oversight

New Rochelle Municipal Housing Authority, New Rochelle, NY, Had Weaknesses in Its Self-Sufficiency Grant Programs

Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-04-07.

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

                                                                             Issue Date
                                                                                      April 7, 2010
                                                                             Audit Report Number
                                                                                      2010-NY-1011




TO:            Mirza Negron Morales, Director, Office of Public Housing, 2APH


                    For
FROM:          Edgar Moore, Regional Inspector General for Audit, New York/New Jersey
                 Region, 2AGA


SUBJECT: New Rochelle Municipal Housing Authority, New Rochelle, NY, Had
         Weaknesses in Its Self-Sufficiency Grant Programs


                                            HIGHLIGHTS

    What We Audited and Why

                 We audited the New Rochelle Municipal Housing Authority’s (Authority)
                 administration of its Resident Opportunities and Self-Sufficiency (ROSS) and
                 Housing Choice Voucher Family Self-Sufficiency grant programs as part of the
                 Office of Inspector General’s (OIG) strategic plan goals to improve the U.S.
                 Department of Housing and Urban Development’s (HUD) fiscal accountability for
                 its assisted housing programs. We selected the Authority because of its designation
                 as high risk in the most recent HUD field office risk assessment and an overall
                 Public Housing Assessment System1 score of 69.

                 The audit objectives were to determine whether the Authority expended ROSS and
                 Family Self-Sufficiency program funds for eligible costs and implemented adequate
                 controls over the programs to ensure compliance with HUD regulations.




1
 HUD uses the Public Housing Assessment System to monitor and rate the performance (on a scale of 100 points) of
housing authorities in the areas of financial condition (30 points), management operations (30 points), physical
condition (30 points), and residents’ satisfaction (10 points).
What We Found


           Contrary to regulations, Authority officials charged ineligible and unsupported
           expenses to the Authority’s Family Self-Sufficiency and various ROSS grant
           programs. These expenses related to charges incurred before the execution of the
           grant agreement and costs that were incurred for activity eligible under another
           grant. As a result, HUD lacks assurance that funds of $219,715 were spent for
           eligible purposes and expenses charged totaling $100,637 were properly supported.

           The Authority had control weaknesses in its procedures for administering its
           Housing Choice Voucher and ROSS Family Self-Sufficiency programs.
           Specifically, it did not (1) properly fund participant’s escrow accounts, (2)
           distribute escrow funds to one participant upon graduation, (3) comply with the
           required minimum program size, (4) ensure that contracts of participation were
           complete, and (5) report the participant escrow accounts as restricted on the
           financial statements. As a result, program participants were not credited with the
           proper escrow amount, and Authority officials did not comply with program
           administrative requirements.

What We Recommend


           We recommend that the Director, Office of Public Housing, New York, instruct the
           Authority to (1) repay from non-Federal funds the $219,715 in ineligible expenses
           charged to the grant programs, (2) provide support for or repay from non-Federal
           funds $100,637 related to the unsupported charges paid with ROSS and Housing
           Choice Voucher program funds, (3) recoup a $265 overpayment from, and pay
           $2,997 due to, FSS participants, and (4) develop procedures to ensure compliance
           with all Family Self-Sufficiency program administrative requirements.

           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06, REV-3. Please
           furnish us copies of any correspondence or directives issued because of the audit.

Auditee’s Response


           We discussed the results of the audit with the auditee during the audit and at an exit
           conference on February 16, 2010. We provided a draft report on February 2, 2010
           and requested written comments by February 26, 2010, which we received on
           March 1, 2010. The auditee generally disagrees with the findings, and states that
           proper support for any ineligible and unsupported expenses will be provided to the
           field office.

           The complete text of the auditee’s response, along with our evaluation of that
           response, can be found in appendix B of this report.

                                              2
                             TABLE OF CONTENTS

Background and Objectives                                                        4

Results of Audit
      Finding 1: Ineligible and Unsupported Expenses Were Charged to the         5
                 Authority’s Family Self-Sufficiency and Various ROSS Programs

      Finding 2: The Authority Had Control Weaknesses in Its Procedures for      8
                 Administering Its Family Self-Sufficiency Programs


Scope and Methodology                                                            11

Internal Controls                                                                12




Appendixes
   A. Schedule of Questioned Costs and Funds To Be Put to Better Use             14
   B. Auditee Comments and OIG’s Evaluation                                      15
   C. Schedule of Ineligible Expenditures                                        18




                                             3
                      BACKGROUND AND OBJECTIVES

The New Rochelle Municipal Housing Authority (Authority) was established in 1941 as a public
governmental agency established under New York State law to provide decent, safe, and sanitary
housing for low-and moderate-income persons and families. The Authority is governed by a
seven-member board of commissioners, five of whom are appointed by the city manager and two
of whom are elected by Authority residents. The executive director, who supervises the daily
management of the Authority, was appointed by the board of commissioners in March 1991. The
Authority’s main office is located at 50 Sickles Avenue, New Rochelle, NY.

The Authority administers Low-Rent Public Housing, Housing Choice Voucher, Public Housing
Capital Fund (Capital Fund), Resident Opportunities and Self-Sufficiency (ROSS) and Family
Self-Sufficiency grant programs funded by the U.S. Department of Housing and Urban
Development (HUD). The Authority manages 543 low-rent public housing units, which are
contained in four developments: the Hartley Houses, which has 240 units among five buildings;
the Bracey Apartments, which has 100 units among two buildings; La Rochelle Manor, a single-
building complex that has 91 units; and Queens City Tower, a single-building complex that has
112 units. The Authority also owns and manages two rental properties.

During the audit period July 1, 2005, through June 30, 2007, the Authority received $2.5 million to
administer 543 low-rent program units, $4.2 million to administer 196 housing choice vouchers,
$1.8 million in Capital Fund program funds, $402,879 in ROSS program funding, and $200,000 to
fund a coordinator position for its Family Self-Sufficiency program. The Authority’s ROSS
programs included Family Self-Sufficiency, Elderly/Persons with Disabilities, Neighborhood
Networks, and Family programs.

The audit objectives were to determine whether the Authority expended ROSS and Family Self-
Sufficiency program funds for eligible expenses and implemented adequate controls over these
programs to ensure compliance with HUD regulations.




                                                 4
                                 RESULTS OF AUDIT

Finding 1: Ineligible and Unsupported Expenses Were Charged to the
           Authority’s Family Self-Sufficiency and Various ROSS
           Programs
Contrary to regulations, Authority officials charged ineligible and unsupported expenses to its
Family Self-Sufficiency and various ROSS grant programs. These expenses related to charges
incurred before the execution of the grant agreement and costs that were incurred for activity
eligible under another grant. As a result, HUD lacks assurance that funds of $219,715 were spent
for eligible purposes and expenses charged totaling $100,637 were properly supported. We
attribute these conditions to weaknesses in financial management controls and unfamiliarity with
HUD program regulations.


 Ineligible Expenses
              Authority officials disbursed $219,715 from various Family Self-Sufficiency and
              ROSS grant programs for ineligible expenses. For instance, while article II.3 of the
              2005 ROSS Elderly/Persons with Disabilities grant provided that costs incurred before
              execution of the grant are not reimbursable, officials charged the grant $18,360 for
              various holiday parties and consulting costs incurred before execution of the grant. In
              another instance, officials charged $50,695 to the 2005 ROSS Neighborhood
              Networks grant project coordinator budget line item for costs incurred to perform low-
              rent tenant background checks, collect tenant accounts receivable, and pay an
              information technology assistant. However, these funds were intended to establish
              and/or update and expand existing neighborhood networks/community technology
              centers, assess residents’ needs, and monitor program progress. In other cases, grants
              were charged for costs that were incurred for activity eligible under another grant. For
              instance, while the Authority received funding for a full-time coordinator for both the
              Housing Choice Voucher and ROSS Family Self-Sufficiency programs, one
              coordinator served in both capacities and was paid from both grants. However, the
              Notice of Funding Availability (Federal Register/Vol. 71, No. 45/ March 8, 2006) for
              both the Housing Choice Voucher and Public and Indian Housing Family Self-
              Sufficiency Programs provided a maximum of up to $65,000 for a full-time
              coordinator position. In addition, the 2006 ROSS Family Self-Sufficiency grant was
              charged $44,397 for expenses related to the ROSS Family program grant. Specific
              details on additional ineligible expenses are shown in appendix C.

 Unsupported Costs

              Authority officials lacked adequate documentation to support that expenses of
              $100,637 were reasonable and necessary program charges. Office of Management
              and Budget (OMB) Circular A-87, attachment B, requires that when employees
              work on multiple activities, a distribution of their salaries or wages be supported by

                                                 5
personnel activity reports or equivalent documentation. Further, 24 CFR (Code of
Federal Regulations) 85.20(b)(2) requires the Authority to maintain records which
adequately identify the source and application of funds provided for financially
assisted activities, and paragraph (b)(6) provides that accounting records must be
supported by source documentation such as cancelled checks, paid bills, payrolls,
time and attendance records, contracts, and subgrant award documents.

As noted in the chart below, Authority officials did not provide adequate support for
$100,637 disbursed from Family Self-Sufficiency and various ROSS program funds.
This deficiency occurred because Authority officials lacked a formal methodology for
allocating costs among programs and controls to maintain records that identify the
application of specific grant funds. Consequently, Authority officials could not
support the allocation of various salary expenses among grants and/or provide
adequate source documents for expenditures. As a result, Authority officials lacked
assurance that funds spent were properly supported.

Unsupported expenditures: Family Self-Sufficiency and ROSS programs

               Grant                      Expense        Amount
2005 ROSS Neighborhood Networks           Training        $9,052
program grant
                                         Computer/
                                           related         1,180
                                         equipment

                                       Administrative      8,400
2005 ROSS Family program                 Stipends          4,781

                                         Supportive
                                          services         3,000
ROSS Family Self Sufficiency
program coordinator:
            2005                        Coordinator        6,508

             2006                       Coordinator          119

              2007                      Coordinator       28,251
2005 ROSS Elderly/Persons with
Disabilities program                   Administrative     30,000
Housing Choice Voucher Family Self-
Sufficiency program coordinator:
              2006                      Coordinator        9,176

             2007                       Coordinator          170

                Total                                   $ 100,637




                                  6
Conclusion

             Contrary to regulations, Authority officials used ROSS and Family Self-Sufficiency
             grant funds for ineligible expenses of $219,715 and unsupported expenses of
             $100,637. We attribute these conditions to the Authority officials’ unfamiliarity
             with HUD program regulations and lack of controls or a formal methodology for
             allocating costs among programs. As a result, HUD lacks assurance that funds were
             spent for eligible purposes and expenses charged were properly supported.

Recommendations

             We recommend that the Director, Office of Public Housing, New York, instruct the
             Authority to

             1A.    Reimburse from non-Federal funds the $219,715 expended for ineligible
                    costs as follows; $215,402 to HUD, and $4,313 to the 2007 ROSS Family
                    grant.

             1B.    Provide documentation for the unsupported Family Self-Sufficiency and
                    ROSS grant program costs of $100,637 so that HUD can make an eligibility
                    determination. If adequate documentation cannot be provided, these costs
                    should be repaid from non-Federal funds.

             1C.    Develop procedures to ensure that ROSS grants are only charged for eligible
                    expenses under the grant terms that are properly supported.




                                              7
Finding 2: The Authority Had Control Weaknesses in Its Procedures for
           Administering Its Family Self-Sufficiency Programs
The Authority had control weaknesses in its procedures for administering its Housing Choice
Voucher and ROSS Family Self-Sufficiency programs. Specifically, it did not (1) properly fund
participants’ escrow accounts, (2) distribute escrow funds to one participant upon graduation, (3)
comply with the required minimum program size, (4) ensure that contracts of participation were
complete, and (5) report the participant escrow accounts as restricted on the financial statements.
We attribute these conditions to Authority officials’ unfamiliarity with HUD Family Self-
Sufficiency program requirements and administrative oversight. As a result, program participants
were not credited with the proper escrow amount, and Authority officials did not ensure
compliance with program administrative requirements.


 Improper Funding of Earned
 Escrow Amounts


               Authority officials’ underfunded one participant’s and overfunded another
               participant’s escrow accounts. Participants earn escrow amounts based upon the
               difference between current family rent less the family rent at the time of the effective
               date of the contract of participation. Regulations at 24 CFR 984.305(a)(2)(i) require
               that each participant family’s escrow account be credited with this amount periodically
               but not less than annually. In the first case, the participant should have received
               monthly escrow of $353 beginning in December 2006; however, due to an oversight,
               the required deposit did not begin until March 2007. Consequently, this participant’s
               escrow account was underfunded by $1,059. Upon our notification, the Authority
               corrected the underfunding in March 2009. In the second case, while the Authority
               correctly adjusted the February 2007 housing assistance payment to reflect the
               participant’s unemployment upon interim recertification in February 2007, an
               oversight prevented Authority officials from voiding the $265 payment into the
               participant’s escrow account, resulting in an overpayment to the participant’s escrow
               account.


 Escrow Funds Not Properly
 Distributed

               Authority officials did not distribute escrow funds to one participant upon
               graduation from the program as required. HUD Housing Choice Voucher Program
               Guidebook 7420.10G, section 23.5, provides that Family Self-Sufficiency program
               participants earn escrow credits equal to the total tenant payment increase caused by
               a family’s earned income increase. Regulations at 24 CFR 984.305(c)(1) provide
               that the amount in a Family Self-Sufficiency program account in excess of any
               amount owed to the Authority should be paid to the head of the participant family
               when the contract of participation has been completed. However, while the
               participant completed the contract goals and left public housing on December 31,
               2007, with an earned escrow balance of $4,352, the participant had not received any

                                                  8
              escrow distribution. The participant owed the Authority $1,335 for rent, and
              Authority officials erroneously believed that the entire escrow account was forfeited
              to the Authority if a participant owed rent. However, this participant was owed
              $2,997 ($4,352 less the $1,335 rent owed).

  Minimum Program
  Participation Not Achieved

              Authority officials did not comply with the minimum program participant
              requirements. The Authority’s Housing Choice Voucher Family Self-Sufficiency
              program action plan, approved by HUD on December 6, 1994, provided for the
              Authority to enroll 32 participants. However, during the audit period, July 1, 2005,
              through June 30, 2007, Authority officials reported only 25 participants. Additionally,
              for the fiscal years ending June 30, 2008, and June 30, 2009, Authority officials
              reported 24 and 20 participants, respectively. In addition, while the Authority’s ROSS
              Family Self-Sufficiency program action plan had a goal of between 25 and 50
              participants, during the same period, Authority officials reported only 24 participants.

              The program coordinator stated that it was difficult to reach the required program size
              because of a lack of interest by both Housing Choice Voucher and low-rent program
              recipients. Regulations at 24 CFR 984.105(d) require HUD approval to operate a
              Family Self-Sufficiency program with less than the required minimum number of
              participants. The Housing Choice Voucher Guidebook, section 23.2, entitled
              Exceptions to the Minimum Program Size, provides that an authority may request
              HUD approval for reduction in the required minimum program size. However,
              Authority officials were unaware of these regulations and did not request HUD
              approval to operate the Authority’s programs with less than the required number of
              participants.

Incomplete Contract of
Participation

              Chapter 23.4 of Housing Choice Voucher Program Guidebook 7420.10g provides that
              participants’ individual training and service plan should include clearly stated goals
              with specific deadlines for accomplishment. Regulations at 24 CFR 984.103 provide
              that each plan must be signed by an authority representative and the participating
              family member and be attached to the contract of participation. However, audit testing
              revealed that the plan for two participants was incomplete. In one case, while
              participant interim and final goals were clearly stated, specific deadlines for
              accomplishment were not noted, and the participating family member had not signed
              the plan. In the second case, the participant did not execute a plan until almost 2 years
              after the contract of participation was signed.




                                                 9
Escrow Accounts Not Properly
Reported as Restricted

             Authority officials did not properly report participants’ escrow account balances as
             restricted on the Authority’s financial statements. Rather, the escrow cash was
             reported with the Authority’s unrestricted cash account. As a result, the Authority’s
             cash position for the fiscal year ending June 30, 2007, was overstated since the
             $33,753 was reported as an Authority asset as opposed to an amount held in escrow
             to be released upon program participants’ fulfillment of their contract provisions.


Conclusion

             Control weaknesses in the administrative procedures for the Authority’s Family
             Self-Sufficiency programs caused Authority officials to underfund one participant’s
             escrow account by $1,059, overpay another participant by $265, not pay escrow of
             $2,997 to one participant upon graduation, and not comply with program
             administrative requirements. We attribute these conditions to Authority officials’
             unfamiliarity with HUD Family Self-Sufficiency program requirements and
             administrative oversight.

Recommendations

             We recommend that the Director, Office of Public Housing, New York, instruct the
             Authority to

             2A.    Recoup $265 from the overfunded participants’ escrow account.

             2B.     Pay the $2,997 escrow due the graduated participant.

             2C.    Strengthen controls over escrow account administration to ensure proper
                    funding of escrow accounts and payment of escrow funds to participants
                    upon graduation from the program.

             2D.    Strengthen controls over program administration to ensure that (1) the
                    required program size is maintained, or request HUD approval to operate a
                    smaller program, (2) contracts of participation are adequately prepared and
                    maintained, and (3) participant escrow funds are properly reported in the
                    Authority’s financial statements, thus ensuring that $33,573 in escrow funds
                    will be put to better use.




                                              10
                         SCOPE AND METHODOLOGY

To accomplish our objectives, we

       Reviewed applicable Code of Federal Regulations requirements, Federal Registers, OMB
       Circulars A-87 and A-133, HUD’s Housing Choice Voucher Guidebook 7420.10G, and
       applicable notices of funding availability.

       Reviewed the Authority’s procurement policy, Housing Choice Voucher and ROSS Family
       Self-Sufficiency programs action plans, ROSS program grant agreements, board meeting
       minutes, and selected contracts to document policies and procedures affecting the
       Authority’s programs.

       Interviewed HUD Office of Public Housing staff and reviewed HUD files on the Authority
       to obtain an understanding of Authority operations.

       Analyzed the Authority’s audited financial statements, general ledger, expense accounts,
       bank reconciliations, bank statements, and cancelled checks for fiscal years 2006 and 2007.

        nterviewed Authority staff to obtain an understanding of Authority operations and
       controls.

       Selected a nonstatistical sample of disbursements from the 2005 ROSS Neighborhood
       Networks program, the 2005 and 2007 Ross Elderly/Persons with Disabilities program,
       2005 and 2007 ROSS Family program and Housing Choice Voucher Family Self-
       Sufficiency program grants to determine whether the Authority expended funds in
       accordance with HUD regulations.

We performed on-site work from November 2008 through September 2009 at the Authority’s main
office, located at 50 Sickles Avenue, New Rochelle, NY. The audit covered the period July 1,
2005, through June 30, 2007, and was expanded as necessary.

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
objectives. We believe that the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.




                                                11
                               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:

                      Program operations - Policies and procedures that management has
                      implemented to reasonably ensure that a program meets its objectives.

                      Compliance with laws and regulations - Policies and procedures that
                      management has implemented to reasonably ensure that resource use is
                      consistent with laws and regulations.

                      Safeguarding resources - Policies and procedures that management has
                      implemented to reasonably ensure that resources are safeguarded against
                      waste, loss, and misuse.

                      Validity and reliability of data - Policies and procedures that management has
                      implemented to reasonably ensure that valid and reliable data are obtained,
                      maintained, and fairly disclosed in reports.

               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.




                                                 12
Significant Weaknesses


           Based on our audit, we believe that the following item is a significant weakness:

           The Authority disbursed grant funds for ineligible and unsupported expenses and
           did not properly administer its Family Self-Sufficiency programs (see findings 1
           and 2, respectively).




                                             13
                                   APPENDIXES

Appendix A
              SCHEDULE OF QUESTIONED COSTS
             AND FUNDS TO BE PUT TO BETTER USE

 Recommendation          Ineligible 1/   Unsupported 2/ Funds to be put
        number                                          to better use 3/

      1A.                   $219,715
      1B.                                      $100,637
      2A.                       $265
      2B.                                                         $   2,997
      2D.                                                            33,573
                             _______           _______             _______
                            $219,980           $100,637             $36,570


1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law; contract; or Federal, State, or local
     policies or regulations.

2/   Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
     or activity when we cannot determine eligibility at the time of the audit. Unsupported
     costs require a decision by HUD program officials. This decision, in addition to
     obtaining supporting documentation, might involve a legal interpretation or clarification
     of departmental policies and procedures.

3/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. These amounts include reductions in outlays, deobligation of funds,
     withdrawal of interest, costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     that are specifically identified. In this case, if Authority officials implement our
     recommendations, $2,997 due a graduate will be available to that person, and $33,573 in
     restricted escrow funds will be used for graduated participants, ensuring that these funds
     will be put to better use.




                                             14
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1



Comment 2



Comment 3




                         15
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation                Auditee Comments




Comment 4




                        OIG Evaluation of Auditee Comments




                                       16
Appendix B
                         OIG Evaluation of Auditee Comments


Comment 1   While Authority officials did not provide documentation for the unsupported
            expenses during the audit, Authority officials stated that the expenses can be
            supported and will provide such support to the HUD field office as part of the
            audit resolution process.

Comment 2   Authority officials acknowledge that two different grant funds were used to pay
            the salary of one coordinator who fulfilled the responsibilities of both programs.
            However, the Notice of Funding Availability (Federal Register/Vol. 71, No. 45/
            March 8, 2006) for both the Housing Choice Voucher and Public and Indian
            Housing Family Self-Sufficiency Programs provided a maximum of up to
            $65,000 for a full-time coordinator position, therefore separate individuals were to
            staff each grant. Further, while Office of Management and Budget Circular A-87,
            attachment B, requires that distribution of wages paid employees who work on
            multiple activities be supported by personnel activity reports or equivalent
            documentation, the coordinator time sheets did not support the time allocated
            between both programs.

Comment 3   The fiscal year 2005 Resident Opportunities and Self-Sufficiency Program for the
            Elderly/Persons with Disabilities grant agreement prohibited using grant funds for
            costs incurred prior to the grant start date, which was February 22, 2006, the date
            that the grant was executed. Further, while Authority officials stated they were
            notified of the grant award on December 29, 2005, 80 percent of the $18,360
            ineligible costs were incurred prior to that date.

Comment 4   Authority officials maintain that one of the five program deficiencies noted is not a
            deficiency, but represents proper enforcement of regulations. Specifically, Authority
            officials stated that they did not distribute one participant’s escrow because the
            participant forfeited the escrow by violating the lease agreement. However,
            Authority files document the program coordinator’s determination on December 19,
            2007 that the participant successfully completed the program and is “entitled to
            receive all the funds from the escrow account (less any moneys owed to MHA)…”
            The files further documented that the participant secured a major raise which
            enabled the participant to leave public housing and afford a private non-subsidized
            apartment. If the participant left the Authority owing rent, regulations at 24 CFR
            984.305(c) (1) provide that the amount owed should be deducted from the escrow
            amount paid; not that the entire escrow is forfeited.




                                             17
Appendix C
              SCHEDULE OF INELIGIBLE EXPENDITURES

                          Grant               Actual
       Grant             category            expense             Amount                        Basis for ineligibility
                         charged               item
   2006 ROSS           Coordinator       ROSS Family grant       $44,397      Use of Family Self-Sufficiency grant funds to pay the ROSS
   Family Self-                          project coordinator                  Family grant project coordinator is contrary to the grant
   Sufficiency                                                                agreement, subarticle F.3, which provides that funds
                                                                              received for one program may not be used to support or
                                                                              reimburse another program.

   2007 ROSS           Coordinator       ROSS Family grant           12,420   Use of Family Self-Sufficiency grant funds to pay the ROSS
   Family Self-                          project coordinator                  Family grant project coordinator is contrary to the grant
   Sufficiency                                                                agreement, subarticle F.3, which provides that funds
                                                                              received for one program may not be used to support or
                                                                              reimburse another program.
   2005 ROSS           Project           Tenant background       $50,695      Federal Register, Vol. 70, No. 53, section I.C.1, provides
   Neighborhood        coordinator       checks, tenant                       that the project coordinator is responsible for assessing
   Networks                              accounts receivable                  residents’ skills and monitoring program progress.
                                         collection, and an                   Cost to perform tenant background checks, collect tenant
                                         assistant                            accounts receivable, and pay an assistant are not eligible as
                                                                              project coordinator expenses.

                       Training          Collection of tenant        34,781   Federal Register, Vol. 70, No. 53, section I.C.8, lists eligible
                                         rent, legal                          training activities as educational training, computer and job
                                         expenses, and                        training, and the purchase of computer-related equipment.
                                         typewriter repair.                   Payment of tenant rent collection, legal, and typewriter
                                                                              repair expense is unrelated to the grant.

                       Computer-         Cell phone and              1,112    Federal Register, Vol. 70, No. 53, section I.C.8, lists eligible
                       related           payroll                              activities as the purchase of computer-related equipment.
                       equipment                                              Funds used for unrelated cell phone and payroll expense are
                                                                              not eligible as computer-related equipment.

   2005 ROSS            Subcontracting   Holiday parties and     $18,360      Article II, #3, of the grant agreement provides that costs
   Elderly/Persons                        consulting costs                    incurred before the execution of the grant agreement are not
   with Disabilities                      incurred before                     reimbursable.
                                          grant execution

                                           Theatre tickets            1,303   Federal Register, Vol. 70, No. 53, section IV.E.6f, prohibits
                                                                              the use of ROSS Elderly/Persons with Disabilities grant
                                                                              funds for ineligible activities, including entertainment cost.
   2005 ROSS           Project           ROSS                    $13,477      Payment of ROSS Elderly/Persons with Disabilities grant
   Family              coordinator       Elderly/Persons                      project coordinator costs with ROSS Family program funds
                                         with Disabilities                    is contrary to the grant agreement, subarticle F.3, which
                                         grant project                        provides that funds received for one program may not be
                                         coordinator                          used to support or reimburse another program.

                       Stipends          Payment to a                 2,000   Federal Register, Vol. 70, No. 53, section III.C.1a, #6,
                                         tenant for painting                  provides that stipends may only be used to reimburse
                                         a room.                              reasonable out-of-pocket expenses related to participation in
                                                                              training.

                                         ROSS                         2,070   Use of ROSS Family program funds to pay the salary of the
                                         Elderly/Persons                      ROSS Elderly/Persons with Disabilities grant project
                                         with Disabilities                    coordinator is contrary to the grant agreement, subarticle
                                         grant project                        F.3, which provides that funds received for one program
                                         coordinator                          may not be used to reimburse another program.


   2005 ROSS             Supportive      Housing Choice              $6,211   Use of ROSS Family program funds to pay the salary of the




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               Grant              Actual
   Grant      category           expense           Amount                        Basis for ineligibility
              charged              item
Family          services     Voucher Family                     Housing Choice Voucher program coordinator is contrary to
                             Self-Sufficiency                   the grant agreement, subarticle F.3, which provides that
                             program                            funds received for one program may not be used to support
                             coordinator                        or reimburse another program.

                             ROSS                       186     Use of ROSS Family program funds to pay the salary of the
                             Elderly/Persons                    ROSS Elderly/Persons with Disabilities grant project
                             with Disabilities                  coordinator is contrary to the grant agreement, subarticle
                             grant project                      F.3, which provides that funds received for one program
                             coordinator                        may not be used to support or reimburse another program.

                             Legal expense,             4,372   Federal Register, Vol. 70, No. 53, section I.D.2, indicates
                             computer, phone,                   that supportive services include but are not limited to job
                             and payroll                        training, youth after-school activities, English as a second
                             expense                            language, and child care. Use of funds for administrative
                                                                costs such as legal, computer, phone, and payroll expense
                                                                is contrary to the grant agreement.

            Subcontracting   Housing Choice             6,211   Use of ROSS Family Program funds to pay the salary of the
                             Voucher Family                     Housing Choice Voucher program coordinator is contrary to
                             Self-Sufficiency                   the grant agreement, subarticle F.3, which provides that
                             program                            funds received for one program may not be used to support
                             coordinator                        or reimburse another program.

                             Cookouts for               2,690   Federal Register, Vol. 70, No. 53, section IV.E.6g, provides
                             residents                          that grant funds may not be used for ineligible activities,
                                                                including the purchasing of food.

                             Budget, legal,             6,463   Use of ROSS Family program funds for ROSS
                             eviction, and                      Neighborhood Networks is contrary to the grant agreement,
                             computer repair                    subarticle F.3, which provides that funds received for one
                             expenses of the                    program may not be used to support or reimburse another
                             ROSS                               program.
                             Neighborhood
                             Networks program
                             coordinator

            Administrative   Housing Choice             8,654   Use of ROSS Family program funds to pay the Housing
                             Voucher Family                     Choice Voucher program coordinator salary is contrary to
                             Self-Sufficiency                   Federal Register, Vol. 70, No. 53, section IV.E.3, which
                             program                            provides that administrative funds may not be used to pay
                             coordinator                        salaries of any kind.
                 Sub-Total                         $215,402

2007 ROSS   Project                Picnic           $ 1,436     Federal Register, Vol. 72, No. 48, section IV.E.7g, provides
Family      coordinator                                         that grant funds may not be used for ineligible activities such
                                                                as purchasing food.

            Training cost     Theme park visit          1,200   Federal Register, Vol. 72, No. 48, section IV.E.7f, provides
                                                                that grant funds may not be used for ineligible activities,
                                                                such as entertainment costs.
                             ROSS
            Subcontracting   Neighborhood               1,677   Use of ROSS Family grant funds to pay administrative
                             Networks program                   expenses of the ROSS Neighborhood Networks program is
                             coordinator                        contrary to the grant agreement, subarticle F.3, which
                             expense related to                 provides that funds budgeted and/or received for one
                             computer repair                    program may not be used to support or reimburse another
                             and upgrading                      program.
                             cameras.
                Sub-Total                              $4,313

                  Total                            $ 219,715




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