Issue Date
October 04, 2011
Audit Report Number
2012-NY-1001
TO: Annemarie Uebbing, Director, Office of Community Planning and
Development, Newark, New Jersey, 2FD
FROM: Edgar Moore, Regional Inspector General for Audit, New York/New Jersey
2AGA
SUBJECT: Bergen County, NJ, Generally Administered Its Homelessness Prevention
and Rapid Re-Housing Program in Accordance With HUD Regulations
HIGHLIGHTS
What We Audited and Why
We audited Bergen County’s administration of its Homelessness
Prevention and Rapid Re-Housing Program (HPRP) grant received under
the American Recovery and Reinvestment Act of 2009. We selected the
County based upon a risk assessment that considered the size of the
County’s HPRP grant, $4.3 million, which was the largest of 23 direct
HPRP city and county grants administered through the Newark field
office, and the lack of recent onsite monitoring by the field office of
similar programs administered by the County. The audit objective was to
determine whether County officials obligated and expended HPRP funds
within prescribed timeframes and implemented adequate controls to
ensure that grants were awarded for eligible activities in accordance with
HPRP requirements.
What We Found
Bergen County officials generally administered the HPRP grant funds in
accordance with HUD regulations. Specifically, the officials obligated
and expended funds within required timeframes and generally disbursed
grant funds for eligible activities and complied with program financial and
administrative requirements. While some participant files did not contain
all required documentation and a $500 grant was erroneously awarded,
County officials had taken action to address these issues.
What We Recommend
We recommend that the Director of HUD’s Newark Office of Community
Planning and Development instruct County officials to strengthen the
County’s administrative controls to ensure that participant case files
include all required supporting documentation and monitoring reviews of
subgrantees are conducted regularly.
For each recommendation without a management decision, please respond
and provide status reports in accordance with HUD Handbook 2000.06,
REV-3. Please furnish us copies of any correspondence or directives
issued because of the audit.
Auditee’s Response
We discussed the results of the review during the audit and at an exit
conference on September 14, 2011. We received County officials’
written comments on September 23, 2011, in which they generally agreed
with the report findings. The complete text of the County’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: County Officials Generally Administered HPRP Funds in Accordance 5
With HUD Regulations
Scope and Methodology 9
Internal Controls 11
Appendixes
A. Audited Comments and OIG’s Evaluation 13
3
BACKGROUND AND OBJECTIVE
The American Recovery and Reinvestment Act of 2009, Public Law 111-5, enacted on
February 17, 2009, established the Homelessness Prevention and Rapid Re-Housing
Program (HPRP) and funded it with $1.5 billion. HPRP is administered by the U.S.
Department of Housing and Urban Development’s (HUD) Office of Community
Planning and Development. HUD allocated HPRP funding based upon the formula used
for its Emergency Shelter Grant 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 State 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.
In July 2009, HUD allocated more than $4.3 million in HPRP funds to Bergen County.
County officials allocated the funds to six nonprofit organizations and its Division of
Community Development. HUD’s Integrated Disbursement and Information System
disclosed that as of August 22, 2011, the County had drawn down more than $3.4 million
from its HPRP grant, which represented approximately 79 percent of the total amount of
$4.3 million. County reports to HUD disclosed that as of March 31, 2011, 9 full-time-
equivalent jobs had been created or retained and 950 households (1,908 people) had been
served through the County’s HPRP.
Bergen County was established in 1683 and has the largest population among New Jersey
counties. The County is governed by the county executive and a seven-member board of
freeholders. In addition to HPRP, the Department of Planning and Economic
Development, Division of Community Development, administers other HUD programs,
such as the Community Development Block Grant and Emergency Shelter Grant
programs.
The audit objective was to determine whether County officials obligated and expended
HPRP funds within prescribed timeframes and implemented adequate controls to ensure
that grants were awarded for eligible activities in accoradance with HPRP requirements.
4
RESULTS OF AUDIT
Finding: County Officials Generally Administered HPRP Funds in
Accordance With HUD Regulations
Bergen County officials generally administered HPRP grant funds in accordance with
HUD regulations. Specifically, the officials obligated and expended funds within
required timeframes, generally disbursed grant funds for eligible activities, and complied
with program financial and administrative requirements. While some participant files did
not contain all required documentation and a $500 grant was erroneously awarded,
County officials had taken action to address these issues.
Funds Were Obligated and
Disbursed in a Timely Manner
County officials complied with HPRP obligation and expenditure
requirements. Federal Register Notice FR-5307-N-01 required that grantees
obligate HPRP funds by September 30, 2009. County officials obligated all
of the more than $4.3 million it was awarded before this deadline through the
following contracts:
Subgrantee or Contract
agency amount Purpose
Center for Food $ 118,893 Provide utility payments and security
Action deposits to individuals and families
who are homeless or at risk of
becoming homeless
Northeast NJ Legal 210,000 Provide legal counseling to
Services individuals and families who are
homeless or at risk of becoming
homeless
Bergen County 422,000 Provide credit counseling to
Community Action individuals and families who are
Partnership, Inc. homeless or at risk of becoming
homeless
Shelter Our Sisters 1,1481 Provide financial assistance and
housing relocation and stabilization
1
The contract was for $57,310 but was canceled after $1,148 was incurred for administrative costs to
screen 18 applicants after it was determined that required HPRP documentation could not be provided for
safety concerns by the applicants who were victims of domestic abuse.
5
assistance to individuals and families
who are victims of domestic violence
Care Plus, Inc. 851,270 Provide case management and
housing search services to
individuals and families who are
homeless or at risk of becoming
homeless
Housing Authority 2,655,577 Provide rental assistance, security
of Bergen County and utility deposits, utility payments,
and housing search and moving costs
to the homeless and those at risk of
becoming homeless
Division of Oversee and monitor overall
Community 75,000 performance of the County’s HPRP
Development grant
The Recovery Act requires grantees to expend 60 percent of their HPRP
funds within 2 years of the date that funds become available to the grantee
for obligation and 100 percent of the funds within 3 years of this date.
HUD’s Integrated Disbursement and Information System disclosed that as of
April 29, 2011, County officials had drawn down more than $2.7 million in
HPRP grants, which represents approximately 64 percent of the $4.3 million
awarded. In addition, County officials stated that they expected to expend
all of the funds within the required timeframe.
Funds Were Generally
Disbursed for Eligible Activities
County officials generally disbursed funds for eligible costs for the grant
awards reviewed. Federal Register Notice FR-5307-N-01 and HUD’s
HPRP Eligibility Determination and Documentation Guidance detailed the
participants and types of costs eligible for the grants. For instance,
Federal Register Notice FR-5307-N-01 Part IV.D.2. provides requirements
for eligible program participants, such as that a household’s total income
must be at or below 50 percent of the area average median income (Part
IV.D.2.2) and that the household 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 (Part IV.D.2.3).
One County subgrantee erroneously approved an applicant whose income
exceeded 50 percent of the area average median income and disbursed
$500 for utility assistance on the applicant’s behalf. County and
subgrantee officials acknowledged the ineligible payment and took action
6
during the review to recover the amount. In July 2011, the $500 was
recaptured and reimbursed to the County’s HPRP funds.
The County Generally
Complied With Administrative
and Financial Requirements
County officials generally complied with HPRP administrative and financial
requirements. The subgrantee contracts reviewed, to carry out HPRP
activities were awarded in compliance with regulations at 24 CFR (Code of
Federal Regulations) 85.36. County officials issued a public notice and
advertised in local newspapers to achieve an open and competitive
competition for subgrantees. County officials evaluated the 10 applications
received based on a reasonable set of criteria such as the organizations’
experience with homeless clients and rapid rehousing and homeless
prevention activities, collaboration with other agencies, and homeless
management information systems.
Regulations at 24 CFR 85.40(a), Monitoring and Reporting Program
Performance, require HPRP grantees to monitor grant- and subgrant-
supported activities to ensure compliance with applicable Federal
requirements. County officials stated that subgrantees would be monitored
onsite annually. They worked closely with the subgrantees to develop an
effective program that incorporated integrated case management, provided
guidance, and oversaw the implementation of the program. Subgrantees
were required to submit their participant data to the integrated Homeless
Management Information System and cooperate with each other while
serving the participants. County officials delivered initial training sessions to
the subgrantees and provided continual guidance to them through emails,
phone calls, and mandatory meetings at the County office to periodically
discuss program administration and any changes in program requirements.
County officials also conducted onsite monitoring reviews of the six
subgrantees in April 2011, provided them a written report and a specific
timeframe within which to respond to any monitoring findings, and
scheduled a follow-up review. However, while County officials said that
they had planned to perform onsite reviews annually, these initial onsite
monitoring reviews were conducted 18 months after the subgrantees were
awarded the contracts. County officials explained that the delay was due to
the late startup of the program and agreed to conduct monitoring reviews
more frequently, preferably every 6 months.
While one subgrantee had reportedly conducted habitability and lead-based
paint inspections and rent reasonableness analysis, the supporting
documentation was not included in the two participant files reviewed.
County officials had also identified this deficiency during the April 2011
7
monitoring review and stated that the subgrantee was taking corrective
action.
The Recovery Act requires grantees to submit quarterly reports on how
HPRP funds were spent. Federal Register Notice FR-5307-N-01 Part VI.C
instructs HPRP grantees to submit initial, quarterly, and annual performance
reports to HUD. The County reported the use of the funds as required.
County officials reviewed monthly financial reports and all reimbursement
requests and supporting documentation submitted by the subgrantees.
Conclusion
County officials complied with HPRP obligation and expenditure
requirements, established an effective program, and generally administered
the HPRP grant funds reviewed in accordance with HUD regulations.
County officials had taken action to address minor exceptions noted.
Consequently, County officials provided HUD assurance that the County’s
HPRP funds were being expended for eligible items.
Recommendations
We recommend that the Director of HUD’s Newark Office of Community
Planning and Development instruct County officials to strengthen
administrative procedures to ensure that
A. Monitoring reviews of subgrantees are conducted in accordance with
County policy.
B. Participant case files include all required supporting documentation,
including habitability and lead-based paint inspections and rent
reasonableness analysis.
8
SCOPE AND METHODOLOGY
We performed the audit fieldwork from May through July 2011 at the County’s office
located at One Hackensack Plaza, Hackensack, NJ. The audit generally covered the
period July 1, 2009, to March 31, 2011, and was extended as necessary.
To accomplish our audit objectives, we
Reviewed relevant HUD HPRP regulations and guidance, particularly Federal
Register Notice FR-5307-N-01 and HUD’s HPRP Eligibility Determination and
Documentation Guidance.
Obtained an understanding of the County’s administrative and financial
management controls and procedures.
Interviewed HUD field office and County HPRP officials.
Reviewed the County’s independent public accountant audit reports and its
subgrantee monitoring review reports.
Reviewed the HPRP contracts between HUD and the County and between the
County and its subgrantees and the related procurement procedures.
Reviewed performance reports the County submitted to FederalReporting.gov and
HUD’s E-Snap reporting system.
Reviewed reports from HUD systems, such as the Integrated Disbursement and
Information System and Line of Credit Control System, to document the reported
obligation and expenditure of HPRP funds. Assessment of the reliability of the
data in these systems was limited to the data sampled, which were reconciled to
the County’s records.
Verified that the County obligated its HPRP funds as required.
Selected a nonstatistical sample of the 10 drawdowns totaling more than
$179,000, which represented the highest administrative costs and employee
compensation expenses, to determine whether the funds were disbursed for
eligible activities and adequately supported. The sample represented 17 percent
of the total disbursement of $1.1 million for administration. The sample was not
statistically selected and cannot be projected to the universe.
Selected a random nonstatistical sample of 15 participant case files out of 369
HPRP participants—10 of the 299 served by the Bergen County Housing
Authority and 5 of the 70 served by the Center for Food Action—to test whether
9
HPRP grant funds were awarded to eligible participants and for eligible costs.2
The sample was not statistically selected and cannot be projected to the universe.
However, since there was one monetary error in the 15 files reviewed and our
assessment of County controls was strong, we did not deem it necessary to expand
the review.
We conducted the audit in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit objective.
2
Since the drawdowns for Northeast NJ Legal Services, Bergen County Community Action Partnership,
and Care Plus, Inc., were for administrative and salary costs, which were sampled separately, we
specifically selected the participants served by these entities. However, if the sampled participants were
also served by any or all of these three entities, we reviewed the documentation from those entities as
well.
10
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:
Program operations – Policies and procedures that management has
implemented to reasonably ensure that a program meets its
objectives.
Compliance with laws and regulations – Policies and procedures that
management has implemented to reasonably ensure that resource use
is consistent with laws and regulations.
Safeguarding resources – Policies and procedures that management
has implemented to reasonably ensure that resources are safeguarded
against waste, loss, and misuse.
Validity and reliability of data – Policies and procedures that
management has implemented to reasonably ensure that valid and
reliable data are obtained, maintained, and fairly disclosed in reports.
We assessed the relevant controls identified above.
A 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 the effectiveness or efficiency of
11
operations, (2) misstatements in financial or performance information, or (3)
violations of laws and regulations on a timely basis.
Significant Deficiency
We evaluated internal controls related to the audit objective(s) in
accordance with generally accepted government auditing standards. Our
evaluation of internal controls was not designed to provide assurance on
the effectiveness of the internal control structure as a whole. Accordingly,
we do not express an opinion on the effectiveness of Bergen County’s
internal control.
12
Appendix A
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
Comment 2
Comment 3
13
Ref to OIG Evaluation Auditee Comments
14
Ref to OIG Evaluation Auditee Comments
15
Ref to OIG Evaluation Auditee Comments
Comment 4
16
OIG Evaluation of Auditee Comments
Comment 1 Bergen County officials’ planned action is responsive to the
recommendation.
Comment 2 The lack of documentation to support inspection and analysis was
discussed during the audit with County officials, who had taken action to
ensure subrecipient compliance with documentation requirements.
Comment 3 Documentation for the repayment was provided and so noted in the report.
Comment 4 The report noted that County officials implemented an integrated case
management approach and provided the subrecipients with initial training
and subsequent guidance as the program was administered.
17
Bergen County, NJ, Generally Administered Its Homelessness Prevention and Rapid Re-Housing Program in Accordance With HUD Regulations
Published by the Department of Housing and Urban Development, Office of Inspector General on 2011-10-04.
Below is a raw (and likely hideous) rendition of the original report. (PDF)