AUDIT REPORT
CITY OF DALLAS
CONTINUUM OF CARE PROGRAM
DALLAS, TEXAS
01-FW-251-1002
DECEMBER 13, 2000
OFFICE OF AUDIT, SOUTHWEST DISTRICT
FORT WORTH, TEXAS
Issue Date
December 13, 2000
Audit Case Number
01-FW-251-1002
TO: Katie S. Worsham
Director
Community Planning and Development, 6AD
SIGNED
FROM: D. Michael Beard
District Inspector General for Audit, 6AGA
SUBJECT: City of Dallas
Continuum of Care Program
Dallas, Texas
As part of a nationwide review of HUD’s Continuum of Care Program, we audited the City of
Dallas’ 1996 Shelter Plus Care grant and its 1997 Supportive Housing grant. Our attached report
contains one finding.
Within 60 days, please furnish this office, for each recommendation in this report, a status on:
(1) corrective action taken; (2) the proposed corrective action and the date to be completed; or (3)
why action is not considered necessary. Also, please furnish us copies of any correspondence or
directives issued related to the audit.
If you have any questions, please contact William W. Nixon, Assistant District Inspector General
for Audit, at (817) 978-9309.
Management Memorandum
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01-FW-251-1002 Page ii
Executive Summary
As a part of a nationwide review of HUD’s Continuum of Care Program, we audited the
City of Dallas’ (City) 1996 Shelter Plus Care grant1 and its 1997 Supportive Housing
grant.2 Our objectives were to determine whether the City: (1) implemented the grants in
accordance with federal regulations and its grant agreements; (2) expended funds for
eligible activities under federal regulations and applicable cost principles; (3) maintained
accurate and adequate evidence of measurable results; (4) administered a sustainable
program; and (5) expended funds timely.
City failed to implement its Our audit concluded the City failed to implement its grants
grants in compliance with in compliance with its grant agreements and federal
grant agreements and regulations. Specifically, the City did not: (1) provide and
federal regulations. document the matching supportive services required by the
Shelter Plus Care grant; (2) expend its funds timely; (3) file
accurate and consistent Annual Progress Reports; (4)
include only eligible and supported costs in its grant
drawdowns; (5) monitor the participants and their
supportive service needs sufficiently; and (6) perform
yearly Housing Quality Standards inspections for
apartments inhabited 1 year or more. Furthermore, the City
received $53,977 and $2,261 for ineligible and unsupported
activities, respectively. The $53,977 included $28,264 of
duplicated expenses, $21,130 in expenses for ineligible
participants, and $4,583 in expenses incurred prior to the
grant start date.
Due to the seriousness of the problems, we recommend that
Recommendations. HUD discontinue funding Continuum of Care grants to the
City until the City can demonstrate that it can administer
the funds appropriately. This includes providing HUD a
comprehensive management plan and documentation
detailing supportive services provided for all Shelter Plus
Care grants. We also recommend that HUD require the
City to repay $53,977 for ineligible costs and either support
or repay $2,261 for unsupported costs.
We held an exit conference with the City on November 2,
2000, during which we presented our findings. The City
provided its response to the audit report on November 3,
1
Shelter Plus Care grant #TX21C96-0503.
2
Supportive Housing grant #TX21B97-0906.
Page iii 01-FW-251-1002
Executive Summary
2000. We considered the responses in preparing our final
report.
01-FW-251-1002 Page iv
Table of Contents
Management Memorandum i
Executive Summary iii
Introduction 1
Finding
1 The City Failed to Implement Its Grants in Compliance 5
with Federal Regulations and Grant Agreements
Management Controls 17
Follow-Up on Prior Audits 19
Appendices
A Schedule of Questioned Costs 21
B Auditee Comments 23
C Distribution 35
Page v 01-FW-251-1002
Table of Contents
Abbreviations
CFR Code of Federal Regulations
HQS Housing Quality Standards
HUD U. S. Department of Housing and Urban Development
NOFA Notice of Funding Availability
OIG Office of Inspector General
01-FW-251-1002 Page vi
Introduction
Title IV of the Stewart B. McKinney Homeless Assistance
Background. Act authorized HUD’s Continuum of Care Programs. HUD
began implementing the Continuum of Care concept
through the Notices of Funding Availability (NOFA)
beginning in fiscal year 1994. The Continuum of Care
concept includes three major competitively funded
programs: (1) Supportive Housing; (2) Shelter Plus Care;
and (3) Section 8 Moderate Rehabilitation for Single Room
Occupancy Dwellings. We audited the City’s 1996 Shelter
Plus Care grant and 1997 Supportive Housing grant.
The City’s offices are located at 1500 Marilla in downtown
Dallas, Texas. The Day Resource Center is located at 901
South Ervay in Dallas, Texas. The City utilized the Day
Resource Center to provide services to the homeless. The
staff at the Day Resource Center included caseworkers
from the City, Dallas Metrocare, and up until recently the
Veterans Administration. The Day Resource Center
offered counseling services as well as referral services to
homeless individuals.
Shelter Plus Care grants provide rental assistance to hard-
Shelter Plus Care.
to-serve homeless people with disabilities.3 A person with
disabilities is defined as one who has a disability that:
• is expected to be of long-continued and indefinite
duration;
• substantially impedes his or her ability to live
independently; and
• is of such a nature that the disability could be improved
by more suitable housing conditions.4
HUD required the City to match the rental assistance
provided with an equal amount of supportive services.5
The supportive services must be appropriate to the needs of
the population served. HUD allowed the City to use up to 8
percent of this grant amount to cover administrative costs.6
Since 1996, HUD has awarded the City over $10 million in
Shelter Plus Care grants:
3
The regulations define such disability as either severely mentally ill or chronic substance abusers.
4
1996 Continuum of Care Application Instructions.
5
24 CFR Part 582 Subpart A defines supportive services as assistance that meets the special needs of eligible persons. Such as
health care, mental health treatment, alcohol and other substance abuse services, child care, case management, counseling, etc.
6
24 CFR Part 582.105(e).
Page 1 01-FW-251-1002
Introduction
Grant Aw ard Start
Number Amount Date Te rm
TX21C92-1051 $ 2,626,560 10/1/96 120 mos.
TX21C93-1031 2,919,120 10/1/94 60 mos.
TX21C96-0503 1,488,600 7/1/97 60 mos.
TXC80-6003 3,480,960 10/1/99 60 mos./re ne w al
TX01-C906-001 350,400
Tota l $ 10,865,640
The City used tenant-based rental assistance to provide
housing under its grant. Participants can select their
apartments from complexes throughout the City.7
Participants must pay 30 percent of their adjusted gross
income8 towards their rent. The Shelter Plus Care grant
pays the remainder of the participant’s rent. If a participant
has no income, the Shelter Plus Care grant will pay 100
percent of the rent.
Supportive Housing grants provide rental assistance and
Supportive Housing
supportive services to homeless individuals. According to
Program.
the goals of the program, the combination of rental
assistance and supportive services enables homeless people
to transition their way into permanent housing. The City
does not require its participants to pay any portion of the
rent. HUD limits assistance under this program to 2 years.
Since 1996, HUD has awarded the City over $1.7 million in
Supportive Housing grants:
G ra n t A w a rd S ta rt
Num be r Am ount D a te T e rm
T X 2 1 B 9 5 -0 9 9 7 $ 402,015 4/1/96 4 6 m o s.
T X 2 1 B 9 7 -0 9 0 6 749,670 10/1/98 3 6 m o s.
T X 0 1 B 9 0 6 -0 0 2 294,000 2 4 m o s.
T X 0 1 B 9 0 6 -0 1 5 299,824 2 3 m o s.
T o ta l $ 1,745,509
Participants can select their apartments from complexes
throughout the City.9 The City’s program provides 18
months of housing assistance along with job placement and
counseling for single homeless individuals. The City
charged its grant for the salaries of a caseworker and a job
7
The City maintains a listing of apartments.
8
As defined by 24 CFR 582 Subpart D.
9
The City maintains a listing of apartments.
01-FW-251-1002 Page 2
Introduction
coach. Both of these individuals work solely with the
supportive housing participants.
The City’s program required participants to conduct a
documented daily job search and save a portion of their
salary. The savings enable them to enter permanent
housing when the program ends. Program staff conduct
quarterly focus group meetings with clients to secure input
and planning for future services or service modifications.
Audit Objectives, Scope, Our objectives in auditing the City’s Continuum of Care
and Methodology. grants were to determine if the City: (1) implemented the
grants in accordance with its applications; (2) expended
funds for eligible activities under federal regulations and
applicable cost principles; (3) maintained accurate and
adequate evidence of measurable results; (4) has a
sustainable program; and (5) expended funds timely.
To achieve the audit objectives we:
• Interviewed HUD staff;
• Reviewed documentation provided by HUD on City
programs;
• Reviewed audited financial statements;
• Reviewed grant applications, agreements, and technical
submissions;
• Interviewed City staff;
• Reviewed City’s policies and procedures relating to
homeless grants;
• Selected sample of transactions and program
participants to determine if the City was following their
own policies and procedures as well as federal
regulations;
• Examined financial records for sample transactions;
• Examined participant records for sample participants;
and
• Reviewed annual progress reports.
We selected a judgmental sample of transactions and
program participants for the audit. The Shelter Plus Care
sample included 6 drawdown periods. We selected June
and July 1997 since this is when the program began. From
then on we selected every 4th drawdown. We reviewed
financial records for each of these drawdowns. We selected
our participants from the selected drawdowns by including
Page 3 01-FW-251-1002
Introduction
every 10th participant from reports provided by the City.
The Supportive Housing transactions sample included the
drawdown covering July 1998 through February 1999 since
this is when the program began. However, we only
sampled transactions occurring in November and
December, since this drawdown covered an 8 month period.
We selected July 1999 through August 1999 since it
appeared that this drawdown had been duplicated. We also
selected September 1999. In general, we selected every
other participant included on a list of participants for the
Supportive Housing sample.
We conducted the audit at City Hall and at the Day
Audit Period and Sites.
Resource Center. Throughout the audit we obtained
computer-generated data from both HUD and the City.
However, we did not perform any tests on the validity or
reliability of such data except as noted in the findings and
management controls. The audit period for the Shelter Plus
Care grant generally covered June 1997 through December
1998. The audit period for the Supportive Housing grant
generally covered July 1998 through January 2000. We
extended the audit period as appropriate. We performed
field work from February through May 2000 with
additional field work performed in August 2000. We
conducted our audit in accordance with generally accepted
government auditing standards.
01-FW-251-1002 Page 4
Finding
The City Failed to Implement Its Grants
in Compliance with Federal Regulations
and Grant Agreements
Overall, the City administered its homeless grants poorly. The City failed to comply with
federal regulations and its grant agreements. Specifically, the City did not:
• Provide and document the matching supportive services required by the Shelter Plus
Care grant;
• Expend its funds timely;
• File accurate and consistent Annual Progress Reports;
• Include only eligible and supported costs in grant drawdowns;
• Monitor the participants and their supportive service needs sufficiently; and
• Perform yearly Housing Quality Standards (HQS) inspections for apartments inhabited
1 year or more.
The City provided insufficient administrative guidance to city personnel responsible for the
day-to-day operations of the grants. Further, the City did not implement sufficient
management controls over grant administration to ensure compliance with grant
requirements. Therefore, HUD cannot rely on the City to properly administer its homeless
grants. HUD should discontinue funding Continuum of Care grants to the City until the
City can demonstrate that it can administer the funds appropriately. This includes
providing HUD a comprehensive management plan and a report detailing supportive
services provided for all Shelter Plus Care grants. HUD should also require the City to
repay the $53,977 for ineligible activities and either support or repay the $2,261 for
unsupported activities.
Criteria. Shelter Plus Care. In obtaining funds, the City agreed to
follow all applicable federal regulations10 and the terms of
its grant agreement including:
• Conducting an ongoing assessment of the rental
assistance and supportive services required by the
participants;
• Ensuring the provision of supportive services in an
amount equal to the rental assistance provided by HUD;
• Being responsible for overall administration of the
grant; and
10
Subtitle F of Title IV of the Stewart B. McKinney Homeless Assistance Act and also 24 CFR 582.
Page 5 01-FW-251-1002
Finding
• Complying with other terms and conditions, including
record keeping and reports.
Supportive Housing. In obtaining funds, the City agreed
to comply with all applicable federal regulations11 and the
terms of its grant agreement including:
• Providing assistance to the participants in securing and
retaining employment and/or training;
• Ensuring that participants conducted daily job search
with verified results; and
• Requiring participants to set up savings accounts.
For its Shelter Plus Care grant, the City failed to provide
The City failed to provide
the required supportive services to its participants. Further,
and document supportive
the City did not adequately document those supportive
services.
services it did provide to the participants. After several
requests, the City supplied documentation to support
$209,215 in supportive services.12 As of November 30,
1999, HUD provided the City with $460,195 in rental
assistance or $250,980 more than the City matched in
supportive services.
HUD required the City to monitor the supportive services
and ensure the participants are receiving the appropriate
supportive services, even if it must fund the services
themselves.13 HUD also required the City to conduct an
ongoing assessment of the supportive services needed by
the participants.14 The City did not maintain
documentation on the supportive services provided (either
aggregate or per participant); therefore, it could not provide
an ongoing assessment of the needs of the participants or
the amount of services provided.
In a 1999 monitoring review, HUD noted similar problems
with the City’s 1994 Shelter Plus Care grant. Its
monitoring review found the City could not provide
documentation to verify that it matched the rental assistance
received with supportive services. The City’s response
stated that it had documented and verified a total of
11
Subtitle C of Title IV of the Stewart B. McKinney Homeless Assistance Act, 24 CFR 583, and also the Notice of Funding
Availability 62 FR 17024.
12
The City should have had this information readily available
13
24 CFR 582.110.
14
24 CFR 582.300(b).
01-FW-251-1002 Page 6
Finding
$1,946,371 in supportive services for this grant. However,
HUD eventually determined the City provided $1,798,911
as a supportive service match. For this grant, HUD
provided $2,919,120 in rental assistance or $1,120,209
more than the required match by the City.
The local HUD field office interprets the McKinney Act as
not allowing it to require the City to repay HUD the
$1,120,209. Its interpretation is that HUD could only
recapture “unexpended housing assistance.” Therefore, its
monitoring review recommended the City “over match”
existing Shelter Plus Care grants to make up for the
supportive services the City did not provide for the 1994
grant. However, this does rectify the fact that the
participants under the 1994 grant did not receive the
necessary supportive services. HUD should ensure that the
City provides the required supportive services to those
participants under the specific grant.
Provision of supportive services is the cornerstone of the
Shelter Plus Care Program. The program targets hard-to-
serve homeless persons with disabilities15. The disabilities
of these individuals substantially impede their ability to live
independently. However, the City placed the individuals in
apartments throughout the City and did not provide the
required supportive services. Without the required match,
the City not only violated its grant agreements but also
hindered the success of any participants and the program.
Since the participants did not receive sufficient supportive
services, this program was nothing more than a temporary
relief from homelessness.
The City did not budget or administer grant funds to ensure
The City did not expend
the timely expenditure of the funds. The City performed
funds in a timely manner.
neither spending projections nor any other analysis for
either of the grants audited. As of November 1999, the
City was behind projected spending by $259,295 in its
Shelter Plus Care grant. As of September 1999, the City
was behind projections of spending in its Supportive
Housing grant by $39,572.
15
24 CFR 582.1.
Page 7 01-FW-251-1002
Finding
Shelter Plus Care - As of November 1999, the City was
behind projected spending by $259,295 in its 1996 Shelter
Plus Care grant. In an effort to expend the funds from a
prior grant, the City transferred 30 of its 35 participants
from this grant.16 This was nothing more than a paper
transaction to help the City to expend its prior grant.
Furthermore, during the first 19 months of the grant, the
City failed to serve the required 50 participants. The City
actually served the following number of participants during
the period:
1997 1998
Month Participants Month Participants
June 13 January 34
July 17 February 38
August 19 March 35
September 21 April 5
October 23 May 5
November 24 June 5
December 28 July 5
August 9
September 19
October 20
November 25
December 24
The City had several waiting lists to get into the program.
Each waiting list could have as many as a dozen individuals
at one time. The City had no excuse for not spending its
funds timely. The City should analyze grant funds on a
continual basis to ensure that it spends funds timely and
that it serves the required number of participants.
Supportive Housing - The City will likely expend the
$39,572 difference between its projected and actual
expenditures, because it has not drawn down any of its
administrative funds. The City was awarded $35,270 for
administrative costs associated with this grant. However,
as of September 1999, the City had not drawn down any
administrative costs from the grant. The City claimed that
HUD instructed them that no administrative costs could be
drawn down until the City had the required number of
participants.17 The City had 26 participants as of January
1999, in spite of this however, it had not drawn down any
16
HUD approved the transfer.
17
This grant was for 25 participants.
01-FW-251-1002 Page 8
Finding
administrative funds. The City should not blame HUD for
its lack of diligence in administering its grants.
The City submitted The City did not collect and maintain documentation on
inaccurate and inconsistent participants to support progress reported to HUD. HUD
Annual Progress Reports. required the City to submit Annual Progress Reports
showing the progress the City made toward its goals during
the year and setting the goals for the upcoming year.
Without participant information, the City could not submit
accurate and consistent Annual Progress Reports.
According to City officials, in order to complete the Annual
Progress Report, the City inspected each participant’s file
to determine if the participant met the City’s goals.
However, it did not maintain any documentation of its
review of the files. Therefore, no one could confirm the
data without inspecting each file again.
Furthermore, the City’s Annual Progress Reports included
mathematical errors, inconsistency between goals set and
the progress reported, and incorrect calculation of progress
achieved. For example, the Annual Progress Report
reflects that the Shelter Plus Care grant had 76 participants
during the period July 1, 1998, through June 30, 1999.
However, a list provided by the City reflected only 74
participants.
As an example of inconsistency, the City’s year one
Annual Progress Report,18 stated that in year two “50% of
those in vocational programs will demonstrate a
documented increase in their vocational skill levels.”
However, in its year two Annual Progress Report,19 the City
reported “this goal has been exceeded in that 30% of the
clients completed the Compensated Work Therapy program
and Dallas Community College program requirements for
graduation.” In addition to the apparent contradiction of
the goal set and progress achieved, the City did not include
individuals who dropped out of the program in the
calculation of progress achieved. This practice inflates the
progress reported on the Annual Progress Reports.
The Annual Progress Reports filed by the City do not
reflect a true picture of the program and the progress
achieved. In order to accurately report its progress, the City
18
July 1, 1997, through June 30, 1998.
19
July 1, 1998, through June 30, 1999.
Page 9 01-FW-251-1002
Finding
must collect and maintain information on each participant.
The City’s practice of inspecting each participant file for
the Annual Progress Report is not only time consuming and
inefficient but reflects poorly on the City’s administration
and implementation of its grants. Essentially, the City’s
record keeping for tracking and documenting the progress
of the participants and its grants is nonexistent. It seems
the City haphazardly placed numbers on the reports and
submitted them. The City should collect and utilize
participant information in order to monitor the success of
its programs. As prepared, the City’s reports are worthless
as an analysis tool or as a measure of progress.
The City has drawn down funds for ineligible and
The City included $53,977 unsupported costs totaling $53,977 and $2,261,
in ineligible and $2,261 in respectively. The City incorrectly received funds for a
unsupported costs in grant duplicated drawdown, expenditures incurred prior to the
drawdowns. grant start date, and expenses for ineligible participants. In
one drawdown reviewed, the City did not have support for
$2,261.
Duplicated Drawdown - The City included the same
leasing and utility costs in two drawdowns from its
Supportive Housing grant. The two drawdowns included:
09/24/99 Co Supportive Tota l
Dra w dow n Lea sing Utilities Pa yme nts Admin Services Draw dow n
July '99 $ 14,451.00 $ 537.00 $ -233.00 $ 1,180.00
August '99 11,028.00 2,481.00 1,081.00
Subtota l $ 25,479.00 $ 3,018.00 $ -233.00 $ 2,261.00 $ 30,525.00
10/13/99 Co Supportive Tota l
Dra w dow n Lea sing Utilities Pa yme nts Admin Services Draw dow n
July '99 $ 14,451.00 $ 537.00 $ 9,874.00
August '99 11,028.00 2,481.00
Subtota l $ 25,479.00 $ 3,018.00 $ 9,874.00 $ 38,371.00
Duplicate
Cha rge s $ 25,479.00 $ 3,018.00 $ -233.00 $ 28,264.00
01-FW-251-1002 Page 10
Finding
The City should repay its grant $28,264 for the duplicate
charges. The City could not support the $2,261 in
administrative costs included in the September drawdown.
The City should either provide support for this amount or
repay its grant the $2,261.
Expenses incurred prior to grant start date - Under the
Supportive Housing grant, the City incurred $4,58320 in
expenses prior to the grant start date.21 HUD prohibits the
City from expending funds until the grant has been
executed. The City offered no explanation for incurring
expenditures prior to the grant start date and should repay
its grant.
Ineligible Participants - The City paid $21,130 in rental
assistance for six ineligible participants. The City did not
properly document homelessness for these participants.
During a start-up conference held for each grant, HUD
instructs grantees on the requirements for documentation of
homelessness. However, the City could not say who
attended the start-up conferences, nor could it verify
whether the information was disseminated to the
individuals who worked on the grant.
The City did not enforce program requirements or provide
The City provided adequate monitoring of participants. In one instance, the
insufficient monitoring of City’s Shelter Plus Care grant paid rent on an apartment
participants. that the participant had vacated at least 7 months earlier.22
The City had documentation that should have alerted it to
this condition. Specifically, the utility bills for this
apartment had gone as low as $5 a month. The City can
pay rental assistance for only 1 month after a participant
vacates the apartment.23
Contrary to the Supportive Housing grant requirements, the
City did not require participants to perform a daily job
search or maintain a savings account. Of the 19 files
reviewed, none had a daily job search and only 3 files had
any evidence of a savings account. Furthermore, the audit
noted instances in which the participant clearly violated
program requirements and the City took nugatory action.
20
This was included in their initial drawdown of $85,899, and includes expenses incurred in July and August 1998.
21
The grant started on September 1, 1998.
22
Also, the City did not document that this individual was homeless.
23
24 CFR 582.105(d)(1).
Page 11 01-FW-251-1002
Finding
For instance, one participant was evicted from her
apartment for alleged drug trafficking and unauthorized
tenants. She also repeatedly missed appointments with her
case worker. Instead of removing the participant from the
program, the City allowed her to sign another agreement.
After entering the new apartment, the participant continued
to have an unauthorized guest. It got so bad that the
apartment complex was forced to change the locks to
remove the unauthorized guest. It appears that during the
1½ years that she participated in the program, she did not
have a steady job much less maintain a savings account.
During the audit period, the participant requested that the
City remove her from the program. It is unknown whether
the City continued paying her rent.
According to City personnel, they have attempted to
terminate participants for noncompliance with program
requirements. However, management has told them to
terminate “only in the most extreme circumstances.” City
personnel believed that they went the extra mile; however,
they acknowledged that going the extra mile usually did not
work. The City did not have adequate procedures to ensure
that the participants followed program requirements or
faced consequences including terminating them from the
program.
The grant provided participants with 2 years of rental
assistance to enable them to make the transition from
homeless to independent living. While in the program, the
grant required participants to obtain a steady job and save
money. With no enforcement of the program requirements,
not only did the City violate its grant agreement, but it also
hindered the success of the participants. The City provided
no incentive for participants to strive to become self-
sufficient. Therefore, at the end of the 2-year period, the
participants gained little to nothing.
If the City did not intend to enforce the requirements of the
grant, the City and not HUD should be paying the rents for
the participants. The City should develop and implement
the necessary procedures to ensure that participants follow
program requirements.
01-FW-251-1002 Page 12
Finding
The City did not perform Contrary to Shelter Plus Care program requirements, the
yearly Housing Quality City did not perform yearly HQS inspections of the
Standards (HQS) apartments. The City’s Housing Inspector explained that
inspections. apartment complexes often refuse to allow him into the
apartments. HUD cannot be sure that the apartments
included in the City programs meet the HQS.
The City’s revised response is included as Appendix B.
Auditee Comments We did not include as part of the City’s response any
confidential information.
The City concurred that it did not implement its grants in
compliance with grant agreements and federal regulations.
However, the City disagreed that it included ineligible
participants in grant drawdowns or drew down funds sooner
than was permitted by regulations. The City’s response
included actions that it has taken to mitigate the severity of
the problems detected during the audit.
The City believes its files had sufficient documentation to
verify the six individuals identified in the audit met the
eligibility requirements. The City stated, “The Department
used as its documentation, the Participant Outcome
Monitoring System (POMS) which was previously
recommended by local HUD staff, to document the
homeless condition of our clients.” Therefore, the City
believes it appropriately paid $21,130 in rental assistance
on behalf of these participants.
The City maintained the eligibility of the $4,583 incurred
prior to the grant start date. According to the City’s
response:
“…the City was notified on July 14, 1998 of the award
of the Supportive Housing funding. The notice
informed the City no funds could be disbursed until
after the grant was fully executed. The City assumed all
eligible expenses incurred from the time of notification
could be reimbursed once the grant was executed.
Review of the applicable regulations does not prohibit
this action.”
With respect to the Housing Quality Standards inspections,
the City acknowledged that it did not perform all the
Page 13 01-FW-251-1002
Finding
inspections. However, this was due to a lack of
cooperation from apartment managers. The City cited
actions it has taken to correct this problem.
Included in the City’s response was a management plan
intended to address the concerns of the OIG and HUD. The
City believes this management plan combined with recent
changes in management and changes in operations will
result in a stronger administration of its programs.
OIG Evaluation of The City’s response, specifically the attached management
plan, shows a willingness to correct the problems noted in
Comments the finding. However, in order to demonstrate its ability to
administer its grants appropriately, the City must
implement these changes and evaluate the outcomes. As
such, we did not change our recommendation that HUD
discontinue funding until the City can administer the grants
appropriately.
We take exception to the City’s statement, “In many
instances program staff responsible for implementing the
grants have in fact met the requirements of the grants with
one major exception – they did not adequately document
their activities.” The City’s statement appears to trivialize
the problems and conditions noted in the finding as simply
a lack of documentation. The City did indeed lack
documentation. However, the lack of documentation is
only a symptom of the City’s inability to administer its
Continuum of Care Programs effectively. For instance, the
lack of supportive services documentation only exposes the
larger problem of the City not addressing the needs of its
participants or demonstrating that the participants received
the care needed to assist them in living as independently as
possible.
The City could not support its assertion that the six
individuals cited in the finding were eligible participants.
As stated in the finding, HUD provided the City specific
instructions on documenting homelessness and the City did
not follow them. Furthermore, the City could not verify
that it trained City staff on administering and operating
these grants. Several of the individuals cited in the finding
had been living with family or friends prior to entering the
01-FW-251-1002 Page 14
Finding
program. Irrespective of the documentation maintained,
these individuals were not eligible to participate under
these grants.
In its response the City included a letter from an apartment
manager regarding the participant who had vacated his
apartment at least 7 months prior to termination of rental
assistance. However, this does not agree with
documentation included in the participant file. No
participant in these programs should go 7 months without
contact. Without this contact, the City does not know if it
is paying rent on a vacant apartment, but also whether the
participant is making progress under this program.
The City’s assumption that expenses incurred prior to the
grant start date were eligible expenses is incorrect.
Regulations clearly define the effective date as the date
HUD executes the grant.
We revised our report as necessary.
Recommendations We recommend HUD to:
1A. Discontinue funding Continuum of Care grants for the
City until such time as the City demonstrates its
ability to administer the grants appropriately. This
includes providing HUD a comprehensive
management plan in the areas of:
• Supportive services;
• Personnel training;
• Oversight responsibility;
• Participant monitoring;
• Draw down procedures and review;
• Expenditures of grant funds along with
projections; and
• Annual Progress Report preparation and review.
1B. Require the City to provide a report detailing
documented supportive services provided for all
Shelter Plus Care grants. The report should reflect:
• Supportive Service providers utilized;
Page 15 01-FW-251-1002
Finding
• Types of services provided;
• Dollar value of those services;
• Steps taken to verify documentation; and
• How the supportive services address the particular
needs of the Shelter Plus Care participants.
1C. Require the City to reimburse HUD for $53,977 for
ineligible expenditures.
1D. Require the City to either support or reimburse HUD
$2,261 in unsupported costs.
01-FW-251-1002 Page 16
Management Controls
In planning and performing our audit, we obtained an understanding of the management
controls that were relevant to our audit. Management is responsible for establishing
effective management controls. Management controls, in the broadest sense, 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.
Significant Controls We determined the following internal controls were relevant
to our audit objectives:
• eligibility of program activities and participants;
• measurement and documentation of program results;
• monitoring of drawdowns;
• timely expenditure of grant funds;
• monitoring of supportive services;
• monitoring of program participants; and
• oversight responsibility and overall grant
administration.
We evaluated all of the relevant control categories
identified above by determining the risk exposure and
assessing control design and implementation.
Significant Weaknesses It is a significant weakness if internal controls do not give
reasonable assurance that resource use is consistent with
laws, regulations, and policies; that resources are
safeguarded against waste, loss, and misuse; and that
reliable data is obtained, maintained, and fairly disclosed in
reports. As discussed in our finding, we believe the
following items are significant weaknesses in that the City
lacks sufficient controls to ensure:
• eligibility of participants;
• proper measurement and documentation of program
results;
• timely monitoring of grant drawdowns;
• timely expenditure of grant funds;
• monitoring and documenting of supportive services;
• monitoring of program participants to ensure adherence
to program rules and guidelines; and
Page 17 01-FW-251-1002
Management Controls
• overall grant administration in accordance with federal
regulations and grant agreements.
01-FW-251-1002 Page 18
Follow-Up on Prior Audits
This is the first audit by our office of the City of Dallas’ Continuum of Care grants.
We reviewed the 1997 and 1998 audited financial statements for the City of Dallas. The audit
contained no findings regarding the Continuum of Care grants.
Page 19 01-FW-251-1002
Follow-Up on Prior Audits
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01-FW-251-1002 Page 20
Appendix A
Schedule of Questioned Costs
Type of Questioned Costs
Issue Ineligible 1/ Unsupported 2/
1C Ineligible expenditures $53,977
1D Unsupported costs $2,261
Totals $53,977 $2,261
1
Ineligible costs are costs charged to a HUD-financed or 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 questioned by the auditor because the 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 of Departmental policies and procedures.
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Appendix A
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Appendix B
Auditee Comments
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Appendix B
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Appendix B
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Appendix B
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Appendix B
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Appendix B
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Appendix B
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Appendix B
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Appendix B
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Appendix B
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Appendix B
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Appendix B
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Appendix C
Distribution
Secretary's Representative, 6AS
Comptroller, 6AF
Director, Accounting, 6AAF
Director, CPD, 6AD
Secretary, S (Room 10000)
Deputy Secretary, SD (Room 10100)
Assistant Deputy Secretary for Field Policy & Mgmt, SDF (Room 7108)
Acting Assistant Secretary for Administration, A (Room 10110)
Deputy Chief of Staff for Programs & Policy, S (Room 10226)
Deputy Asst. Secretary for Public Affairs, S (Room 10222)
Special Asst. for Inter-Faith Community Outreach, S (Room 10222)
Executive Officer for Admin Operations & Management, S (Room 10220)
General Counsel, C (Room 10214)
Director, Office of Federal Housing Enterprise Oversight, O, 9th Floor Mailroom
Assistant Secretary for Housing/FHA, H (Room 9100)
Office of Policy Development & Research, R (Room 8100)
Assistant Secretary for CPD, D (Room 7100)
Government National Mtg. Assoc., T (Room 6100)
Assistant Secretary for Fair Housing & Equal Opportunity, E (Room 5100)
Chief Procurement Officer, N (Room 5184)
Assistant Secretary for Public & Indian Housing, P (Room 4100)
Chief Information Officer, Q (Room 3152)
Director, Office of Departmental Operations & Coordination, I (Room 2124)
Chief Financial Officer, F (Room 2202)
Director, Enforcement Center, V, 200 Portals Bldg., D.C. 20024
Director, REAC, X, 1280 Maryland Ave., SW (Ste.800), D.C. 20024
Director, Office of MF Assistance Restructuring, Y, 4000 Portals Bldg., D.C. 20024
Deputy Chief Financial Officer for Operations, FF (Room 2202)
David Gibbons, Director, Office of Budget, FO (Room 3270)
FTW ALO, 6AF (2)
CPD ALO, DOT (Room 7220) (2)
Dept. ALO, FM (Room 2206) (2)
Acquisitions Librarian, Library, AS (Room 8141)
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Appendix C
DISTRIBUTION (Cont’d)
Director, Hsg. & Comm. Devel. Issues, US GAO, 441 G St. NW, Room 2T23
Washington, DC 20548 Attn: Stanley Czerwinski
Henry A. Waxman, Ranking Member, Committee on Govt Reform,
House of Rep., Washington, D.C. 20515
The Honorable Fred Thompson, Chairman, Committee on Govt Affairs,
U.S. Senate, Washington, D.C. 20510
The Honorable Joseph Lieberman, Ranking Member, Committee on Govt Affairs,
U.S. Senate, Washington, D.C. 20510
Cindy Fogleman, Subcomm. on Gen. Oversight & Invest., Room 212,
O'Neill House Ofc. Bldg., Washington, D.C. 20515
The Honorable Dan Burton, Chairman, Committee on Govt Reform,
House of Representatives, Washington, D.C. 20515
Deputy Staff Director, Counsel, Subcommittee on Criminal Justice, Drug Policy & Human
Resources, B373 Rayburn House Ofc. Bldg., Washington, D.C. 20515
Steve Redburn, Chief, Housing Branch, Office of Management and Budget
725 17th Street, NW, Room 9226, New Exec. Ofc. Bldg., Washington, D.C. 20503
Inspector General, G
Mayor, City of Dallas
City Manager, City of Dallas
Director, Environmental & Health Services Dept.
Assistant Director, Environmental & Health Services Dept.
01-FW-251-1002 Page 36
City of Dallas Continuum of Care Program, Dallas, Texas
Published by the Department of Housing and Urban Development, Office of Inspector General on 2000-12-13.
Below is a raw (and likely hideous) rendition of the original report. (PDF)