oversight

St. Vincent de Paul Village, Inc., San Diego, 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 2009-02-09.

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

                                                                Issue Date
                                                                       February 09, 2009

                                                                Audit Report Number
                                                                         2009-LA-1006




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



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

SUBJECT: St. Vincent de Paul Village, Inc., San Diego, CA
         Supportive Housing Program


                                    HIGHLIGHTS

 What We Audited and Why

      We audited the use of Supportive Housing Program funds by St. Vincent de Paul Village,
      Inc. (St. Vincent de Paul Village), because it is a large organization receiving more than
      $4 million in grants annually. Our objective was to determine whether St. Vincent de
      Paul Village used supportive housing grants in accordance with U.S. Department of
      Housing and Urban Development (HUD) requirements and the grant agreements.

 What We Found


      St. Vincent de Paul Village generally administered its supportive housing grants in
      accordance with HUD requirements. Identity-of-interest contracts between St. Vincent
      de Paul Village and its associated nonprofit, SVDP Management, Inc., were reasonable,
      although contract documents did not include all clauses required by Office of
      Management and Budget Circular A-110. Also, grant expenditures were eligible and
      supported in accordance with HUD requirements and the grant agreements, and adequate
      written procedures were in effect.

      We provided the auditee the final report on February 9, 2009.
                            TABLE OF CONTENTS

Background and Objective                                                          3

Results of Audit
      St. Vincent de Paul Village Generally Administered Its Supportive Housing   4
                 Program in Accordance with HUD Requirements

Scope and Methodology                                                             7

Internal Controls                                                                 8




                                             2
                       BACKGROUND AND OBJECTIVE

St. Vincent de Paul Village, Inc. (St. Vincent de Paul Village), is a faith-based nonprofit 501(c)3
corporation that provides a range of services, including transitional housing, to homeless
individuals and families through five supportive housing programs. Two of the programs,
Solutions 2-5 and Solutions 4, include activities by subrecipient nonprofit organizations, which
the U.S. Department of Housing and Urban Development (HUD) calls “sponsors.” St. Vincent
de Paul Village is funded through donations and grants from federal, state, and local
governments. Federal grants include five concurrent HUD supportive housing grants for five
separate programs run by St. Vincent de Paul Village. These grants are renewed annually.

St. Vincent de Paul Village’s Supportive Housing Program grants include the following:

            Program name              Population served                Annual grant
                                                                         amount
            Solutions 2-5             472 beds for single youth           $1,699,096
                                      and adults
            Fresh Start               150 beds for single adults             $619,024
            Family Living             110 beds for families                  $513,713
            Solutions 4               154 beds for 25 families               $890,000
                                      and 62 single adults
            Toussaint Academy         30 beds for single youth               $402,182
              Total                                                        $4,124,015

Under separate contracts, SVDP Management, Inc. (SVDP Management), an affiliated nonprofit,
provides administrative, security, maintenance, and food services to programs run by St. Vincent
de Paul Village.

Our objective was to determine whether St. Vincent de Paul Village used Supportive Housing
Program grant funds in accordance with HUD requirements and the grant agreements.




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                                RESULTS OF AUDIT

St. Vincent de Paul Village Generally Administered Its Supportive
Housing Program in Accordance with HUD Requirements
St. Vincent de Paul Village generally administered its Supportive Housing Program in
accordance with HUD requirements. Specifically, its (1) contracts with its associated nonprofit,
SVDP Management, were priced reasonably and properly allocated to the grant programs, (2)
expenditures were eligible and adequately supported, (3) internal controls and financial
management systems were adequate, and (4) matching funds were provided as required.



 Contracts Were Reasonably
 Priced and Properly Allocated
 to the Grant Programs

       In addition to administration, services contracted to SVDP Management included
       providing meals for the transitional housing residents, security, and maintenance.
       Although supportive housing grants paid for only a portion of the contracts, project
       budgets (including both grant funds and matching funds) for these services totaled more
       than $2.2 million for grants starting in 2007. We reviewed the basis for the contracts’
       pricing and found the amounts to be reasonable, based on actual costs. The contracts
       were entered into in 2003, based on an average of actual costs to provide the services
       during 2001 and 2002. No changes were made in 2004, but starting in 2005, the prices
       were adjusted annually based on changes in the Consumer Price Index. Food service
       contracts were allocated to grant programs based on the number of meals served for each
       program, and the other contracts were allocated based on the number of square feet
       occupied by each program’s residential area. SVDP Management maintained adequate
       accounting records and supporting documentation to show the actual costs to provide
       services under each contract. In the years 2005 through 2007, costs exceeded the contract
       prices.

       The contract documents did not include clauses required by the Office of Management
       and Budget (OMB), to ensure equal employment opportunity, and the Contract Work
       Hours and Safety Standards Act. In addition, the contracts reviewed did not always
       contain adequate descriptions of scope and quantity for services provided. For example,
       under the food contracts, SVDP Management is to provide three nutritionally balanced
       prepared meals each day for transitional housing residents. The description of services in
       the contracts, however, is limited to three sentences: “The Food Service shall provide
       prepared meals for the Client. Other services will be provided as stipulated from time to
       time by the Client. The food service will provide all equipment and supplies necessary to
       serve meals and clean-up for the client.”



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     We did not observe any adverse effects from the contracts’ omissions; however, we
     discussed the need for new contracts with grantee officials, and they agreed to ensure that
     all contracts meet OMB requirements.


Program Expenditures Were
Eligible and Supported with
Adequate Documentation

     We tested program expenditures by selecting five grant draws (one from each program)
     totaling $264,969 to review for eligibility and supporting documentation. Less than 1
     percent of the expenditures were not eligible and/or did not have adequate supporting
     documentation. We determined that the amount was immaterial.

Internal Controls and the
Financial Management
System Were Adequate

     The financial management of St. Vincent De Paul Village was contracted out to SVDP
     Management. Therefore, all financial-related transactions, including requests for
     supportive housing funds for St. Vincent De Paul Village and its sponsors, were
     conducted by SVDP Management.

     SVDP Management’s accounting system was adequate to conduct financial transactions
     related to HUD supportive housing grants and to ensure reliability of financial reporting.
     Further, SVDP Management had adequate segregation of duties regarding the approval of
     supportive housing funding and drawdown requests. Draws from HUD’s Line of Credit
     Control System were conducted only after a review of reimbursement requests from St.
     Vincent de Paul Village or its project sponsors. The reimbursement requests were subject
     to four levels of review before being approved for payment. In addition, SVDP
     Management’s accounting policies and procedures reasonably assured that disbursements
     of grant funds were consistent with laws and regulations.

Matching Funds Were
Provided as Required

     We tested St. Vincent de Paul Village’s provision of matching funds during our review of
     grant draws and found that the grantee exceeded match requirements. By statute, grant
     funds cannot account for more than 75 percent of the operating budget. For each draw
     tested, supporting documentation showed that St. Vincent de Paul Village spent between
     one and one-half and four times the amount of grant funds drawn for eligible activities.




                                              5
Conclusion


     St. Vincent de Paul Village generally administered its supportive housing program in
     accordance with HUD requirements.




                                             6
                         SCOPE AND METHODOLOGY

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.

We conducted our audit work in San Diego, California, and our audit generally covered the
period January 2006 through March 2008. We expanded our scope when necessary. Our
universe included the supportive housing grants awarded to St. Vincent de Paul Village with
program years starting operations in 2006 or 2007 and ending in 2007 and 2008. These grants
included two one-year grants for each of St. Vincent de Paul Village’s five supportive housing
projects. We selected one grant for each project for review, with a combined award of
$4,124,015. The grants reviewed were:

       Solutions 2-5; CA16B501004
       Fresh Start; CA16B501006
       Family Living Center; CA16B601003
       Solutions 4; CA16B601010.
       Toussaint Academy; CA16B601007

We reviewed policies and procedures related to accounting, monitoring, and internal controls to
determine whether St. Vincent de Paul Village and its administrative services contractor, SVDP
Management, administered the grants in accordance with HUD requirements and provided
adequate oversight of subrecipients/project sponsors. We also conducted site visits to project
sites and observed supportive service activities. More specifically, to accomplish the survey, we
performed the following:

        Reviewed relevant HUD regulations and OMB circulars;
        Reviewed pertinent records maintained by HUD’s Office of Community Planning and
        Development and SVDP Management;
        Interviewed officials from HUD’s Office of Community Planning and Development, St.
        Vincent de Paul Village, and SVDP Management;
        Reviewed service contracts between St. Vincent de Paul Village and its associated
        nonprofit, SVDP Management, including cost analyses and methods of allocating costs
        to grants;
        Reviewed SVDP Management’s written policies and procedures associated with the
        supportive housing program;
        Tested one grant draw for each of the five grant programs, for a total of $264,968.83,
        reviewing all associated invoices, payments, and salaries to determine whether the
        expenditures were eligible and supported by adequate documentation; and
        Tested provision of matching funds.


                                                7
                              INTERNAL CONTROLS

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

       Program operations,
       Relevance and reliability of information,
       Compliance with applicable laws and regulations, and
       Safeguarding of assets and resources.

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


 Relevant Internal Controls


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

              Policies and procedures to ensure that accounting methods, financial
              management, and record-keeping systems are adequate.
              Policies and procedures to ensure that grant expenditures are eligible and
              adequately supported.
              Policies and procedures to ensure that audit findings are resolved effectively and
              efficiently.
              Policies and procedures to ensure that monitoring of subrecipients/project
              sponsors is adequate.
              Policies and procedures to ensure the effectiveness and efficiency of program
              operations.
              Compliance with applicable laws, regulations, and provisions of grant
              agreements.
       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 find any significant weaknesses in internal controls.



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