oversight

Special Services for Groups, Los Angeles, CA, Approved Homelessness Prevention and Rapid Re-Housing Program Assistance for Unsupported and Ineligible Participants

Published by the Department of Housing and Urban Development, Office of Inspector General on 2011-04-06.

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

                                                                  Issue Date
                                                                           April 6, 2011
                                                                  Audit Report Number
                                                                               2011-LA-1009




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: Special Services for Groups, Los Angeles, CA, Approved Homelessness
         Prevention and Rapid Re-Housing Program Assistance for Unsupported and
         Ineligible Participants

                                    HIGHLIGHTS

 What We Audited and Why

      We audited the Homelessness Prevention and Rapid Re-Housing Program (HPRP) of
      Special Services for Groups (Special Services) based on the results of a separate audit of
      the City of Los Angeles Housing Department (Department). Special Services is a
      subrecipient of the Department’s HPRP. HPRP is part of the American Recovery and
      Reinvestment Act of 2009 (Recovery Act), and auditing Recovery Act programs is one of
      the U.S. Department of Housing and Urban Development (HUD), Office of Inspector
      General’s (OIG) audit priorities. Our overall audit objective was to determine whether
      Special Services administered its HPRP in accordance with the Recovery Act and other
      requirements.

 What We Found


      Special Services did not always administer its HPRP in accordance with the Recovery
      Act and other requirements. We reviewed 30 participant files and determined that
      Special Services approved HPRP assistance for an ineligible participant and 25
     participants whose eligibility was not supported. As a result, we questioned the use of
     $53,931 in HPRP assistance provided to these participants.

What We Recommend


     We recommend that the Director of the Los Angeles Office of Community Planning and
     Development require Special Services to (1) reimburse its HPRP $2,300 from non-
     Federal funds for an ineligible participant whose income exceeded HUD requirements;
     (2) provide supporting documentation for 25 participants lacking adequate documentation
     or reimburse its HPRP $51,631 from non-Federal funds; and (3) establish and implement
     sufficient HPRP eligibility and documentation policies and procedures for income
     determinations, homelessness, financial resources, support networks, participant
     recertification, and subsequent housing options.

     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 Special Services and the Department on March 08, 2011,
     and held an exit conference with Special Services and Department officials on March 17,
     2011. Special Services and the Department provided written comments on March 18,
     2011. Special Services generally agreed it needed to improve its policies and procedures,
     but disagreed that the program participants’ eligibility was not adequately documented.

     The complete text of the auditee’s response, along with our evaluation of that response,
     can be found in appendix B of this report. The auditee also provided a binder with
     additional documentation related to the eligibility of the participants we questioned. We
     did not include this in the report because it was too voluminous; however, it is available
     upon request.




                                              2
                            TABLE OF CONTENTS

Background and Objective                                                            4

Results of Audit
Finding: Special Services Approved HPRP Assistance for One Ineligible Participant   6
         and 25 Participants Whose Eligibility Was Not Supported

Scope and Methodology                                                               11

Internal Controls                                                                   13

Appendixes
   A.   Schedule of Questioned Costs                                                14
   B.   Auditee Comments and OIG’s Evaluation                                       15
   C.   Criteria                                                                    25
   D.   Table of Participant Files Reviewed                                         29




                                            3
                         BACKGROUND AND OBJECTIVES

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 Recovery Act established the Homelessness Prevention and Rapid
Re-Housing Program (HPRP), 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 HPRP 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 rehouse persons who are homeless as defined by Section 103 of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. (United States Code) 11302). HPRP 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.

Special Services for Groups

Special Services for Groups (Special Services) is a nonprofit organization administering HPRP, a
program which provides short-term housing assistance to the homeless and at-risk households.
Special Services provides intensive case management and one-time financial assistance for
rental, security, and utility deposits for the homeless and those at risk of homelessness in Los
Angeles, CA. The City of Los Angeles Housing Department (Department) received a $29.4
million HPRP grant from HUD and contracted with the Los Angeles Homeless Service
Authority (Authority) to administer its HPRP as the lead agency. The Department allocated the
Authority more than $28.8 million in HPRP funds to manage the program. Special Services is 1
of 13 subrecipients contracted by the Authority to help administer its HPRP. The Authority
allocated $1.9 million to Special Services to administer a portion of its HPRP. In addition, the
Department allocated $9.5 million to the Housing Authority of the City of Los Angeles. The
HPRP funds we reviewed were part of this allocation.

Audit Objective

Our overall audit objective was to determine whether Special Services administered its HPRP in
accordance with the Recovery Act and other requirements. The focus of our review was to
determine whether Special Services followed eligibility and documentation requirements when it
approved participants for HPRP assistance. The audit originated based on the results of a
separate audit of the Department.1 Our audit of the Department found that its policies and




1
    Audit Report 2011-LA-1001, Los Angeles Housing Department (October 25, 2010)



                                                      4
procedures were not adequate to ensure that its subrecipients fully complied with HPRP
requirements with regard to assuring that adequate documentation was maintained. We
concluded that two audits of Department subrecipients were warranted due to concerns about
expenditure eligibility. This is the first of the two audits.




                                              5
                                           RESULTS OF AUDIT

Finding: Special Services Approved HPRP Assistance for One
         Ineligible Participant and 25 Participants Whose Eligibility
         Was Not Fully Supported
Special Services approved HPRP assistance for ineligible participants and participants whose
eligibility was not supported. This condition occurred because Special Services did not have
adequate written policies and procedures in place to ensure compliance with HPRP requirements.
As a result, it approved $53,931 in financial2 assistance for one ineligible participant ($2,300)
and 25 other participants ($51,361) for whom eligibility was not fully supported. If Special
Services cannot provide support for the unsupported participants, these funds were not available
to other eligible participants, and Special Services did not fully maximize the effectiveness of the
program.


    One Participant Was Not
    Eligible for the Program


           We identified one participant (#1592721) that exceeded HUD’s income requirements for
           HPRP eligibility. This participant’s household income of $38,480 exceeded 50 percent
           of the county’s area median income of $35,700 for a three-member household. Special
           Services determined that the participant was income eligible by incorrectly multiplying
           the average biweekly income by 2 and multiplying that amount by 12 months. Since the
           participant was paid on a biweekly basis, the proper way to calculate the participant’s
           income would have been to multiply the participant’s average biweekly income by 26
           pay periods. Due to this miscalculation, Special Services approved the participant for
           HPRP assistance when the participant’s annual income exceeded HUD’s requirements.

           The participant’s file also contained two other instances of noncompliance. First, Special
           Services did not sufficiently document participant homelessness. It did not include
           documentation in the file to show that the participant resided in an emergency homeless
           shelter or place not meant for human habitation immediately before living in transitional
           housing. It also did not include sufficient documentation to support that the participant
           lacked the financial resources to obtain housing or remain in existing housing.
           Specifically, it did not include a review of the participant’s bank accounts or document
           that the participant did not have a bank account.




2
    The assistance included rental, security deposits, and utilities.


                                                               6
    Special Services’ Files Did Not
    Adequately Support Participant
    Eligibility

         Special Services approved HPRP assistance for 25 of 30 participants reviewed whose
         HPRP participant eligibility was not adequately supported3. Specifically, 25 did not
         include proper documentation of the participant’s financial resources, 4 did not include
         proper documentation of the participants’ homelessness or risk of homelessness, 1 did not
         document the participant’s lack of support networks, and 1 did not document the
         participant’s lack of other subsequent housing options. Further, Special Services failed to
         recertify the eligibility of two participants that received medium-term rental assistance
         lasting longer than 3 months. It also did not make participant income determinations in
         accordance with HPRP requirements for 18 of 30 files reviewed. The specific
         deficiencies identified for each of the 25 participants are shown in appendix D. Some
         examples are discussed below.

         Case 1 (Participant #1596226)

         Special Services did not determine participant income in accordance with HPRP
         requirements for participant #1596226. Based on documentation in the file, the
         participant worked an average of 14.3 hours every 2 weeks and had a salary rate of $8.30,
         resulting in wages of $118.69 each biweekly pay period. As a result, the participant’s
         annual income from employment over 26 biweekly pay periods was $3,086. The
         participant also received $786 in monthly Social Security benefits for a total of $9,432
         per year. In total, we calculated the participant’s annualized income as $12,518 per year.
         Special Services determined that the participant’s annual income was $7,000. We were
         unable to determine how it arrived at this income amount. In this instance, the improper
         income determination did not affect participant eligibility.

         The participant file also contained inconsistent and insufficient documentation of
         homelessness. For example, a self-declaration of homeless status form indicated that the
         participant was homeless and living on the streets, while the self-sufficiency matrix form
         indicated that the participant was living in transitional, temporary, or substandard housing
         and/or the participant’s current rent/mortgage payment was unaffordable. Both of these
         documents were dated March 4, 2010. The caseworker then attempted to obtain third-
         party verification of temporary housing by requesting a lease agreement and letter from
         the family providing the housing. The caseworker was unable to obtain this
         documentation, and the file did not contain other documentation to demonstrate that the
         participant was living in temporary housing. It was unclear whether the participant was
         living on the streets, in transitional housing, or in temporary housing immediately before
         receiving HPRP assistance. However, clearly, Special Services failed to establish the
         participant’s status as homeless or at risk of homelessness immediately before providing
         HPRP assistance.


3
 The deficiencies noted are not independent of one another as one file may have contained more than one
deficiency.


                                                        7
Special Services also did not fully demonstrate that the participant lacked financial
resources to obtain other appropriate subsequent housing or remain in her existing
housing. Specifically, the file did not include a review of the participant’s bank accounts
or document that the participant did not have a bank account. As a result of the
deficiencies described above, $800 in HPRP assistance provided to the participant was
not adequately supported.

Case 2 (Participant #1639919)

Special Services did not include sufficient supporting documentation of participant
#1639919’s income. The case manager’s notes indicated the participant received child
support payments. However, the file only contained unemployment compensation
documents and did not include documentation of child support or that the child support
payments had stopped. Without the child support payment information, we were unable
to determine whether the participant was income eligible for HPRP assistance.

We also noted that this participant received Section 8 assistance and had fallen behind in
her portion of the rent. To be eligible for HPRP assistance, eviction must be imminent.
Although the participant was behind on rent, the file did not include the participant’s
lease, and it did not include an eviction letter from the landlord. For the participant to be
eligible for HPRP assistance, the caseworker must obtain an eviction notice and lease
from the participant to show that the participant is being evicted. The file contained a
letter from the landlord stating that the tenant was behind in her payments and should call
the owner to make arrangements to get current. There was no indication that eviction
was imminent.

Special Services also did not properly document the participant’s lack of financial
resources to obtain other appropriate subsequent housing or remain in her existing
housing. The file did not include a review of the participant’s bank accounts or document
that the participant did not have a bank account. Although Special Services did not
obtain sufficient documentation to support the participant’s eligibility for the program, it
approved $1,000 in HPRP assistance for this participant.

Case 3 (Participant #1589235)

Special Services did not properly calculate participant #1589235’s annual income. It
computed the participant’s annual income using 12 monthly pay periods instead of 26.
Although Special Services miscalculated the participant’s income, it did not affect the
participant’s income eligibility for HPRP.

Special Services also failed to properly document the participant’s lack of financial
resources to obtain other appropriate subsequent housing or remain in his existing
housing. The file did not include a review of the participant’s bank accounts or document
that the participant did not have a bank account.




                                          8
     The participant received security deposit assistance and a total of 6 months of HPRP
     rental assistance. HPRP requires recertification of eligibility at least once every 3 months
     for all program participants receiving medium-term rental assistance. Although this
     participant was receiving medium-term rental assistance, Special Services did not
     conduct a recertification of eligibility for this participant. As a result, it approved $8,075
     in HPRP assistance to a participant whose eligibility was not supported.

Conclusion



     Special Services approved $53,931 in assistance for an ineligible participant and 26
     participants for whom eligibility was not adequately supported. We attribute the
     deficiencies to Special Services’ failure to develop and implement sufficient written
     policies, procedures, and controls. If Special Services cannot provide support for the
     unsupported participants, these funds could have been made available to other eligible
     participants and helped maximize the effectiveness of the program.

Recommendations

     We recommend that the Director of the HUD Los Angeles Office of Community
     Planning and Development require Special Services to

     1A.     Reimburse $2,300 to HPRP from non-Federal funds for the one ineligible
             participant whose income exceeded HUD requirements.

     1B.     Provide supporting documentation for the eligibility of 25 HPRP participants
             listed as unsupported in appendix D or reimburse HPRP $51,631 for participants
             lacking adequate documentation from non-Federal funds and determine and
             reimburse any amounts that have been spent since our review for these
             participants.

     1C.     Establish and implement policies, procedures, and controls to ensure that it
             sufficiently documents that HPRP applicants lack financial resources to obtain
             immediate housing or remain in their existing housing, including obtaining bank
             statements or documenting that the participant does not have a bank account.

     1D.     Establish and implement policies, procedures, and controls to ensure that it
             sufficiently documents homelessness or risk of homelessness of HPRP applicants.

     1E.     Implement procedures and controls to ensure that it sufficiently documents that
             HPRP applicants do not have other subsequent housing options.




                                               9
1F.   Implement procedures and controls to ensure that it recertifies participants that
      receive more than 3 months of medium-term rental assistance.

1G.   Establish and implement sufficient policies, procedures, and controls to ensure
      that it determines household income in accordance with HPRP requirements.




                                       10
                        SCOPE AND METHODOLOGY

We performed our onsite audit work from October 2010 to February 2011 at Special Services’
facility located in Los Angeles, CA. The audit generally covered the period October 1, 2009, to
September 30, 2010. We expanded our audit period as needed to accomplish our objective. Our
methodology included

       Conducting interviews with pertinent personnel at Special Services, including the
       supervisor, case managers, employees, and accounting staff officials;

       Reviewing the contract between Special Services and the Authority;

       Reviewing accounting policies and procedures as well as accounting records of Special
       Services to ensure compliance with HPRP regulations;

       Reviewing supporting documentation for invoices submitted to the Authority for
       reimbursement of HPRP expenses to determine their adequacy and eligibility;

       Reviewing Special Services’ written HPRP policies and procedures to determine whether
       they complied with HPRP regulations;

       Reviewing the programmatic monitoring reports of Special Services provided by the
       Authority;

       Reviewing Special Services’ flowcharts;

       Reviewing Special Services’ audited financial statements for fiscal years 2008 and 2009;
       and

       Reviewing applicable Recovery Act regulations, HPRP laws, the Code of Federal
       Regulations, and HPRP guidance.

We reviewed 30 participant files using two sampling methodologies. We initially selected 10
files based on a nonstatistical sampling methodology to determine whether we could target
specific participant files for review. Based on these 10 files, we concluded that we could not
target specific files for review. As a result, we used a random number generator to select an
additional 20 files for review. In both samples, our universe was limited to 133 participants who
were approved by Special Services to receive HPRP financial assistance (rental, security deposit,
and utility payments). The 133 participants in our universe received $249,131 in HPRP financial
assistance.

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



                                               11
objective. We believe that evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objective.




                                               12
                              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:

           Controls to ensure that subgrantees follow applicable laws and regulations with respect
           to the eligibility of HPRP participants and activities.

       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 informantion, or (3) violations of laws and regulations on a timely
       basis.

 Significant Deficiency


       Based on our review, we believe that the following item is a significant deficiency:

           Special Services did not have adequate policies and procedures in place to ensure
           compliance with HPRP requirements (see finding).




                                                13
                                   APPENDIXES

Appendix A

                 SCHEDULE OF QUESTIONED COSTS

                   Recommendation            Ineligible 1/    Unsupported
                          number                                       2/
                                 1A               $2,300
                                 1B                               $51,631


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. These costs consist of HPRP funds used to assist a participant
     that was ineligible because she exceeded the income limits.

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. These costs consist of HPRP funds used to
     assist participants whose eligibility was not supported by adequate supporting
     documentation.




                                             14
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION


Ref to OIG Evaluation   Auditee Comments




Comment 1




Comment 2




                         15
Comment 3




Comment 4




            16
Comment 5




Comment 6




Comment 4




Comment 6




            17
Comment 4




Comment 7

Comment 9



Comment 3



Comment 8




            18
Comment 7




Comment 10



Comment 11




Comment 10




             19
Comment 12




Comment 13




             20
                         OIG Evaluation of Auditee Comments

Comment 1   We disagree that Special Services administered the program in accordance with
            the Recovery Act and other requirements. The additional documentation
            provided with its response supported the eligibility for 1 of the 26 HPRP
            participants in question.

Comment 2   We recognize that Special Services has taken steps to remedy weaknesses
            identified during our audit. As discussed during the exit conference, the audit
            resolution process will provide Special Services ample opportunity to present
            corrective actions for each recommendation to HUD.

Comment 3   We evaluated Special Services’ revised income calculations for the 18
            participants. Of the 18 participants, Special Services did not provide sufficient
            income documentation for 2 of the participant files. Participant file #1639919 is
            missing child support income documentation and participant file #1592964 does
            not have sufficient payroll documentation to determine the frequency of the
            participant’s income.

Comment 4   Special Services provided documentation in appendix B of its response regarding
            the financial resources of the 26 participants identified in the audit report.
            However, most of these documents were not in the participant files at the time of
            review, nor were they provided to OIG when we informed Special Services of the
            missing documentation during our field work. Further, we found that the
            documentation provided was not sufficient to show that Special Services assessed
            the participants’ bank account balances.

            We disagree with Special Services’ position that its participant files contained
            sufficient documentation to substantiate the participants’ lack of financial
            resources. We further disagree that HUD’s guidance does not require a review of
            the participant’s bank account(s) or documenting the lack of bank account(s).
            The HPRP Eligibility and Documentation Guidance specifically states
            “assessment form or other documentation must include review of current account
            balances in checking and savings accounts held by the applicant household.”
            Account balances cannot be reviewed without the bank statements. Therefore,
            bank statements are required. The sufficiency of the financial resources
            documentation provided by Special Services can be addressed during the audit
            resolution process with HUD.

Comment 5   We agree and made the requested revision.

Comment 6   We disagree with Special Services’ request to remove the last sentence of the
            finding. If Special Services cannot provide adequate documentation for the
            eligibility of the 25 unsupported participants, these funds must be made available
            to other eligible participants in order to maximize the effectiveness of the
            program.



                                            21
Comment 7   We disagree that the documentation provided cleared the three instances of
            undocumented homelessness or risk of homelessness. Details of the specific
            cases are described below.

            Participant #1596226 – Special Services provided a revised version of its “Self-
            Declaration of Housing Status” form for this file. The form was revised to correct
            the housing status and initialed by one of its employees on February 23, 2011.
            Since the original documentation was signed by the participant and case manager
            on March 4, 2010 (after intake), this was insufficient documentation to resolve the
            deficiency. In addition, the file contained numerous inconsistencies with its
            homelessness or risk of homelessness documentation. For example, Special
            Services’ self-sufficiency matrix indicated that the participant was living in
            transitional or temporary housing, while the self declaration of homelessness form
            indicated that the participant was homeless and living on the streets. Both forms
            are dated March 4, 2010. Other documents in the file showed that the participant
            was living with family on February, 2, 2010 and that the case manager attempted
            third party verification of a lease agreement for a host family on May 10, 2010.
            This gave the appearance that the participant may have lived with family and did
            not live on the streets or in transitional housing at the time of entry into the HPRP.
            Regardless of the participant’s specific housing situation at the time of program
            entry, the participant file did not include sufficient documentation of the
            household’s homelessness or risk of homelessness. Special Services will need to
            provide appropriate supporting documentation during the audit resolution process
            with HUD and establish and implement policies, procedures, and controls to
            ensure that it sufficiently documents homelessness or risk of homelessness of
            HPRP applicants.

            Participant #1588371 – Special Services’ “Self-Declaration of Housing Status”
            form stated that the participant was going to be evicted within 15 days from
            December 3, 2009. However, a copy of an eviction notice from the landlord was
            not included in the file. Special Services’ “Prescreening Tool” form stated that
            the landlord was not accepting Section 8 vouchers and would be evicted by
            December 19, 2009. However, there was no support in the file to show that the
            landlord was no longer accepting Section 8 vouchers. Special Services provided
            case notes stating that the participant was staying with friends but its response did
            not include an eviction notice or a lease agreement from the host family.

            Participant #1639919 – The participant file indicated that the participant was a
            Section 8 tenant who was 6 months behind on rent as of February 9, 2010.
            However, the file did not contain any other documentation to show that the
            participant would be evicted. There were also inconsistencies in the file regarding
            the participant’s homelessness or risk of homelessness. For example, one of the
            documents indicated that the participant was living with friends, while another
            indicated that the participant was being evicted from a Section 8 unit. Special
            Services provided a “Self-Declaration of Housing Status” form with its response
            on March 18, 2011. This form was not in the participant file at the time of our



                                             22
             review. Due to the inconsistencies of the participant’s housing status in the file,
             OIG cannot conclude that this documentation is sufficient to support the
             participant’s eligibility. Special Services can work with HUD to clear this issue
             during the audit resolution process.

Comment 8    We disagree that the documentation provided cleared the deficiencies related to
             lack of support networks and other subsequent housing options. Special Services
             did not provide sufficient documentation to demonstrate that participant
             #1601214 lacked support networks and other subsequent housing options. The
             Special Services’ form titled “HUD MINIMUM ELIGIBILTY CRITERIA
             PRESCREENING TOOL” was a standard form used in all of Special Services’
             files that was signed and dated by the case manager to show that the participant
             lacked support networks and other subsequent housing options at the time of
             program entry. Participant file #1601214 did not contain this form. Special
             Services’ provided the “HPRP Self-Sufficiency Matrix” as support in its response.
             However, the form for participant #1601214 indicated that the participant had
             “Strong support from family or friends; household members support other’s
             efforts”. Based on this documentation, it appeared that the participant had support
             from family or friends. Therefore, Special Services did not support that the
             participant lacked support networks needed to obtain housing.

             Special Services also provided “Client Progress Notes” for participant #1601214
             with its response which stated “At this time the participant lacks the financial
             resources and support networks needed to obtain appropriate housing. As well
             the participant has not (sic) subsequent housing options”. A similar document
             was provided for each of the 25 unsupported participant files identified during our
             review. However, the case note for this specific participant was the only one that
             included the “no subsequent housing options” portion in order to address this
             specific file deficiency. This document was not in the file at the time of our
             review. Further, when OIG asked the case managers during the audit for support
             for the deficiencies identified during each of our file reviews, the case managers
             indicated that all documentation was maintained in the participant files. This
             gave the appearance that the case notes were not completed at the time the
             participant was approved for assistance. Therefore, we did not accept this
             documentation. Special Services can work with HUD during the audit resolution
             process to resolve these deficiencies.

Comment 9    Special Services did not provide sufficient supporting documentation of financial
             resources and support networks. Please see comments 4 and 13.

Comment 10 We acknowledge that Special Services is implementing new policies, procedures,
           and controls. The new policies and procedures can be provided to HUD during
           the audit resolution process.




                                              23
Comment 11 We reviewed the recertification documentation for the two participants in
           question and it appeared that Special Services did not conduct a complete
           recertification of the participants’ eligibility. Special Services can address the
           recertification deficiencies with HUD during the audit resolution process.

Comment 12 We agree and have removed all deficiencies related to this participant from the
           report.

Comment 13 We acknowledge Special Services intentions to further improve its program and
           agree that improved policies, procedures, and controls should help to ensure that
           Special Services follows all HPRP requirements. We disagree with Special
           Services’ position that its participant files contained sufficient documentation to
           substantiate the participant’s lack of financial resources. Special Services will
           have the opportunity to address the recommendations and all deficiencies
           identified in the finding during the audit resolution process with HUD. Please
           also see comment 2 and 4.




                                               24
Appendix C

                                        CRITERIA
A. The Recovery Act became Public Law 11-5 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-5301-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. HUD Federal Register Notice FR-5307-N-01, Requirements for Funding, Section IV, states,

“A. Eligible Activities
1. Financial Assistance
    a. Rental Assistance
    (1) After 3 months, if program participants receiving short-term rental assistance need
    additional financial assistance to remain housed, they must be evaluated for eligibility to
    receive up to 15 additional months of medium-term rental assistance, for a total of 18
    months. HUD requires grantees and subgrantees to certify eligibility at least once every 3
    months for all program participants receiving medium-term rental assistance.”

E. HUD Federal Register Notice FR-5307-N-01, Post-Award Process Requirements, Section V,
states,

“F. Responsibility for Grant Administration
Grantees are responsible for ensuring that HPRP amounts are administered in accordance with
the requirements of this Notice and other applicable laws. Each grantee is responsible for
ensuring that its subgrantees carry out the HPRP eligible activities in compliance with all
applicable requirements.”

F. HUD Federal Register Notice FR-5307-N-01, Post-Award Process Requirements, Section V,
states,

“I. Monitoring




                                                25
Grantees are responsible for monitoring all HPRP activities, including activities that are carried
out by a subgrantee, to ensure that the program requirements established by this Notice and any
subsequent guidance are met.”

G. HPRP Eligibility Determination and Documentation Guidance, revised March 17, 2010,
states,

“Other Subsequent Housing Options:
   Assess with applicant all other appropriate (i.e., safe, affordable, available) subsequent
   housing options.
   Verify that no other appropriate subsequent housing options are available.
   Assessment Form or Other Documentation Must:
       Be documented by HPRP case manager or other authorized staff.
       Include assessment summary or other statement indicating that applicant has no other
       appropriate housing options.
       Be signed and dated by HPRP case manager or other authorized HPRP staff.
   Include assessment indicating no other subsequent housing options in participant case file.”

H. HPRP Eligibility Determination and Documentation Guidance, revised March 17, 2010,
states,

“Financial Resources and Support Networks:
   Assess with applicant all financial resources AND support networks (i.e., friends, family or
   other personal sources of financial or material support).
   Verify that applicant lacks financial resources and support networks to obtain other
   appropriate subsequent housing or remain in their housing.
   Assessment Form or Other Documentation Must:
       Be documented by HPRP case manager or other authorized staff.
       Include review of current account balances in checking and savings accounts held by
       applicant household.
       Include assessment summary or other statement indicating that applicant lacks financial
       resources and support networks to obtain other appropriate subsequent housing or remain
       in their housing.
       Be signed and dated by HPRP case manager or other authorized HPRP staff.
 Include assessment indicating insufficient financial resources and support networks in
   participant case file.”

I. HPRP Eligibility Determination and Documentation Guidance, Revised March 17, 2010,
states,

“Income Definition Income is all money that goes to, or on behalf of, the head of household or
spouse (even if temporarily absent) or to any other household member. Annual income includes
the current gross income of all adult household members and unearned income attributable to a
minor (e.g. child support, TANF payments, SSI payment, and other benefits paid on behalf of a
minor).



                                                26
Income Calculation After determining and documenting specific sources of income that must be
included in the income calculation for each household, grantees then calculate the household’s
annual income.

Annualizing Wages and Periodic Payments
When calculating income based on hourly, weekly or monthly payment information, add the
gross amount earned in each payment period that is documented and divide by the number of
payment periods. This provides an average wage per payment period. Depending on pay periods
used by the employer or the schedule of periodic payments, the following calculations convert
the average wage into annual income:

   Hourly Wage, multiplied by hours worked per week, multiplied by 52 weeks.
   Weekly Wage multiplied by 52 weeks.
   Bi-Weekly (every other week) Wage multiplied by 26, bi-weekly periods.
   Semi-Monthly Wage (twice a month) multiplied by 24, semi-monthly periods.
   Monthly Wage multiplied by 12 months.

Documentation of a household’s annual income relative to Area Median Income and indicating
HPRP eligibility (50% of AMI or less) must be maintained in the participant file.”

J. HPRP Eligibility Determination and Documentation Guidance, Revised March 17, 2010,
states,

“Housing Status Documentation

1. Rapid Re-Housing Documentation:
   a. Sleeping in an Emergency Shelter – Written Homeless Certification
          Obtain signed and dated original Homeless Certification from shelter provider. A
          Homeless Certification is a standardized form that, at a minimum, contains the
          following:
              Name of the shelter program
              Statement verifying current shelter occupancy of HPRP applicant
              Signed and dated by authorized shelter provider representative
          Include Homeless Certification in HPRP participant file.
   b. Sleeping in an Emergency Shelter – Emergency shelter provider letter
          Obtain letter from emergency shelter provider.
          Letter must:
              Be on shelter provider letterhead
              Identify shelter program
              Include statement verifying current shelter occupancy of HPRP applicant,
              including most recent entry and exit dates.
              Be signed and dated by shelter provider.
          Include emergency shelter provider letter in participant file.
   c. Place Not Meant for Human Habitation – Written homeless certification




                                              27
          Obtain signed and dated original Homeless Certification from homeless street
          outreach provider (may include other third-party referral source, such as a local law
          enforcement agency). A Homeless Certification is a standardized form that, at a
          minimum, contains the following:
              Name of the outreach program
              Statement verifying current living situation of HPRP applicant
              Signed and dated by authorized outreach provider representative
          Include Homeless Certification in HPRP participant file.
   d. Place Not Meant for Human Habitation – Self-declaration
          Obtain signed and dated original self-declaration from applicant.
          HPRP worker must document attempt to obtain written third party verification and
          sign self-declaration form.
          Include self-declaration in participant file.
   e. Transitional Housing – Written homeless certification
          Obtain signed and dated original Homeless Certification from transitional housing
          provider. A Homeless Certification is a standardized form that, at a minimum,
          contains the following:
              Name of the Transitional housing program
              Statement verifying current transitional housing occupancy of HPRP applicant.
              Statement indicating the HPRP applicant is graduating from or timing out of the
              transitional housing program.
              Statement verifying the HPRP applicant was residing in emergency shelter or
              place not meant for human habitation immediately prior to transitional housing
              admission.
              Signed and dated by authorized transitional housing provider representative.
          Include Homeless Certification in HPRP participant file.

2. Homelessness Prevention Eligibility Documentation
   a. Other Housing Occupied by Applicant without payment rent (including housing shared
      with friends or family)
         Obtain copy of eviction letter (typed or handwritten) and copy of lease or other
         written occupancy agreement.
             Eviction Letter must:
             Identify the HPRP applicant and unit where HPRP applicant is residing.
             Indicate that applicant must leave owner’s/renter’s housing.
             Be signed and dated by the host owner/renter.
         Include eviction letter and copy of lease in participant file.
   b. Other Housing Occupied by Applicant without paying rent (including housing shared
      with friends or family)
         Obtain signed and dated original self-declaration from applicant.
         HPRP worker must document attempt to obtain third party documentation and sign
         self-declaration form.
         Include self-declaration in participant file.”




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Appendix D

                                    TABLE OF PARTICIPANT FILES REVIEWED



                                    Table of participant files reviewed
                                                                          Subsequent              Homeless/risk    Recert. for
   Participant                                Financial      Income        housing     Support         of         medium-term
        ID       Unsupported    Ineligible   resources    determination     options    networks   homelessness     rental asst.
    1631679           $ 2,158                     X             X
    1631266           $ 1,105                     X
    1636791                                                    X
            1
   1640904
    1552569           $ 2,950                    X             X
    1619614           $ 1,950                    X             X
    1639919           $ 1,000                    X             X                                       X
    1653293           $ 2,280                                  X
    1650781           $ 1,400                    X             X
    1641811           $ 4,750                    X                                                                     X
    1592538           $ 1,950                    X             X
    1589235           $ 8,075                    X             X                                                       X
    1588374           $ 2,100                    X
    1601214           $ 1,400                    X             X              X           X
    1567726           $ 1,353                    X             X
    1592721                        $ 2,300       X             X                                       X
    1595217           $ 1,450                    X
    1599238                                                    X
    1530421             $ 400                    X
    1601950
    1607310           $ 2,769                    X



                                                                    29
                                    Table of participant files reviewed
                                                                                 Subsequent                  Homeless/risk    Recert. for
Participant                                     Financial        Income           housing         Support         of         medium-term
     ID       Unsupported       Ineligible     resources      determination        options        networks   homelessness     rental asst.
 1606858           $ 1,100                          X
 1606123           $ 1,550                          X                X
 1588371           $ 1,800                          X                                                             X
 1595276             $ 500                          X                X
 1596226             $ 800                          X                X                                            X
 1589672           $ 1,793                          X                X
 1599862           $ 2,198                          X
 1588619             $ 750                          X
 1592064           $ 4,050                          X                X

    Totals       $ 51,631         $ 2,300          25                18               1               1           4               2

1
 Special Services did not approve assistance for this participant. Therefore, we are not questioning any
costs or deficiencies related to this file.




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