Issue Date
October 25, 2010
Audit Report Number
2011-LA-1001
TO: William Vasquez, Director, Los Angeles Office of Community Planning and
Development, 9DD
FROM: Tanya E. Schulze, Regional Inspector General for Audit, Region IX, 9DGA
SUBJECT: The City of Los Angeles Housing Department, Los Angeles, CA, Did Not
Always Effectively Administer Its Homelessness Prevention and Rapid Re-
Housing Program
HIGHLIGHTS
What We Audited and Why
We audited the Homelessness Prevention and Rapid Re-Housing Program (program) at
the City of Los Angeles Housing Department (Department) because it was the second
largest single program grant awarded within California under the American Recovery and
Reinvestment Act of 2009 (Recovery Act). In addition, our audit is part of the U.S.
Department of Housing and Urban Development (HUD), Office of Inspector General’s
(OIG) national mandate to monitor grant activities funded by the Recovery Act. Our
objective was to determine whether the Department was efficiently and effectively
administering the grant funds in compliance with Recovery Act and other applicable
requirements. Specifically, we wanted to determine whether the Department had
adequate policies and procedures in place to ensure that program expenditures were
supported with adequate documentation and subrecipients were monitored to ensure
compliance with all applicable regulations.
What We Found
The Department did not always efficiently and effectively administer the grant funds in
compliance with the Recovery Act and other applicable requirements. It did not ensure
that expenditures were supported with adequate source documentation. Further, its
policies and procedures were not adequate to ensure that its subrecipients complied with
contractual requirements, maintained source documents for program expenditures, and
received adequate monitoring for compliance with Federal requirements.
What We Recommend
We recommend that HUD require the Department to revise its policies and procedures to
ensure that adequate source documentation is reviewed before disbursing program funds.
We also recommend that HUD require the Department to enforce the Homeless Program
services contract between itself and the Los Angeles Homeless Services Authority
(Authority) to ensure that the Authority collects, reviews, and maintains adequate source
documentation from all of its subrecipients, thereby reducing the risk of fraud, waste, and
abuse. Further, we recommend that the Department revise its policies and procedures to
ensure that the day-to-day activities of all subrecipients are monitored during the grant
term to ensure compliance with Homelessness Prevention and Rapid Re-Housing
Program requirements and other applicable Federal 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 provided a draft report to the Department on September 27, 2010, and held an exit
conference with Department officials on October 7, 2010. The Department provided
written comments on October 12, 2010. The Department generally disagreed with our
report recommendations.
The complete text of the auditee’s response, along with our evaluation of that response,
can be found in appendix A of this report.
.
2
TABLE OF CONTENTS
Background and Objective 4
Results of Audit
Finding: The Department Did Not Always Efficiently and Effectively 6
Administer Its Program
Scope and Methodology 11
Internal Controls 13
Appendixes
A. Auditee Comments and OIG’s Evaluation 15
B. Criteria 22
3
BACKGROUND AND OBJECTIVE
The American Recovery and Reinvestment Act
The American Recovery and Reinvestment Act of 2009 (Recovery Act) became Public Law 111-
5 on February 17, 2009. The purpose of the Recovery Act is to (1) preserve and create jobs and
promote economic recovery; (2) assist those most impacted by the recession; (3) provide
investments needed to increase economic efficiency by spurring technological advances in
science and health; (4) invest in transportation, environmental protection, and other infrastructure
that will provide long-term economic benefits; and (5) stabilize State and local government
budgets to minimize and avoid reductions in essential services and counterproductive State and
local tax increases. The Recovery Act established the Homelessness Prevention and Rapid Re-
Housing Program, which is regulated by the U.S. Department of Housing and Urban
Development (HUD) and administered by its Office of Community Planning and Development.
The Homelessness Prevention and Rapid Re-Housing Program
The purpose of the Homelessness Prevention and Rapid Re-Housing Program (program) is to
provide homelessness prevention assistance to households that would otherwise become
homeless, many due to the economic crisis, and to provide assistance to rapidly re-house persons
who are homeless as defined by section 103 of the McKinney-Vento Homeless Assistance Act
(42 U.S.C. (United States Code) 11302). The program provides temporary financial assistance
and housing relocation and stabilization services to individuals and families that are homeless or
would be homeless but for this assistance. Accordingly, eligible program activities are intended
to target the following two populations of persons facing housing instability:
Homelessness prevention activities assist individuals and families that are currently in
housing but are at risk of becoming homeless and needing temporary rent or utility assistance
to prevent them from becoming homeless or assistance to move to another unit.
Rapid re-housing activities assist individuals and families that are experiencing homelessness
(residing in emergency or transitional shelters or on the street) and need temporary assistance
to obtain housing and retain it.
City of Los Angeles Housing Department
The City of Los Angeles’ (City) mission is to advocate safe and livable neighborhoods through
the promotion, development, and preservation of decent, safe, and affordable housing. The City,
a participating jurisdiction, administers the program through the City of Los Angeles’ Housing
Department (Department). The Department entered into a grant agreement with HUD and was
awarded more than $29.4 million in program funds. The Department kept $558,003 in
administrative funds and allocated the remainder to the Los Angeles Homeless Services
Authority (Authority).
4
Los Angeles Homeless Services Authority
The Department contracted with the Authority to administer the program. The Authority is a
joint powers authority established by the County and the City of Los Angeles in 1993 as an
independent agency and is the lead agency in the Los Angeles Continuum of Care. The
Authority coordinates and manages more than $70 million annually in Federal, State, County,
and City funds for programs providing shelter, housing, and services to homeless persons in Los
Angeles City and County. To achieve the objectives of the program, the Authority has
contracted with 13 subrecipients and has allocated program funds in the following manner:
Legal Aid Foundation of Los Angeles1 $10,600,669
Housing Authority of the City of Los Angeles $9,540,603
People Assisting the Homeless2 $2,453,468
Los Angeles Family Housing $1,953,467
Special Services for Groups $1,953,467
Remainder to Authority $2,386,627
Total program funds allocated to the Authority $28,888,301
Audit Objective
The objective of our audit was to determine whether the Department was efficiently and
effectively administering the grant funds in compliance with Recovery Act and other applicable
requirements. Specifically, we wanted to determine whether the Department had adequate
policies and procedures in place to ensure that program funds drawn from HUD’s Line of Credit
Control System were supported with adequate documentation and its subrecipients were
monitored to ensure compliance with all applicable regulations
1
Contracted with four subrecipients
2
Contracted with four subrecipients
5
RESULTS OF AUDIT
Finding: The Department Did Not Always Efficiently and Effectively
Administer Its Program
The Department did not always efficiently and effectively administer its program in compliance
with Recovery Act and other applicable requirements. Specifically, it did not ensure that
program expenditures were supported with adequate accounting documentation. Further, its
policies and procedures were not adequate to ensure that its subrecipients
Complied with contractual requirements,
Maintained adequate accounting source documentation, and
Received adequate monitoring for compliance with Federal requirements.
These conditions occurred because the Department overrelied on the Authority to administer the
program and did not ensure that more than $3 million in reimbursements paid to the Authority
for grant expenditures was adequately supported. In addition, the Department did not conduct
monitoring of its subrecipients for more than 9 months after program inception. Our review of
more than $400,000 expended by the Authority and two subrecipients did not identify any
ineligible expenses. However, the Department’s overreliance on the Authority put more than $3
million in grant funds at unnecessary risk for fraud, waste, and abuse.
The Department Did Not
Ensure That Expenditures
Were Adequately Supported
The Department reimbursed the Authority more than $3 million in program funds before
obtaining and/or reviewing adequate supporting documentation. We reviewed the
Department’s written payment/reimbursement policies and procedures and found that the
procedures did not fully comply with 24 CFR (Code of Federal Regulations) 85.20(b)
(criterion D-F, appendix B) and program requirements (criterion B-C, appendix B). The
regulations state that the financial management systems of grantees and subgrantees must
maintain records which adequately identify the source and application of funds and those
records must be supported by such source documentation as cancelled checks, paid bills,
payrolls, and time and attendance records. The Department’s procedures state that
supporting documentation for administrative and program expenditures will be
maintained at the Authority (criterion H-I, appendix B). We asked the Department to
provide all supporting documentation for payments made to the Authority for the period
October 2009 to May 2010 to determine what documents the Department reviewed
before reimbursing the Authority. The Department provided accounting records such as
general ledger entries, Integrated Disbursement and Information System reports, and
summary sheets from the Authority. However, it was not able to provide source
documents to support the accounting records mentioned above and later payments made
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to the Authority. Department officials stated that they were familiar with the Federal
requirements, but the Department did not collect supporting documentation from the
Authority because the Authority administered the entire program. Department officials
also stated that they relied on the Authority to review all supporting documentation
because they did not have the resources to review every document.
The Department Did Not
Ensure That the Authority
Maintained Adequate
Accounting Documentation
The Department did not ensure that its subrecipient, the Authority, complied with
contractual requirements. The Department entered into a Homeless Program services
contract with the Authority, which placed the responsibility of administering the program
upon the Authority. The contract stipulated that the Department would only reimburse
the Authority after receiving an invoice and supporting documentation. The contract
defined supporting documentation as payrolls, time cards, payment requisitions, rentals,
leases, vouchers, and invoices as shown below.
In addition to the stipulation above, the contract stated, “Contractor maintains records for
every expenditure incurred which includes time cards, requisitions, payment, rentals,
leases, invoices, and any other documents pertinent to expenditures.” Therefore, the
contract was specific in regard to the identity of the contractor and source documentation
requirements.
7
We asked the Authority to provide all supporting documentation for reimbursements for
the period October 2009 to May 2010. The Authority provided us with invoices that
were the same as those reviewed at the Department, plus the supporting documentation
for $387,931 in administrative expenses incurred for program administration. However,
the Authority was not able to provide source documentation for program expenditures
incurred by its subrecipients.
Although the contract clearly stated that the Authority was responsible for maintaining
source documents for all program expenditures incurred, the Authority violated the
contract by not collecting source documents from its 13 subrecipients. Rather, it
collected summary sheets and general ledger detail reports, which it submitted to the
Department for reimbursement of expenditures.
The Department stated that it was unaware that the Authority did not collect the
accounting source documentation as required. The Department was not aware of this
violation because it did not conduct monitoring of its subrecipients, for more than 9
months after program inception and more than $3 million in grants funds were
reimbursed to the Authority. The Department provided a summary of the monitoring it
conducted at the Authority, which showed that the Department was concerned that the
Authority was not collecting “100 percent” source documentation. A Department official
agreed that the risk to Recovery Act funds was high because of the Authority’s failure to
collect, review, and maintain all supporting documentation.
The Department Did Not
Implement Adequate
Subrecipient Monitoring
Procedures
The Department only had draft subrecipient monitoring policies and procedures, so we
reviewed the draft version and found that it was not adequate. The procedures did not
fully comply with 24 CFR 85.40(a) (criterion G, appendix B) and program requirements
(criterion B-C, appendix B). Regulations state, “Grantees are responsible for managing
the day-to-day operations of grant and subgrant activities. Grantees must monitor grant
and subgrant supported activities to assure compliance with applicable Federal
requirements…” Further, program requirements state, “Grantees are responsible for
monitoring all HPRP [program] activities, including activities that are carried out by a
subgrantee…” The Department’s procedures showed that fiscal monitoring included
three elements:
Desk-top review - The Department reviewed, approved, and processed monthly cash
requests from the Authority;
Onsite monitoring of the Authority - The Department reviewed fiscal operations and
systems of the Authority, as well as a sample of subrecipient transactions and the
backup documentation supporting the costs; and
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Fiscal onsite monitoring of the Authority’s subcontractors - The Department reviewed
the subrecipients’ cost allocation plan, internal fiscal controls, personnel costs,
nonpersonnel costs, and financial management systems. In addition, it selected a
sampling of the subrecipients’ billing requests to the Authority along with the backup
documentation supporting each request.
The three elements discussed above were not effective in ensuring that the day-to-day
activities of all subrecipients were monitored for compliance with applicable Federal
regulations and program requirements. Monthly cash requests submitted by the
Authority did not provide information pertaining to the Authority’s subrecipients; they
only included a summary of expenditures along with the Authority’s trial balance, cash
journal, consolidated statement of revenues and expenses, and personnel position reports.
Therefore, the Department’s monitoring procedures were ineffective because the
Authority did not have subrecipient backup documentation for the Department to review.
Further, the Department’s monitoring procedures were also ineffective because the
selection of subrecipients for review was based on the Authority’s risk assessment, rather
than one conducted by the Department. Additionally, the Department’s procedures stated
that it would monitor one subrecipient per quarter. The grant agreement is for the period
August 26, 2009-2012,3 which has 12 quarters. The Authority has 13 subrecipients, but
the Department had only reviewed one as of July 2010, which left 12 subrecipients to
review in 8 quarters. Therefore, if the Department does not revise its monitoring
procedures, not all subrecipients will receive onsite monitoring during the grant term.
The Subrecipients We Visited
Had Adequate Supporting
Documentation
We conducted site visits to three of the Authority’s 13 subrecipients and found that there
was adequate supporting documentation for $59,690 in grant expenditures billed to the
Authority for the period February through April 2010 from each subrecipient.
We conducted our first site visit at People Assisting the Homeless – Weingart Center
Association (Center). We determined that the Center provided services associated with
the rapid rehousing portion of the program, specifically housing relocation and
stabilization services through case management. Therefore, the majority of program
funding was for caseworker salaries. We reviewed the payroll records and found
adequate support for $46,350 in salaries paid. Our second site visit was to Neighborhood
Legal Services, which provides services associated with the homelessness prevention
portion of the program, specifically legal services through case management. We
determined that the majority of program funding was for caseworker salaries. We wanted
to review support for actual assistance payments; therefore, we chose not to review the
support for salaries at Neighborhood Legal Services. Rather, we visited the Housing
Authority of the City of Los Angeles (Housing Authority) to review support for actual
3
Includes only the months of September 2009-October 2012.
9
housing assistance payments. The Housing Authority received referral packages from the
subrecipients that provided rapid re-housing services, called regional coordinating
agencies (agencies). The referral packages included verifications from agencies that a
client was eligible to receive rental and/or utility assistance. The Housing Authority
inspected the habitability of the rental unit selected by the agencies and assessed rent
reasonableness, then issued payments to property owners and/or utility companies. We
reviewed $13,340 in rental and utility assistance payments and found adequate supporting
documentation for the payments.
Conclusion
We attribute the deficiencies discussed above to the Department’s overreliance on the
Authority to administer the program. While we did not identify any ineligible expenses,
for the $447,621 that the Department reimbursed to the Authority and two subrecipients,
the Department’s overreliance on the Authority and lack of adequate monitoring
procedures not only put the $447,621 expended by the Authority and two subrecipients at
risk, but also put the remaining $2.6 million in grant funds at future risk of fraud, waste,
and abuse.
Recommendations
We recommend that the Director of the Los Angeles Office of Community Planning and
Development require the Department to
1A. Revise its policies and procedures to ensure that adequate source documentation
is reviewed before disbursing Recovery Act funds. In addition, the Department
should enforce the Homeless Program services contract to ensure that the
Authority collects, reviews, and maintains adequate source documentation from
all subrecipients, thereby reducing the risk of fraud, waste, and abuse.
1B. Revise its monitoring policies and procedures to ensure that it monitors the day-
to-day activities of all subgrantees during the term of the grant agreement to
ensure that grant- and subgrant-supported activities comply with applicable
Federal requirements.
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SCOPE AND METHODOLOGY
We performed our onsite audit work from June 3 to July 20, 2010, at the offices of the
Department, the Authority, and three subrecipients, all located in Los Angeles. The audit
generally covered the period October 2009 through May 2010. We expanded our audit period as
needed to accomplish our objective. We reviewed the Department and four of its subrecipients
for compliance with applicable laws and HUD regulations. Our methodology included
Conducting site visits and interviews with pertinent personnel at HUD, the Department,
and four Department subrecipients selected at random in a nonstatistical manner;
Reviewing the program grant agreement between HUD and the Department;
Reviewing the contract between the Department and the Authority;
Reviewing accounting policies and procedures, as well as accounting records of the
Department to ensure compliance with Recovery Act regulations;
Reviewing the Department and Authority monitoring policies and procedures;
Reviewing the Department’s organizational charts;
Reviewing the Department’s payment requests totaling more than $3 million for the
period October 2009 to May 2010 and all available supporting documentation;
Reviewing the Authority’s supporting documentation for $387,931 in administrative
expenses, which was 13 percent of the $3 million reimbursed by the Department.
Reviewing two additional subrecipients’ supporting documentation for $59,690 in
program expenditures, which was 2 percent of the $3 million reimbursed by the
Department.
Reviewing applicable laws and regulations, including guidance issued by HUD and
Office of Management and Budget circulars;
Reviewing HUD’s and the Authority’s monitoring reports;
Reviewing the Department’s single audit reports for years 2007-2009; and
Reviewing the Department’s substantial amendment.
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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 evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.
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INTERNAL CONTROLS
Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to
Effectiveness and efficiency of operations,
Reliability of financial reporting, and
Compliance with applicable laws and regulations.
Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls 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 objective:
Policies and procedures for the review and/or retention of source
documentation for program expenditures and
Policies and procedures for the monitoring of subrecipients to ensure
compliance with all applicable regulations.
We assessed the relevant controls identified above.
A deficiency in internal control exists when the design or operation of a control does not
allow management or employees, in the normal course of performing their assigned
functions, the reasonable opportunity to prevent, detect, or correct (1) impairments to
effectiveness or efficiency of operations, (2) misstatements in financial or performance
information, or (3) violations of laws and regulations on a timely basis.
Significant Deficiencies
Based on our review, we believe that the following items are significant deficiencies:
The Department did not have adequate accounting policies and procedures to
ensure that adequate supporting documentation was reviewed before drawing
13
program funds from HUD’s Line of Credit Control System and reimbursing
its subrecipients, and
The Department did not have adequate subrecipient monitoring policies and
procedures to ensure the subrecipients’ compliance with program
requirements.
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APPENDIXES
Appendix A
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
Comment 2
15
Comment 3
Comment 4
Comment 5
* Names redacted for privacy reasons.
16
Comment 7
Comment 6
Comment 8
Comment 7
Comment 5
17
Comment 8
Comment 1
Exhibits Made Available on Request
18
OIG Evaluation of Auditee Comments
Comment 1 The finding includes the review of internal controls, which included the review of
policies and procedures for drawdowns, reimbursements, document collection,
monitoring, and program administration. Therefore, we believe the finding is
accurately written. However, we did change the title of the finding to state "The
Department Did Not Always Efficiently and Effectively Administer Its Program",
to show that the Department administered some areas better than others.
Comment 2 We disagree. The grant agreement was signed on September 2, 2009 which is
program inception. The Department did not conduct monitoring until June 22,
2010, which is 293 days or 10 months rounded. However, we revised the report
to state, "more than 9 months" to more accurately state the length of time.
Comment 3 We agree. We have changed the wording in the report to read, "The Department's
overreliance on the Authority put more than $3 million in grant funds at
unnecessary risk for fraud, waste, and abuse."
Comment 4 We disagree. The Department’s oversight of the Authority consisted of desk
reviews of reimbursement requests which consisted solely of summary reports, as
well as, onsite monitoring which did not occur until 9 months after program
inception and more than $3 million had been expended. In our opinion, this level
of oversight is minimal; therefore, we have revised the statement in the report to
clarify the statement.
Comment 5 We disagree. The 24 CFR 85.20 specifically states, "The financial management
systems of other grantees and subgrantees must meet the following standards:"
24 CFR 85.20 (b) (2) Accounting records. "Grantees and subgrantees
must maintain records which adequately identify the source and
application of funds provided for financially-assisted activities. These
records must contain information pertaining to grant or subgrant awards
and authorizations, obligations, unobligated balances, assets, liabilities,
outlays or expenditures, and income."
24 CFR 85.20 (b) (6) Source documentation. "Accounting records must be
supported by such source documentation as cancelled checks, paid bills,
payrolls, time and attendance records, contract and subgrant award
documents, etc."
The regulation specifically states that grantees (the Department) and subgrantees
(all other subrecipients) must maintain accounting records and that those records
must contain information pertaining to outlays or expenditures [(b)(2)] and be
supported by source documentation [(b)(6)]. Therefore, the Department, as well
as its subrecipients, was required to maintain source documentation such as
19
cancelled checks, paid bills, payrolls, time and attendance records, contract and
subgrant award documents, etc.
Further, we disagree with excluding the terms of the contract between the
Department and the Authority from our evaluation of the program. Since the
Department is the grantee, and it contracted with the Authority to administer the
program, it was important to evaluate the terms and provisions of the contract to
assess how the program was to be administered by the Authority. Our evaluation
of the contract between the Department and the Authority was consistent with 24
CFR 85.20 by requiring adequate source documentation to be maintained at the
Authority.
The Department provided an organizational chart to us which was used during the
audit. The chart shows that the Department has 17 subrecipients. We removed
the apparent duplicates (PATH Vehicular Outreach, St. Joseph Center, and
Gateways Hospital) and recounted the subrecipients, which resulted in a total of
14 subrecipients to the Department and 13 subrecipients to the Authority.
20
Comment 6 We disagree. The statement was under the heading "The Department did not
implement adequate monitoring procedures". Thus, the statement was made in
regard to monitoring policies and procedures. We reviewed the draft subrecipient
monitoring policies and found them to be inadequate because they did not fully
comply with 24 CFR 85.40 (a). The Department's procedures showed fiscal
monitoring included 3 elements and we found all three elements to be ineffective
in ensuring that the day-to-day activities of all subrecipients were monitored to
ensure compliance with federal regulations. However, we removed the reference
to the one subrecipient that had been monitored and revised some of the wording
to clarify that we are discussing policies and procedures, rather than an actual
monitoring session.
Comment 7 We disagree. However, we recounted the agencies shown on the organizational
chart provided to us during our audit, and removed what appeared to be
duplicative agencies (see Comment 5). Our recount showed that the Authority
had 13 subrecipients, therefore we revised the report. The Department's draft
policies and procedures stated that the Department would monitor one
subrecipient per quarter. Therefore, not all subrecipients will receive monitoring
if the Department does not revise its monitoring procedures.
Comment 8 We agree. We have changed the wording in the report to read, "The Department's
overreliance on the Authority put more than $3 million in grant funds at
unnecessary risk for fraud, waste, and abuse." Further, we commend the
Department on its commitment to improve its program administration.
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Appendix B
CRITERIA
A. The Recovery Act became Public Law 111-5 on February 17, 2009. The Recovery Act
establishes the Homelessness Prevention Fund. The Homelessness prevention portion of
the Recovery Act falls under Title XII Transportation, Housing and Urban Development,
and related Agencies.
B. HUD Federal Register Notice FR-5307-N-01 advised the public of the allocation formula
and allocation amounts, the list of grantees, and requirements for the Homelessness
Prevention Fund, hereafter referred to as the “Homelessness Prevention and Rapid Re-
Housing Program (HPRP),” under Title XII of the Recovery Act.
C. HUD Federal Register Notice FR-5307-N-01, Other Federal Requirements, Section VII,
G. Uniform Administrative Requirements states, “All States, Territories, Urban
Counties, and Metropolitan cities receiving funds under HPRP shall be subject to the
requirements of 24 CFR part 85.”
D. Regulations at 24 CFR 85.20(b) state, “The financial management systems of other
grantees and subgrantees must meet the following standards:”
E. Regulations at 24 CFR 85.20(b)(2) state, “Grantees and subgrantees must maintain
records which adequately identify the source and application of funds provided for
financially-assisted activities. These records must contain information pertaining to grant
or subgrant awards and authorizations, obligations, unobligated balances, assets,
liabilities, outlays or expenditures, and income.”
F. Regulations at 24 CFR 85.20(b)(6) state, “Accounting records must be supported by such
source documentation as cancelled checks, paid bills, payrolls, time and attendance
records, contract and subgrant award documents, etc.”
G. Regulations at 24 CFR 85.40(a) state, “Grantees are responsible for managing the day-to-
day operations of grant and subgrant supported activities. Grantees must monitor grant
and subgrant supported activities to assure compliance with applicable Federal
requirements and that performance goals are being achieved. Grantee monitoring must
cover each program, function, or activity.”
H. The Department’s Homelessness Prevention and Rapid Re-Housing Program Policies and
Procedures – HPRP Funds Disbursement states, “Monthly cash requests must include
required back-up documentation, i.e. trial balance and cash balance reports, accounts
payable reports, including aged AP reports, and a payroll register for administration staff,
22
to support the requested payment of the request will be returned to LAHSA [the
Authority].”
I. The subrecipient contract, section 301, Compensation and Method of Payment, section A
4-5 states:
4. Contractor’s reimbursement for expenses incurred in the performance of this
Agreement shall be made only upon acceptance by the City of the Contractor’s
invoice and supporting documentation as identified herein.
5. The Contractor shall maintain records by the line item for every expenditure
incurred directly or indirectly under this Agreement. Expenditure shall be
supported by properly executed documentation which includes, but it is not
limited to, pay rolls, time cards, requisitions for payment, rental, leases, invoices,
vouchers, and any other official documents pertinent to the expenditures. Such
records shall be maintained in a file and made available for periodic review by
authorized representatives of City, Federal, and/or State agencies or other
sources(s) of grants funds awarded to the Contractor. Undocumented
expenditures shall not be paid under this Agreement.
23
The City of Los Angeles Housing Department, Los Angeles, CA, Did Not Always Effectively Administer Its Homelessness Prevention and Rapid Re-Housing Program
Published by the Department of Housing and Urban Development, Office of Inspector General on 2010-10-25.
Below is a raw (and likely hideous) rendition of the original report. (PDF)