oversight

Dallas Homeless Consortium Continuum of Care Dallas, Texas

Published by the Department of Housing and Urban Development, Office of Inspector General on 2001-09-21.

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

                                                                Issue Date
                                                                    September 21, 2001
                                                               Audit Case Number
                                                                   2001-FW-1006




TO:    Katie Worsham
       Director
       Office of Community Planning and Development, 6AD

           /SIGNED/
FROM: D. Michael Beard
      District Inspector General for Audit, 6AGA

SUBJECT:       Dallas Homeless Consortium
               Continuum of Care
               Dallas, Texas


We audited the Dallas Continuum of Care 1996 and 1997 grants as part of a nationwide review
of HUD’s Continuum of Care Program. Our attached audit report contains one finding.

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

If you have any questions, please call William Nixon, Assistant District Inspector General for
Audit, at (817) 978-9309.
Management Memorandum




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2001-FW-1006               Page ii
Executive Summary
As a part of a nationwide review of HUD’s Continuum of Care Program, we audited the
Dallas Homeless Consortium. Our objectives were to determine whether the Consortium:
(1) fairly represented the needs of the community; (2) achieved broad participation; (3)
held members accountable for their performance; and (4) tracked the progress of
programs and participants.



 The Continuum of Care            Our audit concluded the Consortium has a broad-based
 applications filed by the        membership that provided fair representation of the
 Homeless Consortium              community. However, the Continuum of Care applications
 contain inaccurate               filed by the Homeless Consortium contain inaccurate
 information and overstate        information and overstate its achievements. The peer
 its achievements.                review process, used to determine the priority order of the
                                  projects contained in the consolidated application, was
                                  ineffective and may have allowed unsuccessful programs to
                                  receive higher priority than was appropriate. In addition,
                                  the Consortium had no means of tracking or monitoring its
                                  participants or programs. We also have concerns that in its
                                  role as lead agency of the Consortium, the City of Dallas
                                  did not provide the organization with the leadership and
                                  guidance necessary for the Consortium to become
                                  successful.

                                  We recommend HUD: (1) review the existing Continuum
 Recommendations.                 of Care strategy of the Consortium to ensure that the
                                  strategy accurately represents the efforts and plans of the
                                  Consortium; (2) work with the Consortium to strengthen its
                                  peer review process; (3) require the Consortium to
                                  implement a tracking system; (4) continue to provide
                                  technical assistance to the Consortium as it works through
                                  the process of choosing a lead agency; and (5) assist the
                                  Consortium in formalizing operational requirements for the
                                  Consortium, the lead agency, and the Consortium members.




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Executive Summary




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2001-FW-1006               Page iv
Table of Contents

Management Memorandum                                              i


Executive Summary                                                 iii


Introduction                                                       1


Findings

1    The Consortium Misled HUD and Did Not Effectively              9
     Evaluate or Provide Meaningful Feedback on Grantee
     Performance


Management Controls                                                17



Appendices
      A Auditee Comments                                          19

      B Distribution                                              23




                              Page v                      2001-FW-1006
Table of Contents


Abbreviations
       HUD          U. S. Department of Housing and Urban Development
       NOFA         Notice of Funding Availability
       OIG          Office of Inspector General
       SRO          Single Room Occupancy Dwellings Program




2001-FW-1006                              Page vi
Introduction
                                                HUD developed the Continuum of Care concept to address
    Background
                                                the needs of the homeless and was intended to provide for a
                                                coordinated, long-term approach for meeting those needs.
                                                HUD began implementing the Continuum of Care concept
                                                through a Notice of Funding Availability (NOFA) in 1994.
                                                The purpose of the NOFA was to fund projects and
                                                activities that created locally developed Continuum of Care
                                                systems to assist homeless persons. The Continuum of
                                                Care system consists of four basic components:

                                                ·    Outreach and assessment.
                                                ·    Emergency shelter with appropriate supportive services.
                                                ·    Transitional housing with appropriate supportive
                                                     services.
                                                ·    Permanent housing or permanent supportive housing.

                                                While not all homeless individuals will need to access all
                                                four of these components, coordination of all four
                                                components is necessary for them to be successful.

                                                There are three competitively funded programs included
                                                within the Continuum of Care:

                                                ·    Supportive Housing Program
                                                ·    Shelter Plus Care Program
                                                ·    Section 8 Moderate Rehabilitation for Single Room
                                                     Occupancy Dwellings (SRO) Program

                                                The Supportive Housing Program promotes the
                                                development of supportive housing and supportive services
                                                to assist homeless persons to transition from homelessness
                                                and live as independently as possible.1 The Shelter Plus
                                                Care Program provides rental assistance for hard-to-serve
                                                homeless persons with disabilities in connection with
                                                supportive services funded from sources outside the
                                                program.2 Section 8 Moderate Rehabilitation for SRO
                                                Program provides rental assistance for homeless individuals
                                                in rehabilitated SRO housing.3




1
    Subtitle C of Title IV of the Stewart B. McKinney Homeless Assistance Act.
2
    Subtitle F of Title IV of the Stewart B. McKinney Homeless Assistance Act.
3
    Subpart V of Subtitle F of Title IV of the Stewart B. McKinney Homeless Assistance Act.

                                                         Page 1                                2001-FW-1006
Introduction


                                          HUD designed the Continuum of Care programs to allow
                                          communities the flexibility to determine what worked best
                                          for them. In other words, it is up to the community to
                                          determine what types of assistance it needs and what
                                          priorities to assign to the needs. In order to give
                                          communities this flexibility, HUD issued no regulations
                                          governing the operation or organization of the individual
                                          Continuum of Care organizations.4

                                          Applications for Continuum of Care grants may be
                                          submitted using one of three options:5

                                          ·   Consolidated Application: a single application
                                              encompassing a Continuum of Care strategy and
                                              containing all the projects within that strategy for which
                                              funding is being requested. Individual projects and
                                              operators are contained within the one consolidated
                                              application. Grant funding may go to one entity, which
                                              then administers all funded projects submitted in the
                                              application, or grant funding may go to all or any of the
                                              projects individually. Communities are encouraged
                                              however not required to submit consolidated
                                              applications. A consolidated application is an
                                              application developed from a single Continuum of Care
                                              strategy for a jurisdiction (or a consortium of
                                              jurisdictions) and contains funding requests for all of
                                              the projects within that strategy.

                                          ·   Associated Application: applicants plan and organize
                                              a single Continuum of Care strategy which is adopted
                                              by project sponsors or operators who choose to submit
                                              separate applications for projects while including the
                                              identical Continuum of Care strategy. In this case,
                                              project funding would go to each successful applicant
                                              individually and each would be responsible to HUD for
                                              administering its separate grant.

                                          ·   Solo Application: an applicant applies for a project
                                              exclusive of any Continuum of Care strategy.

                                          HUD considered consolidated and associated applications
                                          equally competitive. However, solo applications, not part


4
    1997 Continuum of Care Application.
5
    1997 NOFA.

2001-FW-1006                                      Page 2
                                                                                                               Introduction


                                                 of a Continuum of Care strategy, received few, if any,
                                                 points under the Continuum of Care rating criteria.

                                                 In general, applications contain two components.6 The first
                                                 component is the process and outcome of the community
                                                 based homeless plan – the Continuum of Care. It contains
                                                 a description of the community’s Continuum of Care
                                                 strategy, the process used to create that strategy and a
                                                 listing of the projects included in the application, in priority
                                                 order.7 This priority order will mean that if funds are only
                                                 available to finance eight of ten proposed projects, then
                                                 funding will be awarded to the first eight projects listed.
                                                 HUD believes that priority decisions are best made through
                                                 a locally-driven process and are key to the ultimate goal of
                                                 reducing homelessness in America. In addition, a
                                                 community’s Continuum of Care strategy should reflect
                                                 maximum participation by a range of participants.8 It
                                                 should also describe a community’s efforts to create,
                                                 maintain, and build upon a community-wide inventory of
                                                 housing and services for homeless families and individuals.
                                                 Instructions direct applicants to pay special attention to this
                                                 component since HUD places a high priority on
                                                 coordination among a spectrum of homeless assistance
                                                 providers.

                                                 The second component of the application contains the
                                                 exhibits for the specific program funds contained in the
                                                 application. These exhibits describe the individual projects
                                                 contained in the application. They contain details regarding
                                                 the population to be served, activity for which assistance is
                                                 requested, proposed participants and their needs, specific
                                                 costs associated with the project, and supportive services
                                                 proposed to help participants achieve permanent housing
                                                 and self-sufficiency.

                                                 HUD reviewed and rated all applications using the same
                                                 process. It conducted two types of reviews. HUD first
                                                 conducted a threshold review of each proposed project for
                                                 the specific criteria identified in the Notice of Funding
                                                 Availability (NOFA). HUD eliminated those projects not
                                                 meeting NOFA requirements from the competition. In the

6
    1997 Continuum of Care Application.
7
    The priority of projects contained in the application is determined by the local Continuum of Care organization.
8
    Examples: non-profit providers of housing and services, homeless and formerly homeless persons, state and local
    governments and agencies, the private sector, housing developers, foundations, and other community organizations.

                                                        Page 3                                                2001-FW-1006
Introduction


                                                  second review, HUD assigned up to 40 points for the
                                                  community’s fundamental need to provide housing and
                                                  services for homeless persons and up to 60 points for the
                                                  community’s Continuum of Care strategy.9

                                                  The Homeless Consortium of Dallas was organized in
     Homeless Consortium of                       1995. However, prior to 1997 the Consortium only met to
     Dallas.                                      discuss grant applications. According to Consortium
                                                  members, in 1997 they sought to place more emphasis on
                                                  the homeless and less on discussing funding issues. They
                                                  elected officers, established committees, broadened their
                                                  base, hired consultants and formed focus groups.

                                                  The Consortium is a combination of different types of
                                                  organizations and individuals. It consists of public entities,
                                                  service providers, private not-for-profit organizations,
                                                  business groups, and formerly homeless individuals. The
                                                  Consortium’s application contained components for
                                                  emergency shelter, transitional and permanent housing, and
                                                  service resources to address the needs of the homeless.

                                                  The City of Dallas took a lead role in the Continuum of
                                                  Care process. The City prepared and submitted the
                                                  Consolidated Application for the Consortium. This
                                                  included preparing Exhibit 1, which included the
                                                  Continuum of Care narrative. The City also paid for and
                                                  gathered the information necessary to determine “gaps” in
                                                  homeless services.10 Further, the City provided a staff
                                                  member who facilitated the ongoing activities of the
                                                  consortium and provided funding for mailings, consultants,
                                                  and other administrative matters.

                                                  The Consortium utilized a peer review process in order to
                                                  evaluate the individual Consortium members. According to
                                                  a Consortium official, any organization that applied for
                                                  Continuum of Care grant funds11 underwent a peer review.
                                                  The peer review results influenced the priority given to the
                                                  projects in the application.12 The peer review team13 relied
                                                  upon the Annual Progress Reports to determine if the
                                                  member met their goals. They also discussed with HUD

9
     1997 Continuum of Care Application.
10
     A “Gap Analysis” compares the existing services with the demands for those services. The difference between the existing
     services and the demand for the services is considered a gap.
11
     Including renewal grants.
12
     1999 was the first time that the peer reviews were used in any way to determine funding priority.
13
     Volunteers from the Consortium comprised the peer review team.

2001-FW-1006                                                Page 4
                                                                                                  Introduction


                                                   whether the member spent their grant funds timely.
                                                   However, in reviewing the Annual Progress Report, the
                                                   review team did not look at any supporting documentation.

                                                   Our audit objectives were to determine if the Consortium:
     Audit Objectives, Scope,
                                                   (1) fairly represented the needs of the community; (2)
     and Methodology
                                                   achieved broad participation; (3) held members accountable
                                                   for their performance; and (4) tracked the progress of
                                                   programs and participants. We audited a judgmental
                                                   sample of seven grants awarded to members of the
                                                   Consortium during 1996 and 1997 and utilized the results
                                                   in our evaluation of the Consortium. The tables below
                                                   show the grants awarded to the Consortium members
                                                   during 1996 and 1997.14

                                              1996 GRANTS/DALLAS HOMELESS CONSORTIUM
                                           City of Dallas15             Shelter Plus Care Grant    $1,488,600
                                           Dallas Jewish Coalition16   Supportive Housing Grant       555,660
                                           Housing Crisis Center17     Supportive Housing Grant       533,130
                                           Promise House Inc.          Supportive Housing Grant       777,281
                                           PWA Coalition of Dallas     Supportive Housing Grant     1,970,320
                                           TOTAL                                                   $5,324,991



                                           1997 GRANTS/DALLAS HOMELESS CONSORTIUM
                                           City of Dallas18            Supportive Housing Grant   $ 749,670
                                           DCCCD                       Supportive Housing Grant     379,733
                                           Family Gateway              Supportive Housing Grant     337,364
                                           Family Gateway              Supportive Housing Grant      98,116
                                           GDCADA19                    Supportive Housing Grant     400,181
                                           Housing Crisis Center20     Supportive Housing Grant     211,358
                                           Housing Crisis Center21     Supportive Housing Grant       546,361
                                           Legal Services of North     Supportive Housing Grant      135,000
                                           Texas
                                           LifeNet                     Supportive Housing Grant      870,178
                                           Rainbow Days                Supportive Housing Grant      558,257
                                           TOTAL                                                  $4,286,218

                                                   Our objectives in auditing the individuals grants were to
                                                   determine if: (1) the individual grants were implemented in

14
     Shaded grants indicate those included in the sample of audits.
15
     Audit Report number 01-FW-251-1002.
16
     Audit Memorandum number 00-FW-251-1801.
17
     Audit Memorandum number 00-FW-251-1804.
18
     Audit Report number 01-FW-251-1002.
19
     Audit Memorandum number 2001-FW-1802.
20
     Audit Memorandum number 00-FW-251-1804.
21
     Ibid.

                                                           Page 5                                 2001-FW-1006
Introduction


               accordance with federal regulations and grant agreements;
               (2) funds were expended for eligible activities under federal
               regulations and applicable costs principles; (3) accurate and
               adequate evidence of measurable results was maintained;
               (4) programs were sustainable; and (5) grant funds were
               expended timely. The findings of those audits are
               summarized below.

               Greater Dallas Council on Alcohol and Drug Abuse

               Overall, the Council’s activities were consistent with its
               application. However, the Council:

               ·   Included $28,892 in ineligible and unsupported salary
                   and benefit costs in grant drawdowns;
               ·   Was behind projected spending by $166,531; and
               ·   Did not achieve its goals, which we determined was due
                   to the lack of cooperation of the Consortium.

               City of Dallas

               Overall, the City did not implement its grants in
               compliance with grant agreements and federal regulations.
               Specifically, the City:

               ·   Failed to provide $250,980 in supportive services
                   required by its Shelter Plus Care grant or adequately
                   document the services it did provide;
               ·   Was behind projected spending for its Shelter Plus Care
                   grant by $259,295, and $39,572 for its Supportive
                   Housing grant;
               ·   Submitted inaccurate and inconsistent Annual Progress
                   Reports;
               ·   Included $53,977 in ineligible and $2,261 in
                   unsupported costs in grant drawdowns;
               ·   Did not monitor the participants and their supportive
                   service needs sufficiently; and
               ·   Did not perform yearly Housing Quality Standards
                   inspections for apartments inhabited 1 year or more.




2001-FW-1006           Page 6
                                                 Introduction


Housing Crisis Center

Overall, the Center’s activities were consistent with its
application. However the Center:

·   Included $48,720 in ineligible costs in grant
    drawdowns;
·   Submitted inaccurate Annual Progress Reports;
·   Was behind projected spending; and
·   Overdrew its grants by $6,995.

Dallas Jewish Coalition

The Coalition’s activities were consistent with its
application. However, the Coalition:

·   Included $91,948 in ineligible costs in grant drawdowns
    and
·   Submitted inaccurate Annual Progress Reports.

To achieve our audit objectives in auditing the Consortium
we:

·   Reviewed audit reports and memorandums issued on
    grants awarded to Consortium members;
·   Reviewed minutes from Consortium meetings;
·   Interviewed City staff responsible for facilitating the
    Consortium;
·   Interviewed HUD staff;
·   Reviewed peer reviews performed by members of the
    Consortium;
·   Interviewed Consortium members; and
·   Reviewed consolidated applications for 1997, 1998, and
    1999 filed by the Consortium.

We conducted our audit at the following offices:

·   Dallas Jewish Coalition
·   Housing Crisis Center
·   City of Dallas City Hall and Day Resource Center
·   Greater Dallas Council on Alcohol and Drug Abuse
·   HUD Fort Worth Office




      Page 7                                     2001-FW-1006
Introduction


     Audit Period and Sites                        During our audit, we obtained computer-generated data
                                                   from both HUD and the grantees. However, we did not
                                                   perform any tests on the validity or reliability of such data
                                                   except as noted in the findings and management controls.
                                                   We performed fieldwork from June 1999 through April
                                                   2001.22 We conducted our audit in accordance with
                                                   generally accepted government auditing standards.




22
     This includes fieldwork in performing the grantee audits as well as the Continuum audit.

2001-FW-1006                                                 Page 8
                                                                                      Finding 1


             The Consortium Misled HUD and
              Did Not Effectively Evaluate or
             Provide Meaningful Feedback on
                   Grantee Performance
The Consortium submitted inaccurate applications to HUD and did not take appropriate
measures to ensure its members met the goals of the Continuum of Care concept.
Specifically, the Consortium’s applications contained inaccurate information and
overstated its achievements. Contrary to what the Consortium stated it would do, the
Consortium did not establish a tracking system that would monitor participants; nor did it
distribute monthly reports, highlighting individual client referrals and progress, to its
members. In addition, the Consortium did not have an effective peer review process.
Therefore, it did not uncover the errors or aid members in setting and achieving their
goals. HUD should review the existing Continuum of Care strategy of the Consortium to
ensure that the strategy accurately represents the efforts and plans of the Consortium;
work with the Consortium to strengthen its peer review process; require the Consortium to
implement a tracking system; continue to provide technical assistance to the Consortium as
it works through the process of choosing a lead agency; and assist the Consortium in
formalizing operational requirements for the Consortium, the lead agency, and the
Consortium members.




The Consortium submitted          Due to the Consortium supplying inaccurate information
inaccurate information to         and overstating its accomplishments, it provided HUD a
HUD.                              distorted view of the administration of the Consortium.
                                  HUD placed a high priority on a community’s Continuum
                                  of Care strategy. In fact, the ranking of the consolidated
                                  application was based on the description of the strategy.
                                  Therefore, HUD relied upon applicants to provide an
                                  accurate picture of their efforts to organize and maintain the
                                  Continuum. The applications filed by the Consortium
                                  contained inaccurate information and overstated its
                                  achievements.

                                  For instance, each Consortium application since 1996
                                  referred to a tracking system. According to the
                                  applications, the Consortium would track options available
                                  to individuals with respect to specific services available, as
                                  well as provide a record of which agencies the individual



                                        Page 9                                     2001-FW-1006
Finding 1


                                               had contacted previously. The applications filed from 1996
                                               through 1999 contained the following statements:

                                               1996        Homeless service providers in the city of Dallas
                                                           are working toward supplying a range of other
                                                           services. Central among these plans is the
                                                           development of a centralized intake system…23

                                                1997       Commitment to implement a centralized,
                                                           integrated electronic system to link agencies
                                                           providing housing and services to homeless
                                                           families through a computerized client referral,
                                                           tracking, and information system…24

                                                           A key part of this year’s Continuum of Care
                                                           strategy is to implement a centralized integrated
                                                           electronic system to link agencies providing
                                                           housing and services to homeless families
                                                           through a computerized client referral, tracking,
                                                           and information system.25

                                                1998       This Continuum comes forth with a structured
                                                           system of client referrals and client tracking
                                                           through the Continuum of Care.26

                                                1999       This Continuum comes forth with a structured
                                                           system of client referrals and client tracking
                                                           through the Continuum of Care (same statement
                                                           as in 1998).27

                                               The 1998 and 1999 applications indicated the Consortium
                                               had implemented a tracking system. However, even though
                                               the Consortium indicated it had been working on
                                               implementing a tracking system for over 4 years, the
                                               Consortium did not have such a system in place.

                                               A system of coordinating services and tracking participants’
                                               progress was essential to the success and evaluation of
                                               these programs. Without some way of demonstrating the
                                               success of the programs and their participants, the

23
     Dallas Homeless Consortium 1996 Consolidated Application, The Continuum of Care Strategy.
24
     Dallas Homeless Consortium 1997 Consolidated Application, Continuum of Care System Under Development.
25
     Dallas Homeless Consortium 1997 Consolidated Application, Actions For The Future.
26
     Dallas Homeless Consortium 1998 Consolidated Application, Abstract Dallas Continuum of Care.
27
     Dallas Homeless Consortium 1999 Consolidated Application, Abstract Dallas Continuum of Care.

2001-FW-1006                                            Page 10
                                                    Finding 1


Consortium and HUD could not objectively evaluate the
effectiveness of its programs. The overall goal of the
Continuum of Care strategy was to assist homeless
individuals and families to make the critical transition from
living on the streets to working and independent living.
During 1996 and 1997, the Consortium received almost $10
million in Continuum of Care grants. However, since
neither the individual grantees nor the Consortium had a
system or process in place to coordinate housing and
services, or to track participant or program success, HUD
did not know if the Consortium and its members utilized
the funds on programs to achieve their basic goal.

We recommend HUD require the Consortium to implement
a tracking system. Further, the Consortium should utilize
any historical data gathered to date.

The City of Dallas Did Not Provide Materials to Members.

While the Consortium developed a common referral and
intake form, the City did not fulfill its statements of
coordinating and providing information to its members. In
addition, while the consolidated applications filed by the
City of Dallas on behalf of the Consortium exhibit efforts
to coordinate and bring together homeless providers, the
City of Dallas could not provide sufficient evidence to
support much of the information in the applications.

The 1998 Consolidated application stated:

     “The members of the Collaborative have all signed a
     Memorandum of Understanding committing to move
     people through the Continuum by formal referrals to
     each other, by tracking clients as they go through the
     system, and by having ongoing discussions about
     client progress. In September, the City of Dallas will
     start to collect client information from each agency
     and provide a formal report on client referrals and
     progress at the end of the month. This system will
     avoid duplication of services, highlight individual
     client progress, and allow for broad input from a
     variety of agencies. Agencies with limited service
     capacity will provide a weekly report on their ability to
     accept new clients. The report will be provided to all
     members who will then be able to make referrals to

    Page 11                                     2001-FW-1006
Finding 1


                                                      agencies with open service slots. All Collaborative
                                                      Agencies will use common referral forms, release of
                                                      information forms, and intake forms. When clients are
                                                      referred, a copy of their intake is sent to the agency
                                                      with a signed release to share information. Therefore,
                                                      the client has one record that details his or her
                                                      movement through the components of the Continuum
                                                      of Care. The components are linked through the
                                                      Collaborative, through the uniform referral and intake
                                                      process, and through the data collection and sharing by
                                                      the City of Dallas.” 28

                                               Again, HUD wanted this type of coordination between
                                               Consortium members. Because the City never
                                               accomplished its goal, the Consortium did not have “one
                                               record that details [the participant’s] movement through the
                                               components of the Continuum of Care.” HUD should
                                               review the existing Continuum of Care strategy to ensure
                                               the strategy accurately represents the efforts and plans of
                                               the Consortium.

                                               The Consortium Had an Ineffective Peer Review Process.

                                               The peer review process utilized by the Consortium did not
                                               effectively assess members’ performance. However,
                                               according to a Consortium official, the peer review affected
                                               the priority given to an individual application. During a
                                               peer review the review team examined Annual Progress
                                               Reports of each agency under review, met with program
                                               managers and bookkeepers at City Hall, toured the various
                                               programs, and spoke to participants. The review team
                                               prepared a summary of results for each review. However,
                                               in performing the review, the peer review team did not
                                               inspect supporting documentation when reviewing progress
                                               reported by members. As a result of not inspecting
                                               supporting documentation, the peer review of these
                                               grantees did not detect any inaccuracies with the Annual
                                               Progress Reports. As we previously reported, each grantee
                                               submitted inaccurate and unsupported Annual Progress
                                               Reports. It appeared the peer review team echoed
                                               management assertions without attempting to verify them.
                                               As a result, members who inflated results or progress may


28
     Dallas Homeless Consortium 1998 Consolidated Application, How the System Facilitates Movement of Homeless Persons
     From One Component of the System to Another, and How the Components are Linked.

2001-FW-1006                                             Page 12
                                                                                                  Finding 1


                                              have received a higher ranking than those who reported
                                              accurate information.

                                              Since no agreements exist between the Consortium and its
                                              members, and HUD did not have any regulations governing
                                              the Consortium, the Consortium did not have direct
                                              authority over the members. Therefore, the Consortium
                                              had limited ability to coordinate and direct its members.
                                              However, the Consortium determined the priority of the
                                              individual applications within the consolidated application.
                                              Since HUD awarded grants based on the priority placed on
                                              the programs by the Consortium, under the existing system
                                              it was possible that ineffective and unsuccessful programs
                                              received priority status in the consolidated applications
                                              filed by the Consortium.

                                              We recommend that HUD work with the Consortium to
                                              strengthen its peer review process.

                                              The Consortium Lacked Effective Leadership.

                                              Our audit of the City of Dallas concluded the City of Dallas
                                              failed to administer its homeless grants in accordance with
                                              its grant agreements and federal regulations.29 Specifically,
                                              the City did not: (1) provide and document the matching
                                              supportive services required by the Shelter Plus Care
                                              program; (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. The report recommended HUD discontinue funding
                                              Continuum of Care grants to the City until the City could
                                              demonstrate that it can administer the funds appropriately.

                                              In spite of the problems faced by the City of Dallas in
                                              managing its own grants, it took on a leadership role in the
                                              Consortium as the “lead agency.” As such, the City of
                                              Dallas was responsible for drafting the Continuum of Care
                                              strategy for the Consortium, facilitating the Consortium,
                                              and packaging the actual consolidated application. The
                                              City of Dallas also provided a staff person to act as a liaison

29
     Audit Report number 01-FW-251-1002, dated December 13, 2000.


                                                    Page 13                                    2001-FW-1006
Finding 1


                     and provided funding for mailings, consultants, and other
                     administrative matters. Due to the conditions noted in this
                     finding and with the City of Dallas’ administration of its
                     grants, HUD should continue to provide technical
                     assistance to the Consortium in order to assist in choosing a
                     lead agency. Once a lead agency has been determined, its
                     roles and responsibilities should be formalized. We
                     recommend HUD provide additional technical assistance to
                     the Consortium in order to document and implement the
                     operational requirements for the Consortium and its
                     members.



                     On September 5, 2001, we held an exit conference with
 Auditee Comments    HUD, and they provided their written response (Appendix
                     A). HUD agreed the Dallas Homeless Consortium’s
                     applications included inaccurate information and overstated
                     achievements. However, they believed the use of the word
                     misled was harsh. HUD did not believe the City or the
                     Consortium tried to intentionally deceive them.

                     HUD did not dispute the issues raised in the finding.
                     However, they did request modifications to the
                     recommendations.

                     HUD has not issued any regulations governing the
                     Continuum of Care organizations. Consequently, HUD has
                     no authority to direct the Consortium or to determine the
                     lead agency. In HUD’s opinion, the Consortium needs to
                     make that determination. Instead of playing an active role
                     in the removal of the City as the lead agency, HUD
                     proposed continuing to provide technical assistance to the
                     Consortium as it works through the process of choosing a
                     lead agency.




 OIG Evaluation of   Considering the evidence, the use of the word misled was
                     appropriate. The applications were prepared in order to
 Comments
                     make the Dallas Homeless Consortium appear as a well-run
                     organization that had made significant strides in its efforts
                     to help the homeless. However, there was little evidence to
                     support this.


2001-FW-1006                 Page 14
                                                                     Finding 1


                  The draft report included the recommendation that HUD
                  work with the Consortium to remove the City of Dallas as
                  the lead agency of the Consortium. However, based on
                  HUD’s response we revised our recommendation. As HUD
                  correctly pointed out, they did not issue regulations
                  governing Continuum of Care organizations. Therefore, it
                  has no official authority to dictate the lead agency or how
                  the organization operates.

                  As a result we modified our recommendation.



Recommendations   We recommend HUD:

                  1A.     Review the existing Continuum of Care strategy of
                          the Consortium to ensure that the strategy accurately
                          represents the efforts and plans of the Consortium.

                  1B.     Work with the Consortium to strengthen its peer
                          review process.

                  1C.     Require the Consortium to implement a tracking
                          system.

                  1D.     Continue to provide technical assistance to the
                          Consortium as it works through the process of
                          choosing a lead agency.

                  1E.     Provide technical assistance to the Consortium in
                          order to document and implement the operational
                          requirements for the Consortium, the lead agency,
                          and its members.




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Finding 1




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2001-FW-1006      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 the
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 management controls were
                                 relevant to our audit objectives:

                                 ·   Fair representation of the needs of the community
                                 ·   Broad participation
                                 ·   A fair funding process
                                 ·   Accountability for performance
                                 ·   Tracking of program progress and participants

 Significant Weaknesses.         It is a significant weakness if management 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
                                 Dallas Homeless Consortium lacks sufficient controls to
                                 ensure:

                                 ·   A fair funding process
                                 ·   Accountability for performance
                                 ·   Tracking of program progress and participants




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Management Controls




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2001-FW-1006              Page 18
                             Appendix A

Auditee Comments




                   Page 19   2001-FW-1006
Appendix A




2001-FW-1006   Page 20
          Appendix A




Page 21   2001-FW-1006
Appendix A




2001-FW-1006   Page 22
                                                                               Appendix B

Distribution
Dallas City Manager
Director, Environmental and Health Services, City of Dallas
Dallas City Auditor
Dallas Homeless Consortium
Principal Staff
Secretary's Representative, 6AS
CFO, 6AF
Director, Accounting, 6AAF
Director, Office of Community Planning & Development, 6FD
Fort Worth ALO, 6AF (2)
CPD ALO, DOT (Room 7220)
Department ALO, FM (Room 2206)
Acquisitions Librarian, Library, AS (Room 8141)

Armando Falcon
Director, Office of Federal Housing Enterprise Oversight
1700 G Street, NW, Room 4011, Washington, D.C. 20515

Sharon Pinkerton
Sr. Advisor, Subcommittee on Criminal Justice, Drug Policy &
Human Resources
B373 Rayburn House Ofc. Bldg., Washington, D.C. 20515

Cindy Fogleman
Subcommittee on General Oversight & Investigations, Room 212
O'Neill House Ofc. Bldg., Washington, D.C. 20515

Stanley Czerwinski
Associate Director, Housing. & Telecommunications Issues
US GAO, 441 G St. NW, Room 2T23, Washington, DC 20548

Steve Redburn
Chief, Housing Branch, OMB
725 17th Street, NW, Room 9226, New Exec. Ofc. Bldg., Washington, D.C. 20503

The Honorable Fred Thompson
Chairman, Committee on Govt Affairs,
340 Dirksen Senate Office Bldg.
U.S. Senate, Washington, D.C. 20510

The Honorable Joseph Lieberman
Ranking Member, Committee on Govt Affairs,
706 Hart Senate Office Bldg.
U.S. Senate, Washington, D.C. 20510

                                        Page 23                                2001-FW-1006
Appendix B



The Honorable Dan Burton
Chairman, Committee on Govt Reform,
2185 Rayburn Building
House of Representatives, Washington, D.C. 20515-6143

Henry A. Waxman
Ranking Member, Committee on Govt Reform,
2204 Rayburn Bldg.
House of Rep., Washington, D.C. 20515-4305

Andrew R. Cochran
Sr. Counsel, Committee on Financial Services
2129 Rayburn, HOB
House of Rep., Washington, D.C. 20510




2001-FW-1006                               Page 24