OFFICE OF AUDIT
REGION 3
PHILADELPHIA, PA
The County of Northumberland
Sunbury, PA
Homelessness Prevention and Rapid Re-Housing
Program
2014-PH-1004 APRIL 30, 2014
Issue Date: April 30, 2014
Audit Report Number: 2014-PH-1004
TO: Nadab O. Bynum, Director, Office of Community Planning and Development,
Philadelphia Regional Office, 3AD
//signed//
FROM: David E. Kasperowicz, Regional Inspector General for Audit, Philadelphia
Region, 3AGA
SUBJECT: The County of Northumberland, Sunbury, PA, Did Not Administer Its
Homelessness Prevention and Rapid Re-Housing Program Grant According to
Recovery Act Requirements
Attached is the U.S. Department of Housing and Urban Development (HUD), Office of
Inspector General’s (OIG) final results of our review of Northumberland County, PA’s
administration of its Homelessness Prevention and Rapid Re-Housing Program grant.
HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.
The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.
If you have any questions or comments about this report, please do not hesitate to call me at
215-430-6730.
April 30, 2014
The County of Northumberland, Sunbury, PA, Did Not
Administer Its Homelessness Prevention and Rapid Re-
Housing Program Grant According to Recovery Act
Requirements
Highlights
Audit Report 2014-PH-1004
What We Audited and Why What We Found
We audited the County of The County did not administer its program according
Northumberland’s Homelessness to Recovery Act requirements. Specifically, it did not
Prevention and Rapid Re-Housing always (1) ensure that program participants were
Program grant because the chairman of eligible for assistance, (2) maintain complete
the Northumberland County board of documentation in the participant files, (3) ensure that it
commissioners requested that we audit incurred only eligible expenses and properly supported
the program. The audit objective was to them, (4) make draws from the correct grant line items,
determine whether the County and (5) perform required unit habitability inspections.
administered its program grant in It also did not return unused program funds as
accordance with American Recovery required.
and Reinvestment Act requirements.
What We Recommend
We recommend that the U.S.
Department of Housing and Urban
Development require the County to (1)
remit to the Commonwealth $15,183
from non-Federal funds for the
ineligible expenditures identified by the
audit so the Commonwealth can return
the funds to the U.S. Treasury, (2)
provide documentation to support the
$159,149 in unsupported expenditures
identified by the audit or repay the
Commonwealth from non-Federal funds
for any amount that it cannot support so
the Commonwealth can return the funds
to the U.S. Treasury, and (3) remit to
the Commonwealth $3,541 in program
funds on deposit in its grant account so
the Commonwealth can return the funds
to the U.S. Treasury.
TABLE OF CONTENTS
Background and Objective 3
Results of Audit
Finding: The County Did Not Administer Its Grant According to Recovery 5
Act Requirements
Scope and Methodology 12
Internal Controls 14
Appendixes
A. Schedule of Questioned Costs and Funds To Be Put to Better Use 15
B. Auditee Comments and OIG’s Evaluation 16
2
BACKGROUND AND OBJECTIVE
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act
of 2009, which included $1.5 billion for a homelessness prevention fund. Funding for this
program, called the Homelessness Prevention and Rapid Re-Housing Program, was distributed
based on the formula used for the Emergency Shelter Grants program. The purpose of the
program was to provide financial assistance and services to prevent individuals and families
from becoming homeless and to help those who were experiencing homelessness to be quickly
rehoused and stabilized. The funds provided for a variety of assistance, including short-term or
medium-term rental assistance; housing relocations; stabilization services, including such
activities as mediation, credit counseling, and case management; and financial assistance,
including security or utility deposits, utility payments, and moving cost assistance.
On August 13, 2009, the U.S. Department of Housing and Urban Development (HUD) awarded
the Commonwealth of Pennsylvania a $23.4 million Homelessness Prevention and Rapid Re-
Housing Program grant. The Commonwealth executed agreements with 74 subgrantees to carry
out program activities, including the County of Northumberland, which received an award of
$365,361 in program funds. The grantee and its subgrantees were required to expend 100
percent of their grant funds within 3 years from the date on which HUD signed the grant
agreement. Accordingly, the term of the County’s grant agreement ended on August 12, 2012.
The County spent only $291,829 of its grant funds. The following chart provides details.
Eligible program activities Budget Expenditures
Financial assistance $227,620 $173,295
Housing relocation and
stabilization services 85,129 69,425
Data collection and evaluation 43,478 39,986
Administrative costs 9,134 9,123
Total $365,361 $291,829
The County closed out its program in April 2012, leaving a balance of $73,532, which the
Commonwealth recaptured.
The Commonwealth monitored the County’s administration of the grant by conducting desk
reviews in May 2011 and January 2012. The Commonwealth found that the County did not
maintain adequate documentation to support the eligibility of program costs. As a result, in July
2012, the Commonwealth performed an onsite monitoring review of the County’s program. It
reported that it reviewed 153 participant files and determined that, overall, the County made
3
ineligible payments totaling $188,325. 1 Therefore, it requested that the County repay that
amount. However, the County did not agree with the Commonwealth’s conclusions and
requested that we audit its program.
The objective of the audit was to determine whether the County administered its program in
accordance with Recovery Act requirements.
1
Although the Commonwealth identified only $75,775 in ineligible expenditures during its review of the 153 files,
it did not use this figure in its calculation of the total ineligible costs that it reported in its monitoring report. The
Commonwealth considered some expenditures ineligible because documentation in a participant’s file was
incomplete or documentation was missing from the file. (We consider expenditures with incomplete documentation
or missing documentation unsupported costs.) To calculate the $188,325, the Commonwealth deducted the amount
of eligible expenditures that it identified during its review ($56,206) from the total financial assistance payments that
the County made ($170,254) and considered the difference ($114,048) ineligible. It chose this methodology because
the County did not provide 52 files for review, so it considered the payments related to those files ineligible. Since
the Commonwealth determined that 67 percent of the financial assistance payments were ineligible ($114,048
divided by $170,254 = .67), it applied that percentage to the amount the County spent for the housing relocation and
stabilization services activity and considered those costs ineligible as well ($46,181). It also declared that only 50
percent of the administrative ($4,562) and data collection and evaluation ($19,993) costs were ineligible because it
recognized that the County made an attempt to comply with the reporting and data collection requirements. Lastly,
the Commonwealth included $3,541 in program funds that was on deposit in the County’s bank account.
4
RESULTS OF AUDIT
Finding: The County Did Not Administer Its Grant According to
Recovery Act Requirements
The County did not always (1) ensure that program participants were eligible for assistance, (2)
maintain complete documentation in the participant files, (3) ensure that it incurred only eligible
expenses and properly supported them, (4) make draws from the correct grant line items, and (5)
perform required unit habitability inspections. It also did not return unused program funds as
required. These problems occurred because the County did not provide adequate oversight of its
case worker, who was responsible for determining client eligibility and maintaining
documentation in the participant files, to demonstrate compliance with requirements and support
disbursements. Also, it lacked controls to ensure that it complied with program requirements for
incurring expenses, processing draws, and conducting inspections. As a result, the program did
not fully meet its intended goal of preventing homelessness or providing stabilization to those
with housing needs because the County made ineligible expenditures of $35,031, unsupported
expenditures of $159,149, and it needs to return $3,541 in unused grant funds to the U.S.
Treasury.
Participants That Received
Financial Assistance Did Not
Always Meet Eligibility
Requirements
The County provided financial assistance totaling $173,295 to 205 program
participants. We reviewed the files for only 199 participants because the County
could not provide the files for 6 participants. Of the 199 participants, 43 did not
meet eligibility requirements. As a result, financial assistance totaling $32,661
that the County provided to these 43 participants was ineligible because the
participants did not meet program requirements. The following paragraphs
provide details.
• Twenty-five participants received program funds totaling $15,476 while also
receiving rental assistance from other housing subsidy programs, which is
prohibited. The County did not verify whether participants were already
receiving rental assistance from other housing subsidy programs. For
example, one participant received $1,200 in rental assistance. The County
paid $600 from program funds, and the other $600 was paid from the
5
County’s homeless assistance program. Section IV of the HUD notice 2 stated
that rental assistance payments could not be made on behalf of eligible
individuals or families for the same period and for the same cost types that
were being provided through another Federal, State, or local housing subsidy
program.
• Fourteen participants received program funds totaling $12,799 although they
were not eligible because they did not meet income eligibility requirements.
The documentation in the participant files showed that the family income
exceeded area median income limits. Section IV of the HUD notice required
program participants to have an initial consultation with a case manager and
have a total household income at or below the area median income limits.
Program eligibility determination and documentation guidance 3 required that
annual income include the current gross income of all adult household
members, income documentation be dated within 30 days before the time of
application, and total household income be at or below 50 percent of the area
median income.
• Two participants received program funds totaling $2,446 although they were
not eligible to receive assistance because they were not at risk of being
homeless. Documentation in their participant files showed that these
participants were moving voluntarily. Section I of the HUD notice stated that
the purpose of the Homelessness Prevention and Rapid Re-Housing Program
was to provide homelessness prevention assistance to households who would
otherwise become homeless and to provide assistance to rapidly re-house
persons who are homeless.
• One participant received program funds totaling $1,440 although ineligible
due to an apparent conflict of interest. The participant received assistance for
a property that was partially owned by the County’s grants manager. The
grants manager was responsible for administering the grant and received
training and guidance related to the program. Section VII of the HUD notice
required that no person who was an employee, agent, consultant, officer, or
elected or appointed official of the grantee and who exercised or had exercised
any functions or responsibilities with respect to assisted activities, or who was
in a position to participate in a decision-making process or gain inside
information with regard to such activities, may obtain a personal or financial
interest or benefit from the activity, or have an interest in any contract or
agreement either for himself or herself or for those with whom he or she has
family or business ties, during his or her tenure or for 1 year thereafter.
Further, although HUD could grant an exception to the restrictions on a case-
2
HUD Notice of Allocations, Application Procedures, and Requirements for Homelessness Prevention and Rapid
Re-Housing Program Grantees under the American Recovery and Reinvestment Act of 2009, effective March 19,
2009
3
HUD’s Eligibility Determination and Documentation Guidance, dated March 2010
6
by-case basis upon the written request of the grantee, in this case, the County
did not make a written request for an exception.
• One participant received program funds totaling $500 but did not lack
financial resources to obtain immediate housing. Documentation in the file
showed that the participant had a bank account with a balance of $25,000
available for use. The funds in the bank account could have been used to assist
the participant in securing immediate housing, but the County did not require
the participant to do so. Section IV of the HUD notice required that
participants be either homeless or at risk of being homeless. Participants were
also required to show that no appropriate housing options were available for
them and that they lacked financial resources and support networks to obtain
immediate housing.
Some Participant Files Lacked
Documentation
The County did not maintain required documentation in 102 participant files. 4
HUD program eligibility determination and documentation guidance required that
the County obtain and maintain in the participant files complete documentation
such as current income documentation for all family members, eviction notices,
lease agreements, utility shutoff notices, homeless self-certifications, self-
declarations of housing status, and third-party certifications to support the
participants’ housing status. The documentation was required to ensure that the
participant met program requirements. Since the files lacked documentation or
lacked complete documentation, we considered the related financial assistance
payments totaling $86,424 to be unsupported.
Some Participant Files Were
Not Provided
The County could not provide files for six participants that it assisted. Because
the County provided no documentation, we considered the related financial
assistance payments totaling $3,877 to be unsupported.
Housing Relocation and
Stabilization Services Expenses
Did Not Always Meet Program
Requirements
The County was approved to draw down funds for four eligible activities:
financial assistance, housing relocation and stabilization services, data collection
4
Forty-three participant files contained more than one deficiency.
7
and evaluation, and administrative costs. Section IV of the HUD notice
specifically explained each eligible program activity and what costs could be
charged to it. For example, financial assistance was limited to short-term rental
assistance, medium-term rental assistance, security deposits, utility deposits,
moving cost assistance, and motel and hotel vouchers. We reviewed all $69,425
of the County’s expenditures for the housing relocation and stabilization services
activity and found that it did not always comply with these requirements. The
County erroneously drew down $42,770 from its financial assistance activity for
expenses that should have been drawn down from the housing relocation and
stabilization services activity. The expenses were for the salaries, benefits, and
other costs associated with the case manager who assisted with providing
stabilization services. As a result, the draw of $42,770 was unsupported.
Additionally, the County erroneously drew down $6,595 from its housing
relocation and stabilization services activity for expenses that should have been
drawn down from its financial assistance activity. These expenses were related to
participant files that had no eligibility or documentation deficiencies. As a result,
the draw of $6,595 was unsupported.
The County also charged indirect costs totaling $1,580 to the housing relocation
and stabilization services activity without getting approval from the
Commonwealth to charge indirect costs to the grant. Regulations at 2 CFR (Code
of Federal Regulations) Part 225 require departments or agencies desiring to
claim indirect costs to prepare an indirect cost rate proposal. The Commonwealth
informed us that the County did not submit an indirect rate proposal for review
and approval. As a result, the $1,580 was ineligible.
In addition, the County charged $653 in excess salary and benefit costs to the
housing relocation and stabilization services activity. The timesheets, wage
journals, and revenue and expense reports did not support all of the expenditures.
As a result, the $653 was unsupported.
Data Collection and
Administrative Expenses Did
Not Always Meet Program
Requirements
We reviewed all $49,109 5 of the County’s expenses for data collection and
evaluation and administrative costs. The County did not always ensure that these
expenses met program requirements. As a result, it incurred ineligible costs
totaling $790 and unsupported costs totaling $18,830. The following paragraphs
provide details.
• The County erroneously drew down $16,815 from its data collection and
evaluation activity for expenses that should have been drawn down from its
5
Data collection and evaluation costs of $39,986 plus administrative costs of $9,123 equals $49,109.
8
housing relocation and stabilization services activity. Section IV of the HUD
notice specifically explained each eligible program activity under the grant
and what costs could be charged to it. The HUD notice required that only
collecting and reporting expenses associated with HUD’s homeless
management information system be charged to the data collection and
evaluation activity. The expenses were for the salaries, benefits, and other
costs associated with the case manager who assisted with providing
stabilization services. As a result, the draw of $16,815 was unsupported.
• The County charged indirect costs totaling $790 to the data collection and
evaluation activity without getting approval from the Commonwealth to
charge indirect costs to the grant. Regulations at 2 CFR Part 225 require
departments or agencies desiring to claim indirect costs to prepare an indirect
cost rate proposal. The Commonwealth informed us that the County did not
submit an indirect rate proposal for review and approval. As a result, the $790
was ineligible.
• The County charged $2,015 for salaries that were unsupported. It charged
$1,309 to administrative costs for the salaries of three employees that did not
have timesheets to support their hours charged to the grant. It also charged
$706 in excess salaries to the data collection and evaluation activity. The
timesheets, wage journals, and revenue and expense reports did not support
the costs. Section IV of the HUD notice required that administrative costs be
used only for the County’s staff salaries associated with those who
administered the grant. Therefore, the $2,015 was unsupported.
Habitability Inspections Were
Not Always Performed
The County did not comply with program habitability inspection requirements.
Section VII of the HUD notice required the County to conduct initial and follow-
up inspections of housing units into which a program participant would be
moving. Of the 205 participants, 51 had moved into units. The County was
required to inspect those 51 units. It did not inspect 40 of the 51 units as required.
The participant files lacked documentation to demonstrate that inspections were
conducted. The County agreed that it did not conduct all of the necessary
inspections because it lacked the human resources necessary to conduct them.
Without the inspections, there was no assurance that the units met habitability
standards.
9
The County Had Excess Funds
That Need To Be Returned
During the Commonwealth’s July 2012 monitoring review, it determined that the
County had $3,541 in grant funds on deposit in its bank account. The funds
represented several payments that had been made to landlords but were returned
to the County for various reasons. Article III of the County’s grant agreement
required it to return unused funds to the Commonwealth. Further, the Recovery
Act required grantees and subgrantees to expend 100 percent of the program
funds within 3 years from the date on which HUD signed the grant agreement. It
stated that any funds not spent by the deadline would be recaptured. HUD signed
the grant agreement with the Commonwealth on August 13, 2009, and the funds
were still in the County’s bank account as of February 2014. Therefore, the
County needs to remit the $3,541 to the Commonwealth so it can be returned to
the U.S. Treasury.
Conclusion
The County did not administer its Homelessness Prevention and Rapid Re-
Housing Program in accordance with Recovery Act requirements. This condition
occurred because the County did not provide adequate oversight of its case
worker, who was responsible for determining client eligibility and maintaining
documentation in the participant files, to demonstrate compliance with
requirements and support disbursements. Also, it lacked controls to ensure that it
complied with program requirements for incurring expenses, processing draws,
and conducting inspections. As a result, the County made ineligible expenditures
totaling $35,031 6 and unsupported expenditures totaling $159,149. 7 It also needs
to return $3,541 in unused program funds. To resolve these issues, the County
needs to remit payment for the ineligible costs and unused funds and either
provide documentation to support the unsupported costs or remit payment for the
costs it cannot support. The County stated that it has resumed working to obtain
further documentation and supporting evidence for the deficient participant files
and looks forward to working with HUD and the Commonwealth to address the
audit issues.
Recommendations
We recommend that the Director of HUD’s Philadelphia Office of Community
Planning and Development require the County to
6
$35,031 = $32,661 + $1,580 + $790
7
$159,149 = $86,424 +$3,877 + $42,770 + $6,595 + $653 + $16,815 + $2,015
10
1A. Remit to the Commonwealth $15,1838 from non-Federal funds for the
ineligible expenditures identified by the audit so the Commonwealth can
return the funds to the U.S. Treasury.
1B. Provide documentation to support the $159,149 in unsupported
expenditures identified by the audit or repay the Commonwealth from
non-Federal funds for any amount that it cannot support so the
Commonwealth can return the funds to the U.S. Treasury.
1C. Remit to the Commonwealth $3,541 in program funds on deposit in its
grant account so the Commonwealth can return the funds to the U.S.
Treasury.
8
This figure is net of $19,848 of ineligible expenditures related to 26 participant files that the Commonwealth also
determined were ineligible during its monitoring review ($35,031 - $19,848 = $15,183).
11
SCOPE AND METHODOLOGY
We conducted our onsite work from July through December 2013. We performed our work at
the County’s office located at 399 South Fifth Street, Sunbury, PA; the Commonwealth’s office
located at 400 North Street, Harrisburg, PA; and our office located in Baltimore, MD. The audit
covered the period September 2009 through June 2012 but was expanded when necessary to
include other periods.
To accomplish our objective, we reviewed
• The Recovery Act, Office of Management and Budget implementation guidance, and
applicable HUD regulations and guidance.
• The County’s grant agreement; grant application; accounting records; program-related
files; single audit reports for its fiscal years 2010, 2011, and 2012; policies and
procedures; and organizational chart.
• The Commonwealth’s grant agreement with HUD, documentation related to its desk and
onsite monitoring reviews of the County, and other program-related records.
• Files for 199 participants assisted by the County to determine whether they contained
documentation to demonstrate that the participants met program eligibility requirements
and included documents such as support for expenses, habitability inspection reports, and
lead-based paint disclosures.
• Drawdown reports for the County’s grant from HUD’s Integrated Disbursement and
Information System.
• The County’s 20 drawdown requests and related supporting documentation totaling
$291,829 to determine whether expenses charged to its grant were eligible and supported
according to program requirements.
We also interviewed responsible County employees, staff from the Commonwealth of
Pennsylvania’s Department of Community and Economic Development, and officials from
HUD’s Philadelphia Office of Community Planning and Development.
To achieve our audit objective, we relied in part on computer-processed data from the County’s
accounting system. We used the computer-processed data to determine the amount of grant
funds the County used. Although we did not perform a detailed assessment of the reliability of
the data, we did perform a minimal level of testing and found the data to be adequate for our
purposes.
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
12
objective(s). We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.
13
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 that management has implemented to reasonably ensure that (1) funds
are withdrawn in accordance with program guidelines and (2) participants meet
program eligibility and documentation requirements.
We assessed the relevant controls identified above.
A deficiency in internal control exists when the design or operation of a control does
not allow management or employees, in the normal course of performing their
assigned functions, the reasonable opportunity to prevent, detect, or correct (1)
impairments to effectiveness or efficiency of operations, (2) misstatements in
financial or performance information, or (3) violations of laws and regulations on a
timely basis.
Significant Deficiencies
Based on our review, we believe that the following items are significant deficiencies:
• The County did not provide adequate oversight of the employee responsible for
determining participant eligibility and maintaining documentation.
• The County lacked controls to ensure that it complied with program
requirements for incurring expenses, processing draws, and conducting
inspections.
14
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
AND FUNDS TO BE PUT TO BETTER USE
Recommendation Funds to be put to
Ineligible 1/ Unsupported 2/
number better use 3/
1A $15,183
1B $159,149
1C $3,541
1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
that the auditor believes are not allowable by law; contract; or Federal, State, or local
policies or regulations.
2/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
or activity when we cannot determine eligibility at the time of the audit. Unsupported
costs require a decision by HUD program officials. This decision, in addition to
obtaining supporting documentation, might involve a legal interpretation or clarification
of departmental policies and procedures.
3/ Recommendations that funds be put to better use are estimates of amounts that could be
used more efficiently if an Office of Inspector General (OIG) recommendation is
implemented. These amounts include reductions in outlays, deobligation of funds,
withdrawal of interest, costs not incurred by implementing recommended improvements,
avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
that are specifically identified. In this instance, if the County implements our
recommendation, it will return unused grant funds to the U.S. Treasury.
15
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
16
17
18
OIG Evaluation of Auditee Comments
Comment 1 We did not identify any payments from the County to clients (program
participants). Section IV.A.1 of the HUD notice prohibited the County from
making payments directly to program participants.
19
The County of Northumberland, Sunbury, PA, Did Not Administer Its Homelessness Prevention and Rapid Re-Housing Program Grant According to Recovery Act Requirements
Published by the Department of Housing and Urban Development, Office of Inspector General on 2014-04-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)