Issue Date
June 13, 2011
Audit Report Number
2011-SE-1006
TO: Douglas P. Carlson, Director, Office of Community Planning
and Development, 0ED
//signed//
FROM: Ronald J. Hosking, Regional Inspector General for Audit, 0AGA
SUBJECT: Mid-Willamette Valley Community Action Agency Did Not Always Follow
Recovery Act Homelessness Prevention and Rapid Re-Housing Program
Requirements
HIGHLIGHTS
What We Audited and Why
We audited Mid-Willamette Valley Community Action Agency (Agency) because
it received more than $1.4 million in Homelessness Prevention and Rapid Re-
Housing Program (HPRP) funding under the American Recovery and
Reinvestment Act of 2009 (Recovery Act). The Agency received the second
largest amount of HPRP funds in Oregon as a subgrantee of both the State of
Oregon and the City of Salem. Our objective was to determine whether the
Agency disbursed HPRP funds and reported data in accordance with Recovery
Act requirements.
What We Found
The Agency paid for HPRP services without adequate supporting documentation
for participant eligibility and expenses. Specifically, the Agency lacked
documentation to support the eligibility of 10 participants, paid expenses for 10
participants without adequate documentation, had 6 participants presign blank
billing support forms, and did not ensure that 15 participant files contained staff
certifications of eligibility when a change in case managers occurred.
Also, the Agency did not always enter participant data accurately into the HPRP
reporting system.
What We Recommend
We recommend that the Agency either provide supporting documentation for
participant eligibility and expenditures or reimburse its program accounts $64,608
and reimburse any ineligible amounts that have been spent since our review for
these participants. We also recommend that the Agency develop and implement a
quality control plan that includes procedures to ensure that it verifies and
documents the eligibility of HPRP participants and expenditures.
In addition, we recommend that the Agency correct discrepancies in the HPRP
reporting system and implement procedures to ensure that case managers enter
accurate participant data.
The Portland Office of Community Planning and Development provided a
management decision on June 9, 2011 for all of the recommendations. It
determined that the Agency corrected all of the issues identified after receiving
the draft report and believes the recommendations should be closed. We concur
and will close all recommendations as we issue the report.
Auditee’s Response
We provided the discussion draft of the audit report to the Agency on May 5,
2011, and requested its comments by May 20, 2011. The Agency provided its
written comments on May 19, 2011. It generally agreed with the factual elements
of the findings and proceeded to implement the recommendations prior to report
issuance.
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 Objective 4
Results of Audit
Finding 1: The Agency Paid for Unsupported Participants and Expenses 5
Finding 2: The HPRP Reporting System Contained Inaccuracies 9
Scope and Methodology 11
Internal Controls 12
Appendixes
A. Schedule of Questioned Costs 14
B. Auditee Comments and OIG’s Evaluation 15
C. Criteria 28
D. Unsupported Participant Expenditures 30
3
BACKGROUND AND OBJECTIVE
The Homelessness Prevention and Rapid Re-Housing Program (HPRP) is a program under the
U.S. Department of Housing and Urban Development’s (HUD) Office of Community Planning
and Development. It was funded under the American Recovery and Reinvestment Act of 2009
(Recovery Act) on February 17, 2009. 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).
Federal Register Notice FR-5307-N-01 (HPRP Notice) advised the public of the HPRP
requirements. It states that funds must be used to provide rental, utility, moving, and/or motel
and hotel assistance for eligible participants; housing relocation and stabilization services; data
collection and evaluation; and administrative costs. These funds are subject to reporting
requirements established by the Recovery Act.
Congress designated $1.5 billion for communities to provide temporary financial assistance and
services to persons who are homeless or would be homeless but for HPRP assistance. HUD used
its Emergency Shelter Grant formula to allocate HPRP funds to U.S. territories, metropolitan
cities, urban counties, and States. However, the HUD Secretary reduced the minimum grant
amount to $500,000 to increase the number of cities and counties eligible to directly receive
funds.
In July of 2009, HUD distributed HPRP funds to the State of Oregon (State) and the City of
Salem (City). They both entered into grant agreements with Mid-Willamette Valley Community
Action Agency (Agency), located in Salem, OR, to administer the program. The Agency
received $818,455 in HPRP funds from the State on July 7, 2009, and $582,623 from the City on
September 25, 2009. The Agency had spent almost $700,000 as of December 31, 2010, nearly
half of the HPRP funds subawarded.
The Agency was incorporated in 1967 to meet the needs of its community. It operates eight
programs primarily funded through Federal and State grants. HPRP funds are administered at
the Agency’s Community Action Resource Centers located in the Oregon cities of Salem, Dallas,
Stayton, and Woodburn.
The State developed the HPRP reporting system used by the Agency. The Agency’s case
managers enter participant data into this system. The grantees compile the data provided into
performance reports, which are required to be submitted to HUD. The reports include the
number and demographic characteristics of persons served, HPRP funds expended by activity
type, and outcomes related to housing stability required by the Recovery Act.
Our objective was to determine whether the Agency disbursed HPRP funds and reported data in
accordance with Recovery Act requirements.
4
RESULTS OF AUDIT
Finding 1: The Agency Paid for Unsupported Participants and Expenses
The Agency paid for HPRP services without adequate supporting documentation for participant
eligibility and expenses. This condition occurred because the Agency’s policies and procedures
were not adequate. Consequently, it spent $64,608 on unsupported expenditures.
The Agency lacked documentation to support the eligibility of 10 participants, paid expenses for 10
participants without adequate documentation, had 6 participants presign blank billing support forms,
and did not ensure that 15 participant files contained staff certifications of eligibility when a change
in case managers occurred.
Agency Files Did Not Include
Adequate Support for
Eligibility
The Agency provided financial assistance without adequate documentation to
support participant eligibility and expenses. Without supporting documentation,
we were unable to determine whether participants and/or expenses were eligible
or ineligible.
The Agency lacked documentation to support the eligibility in 10 of the 21
participant files reviewed. For one participant, the Agency did not document
verification of the amount of child support used in the income calculation as
required. Two other participant files did not contain complete 3-month
reassessments of eligibility; one was missing the reassessment entirely, and the
other was missing the second page and income calculation. The eligibility of
three other participants was not established because two of the files did not
indicate whether the participant had other housing options and the third did not
have the staff certification filled out. Four additional participant files did not
contain verification of bank account balances to show a lack of financial
resources. Federal Register Notice FR-5307-N-01(HPRP Notice), Section
IV.D.2(3) states that the household must not have subsequent housing options and
financial resources needed to sustain housing.
The HPRP Notice requires subgrantees to evaluate and certify the eligibility of
program participants at least once every 3 months (Section IV.D.1) and ensure
that grant funds are solely used for eligible activities (Section IV.A). The HPRP
Notice and Eligibility Determination and Documentation Guidance lay out the
documentation requirements for participant eligibility and qualified expenses (see
criteria in appendix C).
5
The Agency Paid for
Unsupported Expenses
The Agency paid rent expenses for 10 participants without adequate
documentation as follows:
Rent payments made Late rent fees
Participant Rent payments made without verification paid without
number with no lease on file of property owner explanation
1 X X X
2 X X
3 X
4 X
5 X
6 X
7 X
8 X
9 X
10 X
Agency Files Contained
Presigned Blank Forms
The Agency’s case managers had six participants presign blank billing support
forms. The forms included lines for the date, landlord’s name, rental location,
amount to be paid by each party, and signatures of the participant and landlord,
along with their addresses and phone numbers. Above the signature section, was
the statement: “I certify that the above information is correct to the best of my
knowledge.” One participant file contained seven of these forms as support for
January through July 2010 rent payments. Each form included the same
signatures for both the landlord and participant, with indications that the forms
had been copied and altered by the case manager. The case managers also
allowed participants to hand-carry these forms to the landlord and return the
forms to them. The forms were subjected to an increased risk of manipulation
since the Agency did not obtain them directly from the landlord.
Agency Files Were Missing
Staff Certifications
The Agency did not ensure that 15 of the 100 participant files approved during
our audit period contained staff certifications of eligibility when a change in case
managers occurred. The staff certification serves as documentation of participant
eligibility and certifies that no conflict of interest exists. When case managers
6
completed the 3-month reassessment of participant eligibility, they did not
complete the staff certification as required in Section 2 of the HPRP Eligibility
Determination and Documentation Guidance. Therefore, the Agency did not
ensure that a conflict of interest did not exist.
Agency Policies and Procedures
Were Not Adequate
The Agency’s policies and procedures controlling its HPRP program were not
adequate. Its written policies and procedures lacked sufficient controls. Although
the Agency used standard forms and worksheets, it did not provide adequate
guidance for establishing, documenting, and verifying participant and expenditure
eligibility in accordance with requirements.
In addition, the Agency did not always implement its written policies and
procedures. For example, the Agency’s policies and procedures included
verifying that the “household has no money in a savings, checking, or other
account that can be accessed for purposes of addressing the current housing crisis,
or the amount is insufficient to make a difference.” However, case managers did
not always document verification of account balances when participants indicated
that they had bank accounts.
During the audit, we informed Agency management officials of the
documentation deficiencies, and they immediately took steps to remedy the
problem. They made several changes to the policies and procedures to improve
participant eligibility and expenditure documentation standards. Agency
management will no longer approve assistance payments without all eligibility
and expense documentation being in the participant files. They also developed
new and updated forms to be completed by the case managers. The actions taken
by the Agency are noteworthy; however, it needs to develop a quality control plan
to ensure that its policies and procedures only allow participants and expenditures
that are eligible and properly documented under the HPRP requirements.
The Agency Paid for
Unsupported Expenses
The Agency spent $64,608 on unsupported expenditures (see appendix D for
details). Without adequate supporting documentation, the Agency could not
ensure that the participants and the assistance provided were eligible. These
funds were placed at an increased risk of misuse.
7
Recommendations
We recommend that the Director of the HUD Portland Office of Community
Planning and Development
1A. Require that the Agency either provide supporting documentation
for participants’ eligibility and expenditures or reimburse its
program accounts $64,608 with nonfederal funds for participants
lacking adequate documentation and reimburse with nonfederal
funds any amounts that have been spent since our review for these
participants.
1B. Require that the Agency develop and implement a quality control
plan that includes procedures to ensure that it verifies and
documents participant eligibility and expenditures in accordance
with requirements.
8
RESULTS OF AUDIT
Finding 2: The HPRP Reporting System Contained Inaccuracies
The Agency did not always enter participant data accurately into the HPRP reporting system.
This condition occurred because the Agency did not have procedures to ensure that case
managers accurately entered the data. Therefore, HUD does not have assurance that the reports
contain accurate data to pass on to the public.
The HPRP Reporting System
Contained Inaccurate Data
The Agency’s case managers did not always enter participant data accurately into
the HPRP reporting system. There were discrepancies between the case files and
the reporting system for 11 of 21 participants reviewed. For example, one of the
participants was missing a utility payment entry and had a utility payment
categorized as rental assistance. Further, a participant was missing entries for a
late fee and utility payment, and another participant was missing two rental
payments and a late fee. The participant data in the reporting system did not
always reflect actual HPRP activities.
Section VI.B of the HPRP Notice requires subgrantees to use a database system to
collect data for reports on outputs. Section 4.3 of the Recovery Act guidance on
reporting states: “At a minimum, Federal agency, recipients, and sub-recipients
should establish internal controls to ensure data quality, completeness, accuracy
and timely reporting of all amounts funded by the Recovery Act.” Section 2.1
further states that the reports are aimed at providing transparency to the public on
the use of Recovery Act funds (see criteria in appendix C).
Agency Procedures Did Not
Include Verification of HPRP
Entries
The Agency did not have procedures to ensure that case managers accurately
entered participant data into the system. Although it had a procedure for case
managers to enter participant data, that procedure did not include a step to check the
data entered. No one at the Agency verified that all entries made were correct and
all activities were entered. After we informed Agency management officials of the
deficiencies in the reporting system, they promptly added a procedure for the HPRP
coordinator to review the data entered by the case managers.
9
HUD May Not Be Receiving
Accurate Data
HUD does not have assurance that the required reports contain accurate HPRP data
to pass on to the public. Since the Agency did not always enter accurate participant
data, the grantees may have submitted inaccurate reports to HUD. Although the
financial section of the reports is obtained from the Agency’s fiscal department, the
participant data, specifically the number of persons served by HPRP activity type, is
collected from the reporting system. HUD uses this data to report how many
persons and households are receiving services and assistance.
Recommendations
We recommend that the Director of the HUD Portland Office of Community Planning
and Development
2A. Require that the Agency correct discrepancies in the HPRP reporting
system.
2B. Require that the Agency implement procedures to ensure that case
managers enter accurate participant data into the HPRP reporting
system.
10
SCOPE AND METHODOLOGY
We performed our onsite audit work at the Agency’s Community Resource Program office
located at 1164 Madison Street NE., Salem, OR; its administrative office in Salem, OR; and rural
offices in Dallas, Stayton, and Woodburn, OR, between January and February 2010. The audit
generally covered the period July 2009 through January 2011.
To accomplish our objective, we interviewed HUD, grantee, and Agency staff working directly
with the HPRP program. We also reviewed
Applicable laws and regulations including program guidance issued by HUD and Office
of Management and Budget circulars,
Grant agreements between the grantees and the Agency,
Accounting policies and procedures and accounting records,
Agency program policies and procedures,
Participant case files, and
Entries in the HPRP reporting system.
We selected a sample consisting of eight participant case files at the Agency’s Salem office and
four case files at each of the three rural offices. We chose the first participant approved at each
office and the remaining participants evenly distributed throughout our audit period based on the
approval date. We selected one additional participant because one participant had the same last
name as another participant who was an Agency employee. Of the 100 participants approved
during our audit period, the 21 case files selected totaled $115,598 of $691,466 in program
expenditures. We reviewed the case files for participant and expenditure eligibility in
accordance with requirements and entries into the reporting system.
We tested participant data entered into the HPRP reporting system. We compared the documents
contained in the case files to the entries into the system. We determined that the data in the
system were not always accurate therefore, we did not rely on the data (see finding 2).
We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.
11
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 to ensure that HPRP requirements are followed with
respect to the eligibility of participants and expenditures and
Procedures to ensure that HPRP activities are accurately entered into the
reporting system.
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.
12
Significant Deficiencies
Based on our review, we believe that the following items are significant deficiencies:
The Agency did not have adequate policies and procedures to ensure that
participant and expenditure eligibility was established, verified, and
documented (see finding 1).
The Agency did not have procedures to ensure that it accurately entered
participant activities into the reporting system (see finding 2).
13
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
Recommendation number Unsupported
1A $64,608
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.
14
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Mid-Willamette Valley Community Action Agency Response to Office of Inspector
General (OIG) findings:
Finding 1: The Agency Paid for Unsupported Participants and Expenses
A. General Response to Agency’s Finding 1
Although the OIG’s Audit Report contains individual factual determinations in
support of Finding 1, there exist certain common considerations of relevance to that
Finding. Those considerations are discussed in this section. The Agency’s specific
responses to the Report’s individual factual determinations are set forth in Section B,
below.
1. The Audit Report concludes that the Agency spent $64,608 in unsupported
expenditures. Due to the Agency’s remedial actions, all of those expenditures are
Comment 1 appropriately supported. The Agency has provided all supporting documentation for
participants’ eligibility and expenditures. The details of the Agency’s remedial actions
are set forth in Section B, below.
2. Certain issues arose from requirements that were either not well defined or not
reasonably ascertainable by the Agency at the time the Agency was developing its
Homeless Prevention and Rapid Re-Housing (HPRP) program. For example, the
Housing and Urban Development (HUD) policy pertaining to Staff Certifications was
not well defined by HUD as the Agency was developing the program. The Agency
understood, based on two HUD trainings, that a new Staff Certification was not
necessary unless re-determining eligibility. It was only through the OIG auditing
Comment 2 process that the Agency became aware of this requirement.
Another example is that the Agency has been unable to find any reference in the
HPRP Training Manual or the FAQs that address the need to obtain more stringent
verification of ownership if the owner is an individual landlord. There may be a
“rule” pertaining to this issue; however, unless it is made available to grantees, they
Comment 3
have no practical way of obtaining this information.
The necessity for implementing the HPRP program and getting services “out the
door” created an environment requiring flexibility, creativity, and common sense.
HUD, Oregon Housing and Community Services, and the City of Salem did an
amazing job of channeling resources and information to the local agencies in order to
implement the program in an efficient manner under some very difficult
circumstances. However, these circumstances mandated a somewhat fluid approach
by HUD to program requirements and the dissemination of information relating to
those requirements. As a result, at the time the agencies were working to implement
15
Ref to OIG Evaluation Auditee Comments
the program, the contours of every rule had not yet been completely defined.
Similarly, not every relevant rule or policy was able to be communicated to the
agencies at the times the agencies needed to act. While it would be unfair to hold
HUD, Oregon Housing and Community Services, or the City of Salem responsible for
these unavoidable systemic imperfections, it seems similarly inequitable to place the
blame for these imperfections at the feet of the agencies.
B. Specific Responses to Individual Factual Determinations
Comment 4 1. Agency Files Did Not Include Adequate Support for Eligibility
For one participant, the agency did not document verification of the amount of child
support used in the income calculation as required (Participant D).
Although the child support was part of a parenting agreement between the
client and the father of the children, the support was not going through Child
Support Enforcement. The client had not received payments for several
months and was unable to provide any documentation or a copy of a check
since she had not received any payments. Although this was listed as income
it was not actually reliable and steady income that the client was currently
receiving at the time of enrollment. The case manager wrote on the income
form “sporadic” next to child support to indicate this. HPRP eligibility
guidelines state that income counted should be current income.
Therefore, since child support was received sporadically and was not
received in the month of eligibility determination, it did not have to be
counted as income. The case manager should have made a more detailed
note about this situation in the client file. The program will make sure to
include more detailed notes regarding situations such as these.
Two other participant files did not contain complete 3-month reassessments of
eligibility; one was missing the reassessment entirely, and the other was missing the
second page and income calculation (Participants R and S).
Both of these are from the same case manager who is no longer with the agency due
to poor work performance.
Participant R, missing second page of June 2010 assessment and income
calculation was missing for the March 2010 assessment: The case manager at
the time submitted the June reassessment to the program coordinator for
approval. The program coordinator returned the reassessment to the case
manager unapproved, requesting that she fix the second page. At this same
time, the case manager left her employment with the Agency due to poor
work performance. The program coordinator and remaining case managers
had to “regroup” and pick up where things were left. There was a delay in
processing a new reassessment due to this transition. However, the front page
of the reassessment proves the eligibility of the participant. The front page
contains all of the vital information; income documentation was also
attached to the original assessment. In addition, one rent payment of
$865 that was paid after the September 3rd reassessment.
16
Ref to OIG Evaluation Auditee Comments
The 3-month assessment due on March 23rd was completed and income
documentation was attached at the time the assessment was signed by the
program coordinator. When the file was later reviewed, following the case
manager leaving late in June 2010, it was discovered that the income
verification documents for the March assessment were missing. However,
there were copies of income verification documents received on April 29,
2010 that also listed the income relevant to the March assessment period.
This document verifies that the household income at the time of assessment
fell within the program eligibility requirements.
Participant S: The program coordinator confirms that the first reassessment
was conducted and approved following standard procedure. All
documentation was present at the time the reassessment was conducted. The
original case manager is no longer employed with the Agency; therefore we
are unable to determine where this documentation went. The assessment
was completed in OPUS at the same time (as is our practice) and the
program coordinator was able to share this with the OIG while they were
on site. In addition, the program has implemented a new policy to ensure
this does not happen again. The program coordinator will make copies
of all approved reassessment paperwork and store them in her office as
back-up.
The eligibility of three other participants was not established because two of the files
did not indicate whether the participant had other housing options (Participant N and
Q) and the third did not have the staff certification filled out (Participant E).
Two files did not indicate whether the participant had other housing options
(Participant N and Participant Q)
Participant N: The case manager and coordinator missed checking the “yes”
box regarding the client’s willingness to participate in case management and
the box asking if the household had any other housing options. Both have
been remedied. As demonstrated within the file, the client has been
consistently active in case management and was very willing to participate.
A statement provided by the case manager states that she unintentionally
missed checking the box but that the participant did not have any other
housing options.
Participant Q: The checkbox regarding the client’s homeless status meeting
HUD’s definition of homelessness was left unchecked and the line asking
where they were staying was not filled out on the Eligibility Screening Tool.
This was an oversight by the case manager and program coordinator, and has
been remedied. However, there is no question that the client met eligibility.
The client was residing at a shelter and, therefore, met HUD’s definition
of homeless at the time of program enrollment. Other documentation in
the file provided verification of the client’s homeless status (i.e. Referral
form, Application, and a Homeless Certification signed by the
Administrator of St. Joseph Shelter). The box asking if the household had
any financial resources was also left unchecked. This was an oversight by the
case manager and program coordinator, and has been remedied. The
17
Ref to OIG Evaluation Auditee Comments
household’s monthly income is listed on the form and the verification of
income is in the file. We believe that eligibility was met and clearly
demonstrated within the file.
One file did not have the staff certification filled out (Participant E).
The certification was signed prior to the household members’ names being
added to the form. This was remedied while the OIG was onsite.
Four additional participant files did not contain verification of bank account
balances to show a lack of financial resources (Participant A, Participant I, Participant
M and Participant T) .
Participant A: The case manager confirms that she viewed the bank statement
online with the client prior to signing off on the Income and Asset form (the
one currently in the file). The case manager felt this would be adequate
verification. However, she did not make a note in the Client Notes, as she
should have, to explain that she did verify the account information. The case
manager has written a statement testifying to the fact that she viewed the
statement at the initial intake as well as during self-sufficiency
appointments with the participant. The program has implemented a new
form, Household Asset Verification that lists different options for
verification, which the case manager certifies with a signature. The new form
allows case managers to verify bank information in one of the following
ways: bank statement accessed online with client, paper copy of statement
returned to client, and paper copy of statement attached.
Participant I: This participant did not have a bank account when he entered
our program, as evidenced by the Income and Asset form. However, he did
obtain one as evidenced by case management notes of June 9th, 2010. The
case manager did not go back and look at the original Income and Asset form
and, therefore, did not realize that this was a new development. The case
manager has spoken with the client, and the client states that he opened an
account in March or April for the purpose of getting direct deposit for his
unemployment check. The program has implemented a new form,
Household Asset Verification that lists different options for verification
which the case manager certifies with a signature. The new form allows case
managers to verify bank information in one of the following ways: bank
statement accessed online with client, paper copy of statement returned to
client, and paper copy of statement attached.
Participant M: Case manager verified bank statement of client as
evidenced by her written statement. The program has implemented a new
form, Household Asset Verification that lists different options for verification
which the case manager certifies with a signature. The new form allows case
managers to verify bank information in one of the following ways: bank
statement accessed online with client, paper copy of statement returned to
client, and paper copy of statement attached.
18
Ref to OIG Evaluation Auditee Comments
Participant T: A bank statement is now in the file that matches the
amount listed on the Income Calculations Worksheet and signed off on
by the client. The program has implemented a new form, Household Asset
Verification that lists different options for verification, which the case
manager certifies with a signature. The new form allows case managers to
verify bank information in one of the following ways: bank statement
accessed online with client, paper copy of statement returned to client, and
paper copy of statement attached.
2. The Agency Paid for Unsupported Expenses
The Agency paid rent expenses for 10 participants without adequate documentation as
follows:
4 participants did not have a lease on file (Participant K, Participant J, Participant C
and Participant U)
Participants U, J and C now have leases in their files. Participant K does
not have a lease in her file for the following reason: No HPRP funding was
used for Participant K. One payment was accidentally coded to HPRP
instead of Community Services Block Grant (CSBG). This has been
remedied, as evidenced by financial documents.
The HUD HPRP Homeless Prevention Eligibility Documentation states
“that the case file must include a lease naming the applicant as the
leaseholder or other written occupancy agreement identifying applicant as
the legal tenant and an eviction notice or utility shut-off notice to qualify for
homeless prevention assistance when the participant is renting the property”.
As part of the eligibility determination process for HPRP assistance, the
program obtains a copy of the lease/rental agreement for the unit where the
applicant household is residing at the time of intake. These leases/rental
agreements verify that the applicant household is the tenant of record for
those households claiming imminent risk of homelessness due to eviction
from that unit.
The program did not always obtain a lease when placing a household into a
new unit (Participants U, J and C) because program staff coordinated with
the landlord to complete a Rent Comparability form, complete a Rent
Reasonableness Certification, and conduct a Habitability Standards
inspection and Lead-Based Paint Visual Assessment when appropriate. The
landlord also completed the Landlord Payment Request form monthly,
verifying that the household receiving assistance would be residing at the
specified unit during the month the program was providing assistance. The
Agency utilized the Landlord Request for Payment form as proof of the
rental agreement between the tenant and landlord. The Agency understood
the Landlord Request for Payment form to be a legal rental agreement under
Oregon Tenant-Landlord law. The Agency also concluded that all of the
19
Ref to OIG Evaluation Auditee Comments
Comment 5 documents listed above served as proof of tenant residency.
All of the documents listed above supported the payment, and eligibility
had been previously determined; however, it is now our policy to obtain
a lease for all participants. The program coordinator will monitor this
when reviewing files during the initial eligibility screening and will ensure
that the file includes a copy of the rental agreement/lease. In cases where
the file does not include a rental agreement/lease at enrollment, such as with
clients eligible for Rapid Re-Housing, the coordinator will sign off on the
enrollment but will not process any rental or utility assistance payments until
confirmation that the rental agreement/lease has been received and placed in
the file. The case manager will email the coordinator to confirm that this has
occurred. The File Checklist and File Cover Sheet have also been updated
to include the date the rental agreement/lease was received and placed in the
file. The coordinator maintains an Inspection Spread Sheet, which tracks
inspection needs for all households enrolled in the program. A column has
been added to track the date the rental agreement/lease was submitted.
Rent payments made without verification of property owner (Participant K,
Participant J, Participant S, Participant T, Participant I and L):
Participants J, S, T, I and L now have verification of property owner in
their files. Participant K does not have verification of property owner in her
file for the following reason: No HPRP funding was used for Participant
K. One payment was accidentally coded to HPRP instead of Community
Services Block Grant (CSBG). This has been remedied, as evidenced by
financial documents.
The Agency has been unable to find any reference in the HPRP Training
Comment 3 Manual or FAQs that address the need to obtain more stringent verification
of ownership if the owner is an individual landlord, i.e. owner’s tax ID
number, property tax form, etc. However, the program has adopted a new
policy regarding this concern. When a rent payment will be made to an
individual landlord (not including property management companies and/or
apartment complexes) additional documentation will be gathered to ensure
that the individual is legitimate. Information regarding the name and
address of the owner has always been on the second page of the Owner’s
Initial Rent Comparability form. This form has recently been revised to
request the tax identification number of the owner. As is standard
procedure, the case manager will continue to contact the County Assessor’s
office to verify the date of construction and location of the housing unit
being processed, by using the Verification of Housing Construction Date
form to document this information. This form has recently been modified to
include a question regarding ownership records for the property.
Information obtained from the County Assessor’s will be compared with
information that the owner/management company has provided on page 2 of
the Owner’s Initial Rent Comparability form. If there is a discrepancy
between information provided on page 2 of the Owner’s Initial Rent
Comparability form and information provided by the County Assessor’s
records, the case manager will request a copy of the owner’s W-9 form,
20
Ref to OIG Evaluation Auditee Comments
which will be placed in the client file.
The Policies and Procedures Manual has been updated to reflect this
programmatic change, and the updated form has been placed in the manual.
Late rent fees paid without explanation (Participant K, Participant B and Participant
R)
No HPRP funds were used for Participant K
An explanation for Participant B late fees is now in the file. The program
accrued a late fee while waiting for the unit to pass rent reasonableness.
An explanation for Participant R late fees is now in the file. The $150 in
late fees paid in August 2010 was due to the unexpected case manager
turnover which delayed the processing of rent payments for the months of
July and August.
3. Agency Files Contained Presigned Blank Forms
6 participants presigned blank billing support forms
This issue was noticed and corrective action was taken by Agency staff 8
months prior to the OIG audit. There was a concern noted by program
supervisors in May 2010 that a specific HPRP employee may have been
revising previously signed Landlord Request for Payment forms in order to
process monthly rental payments. The forms had been signed by both the
landlords and client. The employee said that the landlords and clients were
aware of this, and preferred this method because it expedited the billing
process. This employee was counseled and was placed on a workplan. In
addition, beginning in September 2010, the responsibilities of this particular
employee were shifted so that she no longer worked with HPRP. An email
was sent on May 28, 2010 by the program manager to all HPRP employees
regarding this concern, advising them that altering signed/dated documents is
unacceptable and cannot happen.
In May 2010 the coordinator noticed during a file review that the case
manager had the client sign an incomplete Landlord Request for Payment
form prior to faxing the form to the landlord for signature. The coordinator
contacted the case manager directly, stating that the signing of incomplete
forms is not acceptable, and followed up with all HPRP employees at the next
HAP staff meeting. In October 2010 the coordinator reviewed this policy
again at a staff meeting, as new HPRP employees had been hired. The
discussion included the expectations of how forms are to be filled out prior to
obtaining the necessary signatures, and the absolute unacceptability of
obtaining signatures on incomplete forms. Case managers were also given
examples of the information to be completed on forms prior to obtaining
signatures.
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Ref to OIG Evaluation Auditee Comments
In an effort to prevent this situation from happening again, the process was
changed to having the landlord sign the completed Landlord Request for
Payment form first, and then the client signing the form. In addition, the
program has enforced a new policy requiring that original back-up
documentation be attached to all Client Services Billing forms. The
coordinator and supervisor(s) reviewing the billings will look for evidence
that the back-up documentation has not been altered in any way (i.e. no white
out or photo copies). The exception is signed forms faxed by third-parties to
case managers. In these cases, the coordinator and supervisor(s) will look at
the date the fax was sent as indicated on the header/footer of the document to
ensure that the form was faxed recently. The Policies and Procedures Manual
has been updated to reflect these new programmatic changes.
4. Agency Files Were Missing Staff Certifications
The Agency did not ensure that 15 participant files contained staff certifications of
eligibility when a change in case managers occurred.
Comment 6 Clarification: The program was asked for a complete list (15) of HPRP
clients that had a case manager change. The 15 were not out of the 21 files
audited.
All 15 files have a new Staff Certification of Eligibility.
It was the understanding of staff, based on a Webinar and an HPRP training
in Los Angeles, that there was a difference between re-determining eligibility
after a household closed and then later re-opened, and the 3 month assessment
to determine continued eligibility for ongoing services. Based on this
understanding, we did not complete a new Staff Certification form at the time
the client was switched from one case manager to another. Immediately upon
learning that a new form needed to be filled out whenever there was a
transition, all case managers working with clients that had transferred from
Comment 2 other case managers reviewed the eligibility information in the files and filled
out a new Staff Certification of Eligibility form.
5. The Agency Policies and Procedures Were Not Adequate
The Agency’s policies and procedures controlling its HPRP program were not
adequate.
While the OIG was still on site, the Agency made several changes to HPRP
policies, procedures and forms to improve documentation standards. The
Agency also put into place several quality controls to assure that all of the
appropriate documents are in the case files.
6. The Agency Paid for Unsupported Expenses
The Agency spent $64,608 on unsupported expenditures (see appendix D for
details). Without adequate supporting documentation, the Agency could not
ensure that the participants and the assistance provided were eligible. These
funds were placed at an increased risk of misuse.
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Ref to OIG Evaluation Auditee Comments
The Agency has supporting documentation for all expenditures.
OIG Recommendations
We recommend that the Director of the HUD Portland Office of Community
Planning and Development
1A. Require that the Agency either provide supporting documentation
for participants’ eligibility and expenditures or reimburse its
program accounts $64,608 with nonfederal funds for participants
lacking adequate documentation and reimburse with nonfederal
funds any amounts that have been spent since our review for these
participants.
Comment 1 The Agency has provided all supporting documentation for participants’
eligibility and expenditures, as described above.
1B. Require that the Agency develop and implement a quality control
plan that includes procedures to ensure that it verifies and
documents participant eligibility and expenditures in accordance
with requirements.
The Agency has developed and implemented procedures to ensure that it
Comment 7 verifies and documents participant eligibility and expenditures in
accordance with requirements, as described above.
Finding 2: The HPRP Reporting System Contained Inaccuracies
A. General Response to Agency’s Finding 2
Although the OIG’s Audit Report contains factual determinations in support of
Finding 2, there exist certain common considerations of significant relevance to that
Finding. Those considerations are discussed in this section. The Agency’s specific
responses to the Report’s individual factual determinations are set forth in Section B,
below.
1. It has always been the program’s understanding that OPUS, the statewide
Homeless Management and Information System (HMIS), is not used for
fiscal reporting. HPRP guidelines require that data collection and evaluation
must be conducted through an HMIS to report client-level data. The program
Comment 8 reported client-level data accurately through OPUS. The Agency relies on
the MWVCAA fiscal department to provide all financial data to the City of
Salem and Oregon Housing and Community Services regarding HPRP
expenditures.
2. The Agency’s case managers entered rent and utility payments into the OPUS
system with a 92% accuracy rate.
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Ref to OIG Evaluation Auditee Comments
B. Specific Responses to Individual Factual Determinations
1. The HPRP Reporting System Contained Inaccurate Data
The Agency’s case managers did not always enter participant expenses accurately into
the HPRP reporting system. There were discrepancies between the billing forms and
the reporting system for 11 of 21 participants reviewed.
All corrections have been made in OPUS. Out of the 21 files reviewed, 310
total OPUS expense entries were made by case managers and 24 entry errors
were made (92% accuracy).
2. Agency Procedures Did Not Include Verification of Expense Entries
The Agency did not have procedures to ensure that case managers accurately entered
participant expenses into the system.
The program has a new policy in place, as outlined in the revised HPRP
Policy and Procedures Manual effective 2/16/11. The program coordinator
will check all OPUS entries for accuracy as part of the 3-month assessment
process and will certify this in the file. The coordinator will print off an
OPUS- generated listing of all OPUS entries for the quarter, which will be
placed in the file along with all other 3-month assessment paperwork.
3. HUD Did Not Receive Accurate Data
HUD did not receive accurate HPRP data to pass on to the public. Since the Agency
did not enter accurate participant expense data, the grantees submitted inaccurate
reports to HUD.
Participant expense data entered into OPUS by case managers is not used for
fiscal reporting. The program relies on the Agency’s fiscal department to
provide all financial data to the City of Salem and Oregon Housing and
Community Services regarding HPRP expenditures. The program
coordinator works closely with the Agency’s accounting manager to make
sure that the expenditures reported match the program records. No financial
information that was entered by case managers was used to report to
HUD. Oregon Housing and Community Services and the City of Salem
rely on the information provided by the Agency’s financial department to
Comment 8
report to HUD. Therefore, HUD did not receive inaccurate reports.
The State of Oregon and the City of Salem, as Grantees, are required to
ensure that the data they report to HUD is accurate. The Grantees monitor
Comment 9 their sub-recipients (including MWVCAA), send out HMIS data quality
reports to all sub-recipients, and reports data to HUD. As a sub-recipient,
MWVCAA is not responsible for the Grantee reports to HUD.
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Ref to OIG Evaluation Auditee Comments
The program has a new policy in place, as outlined in the revised HPRP
Policy and Procedures Manual effective 2/16/11. The program coordinator
will check all OPUS entries for accuracy as part of the 3-month assessment
process and will certify this in the file. The coordinator will print off an
OPUS- generated listing of all OPUS entries for the quarter, which will be
placed in the file along with all other 3-month assessment paperwork.
Recommendations
We recommend that the Director of the HUD Portland Office of Community Planning
and Development
Require that the Agency correct discrepancies in the HPRP reporting
system.
All discrepancies have been corrected within OPUS.
Require that the Agency implement procedures to ensure that case
managers enter accurate participant data into the HPRP reporting
system.
Procedures to ensure that case managers enter accurate participant data
into OPUS have been developed and implemented, as described above.
25
OIG Evaluation of Auditee Comments
Comment 1 The supporting documentation was provided to the HUD Office of Community
Planning and Development for evaluation in accordance with audit resolution
procedures. We did not review further documentation after our audit work.
Comment 2 The Staff Affidavit (Certification) form used by the Agency states: "The
completed Staff Affidavit remains valid until or unless a different staff person re-
determines HPRP eligibility." The HPRP Notice, Section IV, requires
"subgrantees to certify eligibility at least once every 3 months for all program
participants receiving medium-term rental assistance." Therefore, if a different
case manager certifies participant eligibility a new Staff Certification is required.
Comment 3 Section IV of the HPRP Notice states that rent payments must be made to third
party landlords and the property may not be owned by a related party of the
Agency. Verification of the property owner is necessary to be certain that an
individual is actually an unrelated third party and legally owns the property.
Comment 4 Section 5 of the HPRP Eligibility Determination and Documentation Guidance
states that "subgrantees are responsible for verifying and documenting the
eligibility of all HPRP applicants prior to providing HPRP assistance. They are
also responsible for maintaining this documentation in the HPRP participant case
file once approved for assistance. It is important for grantees to develop policies
and procedures to ensure appropriate documentation is obtained and included in
HPRP participants’ files." Therefore the case file was required to include all
supporting documentation.
Comment 5 HUD requires a lease in order to make rental payments on behalf of a participant
and does not consider the Landlord Request for Payment form to be a valid lease.
Comment 6 The 15 participants were out of the 100 participants approved during the audited
time period. We clarified this in the finding.
Comment 7 A quality control plan needs to be in place involving a review by individuals
independent of the HPRP program to ensure requirements are being followed.
Comment 8 The financial section of the reports is derived from the Agency’s fiscal
department as noted in the response. We clarified this in finding 2 of the report.
However the client-level data, i.e. number of persons served by HPRP activity
type, does come from the reporting system (OPUS) and is used by HUD.
Therefore it is important that the entries into the reporting system be accurate.
Comment 9 Section VI of the HPRP Notice states that "subgrantees providing financial
assistance and services directly will use the HMIS in the applicable Continuum of
Care to collect data and report on outputs and outcomes as required by HUD."
Although the grantee is the party responsible for submitting the required reports to
26
HUD it is still the subgrantees responsibility to ensure that the data in the system
is accurate.
27
Appendix C
CRITERIA
A. The Recovery Act became Public Law 111-5, which 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 HPRP under Title XII
of the Recovery Act. The HPRP Notice includes the following:
Any organization receiving HPRP funds shall be subject to all of the requirements
that apply to the grantee under the HPRP Notice (Section III.A).
Subgrantees must evaluate and certify the eligibility of program participants at
least once every three months (Section IV.D.1). In order to receive financial
assistance or services funded by HPRP, households must meet the following
minimum criteria (Section IV.D.2):
o Have an initial consultation with a case manager or other authorized
representative who can determine the appropriate type of assistance.
o Have a gross annual income that is at or below 50 percent of the area
median income, which is determined according to the State and local
jurisdiction in which a household resides and is dependent on the number
of household members.
o Be either homeless or at risk of losing its housing and meet both of the
following circumstances: (1) no appropriate subsequent housing options
have been identified and (2) the household lacks the financial resources
and support networks needed to obtain immediate housing or remain in its
existing housing.
There are four categories of eligible activities for HPRP funds (Section IV.A):
o Financial assistance includes short-term rental assistance (up to three
months), medium-term rental assistance (four to 18 months), security
deposits, utility deposits, utility payments, moving cost assistance, and
motel and hotel vouchers,
o Housing relocation and stabilization services includes case management,
outreach and engagement, housing search and placement, legal services,
and credit repair,
o Data collection and evaluation must be conducted through the use of a
Homeless Management Information System (HMIS) or a comparable
database to report client-level data, such as the number of persons served
and their demographic information required by HUD, and
o Administrative costs may be used for: pre-award administrative costs;
accounting for the use of grant funds; preparing reports for submission to
28
HUD; obtaining program audits; similar costs related to administering the
grant after the award; grantee or subgrantee staff salaries associated with
administrative costs, and training for staff.
C. HUD HPRP Eligibility Determination and Documentation Guidance includes:
Staff Certification of Eligibility for HPRP Assistance form must be maintained in
each HPRP participant’s file. This form certifies that the household meets all
eligibility criteria for HPRP assistance, that true and complete information was
used to determine eligibility, and that no conflict of interest exists related to the
provision of HPRP assistance. The form must be completed and signed by the
person determining eligibility and his or her supervisor for all households
determined eligible or recertified on or after November 1, 2009. A new Staff
Certification form is only required if a different staff person re-certifies eligibility
at a later date (Section 2).
Subgrantees are responsible for verifying and documenting the eligibility of all
HPRP applicants before providing HPRP assistance. Subgrantees are also
responsible for maintaining this documentation in the HPRP participant case file
once approved for assistance. Insufficient case file documentation may be found
to be out of compliance with HPRP program regulations during a HUD
monitoring (Section 5).
The case file documentation standards, in order of preference, are written third-
party verification, oral third-party verification, and applicant self-declaration. The
reasons why third party written and/or oral verification could not be obtained
must be documented in the HPRP participant file (Section 5).
Income Documentation Standards state that alimony, child support, and foster
care payments must be documented by obtaining a copy of the most recent
alimony, foster care, child support, other contributions or gift payment statements,
notice, order, or the case manager must document an attempt to obtain third party
verification and sign the self-declaration of income (Section 5).
Homelessness Prevention Eligibility Documentation states that the case file must
include a lease naming the applicant as the leaseholder or other written occupancy
agreement identifying applicant as the legal tenant and an eviction notice or utility
shut-off notice to qualify for homelessness prevention assistance when the
participant is renting the property (Section 5).
D. The Office of Management and Budget issued Implementing Guidance for the Reports on
Use of Funds Pursuant to the Recovery Act to provide funding recipients with
information to implement reporting requirements. Section 4.1 states that data quality
(i.e., accuracy, completeness, and timely reporting of information) reviews required by
this guidance are intended to emphasize the avoidance of two key data problems—
material omissions and significant reporting errors.
29
Appendix D
UNSUPPORTED PARTICIPANT EXPENDITURES
Participant Unsupported Inadequate Omission Unverified Unexplained Participant
eligibility reassessment of lease property late fees total
of eligibility owner
A $3,647.77 $3,647.77
B $380.00 $380.00
C $1,379.90 $1,379.90
D $3,290.00 $3,290.00
E (1) $1,920.09 -
F -
G -
H -
I (2) $6,395.89 $6,395.89
J (3) $5,450.00 -
K $2,375.00 $2,375.00
L $6,900.00 $6,900.00
M $7,134.31 $7,134.31
N $8,111.43 $8,111.43
O -
P -
Q $1,080.50 $1,080.50
R $3,402.13 $150.00 $3,552.13
S $420.22 $8,615.07 $9,035.29
T (4) $10,085.59 $10,085.59
U $1,240.00 $1,240.00
Total $41,665.58 $3,822.35 $10,444.90 $15,515.07 $530.00 $64,607.81
For further details on the 10 participants in columns unsupported eligibility and inadequate
reassessment of eligibility see Finding 1: Agency Files Did Not Include Adequate Support for
Eligibility. The 8 participants in columns omission of lease, unverified property owner, and
unexplained late fees plus the 2 participants in footnotes 2 and 4 make up the 10 participants
noted in Finding 1: The Agency Paid for Unsupported Expenses.
(1) The participant case file contained a staff certification with the household section left blank.
The Agency filled out the staff certification while we were onsite; therefore, the $1,920.09 is
now supported.
(2) The participant case file lacked verification of property owner in addition to unsupported
eligibility. The rental payments totaled $6,263.20.
(3) The participant case file did not contain a lease. The Agency obtained the lease from the
participant while we were onsite; therefore, the $5,450.00 is now supported.
(4) The participant case file lacked verification of property owner in addition to unsupported
eligibility. The rental payments totaled $8,135.00.
30
Mid-Willamette Valley Community Action Agency Did Not Always Follow Recovery Act Homelessness Prevention and Rapid Re-Housing Program Requirements
Published by the Department of Housing and Urban Development, Office of Inspector General on 2011-06-13.
Below is a raw (and likely hideous) rendition of the original report. (PDF)