might not be accurate at times because updates to both
                   systems were not made consistently or in a timely manner.

                   Travelers charged HUD $104 in communication expenses
                   for payment of a telephone bill for two telephone numbers
                   that belonged to cost centers other than NextStep. Travelers
                   indicated that this charge to NextStep was a clerical error.

                   Travelers erroneously charged HUD $8,316 for clients’
                   meals. Of $12,342 charged to HUD for meals in January
                   2000, only $4,026 of the expense belonged to the NextStep
                   program, as supported by the purchase order and invoice.
                   Travelers said it was an error to charge the remaining amount
                   of $8,316 to HUD. The excess charge may not have
                   occurred if Travelers’ accounting staff had matched
                   documentation attached to the payment check to ensure
                   dollar amounts on the check and supporting detail
                   corresponded.

                   As a result of the unsupported and ineligible expenses
                   charged by Travelers, HUD funds may have been used for
                   activities and programs not related to the Supportive Housing
                   Grant Agreement, and a default may have been committed
                   under its terms.


Auditee Comments   (Excerpts from Travelers’ comments on our draft finding
                   follow. Appendix B contains the entire text of the auditee
                   comments.)

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Finding 1



                    While the ADP system has served well with respect to
                    processing the payments of employees, it had proved
                    problematical in addressing the organization’s needs with
                    respect to salary allocation. In response to this, and in
                    conjunction with the purchase of a new accounting software
                    package containing a far superior allocation system, the use
                    of the ADP system to perform salary allocation was
                    discontinued.

                    We are concerned about the several ineligible expense items
                    discovered through this comprehensive audit, and have
                    reviewed the issues presented with the staff responsible for
                    the coding, approval and monitoring process. Although the
                    organization has received clean reports from our audits over
                    the years by diverse funders and the regular auditing process,
                    this 100 percent audit did reveal some difficulties with our
                    filing (refiling) systems and we have taken steps to address it.


OIG Evaluation of   We adjusted our Finding to reflect additional documentation
Auditee Comments    provided to us before and subsequent to the exit conference,
                    and clarifying information that resulted from further
                    discussions with the auditee and HUD.


Recommendations     We recommend that the Director, Community Planning and
                    Development, Illinois State Office, assures that Travelers:

                    1A.     Furnishes HUD with documentation to support the
                            $11,441 in unsupported expenses, or repays the
                            unsupported amount to HUD;

                    1B.     Repays HUD $9,050 for the ineligible expenses
                            charged to the NextStep Program; and

                    1C.     Strengthens controls over its monitoring of financial
                            data contained in both the accounting and payroll
                            systems to ensure the accuracy of payroll and other
                            expenses charged to HUD.




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Management Controls
In planning and performing our audit, we considered the management controls of Travelers and
Immigrants Aid/Chicago Connections in order to determine our auditing procedures, not to provide
assurance on the controls. Management controls include the plan of organization, methods and
procedures adopted by management to ensure that its goals are met. Management controls include
the processes for planning, organizing, directing, and controlling program operations. They include
the systems for measuring, reporting, and monitoring program performance.



Relevant Management                   We determined the following management controls were
Controls                              relevant to our audit objectives:

                                      ·   Program Operations - Policies and procedures that
                                          management has implemented to reasonably ensure that a
                                          program meets its objectives.

                                      ·   Validity and Reliability of Data - Policies and procedures
                                          that management has implemented to reasonably ensure
                                          that valid and reliable data are obtained, maintained, and
                                          fairly disclosed in reports.

                                      ·   Compliance with Laws and Regulations - Policies and
                                          procedures that management has implemented to
                                          reasonably ensure that resource use is consistent with
                                          laws and regulations.

                                      ·   Safeguarding Resources - Policies and procedures that
                                          management has implemented to reasonably ensure that
                                          resources are safeguarded against waste, loss, and
                                          misuse.

                                      We assessed all of the relevant controls identified above.

                                      It is a significant weakness if management controls do not
                                      provide reasonable assurance that the process for planning,
                                      organizing, directing, and controlling program operations
                                      will meet an organization’s objectives.

Significant Weakness                  Based on our review, we believe the following item is a
                                      significant weakness:



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Management Controls


                      ·   Compliance with Laws and Regulations: Travelers
                          failed to spend a portion of the grant funds as prescribed
                          in HUD’s grant agreement and other regulations. (See
                          Finding.)




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Follow Up On Prior Audits
The Office of Inspector General issued an audit report on Travelers and Immigrants Aid on June 9,
1993 (Audit Case Number 93-CH-251-1024). That report contained four findings which were
closed on November 5, 1993. The Finding contained in this report does not repeat any of the
previous findings.

An Independent Auditors’ Report on Travelers and Immigrants Aid (consolidated with Heartland
Alliance For Human Needs & Human Rights) for the fiscal year ended June 30, 1999, contained no
findings.




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Follow Up On Prior Audits




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                                                                                   Appendix A

Schedule of Questioned Costs


Recommendation                                           Type of Questioned costs
   Number                                        Ineligible 1/         Unsupported 2/

     1A                                                                  $11,441
     1B                                          $9,050



1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law, contract or Federal, State or local
     policies or regulations.

2/   Unsupported costs are costs charged to a HUD-financed or HUD-insured program or
     activity and eligibility cannot be determined at the time of audit. The costs are not
     supported by adequate documentation or there is a need for a legal or administrative
     determination on the eligibility of the costs. Unsupported costs require a future decision
     by HUD program officials. This decision, in addition to obtaining supporting
     documentation, might involve a legal interpretation or clarification of Departmental
     policies and procedures.




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                                                                                              Appendix B

Auditee Comments

April 26, 2001

Mr. Ron Huritz, Assistant District Inspector General for Audit
Office of Inspector General for Audit, Midwest
U.S. Department of Housing and Urban Development
77 W. Jackson Blvd., Room 2646
Chicago, IL 60604-3507

Dear Mr. Huritz:

Thank you for providing the opportunity to respond to the report on the recently completed program
audit. I believe that the attached documentation from our Vice President of Finance and Information
Systems provides additional clarification and documentation about some of the items that were
unsupported or considered ineligible at the time the report was written.

We would appreciate having the opportunity to meet with you after you’ve reviewed the attached
response to specific items, to discuss next steps, including any additional actions we might be able to take
to address the outstanding items. We hope that you will agree that the additional documentation is
sufficient to almost eliminate the unsupported cost finding and to substantially reduce the items
considered ineligible for this grant.

We are concerned about the several ineligible expense items discovered through this comprehensive
audit, and have reviewed the issues presented with the staff responsible for the coding, approval and
monitoring process. Although the organization has received clean reports from our audits over the years
by diverse funders and the regular auditing process, this 100% audit did reveal some difficulties with our
filing (refiling) systems and we have taken steps to address it.

I will call you next week to follow-up, or please call me and let me know if there is other information I
can provide.

Sincerely,


Linda E. Traeger
Vice President and Executive Officer

cc: Robert Lowe

Enclosures




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Appendix B


                                                             Heartland Alliance




Memo
        To:     Linda Traeger
        From: Rob Lowe
        cc:     Sid Mohn, Jim Jernigan
        Date: 4/26/01
        Re:     OIG Draft Audit Findings



I am writing this document in response to the draft finding and detail provided by Mr. Huritz’s
office. Below and attached is additional information in the hopes of clarifying much of what has
been categorized as either unsupported or ineligible in the draft.

        I.      Salary Expense (Various staff identified as unsupported costs for a total of
                $7,023)

               Attached are the earnings records and timesheets for the individuals listed in the
               draft report detail. These individuals all worked for the program and were paid
               accordingly. Apparently, the point of contention is with to what extent the ADP
               payroll system is utilized in the accounting process. While ADP has served well
               with respect to processing the payments of employees, it had proved problematical
               in addressing the Organization’s needs with respect to salary allocation. In
               response to this, and in conjunction with the purchase of a new Accounting
               software package containing a built-in and far superior allocation system, the use
               of the ADP to perform salary allocation was discontinued.        I believe the OIG
               auditors were given demonstrations of how the allocation system works during
               their review. Moreover, this system has been reviewed and approved by our
               regular fiscal Auditors, numerous funders, both private and governmental, as well
               as by nationally recognized Accreditation Boards. All have found our payroll
               procedures to be in accordance with GAAP and possess proper internal control
               design with necessary separation of duties. In light of this, we would ask these
               items to be removed from the draft report.

        II.     Communication Expense (Ameritech $2,267.93 in unsupported costs)

               The P.O., invoice, and check copy, and cancelled check have all been located for
               the Ameritech purchase listed on the sheet. A copy is attached and the original is
               available for review if needed. In light of this, we would ask this item to be

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                                                                                   Appendix B

               removed from the draft report.


        III.    Rent Expense ($13,781.97 in ineligible cost)

               There may have been some misunderstanding on the grant procedure that created
               the issue described on the report. While it is true that due to increased utilization
               of the 4750 N. Sheridan location by this program their allocation of rent cost was
               increased, it was not our understanding that this change had to be communicated
               to the funder due to the consolidated line item it was paid from. In the original
               budget, rental costs are part of a consolidated budget line item titled “Operating
               Costs”. This line item not only includes rent but a number of other sub categories
               as well. Because the “Operating Costs” line item did not change, and the costs
               remained within the 10% variance threshold, we did not at the time inform HUD.

               Additionally, we would like to note that the narrative section contained some
               inaccuracies regarding the utilization of space at the Ecumenical Institute. This
               space, in addition to being the administrative office for Rafael Center, is primarily
               utilized for program activities.      The change in the rent corresponded with
               increased proportional utilization by the Next Step program at the Sheridan location
               for program operations.

               It is our desire to work directly with HUD to address this issue and clarify any
               procedural issues that may not have been followed.         However, the matter is
               categorized in the report in a way that we are not in agreement with and would like
               to see the report language revised accordingly.

        IV.     Client Support (Jewel Food Store $5,000 in unsupported costs)

               The P.O., invoice, and check copy, and cancelled check have all been located for
               the Jewel purchase listed on the sheet. A copy is attached and the original is
               available for review if needed. In light of this, we would ask this item to be
               removed from the draft report.

Summary:

If agreed to, the removal of the above items would reduce the findings of the report from
$14,912.11 in unsupported costs to $817.11 in unsupported costs. Additionally, it would reduce
the amount of ineligible costs from $22,831.92 to $9,049.95. We are willing to take whatever
steps needed to resolve the open items. While certainly not making light of these amounts, it
should be noted that the remaining open items represent less than 1% of the $1.3 million program
budget. We will continue to review our procedures and policies to ensure that even this very
small variance amount is not repeated in future years. If the provided documentation is not
sufficient to make the requested changes in the draft report, we would be willing to meet with the
OIG review group to discuss the matter further.




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                                                                                   Appendix C

Distribution
Acting Secretary’s Representative, Midwest (2)
Director of Community Planning and Development, Illinois State Office (2)
Secretary, S (Room 10000)
Deputy Secretary, SD (Room 10100)
Chief of Staff, S (Room 10000)
Acting Associate General Deputy Assistant Secretary for Administration, AB (Room 10158)
Acting Assistant Secretary for Congressional and Intergovernmental Relations, J (Room 10120)
Deputy Assistant Secretary for Public Affairs, W (Room 10222)
Deputy Assistant Secretary for Administrative Services, Office of the Executive
  Secretariat, AX (Room 10139)
Deputy Assistant Secretary for Intergovernmental Relations, JI (Room 10234)
Deputy Chief of Staff for Policy and Programs, S (Room 10226)
Deputy Chief of Staff for Intergovernmental Affairs, S (Room 10226)
Special Counsel to the Secretary, S (Room 10234)
Senior Advisor to the Secretary, J (Room 10120)
Special Assistant for Inter-Faith Community Outreach, S (Room 10222)
Executive Officer for Administrative Operations and Management, S, (Room 10220)
General Counsel, C (Room 10214)
Deputy General Counsel for Housing Finance and Operations, CA (Room 10240)
Assistant Secretary for Housing/Federal Housing Commissioner, H (Room 9100)
General Deputy Assistant Secretary for Housing, H (Room 9100)
Assistant Secretary for Policy Development and Research, R (Room 8100)
Assistant Secretary for Community Planning and Development, D (Room 7100)
Assistant Deputy Secretary for Field Policy and Management, SDF (Room 7108)
Office of Government National Mortgage Association, T (Room 6100)
Assistant Secretary for Fair Housing and Equal Opportunity, E ( Room 5100)
Director, Office of Departmental Equal Employment Opportunity, U (Room 5128)
Chief Procurement Officer, N (Room 5280)
Assistant Secretary for Public and Indian Housing, P (Room 4100)
Director, Office of Departmental Operations and Coordination, I (Room 2124)
Office of the Chief Financial Officer, F (Room 2202)
Chief Information Officer, Q (Room P8206)
Acting Director, Enforcement Center, V (200 Portals Building)
Acting Director, Real Estate Assessment Center, X (1280 Maryland Avenue, SW, Suite 800)
Director, Office of Multifamily Assistance Restructuring, Y (4000 Portals Building)
Deputy Assistant Chief Financial Officer for Financial Management, FF (Room 2202)
Director of Audit Coordination/Departmental Audit Liaison Officer, FMA (Room 2206)
Director of Risk Management, FMR (Room 2214)
CFO Audit Liaison Officer, FMA (Room 2206)
Primary Audit Liaison Officer, 3 AFI (2)
Acquisitions Librarian, Library, AS (Room 8141)
Director, Office of Federal Housing Enterprise Oversight, 1700 G Street NW, Room 4011,
  Washington, DC 20552
The Honorable Joseph Lieberman, Chairman, Committee on Governmental Affairs, 340 Dirksen

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Appendix C


  Senate Office Building, United States, Senate, Washington, DC 20510
The Honorable Fred Thompson, Ranking Member, Committee on Governmental Affairs, 706 Hart
  Senate Office Building, United States Senate, Washington, DC 20510
The Honorable Dan Burton, Chairman, Committee on Government Reform, 2185 Rayburn
  Building, United States House of Representatives, Washington, DC 20515
The Honorable Henry A. Waxman, Ranking Member, Committee on Government Reform, 2204
  Rayburn Building, United States House of Representatives, Washington DC 20515
Ms. Cindy Fogleman, Subcommittee on Oversight and Investigations, Room 212, O’Neil House
  Office Building, Washington, DC 20515
Ms. Sharon Pinkerton, Staff Director, Subcommittee on Criminal Justice, Drug Policy & Human
  Resources, B373 Rayburn House Office Building, Washington, DC 20515
Steve Redburn, Chief, Housing Branch, Office of Management and Budget, 725 17th Street NW,
  Room 9226, New Executive Office Building, Washington, DC 20503
Associate Director, Resources, Community, and Economic Development Division, United States
  General Accounting Office, 441 G Street NW, Room 2T23, Washington, DC 20548
Andy Cochran, House Committee on Financial Services, 2129 Rayburn House Office Building,
  Washington, DC 20515
President, Heartland Alliance for Human Needs and Human Rights
Executive Officer, Travelers and Immigrants Aid/Chicago Connection




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