oversight

Houston/Harris County/Coalition for the Homeless Continuum of Care Houston, Texas

Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-01-11.

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

                                                                Issue Date
                                                                   January 11, 2002
                                                               Audit Case Number
                                                                   2002-FW-1001




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

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

SUBJECT:       Houston/Harris County/Coalition for the Homeless
               Continuum of Care
               Houston, Texas


We audited Houston/Harris County 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. We have addressed our recommendations to your office due to HUD having no
grant or contractual agreement with the Houston/Harris County Continuum. We will provide
copies to the three entities comprising the collaborative: Harris County, City of Houston, and
Coalition for the Homeless.

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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2002-FW-1001               Page ii
Executive Summary
We audited the Houston/Harris County Continuum of Care (Continuum) 1996 and 1997
grants. Our audit objectives were to determine whether the Continuum had adequate
management controls to ensure that it: (1) developed a strategic plan that fairly
represented the community’s needs; (2) had a representative membership; (3) had a fair
funding process; (4) held its members accountable for their performance; and (5) tracked
participant progress.



 Audit Results.                   Our audit concluded the Continuum had adequate
                                  management controls to ensure it: (1) developed a strategic
                                  plan that fairly represented the community’s needs; (2) had
                                  a representative membership; and (3) had a fair funding
                                  process. However, the Continuum did not administer its
                                  Continuum of Care Programs according to the terms and
                                  conditions of its consolidated applications. Specifically, it
                                  did not have sufficient management controls to measure its
                                  members’ performances and to gather, track, record, and
                                  report critical program data.

                                  As a result, the Continuum did not know which members
                                  were performing as planned in order to hold them
                                  accountable for their performance. Additionally, it could
                                  not provide evidence it met HUD’s goal of helping
                                  homeless individuals and families “transition from the
                                  streets to jobs and independent living.”

                                  Through Continuum of Care Programs, HUD planned for
                                  communities to coordinate their housing and service
                                  delivery system, not only during the grant application
                                  process, but also throughout grant programs, to ensure the
                                  community met the needs of homeless individuals and
                                  families. Contradicting plans submitted to HUD, the
                                  Continuum did not coordinate its programs once HUD
                                  awarded grant funds. The Continuum believed it was only
                                  responsible for coordinating the consolidated grant
                                  application process.

                                  We recommend HUD encourage the Continuum to develop
 Recommendations.                 and implement a process for evaluating program
                                  effectiveness and participant outcomes. HUD should
                                  persuade the Continuum to establish policies and
                                  procedures so that its members: (1) coordinate services
                                  among themselves; (2) serve only homeless individuals and

                                         Page iii                                2002-FW-1001
Executive Summary


                     families; and (3) track participants throughout the
                     Continuum of Care system to ensure participants’ transition
                     to jobs and independent living.

                     We provided a draft of this report to HUD’s Fort Worth
 Auditee Comments.
                     Community Planning and Development Director on
                     October 11, 2001. HUD provided written comments on
                     November 29, 2001, and we held an exit conference on
                     December 7, 2001. We have summarized and evaluated the
                     response in the findings and included the written response
                     in its entirety as Appendix A. Based upon their response,
                     we modified the report, where appropriate. While HUD
                     generally agreed with the finding, it believed the
                     recommendations should be modified to reflect the lack of
                     authority that HUD has over the Continuum.




2002-FW-1001                      Page iv
Table of Contents

Management Memorandum                                  i


Executive Summary                                     iii


Introduction                                           1


Finding

1    Supportive Housing Programs Not Managed           11



Management Controls                                    17



Appendices
      A Auditee Comments                               19

      B Distribution                                   23




                             Page v            2002-FW-1001
Table of Contents


Abbreviations
       BLOCK            Building Lives Offering Community Knowledge
       Campus           University of Texas – Houston Recovery Campus
       CFR              Code of Federal Regulations
       Circular         Office of Management and Budget Circular A-122, Cost
                         Principles for Non-Profit Organizations
       Coalition        Coalition for the Homeless
       Continuum        Houston/Harris County Continuum of Care
       County           Harris County
       Foundation       AIDS Foundation Houston, Inc.
       Grantees         Houston/Harris County Continuum of Care members
                         awarded Continuum of Care grants
       HUD              U.S. Department of Housing and Urban Development
       OIG              Office of Inspector General
       Resource Group   Houston Regional HIV/AIDS Resource Group, Inc.
       S+C              Shelter Plus Care Program
       SHP              Supportive Housing Program
       SRO              Section 8 Moderate Rehabilitation for Single Room
                         Occupancy Dwellings
       Trinity          Trinity Life Center




2002-FW-1001                               Page vi
Introduction
Background                                       The McKinney-Vento Homeless Assistance Act authorized
                                                 HUD’s Continuum of Care Programs. HUD initiated the
                                                 Continuum of Care Programs to address the needs of
                                                 homeless individuals and families to enable them to leave
                                                 “the streets”, acquire jobs, and obtain independent living.

                                                 HUD used its Continuum of Care Programs to encourage
                                                 communities to form a comprehensive housing and service
                                                 delivery system to meet the needs of their homeless
                                                 subpopulations. The Continuum of Care concept included
                                                 three major competitively funded programs: (1) Supportive
                                                 Housing; (2) Shelter Plus Care; and (3) Section 8 Moderate
                                                 Rehabilitation for Single Room Occupancy Dwellings
                                                 (SRO).1

                                                 HUD planned the Supportive Housing Program to promote
                                                 the development of supportive housing and services for
                                                 homeless individuals to live as independently as possible.
                                                 The program encouraged the use of innovative approaches
                                                 to assist homeless persons.

                                                 HUD designed the Shelter Plus Care Program to provide
                                                 rental assistance for hard-to-serve homeless individuals
                                                 with disabilities. Other sources outside the program
                                                 provided funds for supportive services.

                                                 HUD believed carefully planned and systemic local
                                                 approaches, or Continuum of Care systems, were more
                                                 effective and efficient than disconnected approaches.
                                                 Therefore, it placed heavy emphasis on programs designed
                                                 and carried out through Continuum of Care systems. To
                                                 provide communities maximum flexibility, HUD issued no
                                                 regulations governing the operation or organization of the
                                                 individual Continuum of Care organizations.

                                                 Three agencies comprised the Continuum: (1) the City of
                                                 Houston Housing and Community Development
                                                 Department; (2) Harris County Community Development
                                                 Department; and (3) Coalition for the Homeless of
                                                 Houston/Harris County (Coalition). The City of Houston
                                                 and Harris County are government agencies and the
                                                 Coalition is a nonprofit organization.

1
    According to the applications, the Continuum did not apply for SRO funding for 1996 and 1997, the period we audited.

                                                         Page 1                                              2002-FW-1001
Introduction



                       The City of Houston Housing and Community
                       Development Department is located at 601 Sawyer,
                       Houston, Texas. Harris County Community Development
                       Department is located at 8410 Lantern Point, Houston,
                       Texas. The Coalition is located at 1301 Travis, Suite No.
                       1701, Houston, Texas.

Grant award process.   Prior to submitting its consolidated grant application to
                       HUD, the Continuum provided technical assistance and
                       workshops for individual agencies competing for
                       Continuum of Care funds. After the Continuum received
                       the individual grant applications, it scored them and then it
                       ranked the proposed programs based on the homeless
                       community’s needs. The Continuum then selected
                       programs to include in its consolidated application for
                       HUD funding. The Continuum’s consolidated application
                       not only described the individual agencies and their
                       proposed programs, but also explained the Continuum’s
                       organization and strategic plan.

                       HUD reviewed and rated all applications using the same
                       procedures. It first conducted a threshold review of each
                       proposed program for the criteria identified in the Notice of
                       Funding Availability, eliminating all programs from the
                       competition that did not meet the specified criteria.

                       Next, 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 strategic plan. Thus, HUD established
                       funding decisions based upon the Continuum’s strategic
                       plan listed in its consolidated application.




2002-FW-1001                   Page 2
                                                                                                         Introduction



Grant funds awarded to the                              Number          Total SHP         Number
Continuum.                                              of SHP2          Amount           of S+C3         Total S+C
                                            Grant        Grants         Awarded            Grants          Amount
                                            Year        Awarded                           Awarded         Awarded
                                           1996              19        $11,177,351              9         $6,302,580
                                           1997              18         11,169,632              1            108,960
                                           Totals4           37        $22,346,983             10         $6,411,540

                                               HUD awarded Supportive Housing Program grants in part
                                               based on Continuum members’ stated ability to provide
                                               measurable results. Once HUD approved their programs,
                                               agencies entered into grant agreements with HUD. By
                                               signing the grant agreements, Continuum members
                                               accepted responsibility for ensuring they used HUD funds
                                               in accordance with all program requirements and written
                                               agreements.

                                               HUD required Continuum members to submit Annual
                                               Progress Reports detailing progress in achieving
                                               performance measures. Members were responsible for
                                               information submitted in the Annual Progress Reports just
                                               as the Continuum was responsible for the strategic plan
                                               listed in its consolidated applications.

    Continuum strategic plan.                  HUD believed the best approach for alleviating
                                               homelessness was through a community-based process
                                               providing a comprehensive response. Under the 1997
                                               consolidated application, the Continuum listed the
                                               following strategies to achieve the ultimate goal of helping
                                               participants’ transition from homelessness to jobs and
                                               independent living:

                                               1.    Develop formal and informal multi-agency
                                                     collaboration;
                                               2.    Link information, processes and program participants
                                                     among the collaborating and independent agencies;
                                               3.    Evaluate program effectiveness and participant
                                                     outcomes;
                                               4.    Encourage a variety of agency types to address the
                                                     needs of similar subpopulations;

2
    Supportive Housing Program.
3
    Shelter Plus Care Program.
4
    HUD awarded $3,903,752, or 17.5 percent of $22,346,983 total Supportive Housing Program funds, to Harris County. HUD
    awarded all of the $6,411,540 Shelter Plus Care funds to Harris County.

                                                      Page 3                                             2002-FW-1001
Introduction


                            5.   Identify and access multiple funding sources that can
                                 be integrated into a comprehensive funding system;
                                 and
                            6.   Expand the power base of the local service providers,
                                 the Homeless Services Coordinating Council and the
                                 Coalition for the Homeless of Houston/Harris County.

                            The 1996 and 1998 through 2000 consolidated applications
                            generally contained the same strategic plan, including
                            quality assurance and program evaluation goals. Those
                            applications also listed the strategy of linking information,
                            processes, and program participants among the
                            collaborating and independent agencies. In its 1996
                            through 2000 grant applications, the Continuum assured
                            HUD that it was developing a program “…to track the
                            movement of participants through the system into
                            permanent self-sufficiency.”

                            The Continuum planned to provide quality assurance and
                            program evaluation utilizing the Annual Progress Reports
                            prepared by individual grantees. It also planned to meet its
                            goal by collecting and analyzing data in its tracking system,
                            the Computerized Homeless Network.

 Audit Objectives, Scope,   Our audit objectives were to determine whether the
 and Methodology            Continuum had adequate management controls to ensure
                            that it: (1) developed a strategic plan that fairly represented
                            the community’s needs; (2) had a representative
                            membership; (3) had a fair funding process; (4) held its
                            members accountable for their performance; and (5) tracked
                            the progress of programs and participants.

                            To accomplish our objectives, we reviewed documents
                            from the County and the Coalition; and interviewed HUD,
                            the County, the City of Houston, and Coalition officials.
                            We reviewed and analyzed the Continuum’s consolidated
                            applications for 1996 through 2000; reviewed and analyzed
                            the Continuum’s policies and procedures; and audited three
                            Continuum of Care grants awarded to the following
                            agencies: AIDS Foundation Houston, Inc., Houston
                            Regional HIV/AIDS Resource Group, Inc., and Harris
                            County, as detailed in the chart below. During the audits of




2002-FW-1001                        Page 4
                                                                                                               Introduction


                                                 the grantees, we also performed audit work at 13
                                                 subrecipient locations under the same grants.5

                                                 In order to develop conclusions on the Continuum, we
                                                 reviewed applicable criteria, including Office of
                                                 Management and Budget Circular A-122, Cost Principles
                                                 for Non-Profit Organizations (Circular); reviewed grantee
                                                 and subrecipient policies and procedures, grant
                                                 applications, grant agreements, technical submissions, and
                                                 Annual Progress Reports; interviewed grantees and
                                                 subrecipients; visited transitional housing locations;
                                                 reviewed and analyzed participant files; and reviewed and
                                                 analyzed financial records.
Grants audited.



                                       Agency                    Grant       Grant Number                       Grant
                                                             Year/Program                                       Amount
                               AIDS Foundation              1997 Supportive TX21B-97-1304                       $3,000,645
                               Houston, Inc.                Housing Program
                               (Foundation)6
                               Houston Regional             1996 Supportive TX21B-96-0617                         1,332,281
                               HIV/AIDS                     Housing Program
                               Resource Group,
                               Inc. (Resource
                               Group)7 8
                               Harris County                1997 Supportive TX21B-97-1306                         1,096,530
                               (County)9                    Housing Program
                               Total                                                                            $5,429,456

                                                 Overall, we audited $5,429,456, or 24.3 percent of
                                                 $22,346,983 Supportive Housing program funds and 18.9
                                                 percent of $28,758,523 total funds, awarded to the
                                                 Continuum for 1996 and 1997.




5
    The subrecipients were (1) A Friendly Haven; (2)The Arrow Project; (3) Building Lives Offering Community Knowledge
    (BLOCK); (4) CASA de Nino; (5) Milam House; (6) OMNI; (7) People With AIDS Coalition; (8) Stevens House; (9) Vita
    Living; (10) Covenant House Texas; (11) DePelchin Children’s Center; (12) Trinity Life Center; and (13) University of Texas
    – UT Houston Recovery Campus.
6
    Audit Memorandum number 2001-FW-1803, issued on March 9, 2001.
7
    Audit Memorandum number 00-FW-251-1806, issued on September 27, 2000.
8
    Audit Memorandum number 00-FW-251-1805, issued on September 5, 2000.
9
    Audit Memorandum number 2001-FW-1805, issued on April 27, 2001.

                                                        Page 5                                                2002-FW-1001
Introduction


               HUD did not require the Continuum to enter into any type
               of signed agreement concerning its role in the Continuum
               of Care process. As a result, the Continuum did not believe
               it was responsible for ensuring that its members, including
               the Foundation, the Resource Group, and the County,
               accomplished their program goals.

               The Foundation, the Resource Group, and the County
               entered into grant agreements with HUD. The grant
               agreements, including the grant applications, delineated the
               agencies’ responsibilities within the Continuum of Care
               system. The Foundation, the Resource Group, and the
               County submitted their grant applications as part of the
               Continuum’s consolidated applications.

               HUD based its decision to fund member programs on the
               Continuum’s consolidated applications. The Continuum
               based its consolidated applications on strategies developed
               by combining the objectives of the individual grant
               applications submitted to HUD by its members. As a
               result, the Continuum was responsible for achieving the
               strategies that it proposed in those applications. We
               compared the Continuum’s strategies to its results to
               determine whether its policies, procedures, and
               management controls met the needs of homeless
               individuals and families as discussed in its applications.

               During our audit, we became aware of a complaint
               concerning the Continuum’s program selection process for
               its 2000 consolidated application. The complainant wrote
               the Continuum used a “flawed” process of ranking
               proposals for its 2000 grants, causing it to rank proposals
               with lower scores above those with high scores. The
               complaint alleged the Continuum allowed “personalities
               and misinformation” to guide its decisions concerning
               funding matters. We could not substantiate the complaint.

               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 audit work at the Foundation, the Resource
               Group, and the County for the period May 23, 1997,
               through July 31, 2000. We performed our audit between
               January 2000, and March 2001. We conducted our audit in

2002-FW-1001           Page 6
                                                                                               Introduction


                                                accordance with generally accepted government auditing
                                                standards.

     Grant audit results.                       We summarized the results of our grant audits below.

                                                The Foundation

                                                Our audit concluded the Foundation and its subrecipients
                                                generally implemented grant activities consistent with the
                                                grant application. The Foundation maintained evidence of
                                                measurable results, leveraged HUD funds adequately,
                                                expended funds timely, and met federal requirements
                                                related to leasing. Additionally, the Foundation provided
                                                sufficient technical assistance to its subrecipients and
                                                reviewed their single audit reports and monthly expense
                                                reports.

                                                However, the Foundation expended funds for ineligible and
                                                unsupported activities and did not comply with federal cost
                                                requirements. The Foundation reimbursed the BLOCK, a
                                                subrecipient, $42,091 for ineligible and unsupported
                                                costs.10 The Foundation also used HUD funds to reimburse
                                                itself $27,278 for ineligible costs, including $2,706 for an
                                                ineligible participant and $1,483 for a computer that the
                                                BLOCK used for financial purposes as opposed to tracking
                                                participants as authorized by HUD.

                                                The Resource Group

                                                Our audit concluded the Resource Group generally
                                                implemented its activities consistent with its application.
                                                The Resource Group provided adequate technical assistance
                                                to its subrecipients. It also reviewed its subrecipients’
                                                single audit reports, monthly expense reports, and Annual
                                                Progress Reports.

                                                However, Trinity Life Center (Trinity) and Covenant
                                                House, two subrecipients, did not maintain sufficient
                                                documentation to determine that a sample of program
                                                participants met HUD’s homeless requirements. As a result
                                                of Trinity’s insufficient file documentation, the Resource
                                                Group could not accurately conclude it served the intended
                                                population. We attributed the problems to staff not

10
     Ineligible $14,888; unsupported $27,203.

                                                     Page 7                                    2002-FW-1001
Introduction


                                                  knowing HUD requirements related to documenting
                                                  homelessness.

                                                  Trinity did not maintain support for its accomplishments it
                                                  reported to the Resource Group and subsequently to HUD.
                                                  Accordingly, the Resource Group could not conclude
                                                  whether it met the purpose of the grant program. The
                                                  Resource Group reported the erroneous information to
                                                  HUD in its Annual Progress Reports.

                                                  Trinity did not provide housing that met standards required
                                                  by the grant agreement.11 In addition, Trinity did not have
                                                  evidence that it analyzed the rent for reasonableness. As a
                                                  result, HUD had no assurance it paid reasonable rents for
                                                  participants. Further, the Resource Group inappropriately
                                                  reimbursed Trinity $182,398 for ineligible and unsupported
                                                  costs.12

                                                  Harris County

                                                  Our audit concluded the County’s activities were eligible
                                                  and consistent with its application and it adequately
                                                  leveraged HUD funds and met federal cost requirements.
                                                  However, the County’s subgrantee, University of Texas –
                                                  Houston Recovery Campus (Campus), could not support
                                                  information contained in its Annual Progress Report;13 did
                                                  not capture necessary housing data; and did not provide its
                                                  participants with decent, safe, and sanitary housing.

                                                  Additionally, the Campus charged HUD unreasonable
                                                  rents. A HUD contractor expressed concerns about rent
                                                  reasonableness and the County responded with unrealistic
                                                  comparable units. Disregarding HUD requirements, the
                                                  Campus charged participants a flat rental rate of $85 per
                                                  month without considering the participant’s monthly
                                                  income. Further, the County did not draw down its funds
                                                  timely because it had reconciliation and documentation
                                                  problems.

                                                  We provided a draft of this report to HUD's Fort Worth
                                                  Community Planning and Development Director on

11
     See 24 CFR 583.300(b).
12
     Including $100,259 paid for participants with no evidence of homelessness.
13
     The Campus reported a 79% successful graduation rate even though its files indicated a 26% rate.


2002-FW-1001                                                 Page 8
                                              Introduction


October 11, 2001. HUD provided written comments on
November 29, 2001, and we held an exit conference on
December 7, 2001. We have summarized and evaluated the
response in the findings and included the written response
in its entirety as Appendix A. Based upon their response,
we modified the report where appropriate. While HUD
generally agreed with the finding, it believed the
recommendations should be modified to reflect the lack of
authority that HUD has over the Continuum.




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Introduction




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2002-FW-1001       Page 10
                                                                                        Finding


    Supportive Housing Programs Not Managed
The Continuum did not administer its programs in accordance with its consolidated
applications. The Continuum did not have a system in place to evaluate program
effectiveness and participant outcomes, or a management information system to timely
gather, track, record, and report critical program data to Continuum management and to
HUD.

The lack of management controls negatively impacted program effectiveness and efficiency.
For instance, the Continuum did not obtain measurable results for addressing
homelessness. The Continuum did not have management controls for verifying members
maintained adequate documentation of homelessness as required by HUD, and members
expended funds only for eligible participants. As a result, it did not know whether or not its
programs met the community’s needs or even that participants obtained and remained in
permanent housing.



                                    The Continuum did not have adequate management
The Continuum did not have
                                    controls to evaluate members’ performance or even monitor
sufficient management
                                    the effectiveness of its Continuum of Care system.
controls to measure
                                    Grantees reported erroneous information in their Annual
members’ performance.
                                    Progress Reports, giving HUD and the Continuum the false
                                    impression they met the goals outlined in their applications
                                    for funding. The Continuum did not ensure the Annual
                                    Progress Reports were correct and coordinated.
                                    Additionally, it did not have procedures in place to monitor
                                    the effectiveness of the Continuum of Care system. As a
                                    result, it did not know which members performed as
                                    planned.

                                    According to the Continuum’s applications, it planned to
                                    evaluate program effectiveness and participant outcomes.
                                    However, the Continuum did not perform any independent
                                    analyses of its Continuum of Care system.

                                    Contrary to its 1996 through 2000 consolidated grant
 The Continuum did not have
                                    applications, the Continuum did not have management
 management controls to
                                    controls necessary to track participant’s progress.
 ensure tracking of
                                    According to those applications, the Continuum planned to
 participant progress.
                                    install a computerized tracking system throughout the
                                    Houston/Harris County area to track participants.
                                    Additionally, the 1998 and 1999 consolidated applications
                                    stated the Continuum was developing an evaluation

                                         Page 11                                   2002-FW-1001
Finding


                          program from data in the Computerized Homeless
                          Network, even though the Continuum never used such a
                          Network.

                          To complement the Continuum’s plans for tracking, the
                          Foundation, the Resource Group, and the County planned
                          to implement their own tracking systems. Both the
                          Foundation and the County described their plans to track
                          participants in their 1997 grant applications. Additionally,
                          the Foundation notified HUD that they planned to set up a
                          tracking system with the Resource Group.

                          Although the Resource Group and the County signed grant
                          agreements requiring them to track departing participants,
                          neither Trinity nor the Campus captured housing related
                          data. These subrecipients, along with Covenant House, did
                          not track grant participants.

                          Directly contradicting its consolidated applications, the
                          Continuum did not ensure that its members used sufficient
                          tracking systems. As of March 30, 2001, the Continuum
                          had not implemented its community-wide tracking system.
                          As a result, the Foundation, the Resource Group, and the
                          County did not use tracking systems as of our last day of
                          fieldwork at each location. Our last day of fieldwork at:
                          the Foundation was November 2000; the Resource Group
                          was May 2000, and the County was March 2001.

                          Although HUD did not issue any requirements regarding
 The Continuum had an
                          the Continuum, the Continuum nonetheless had an
 obligation to ensure
                          obligation to develop and implement procedures to aid its
 members met its goals.
                          members to meet their goals. The Continuum promised
                          HUD it would take an active part in accomplishing program
                          goals through the strategies summarized in its applications.
                          HUD relied upon the Continuum’s strategies during its
                          conditional selection process.

                          The Continuum planned to implement policies and
                          procedures to evaluate program effectiveness and
                          participant outcomes. Those policies and procedures would
                          encourage members to more thoroughly examine their
                          program outcomes. Thus, members may have provided
                          additional support and critical evaluation of subrecipients.
                          Unfortunately, the Continuum did not have a system in


2002-FW-1001                      Page 12
                                                                                                                   Finding


                                                 place to evaluate its members’ programs. Thus, allowing
                                                 members’ assertions to go unchallenged.

                                                 As reported in previous audit memorandums, Continuum
                                                 members did not have evidence to support claims
                                                 concerning program goals achieved or even that they served
                                                 the intended population. Not only did Continuum members
                                                 fail to maintain adequate supporting documentation of
                                                 costs, they incorrectly paid grant funds for costs clearly
                                                 disallowed by the Circular.

                                                 Additionally, the Continuum did not have procedures to
                                                 detect that the Resource Group and the County provided
                                                 unacceptable housing for grant participants, many who
                                                 were teenagers and young adults, or that the County paid
                                                 excessive rents with HUD funds.
                                                 Furthermore, the Continuum could not substantiate the
                                                 activities reported to HUD in its Consolidated Applications.
                                                 For example, the 1999 Consolidated Application included
                                                 the following statements:

                                                     “Each recipient of HUD Homeless Assistance funds is
                                                     provided with a computer, software, connection and
                                                     training for participating in a region-wide computerized
                                                     information and client tracking network. The system
                                                     ties together homeless service providers and the
                                                     Coalition with a uniform intake/assessment/case
                                                     management and tracking system.”14

                                                     “The Collaborative is currently developing a plan of
                                                     action to implement a broad-based multi-site process
                                                     and outcome evaluation, coupled with an assessment of
                                                     the data collected by tracking participants through the
                                                     Computerized Homeless Network.” 15

                                                     “The network is the underpinning of a measurement
                                                     data base, forming a quantifiable baseline of
                                                     information and empirical data to backup agency
                                                     determinations and reports. Analysis of the data serves
                                                     to track participants through the seamless system,
                                                     monitor service populations by subgroup and

14
     Houston/Harris County, Texas 1999 Consolidated Application: Linking of information, processes and program participants
     throughout the system.
15
     Houston/Harris County, Texas 1999 Consolidated Application: Evaluation of program effectiveness and participant
     outcomes.

                                                       Page 13                                              2002-FW-1001
Finding


                                                     geographic distribution, and to measure the cost
                                                     effectiveness of service programs.” 16

                                               The Continuum provided erroneous information to HUD in
                                               its consolidated applications because it never used or
                                               implemented a tracking system. Thus, the Continuum gave
                                               the false impression that it could implement its strategies
                                               when it did not even have the necessary resources to do so.

                                               Additionally, the Continuum did not document it had
                                               provided adequate outreach work or any other planned
                                               activities to enable homeless individuals and families to
                                               leave the streets, obtain jobs, and become self-sufficient.



                                               HUD provided a written response on November 29, 2001.
     Auditee Comments                          We have included its response in its entirety as Appendix
                                               A. HUD generally agreed with the conclusions in the draft
                                               report. However, HUD did not believe it had "any basis"
                                               for requiring the Continuum to implement systems or
                                               procedures. Also, HUD noted the Continuum has not
                                               requested or received any funds therefore may not have the
                                               ability to monitor grantees.



     OIG Evaluation of                         We agree HUD does not have the regulatory authority to
     Comments                                  compel the Continuum to comply with its application.
                                               Further, during our audit period, HUD did provide training
                                               to grantees. HUD should continue to work with the
                                               Continuum and its members to ensure that the Continuum
                                               meets the objectives of the program and of its applications.
                                               We made changes to the draft report where necessary.



     Recommendations                           We recommend that HUD:

                                               1A.     Persuade the Continuum to develop and implement a
                                                       process to evaluate program effectiveness and
                                                       participant outcomes so as to meet their application.
                                                       The Continuum should have policies and procedures
                                                       so that its members: (1) coordinate services among
16
     Houston/Harris County, Texas 1999 Consolidated Application: Quality Assurance/Program Evaluation.

2002-FW-1001                                             Page 14
                                                    Finding


       themselves; (2) serve only homeless individuals and
       families; and (3) track participants throughout the
       Continuum of Care system to ensure participants
       transition to jobs and independent living.

1B.     Continue to provide technical assistance workshops
       for grantees and Continuum members throughout the
       grant. The technical assistance should focus on the
       following areas: basic program requirements; HUD
       homeless eligibility requirements; establishing and
       maintaining complete and accurate participant
       records; creating and retaining sufficient fiscal
       records; and Annual Progress Report preparation.




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Finding




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2002-FW-1001       Page 16
Management Controls
In planning and performing our audit, we obtained an understanding of the management
controls 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;
                                  ·   A representative membership;
                                  ·   A fair funding process;
                                  ·   Accountability of performance; and
                                  ·   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 the finding, we believe the
                                  following items are significant weaknesses in that the
                                  Continuum lacked sufficient controls to ensure:

                                  ·   Accountability of performance and
                                  ·   Tracking of program progress and participants.




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Management Controls




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2002-FW-1001              Page 18
                             Appendix A

Auditee Comments




                   Page 19   2002-FW-1001
Appendix A




2002-FW-1001   Page 20
          Appendix A




Page 21   2002-FW-1001
Appendix A




2002-FW-1001   Page 22
                                                                               Appendix B

Distribution
City of Houston/Harris County/Coalition for the Homeless. Houston, TX
Principal Staff
Secretary's Representative, 6AS
CFO, 6AF
Director, Accounting, 6AAF
Director, Office of Community Planning & Development, 6AD
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                                2002-FW-1001
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




2002-FW-1001                               Page 24