oversight

Los Angeles Family Housing Corporation, North Hollywood, California, Generally Administered Its Supportive Housing Program Grants in Accordance with HUD Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2006-07-20.

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

                                                                  Issue Date
                                                                         July 20, 2006
                                                                  Audit Report Number
                                                                         2006-LA-1016




TO:         William Vasquez, Director, Los Angeles Office of Community Planning and
            Development, 9DD




FROM:       Joan S. Hobbs, Regional Inspector General for Audit, Region IX, 9DGA

SUBJECT: Los Angeles Family Housing Corporation, North Hollywood, California,
           Generally Administered Its Supportive Housing Program Grants in
           Accordance with HUD Requirements


                                  HIGHLIGHTS

 What We Audited and Why


             We audited the Los Angeles Family Housing Corporation (Corporation) in
             response to a request from the U.S. Department of Housing and Urban
             Development’s (HUD) Los Angeles Office of Community Planning and
             Development.

             Our audit objective was to determine whether the Corporation administered its
             Supportive Housing Program grants in accordance with HUD requirements and its
             grant agreements. We wanted to determine whether (1) grant expenditures were
             eligible and supported with adequate documentation, (2) the grantee had
             implemented adequate internal controls and a financial management system, (3)
             matching funds were provided as required, and (4) the grantee provided services
             reported in the technical submissions and annual progress reports.
What We Found


           The Corporation generally administered its Supportive Housing Program grants in
           accordance with HUD requirements and grant agreements.


Auditee’s Response


           We held an exit conference with the auditee on July 21, 2006, and provided them
           with the final report.




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                           TABLE OF CONTENTS


Background and Objectives                                                      4

Results of Audit

      Finding: The Corporation Generally Administered Its Supportive Housing   5
      Program Grants in Accordance with HUD Requirements

Scope and Methodology                                                          7

Internal Controls                                                              9




                                           3
                      BACKGROUND AND OBJECTIVES

The Supportive Housing Program is authorized under Title IV of the McKinney Homeless
Assistance Act. The program is designed to promote the development of supportive housing and
services, including innovative approaches to assist homeless persons in the transition from
homelessness, and to promote the provision of supportive housing for homeless persons to
enable them to live as independently as possible. Eligible activities include transitional housing,
permanent housing for homeless persons with disabilities, innovative housing that meets the
intermediate and long-term needs of homeless persons, and supportive services for homeless
persons not provided in conjunction with supportive housing.

The Los Angeles Family Housing Corporation (Corporation) was founded in 1983 by a group of
citizens and interfaith clergy in the San Fernando Valley. Since inception, the Corporation has
provided housing and caring supportive services to more than 80,000 homeless and low-income
people. The agency has grown from 40 beds in an old motel to 20 facilities serving more than
7,300 people annually in eight different regions of Los Angeles, California. Its mission is as
follows: “Through an integrated system of emergency, transitional, and permanent affordable
housing, Los Angeles Family Housing strives to provide a safe, caring, and service-rich
environment that helps homeless families and individuals rebuild their lives.”

The Corporation has three transitional living facilities: Sydney M. Irmas Transitional Living
Center for families, Trudy and Norman Louis Valley Shelter Transitional Living Program for
single individuals, and Communidad Caesar Chavez (East Los Angeles) for families. Two of
these projects, the Sydney M. Irmas and the Trudy and Norman Louis facilities, received
Supportive Housing Program grants from the U.S. Department of Housing and Urban
Development (HUD). The Corporation received one grant per year for each of the projects for
the last two operating years as follows:

                         Project                                 Grant number       Grant amount
Trudy and Norman Louis Valley Shelter Transitional Living        CA16B300034              $355,664
Program
Sydney M. Irmas Transitional Living Center                       CA16B300046              $363,659
Sydney M. Irmas Transitional Living Center                       CA16B400061              $363,659
Trudy and Norman Louis Valley Shelter Transitional Living        CA16B400067              $355,664
Program
                                              Grand total                               $1,438,646

The Corporation operates a year-around shelter program at the Trudy and Norman Luis Valley
Shelter Transitional Living Program. It also manages 22 properties, which include low-income
housing apartment buildings in and around the city of Los Angeles. Further, the Corporation is
involved in real estate development such as purchasing property to develop with homebuilders
and fundraising.

Our objective was to determine whether the Corporation administered its Supportive Housing
Program grants in accordance with HUD requirements and grant agreements.


                                                 4
                                  RESULTS OF AUDIT

Finding: The Corporation Generally Administered Its Supportive
Housing Program Grants in Accordance with HUD Requirements
The Corporation generally administered its Supportive Housing Program grants in accordance
with HUD requirements and grant agreements. The Corporation’s (1) grant expenditures were
eligible and adequately supported, (2) internal controls and financial management system were
adequate, (3) matching funds were provided as required, and (4) services were provided as
intended under the grants.



 Grant Expenditures Were
 Eligible and Supported with
 Adequate Documentation

Based on our testing of voucher summary reports, various vendors, and invoices from the
Corporation, (1) all of the costs charged to the Corporation’s Supportive Housing Program grants
were for direct costs and (2) it used a direct cost allocation plan to distribute these costs. Project
activity reports were available for each grant reviewed, listing every invoice and applicable cost
charged to the grant. The corresponding invoices supporting these reports had the check
remittance stapled to an allocation sheet and/or a purchase/payment request form, the original
invoice, and allocation printouts.


 The Grantee’s Internal
 Controls and Financial
 Management Systems Were
 Adequate

The Corporation had adequate controls based on transactions tested for each grant. It had the
following controls in place: (1) segregation of duties, (2) approval authorization obtained for
purchasing items, (3) signature of acceptance for receipt of supplies, (4) approval authorization
for approval of payments, and (5) required documentation to support transactions. The
Corporation’s financial management system was adequate, and it had established accounting
system procedures and controls needed to comply with federal requirements for grant fund
accounting.




                                                  5
 Matching Funds Were Provided
 as Required

Based on the schedule of cash match for HUD programs, copies of checks, and bank statements
and the Corporation was able to provide supporting documentation for each of the amounts
claimed as matching funds. As a result, we concluded that the matching requirements were met
for the grants reviewed.



 The Grantee Provided Services
 as Reported in Its Technical
 Submissions and Annual
 Progress Reports

We toured the two facilities located in North Hollywood, reviewed client files, and interviewed
clients and case managers at each facility. We confirmed that supportive services such as
housing, childcare, meals, and case management were provided. Further, we observed security
guards, clients, case managers, a youth center, and the intake coordinator administering the
program activities. We reviewed client files to confirm that the clients received services listed in
the technical submissions and interviewed the same clients for additional confirmation of
services provided and received. We also traced data shown on the most recent annual progress
report to the corresponding documentation and validated the information. We obtained
reasonable assurance that the services were rendered as provided in the grant technical
submissions.


 Conclusion


The Corporation generally administered its Supportive Housing Program grants in accordance
with HUD requirements.




                                                 6
                         SCOPE AND METHODOLOGY

Our audit generally covered the period October 2004 through May 2006 and focused on the
largest drawdown disbursement received by the grantee for each of the four grants we reviewed
as follows:

CA16B300034 ($43,209),
CA16B300046 ($49,402),
CA16B400061 ($57,391), and
CA16B400067 ($51,003).

We reviewed the Corporation’s internal controls and accounting information such as bank
statements, cancelled checks, and payroll related to the disbursements selected for analysis. We
also reviewed client files for verification of eligibility of homelessness and services provided.
To accomplish the audit we performed the following:

   •   Reviewed relevant HUD requirements and regulations and Office of Management and
       Budget circulars.

   •   Reviewed the Corporation’s policies and procedures.

   •   Reviewed the grant applications, grant agreements, technical submissions, and annual
       progress reports.

   •   Reviewed the Community Planning and Development grant files.

   •   Interviewed appropriate Office of Community Planning and Development personnel.

   •   Interviewed the Corporation’s personnel to obtain an understanding of its operations and
       internal controls.

   •   Interviewed clients from both the Transitional Living Center and Transitional Living
       Program facilities to gain an understanding of their experience as clients within the
       programs.

   •   Reviewed audited financial statements for 2004.

   •   Reviewed financial records such as invoices and accounting reports as supporting
       documentation for the $201,005 in drawdown funds reviewed.

   •   Reviewed payroll reports and employee timesheets for both the Transitional Living
       Center and Transitional Living Program.




                                                7
   •   Reviewed client files to verify eligibility (homelessness) and to determine the nature and
       extent of supportive services provided.

   •   Reviewed matching funds supporting documentation such as bank statements, check
       copies, and contracts with the funding sources.

We performed the audit work between April 18 and June 16, 2006.

We conducted our audit in accordance with generally accepted government auditing standards and
included tests of management controls that we considered necessary under the circumstances.




                                                8
                             INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:

   •   Effectiveness and efficiency of operations,
   •   Reliability of financial reporting, and
   •   Compliance with applicable laws and regulations.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.



 Relevant Internal Controls


              We determined the following internal controls were relevant to our audit objectives:

                  •   Compliance with applicable laws, regulations, and provisions of grant
                      agreements.
                  •   Effectiveness and efficiency of program operations.
                  •   Policies and procedures to ensure that grant expenditures were eligible and
                      adequately supported.
                  •   Policies and procedures to ensure that financial management and record-
                      keeping systems were adequate.

              We assessed the relevant controls identified above.

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

 Significant Weaknesses


              We did not identify any significant weaknesses in the relevant controls identified
              above.




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