oversight

Broward County, Fort Lauderdale, FL, Did Not Properly Administer One of Its Projects and Did Not Comply With Some Match Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2015-08-23.

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

  Broward County, Fort Lauderdale, FL
                      Continuum of Care Program




Office of Audit, Region 4           Audit Report Number: 2015-AT-1008
Atlanta, GA                                            August 23, 2015
To:            Ann D. Chavis, Director, Office of Community Planning and Development,
               Miami Field Office, 4DD


               //signed//
From:          Nikita N. Irons, Regional Inspector General for Audit, 4AGA
Subject:       Broward County, Fort Lauderdale, FL, Did Not Properly Administer One of Its
               Projects and Did Not Comply With Some Match 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 Broward County’s administration of its Continuum
of Care Program as it relates to the audit objective.
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
404-331-3369.
                   Audit Report Number: 2015-AT-1008
                   Date: August 23, 2015

                   Broward County, Fort Lauderdale, FL, Did Not Properly Administer One of
                   Its Projects and Did Not Comply With Some Match Requirements




Highlights

What We Audited and Why
The U.S. Department of Housing and Urban Development (HUD) increased funding for the
homeless assistance programs from $1.9 billion in 2012, to $2.1 billion in 2014, to achieve its
strategic objective to end homelessness. Given this heightened attention, the U.S. Department of
Housing and Urban Development (HUD), Office of Inspector General, audited Broward
County’s Continuum of Care Program, which was awarded more than $21 million in the 2011
through 2013 grant years. The objectives were to determine whether Broward County (1) spent
grant funds for eligible program activities and ensured that expenditures were sufficiently
supported and (2) maintained sufficient documentation to support that the funding sources used
to match the grant funds were eligible.

What We Found
Broward County inappropriately spent grant funds to pay for rent amounts that were above rent
reasonableness standards and for duplicate charges. This condition occurred because the County
did not have adequate oversight controls to ensure that rent amounts charged to the program
were reasonable and to detect the double billing of charges. The County’s lack of adequate
controls resulted in $78,231 in questioned costs and $195,975 in funds to be put to better use.

The County generally ensured that its projects complied with HUD’s match requirements.
However, it did not ensure that a sponsor executed conforming agreements with the third parties
that provided in-kind services and did not ensure the reporting of accurate match amounts to
HUD. This condition occurred because the County did not have an adequate control process to
ensure compliance. These issues could result in the sponsor not meeting the match requirements
or the County making decisions to approve or fund a project without accurate information.

What We Recommend
We recommend that the Director of the Miami HUD Office of Community Planning and
Development require Broward County to provide documentation to justify the rent amounts
charged to the 2012 grants or repay HUD from non-Federal funds the $57,906 in excess rent plus
$2,932 in administrative fees. In addition, the County should strengthen, implement, and enforce
procedures to (1) ensure that rents charged are reasonable to prevent $195,975 in future excess
rents, (2) detect double billing, and (3) ensure compliance with HUD match requirements.
Table of Contents
Background and Objectives ....................................................................................3

Results of Audit ........................................................................................................4
         Finding 1: Broward County Did Not Ensure the Proper Administration of One of
         its Continuum of Care Projects ....................................................................................... 4

         Finding 2: Broward County Did Not Comply With Some Match Requirements ...... 7

Scope and Methodology .........................................................................................11

Internal Controls ....................................................................................................15

Appendixes ..............................................................................................................17
         A. Schedule of Questioned Costs and Funds To Be Put to Better Use ...................... 17

         B. Auditee Comments and OIG’s Evaluation ............................................................. 18

         C. List of 2012 Continuum of Care-Funded Projects by Project Sponsor ............... 23

         D. List of Excess Rents Charged................................................................................... 24




                                                               2
Background and Objectives
On May 20, 2009, the Homeless Emergency Assistance and Rapid Transition to Housing Act of
2009 was enacted into law, consolidating three separate homeless assistance programs administered
by the U.S. Department of Housing and Urban Development (HUD) – Supportive Housing, Shelter
Plus Care, and Moderate Rehabilitation-Single Room Occupancy – into a single grant program, the
Continuum of Care Program. The purpose of the program is to (1) promote communitywide
commitment to end homelessness; (2) provide funding to nonprofit providers, and State and local
governments to quickly rehouse homeless individuals and families; (3) promote access to and
effective use of mainstream programs by homeless individuals and families; and (4) boost self-
sufficiency among individuals and families experiencing homelessness. A continuum of care was a
system administratively established by HUD in 1995 to address homelessness through a coordinated
community-based process of identifying needs and building a system of housing and services to
address those needs.
The Broward County Continuum of Care is a network of organizations, advocates, community
residents, and businesses that plan programs with the primary goal of alleviating homelessness in
Broward County, FL. The Broward County governmental entity served as the collaborative
applicant, the entity that applied for HUD’s Continuum of Care Program grant on behalf of the
Continuum.
Broward County’s Homeless Initiative Partnership Section is the lead agency for the Broward
County Continuum of Care. This section is responsible for administering the homeless programs,
funded by the County, State of Florida, and HUD, in a collaborative effort with other County
divisions, community service providers, business leaders, and government officials to maintain a
countywide continuum of homeless services.

HUD awarded the Broward County Continuum of Care more than $21 million in the 2011 through
2013 grant years. Specifically, the County received $7.8 million in 2012 Continuum of Care grant
funds to administer 17 projects. These 17 projects had varying operating years, ranging from March
1, 2013, through December 31, 2014. Eight project sponsors, consisting of Broward County
divisions, a city government, a housing authority, and five nonprofits, administered the projects. A
list of the 17 projects and their project sponsors can be found in appendix C of this report. The
Homeless Initiative Partnership Section oversaw the administration of the projects by reviewing the
projects’ invoices for drawdown of the grant funds and monitoring them for compliance with
program requirements.

The audit objectives were to determine whether Broward County (1) spent grant funds for eligible
program activities and ensured that expenditures were sufficiently supported and (2) maintained
sufficient documentation to support that the funding sources used to match the grant funds were
eligible.




                                                 3
Results of Audit

Finding 1: Broward County Did Not Ensure the Proper
Administration of One of its Continuum of Care Projects

The County inappropriately spent grant funds to pay for rent amounts that exceeded rent
reasonableness standards and for duplicate charges. This condition occurred because the County
did not have adequate oversight controls to ensure that rent amounts charged to the program
were reasonable and to detect the double billing of charges. The County’s lack of adequate
controls resulted in $274,206 in questioned costs and funds to be put to better use.

Excess Rents Charged
The Fort Lauderdale Chronic Homelessness Housing Collaborative project was awarded
$455,000 in Continuum of Care grant funds to provide permanent housing and supportive
services for the homeless. The City contracted with the Housing Authority of the City of Fort
Lauderdale to lease 22 housing units, consisting of one- and two-bedroom units, to house
homeless clients. The Authority provided housing to the homeless clients in five separate
buildings that it owned and received rental payments from the City. Broward County reimbursed
the City for the project expenses, including the rental charges, with its grant funds.

The County spent $57,906 in 2012 grant funds for rent amounts that exceeded rent
reasonableness standards. An additional $17,020 in excessive rent amounts had been approved
to be paid with 2013 grant funds for the months of January and February 2015 but had not been
paid as of June 8, 2015. The excessive rent amount was based on the grant-assisted unit rent
charges that exceeded the average rent charges for comparable units within the same five
buildings, taking into account the electricity costs included as part of the rent for the grant-
assisted units and any portion of the rent allocated to the tenant. The monthly rents charged in
the five buildings ranged between $450 and $700 in 2014 and between $500 and $700 in 2015
for the one- and two-bedroom units. However, the grant-assisted clients were charged $988 for
one-bedroom and $1,187 for two-bedroom units. HUD regulations at 24 CFR (Code of Federal
Regulations) 578.49(b)(2) state that rents paid with grant funds must be reasonable and cannot
exceed rents charged for comparable units, considering the location, size, type, quality,
amenities, facilities, and management services. Additional details can be found in the Scope and
Methodology section and appendix D of this report.

The excessive rental charges occurred because the City did not understand program
requirements. The manager contracted by the City to oversee the project stated that the City had
never managed this type of project and she was not familiar with the rent reasonableness
requirements. In particular, she believed the City was automatically allowed to charge the HUD-
published fair market rents, relied on incorrect rental rates from an outdated grant application,
and presumed the Authority had performed the rent reasonableness analysis for the rent amounts
in the grant application. However, neither the City nor the Authority performed the rent
reasonableness review for the units leased in 2014. In addition, the rent reasonableness reviews



                                                4
performed by the Authority for the 2015 leased units did not use the most comparable properties
to accurately reflect the market rent, and the Authority set rent amounts that exceeded its own
rent reasonableness range without adequate justification. Finally, the County lacked control
processes to ensure that rents charged to the grant met rent reasonableness requirements.

The County and the City collected a 7 percent administrative fee, 3.5 percent each, based on the
amount of eligible grant funds disbursed. As a result, $57,906 plus $2,932 in administrative fees
collected were not used to benefit the homeless program. If the County does not implement
procedures to ensure that grant funds pay for rents that meet rent reasonableness requirements,
grant funds could pay another $195,975 1 in excessive rents for this project.

Duplicate Charges
The County spent $16,805 in grant funds to pay for duplicate rental and maintenance charges.
Specifically, the City charged the grant twice for the August 2014 rents for 15 units totaling
$15,489 and maintenance payroll costs of $1,316. The City attributed the issue of the double
billing and retention of such charges to an accounting error. Although the County was
responsible for reviewing the City’s invoices to justify the drawdown of grant funds, it did not
have adequate control processes to detect the double-billing. This deficiency violated 2 CFR
200.403(a) and 200.405(a), which states that a cost is allowable if it is allocable. The cost is
allocable to a particular cost objective if the goods or services involved can be charged to the
cost objective relative to the benefits received. In this case, no benefits were received for the
duplicate payment. As a result, $16,805 in Continuum of Care grant funds was not used to
achieve the intent of the grant or assist more homeless tenants. The $588 in administrative fees
collected 2 on the duplicated funds was also questioned.

We discussed the duplicate charges with the County during our review. In a June 5, 2015, letter,
the County requested that the City repay the duplicate payments. The County reviewed the
project expenditures and identified other questionable expenditures and program violations that
required corrective action by the City. In addition, the County took other proactive measures to
address the issues identified during our review. These measures included plans to require the
project sponsors to submit rent reasonableness assessments with the first invoice requesting
reimbursement for assisted units and plans to revise its invoice and monitoring checklists.

Conclusion
The County did not ensure that the Fort Lauderdale Chronic Homelessness Housing
Collaborative project administered by the City complied with program requirements.
Specifically, grant funds of $60,838 were used to pay for excess rent amounts from the 2012




1
  The excess funds of $195,975 were determined by calculating the difference between the rent charged for the
grant-assisted units over the average rent charged for the non-grant-assisted units in the same five buildings and our
rent reasonableness analysis for another building leased in 2015. The period for the calculation was from January
through December 2015 for the 2013 grant and from January through December 2016 for the 2014 grant. HUD had
awarded funds to the project for the 2013 and 2014 grants. See the Scope and Methodology section for our
calculation.
2
  For the $16,805 in grant funds disbursed, the County did not collect its 3.5 percent administrative fee. Thus, only
the 3.5 percent ($588) collected by the City ($16,805 x .035) was questioned.



                                                           5
grant. In addition, grant funds were used to pay for duplicate rental and maintenance charges
totaling $17,393. This condition occurred because the County did not (1) practice due diligence
in reviewing the project’s expenditures and (2) lacked adequate controls to comply with rent
reasonableness requirements, detect double billing, and prevent duplicate payments. As a result,
$78,231 in grant funds, which could have been used to further the program’s purposes were
inappropriately spent. In addition, if the County does not implement the necessary controls to
ensure that grant funds pay for reasonable rents, $195,975 in future grant funds may be used on
unjustified excessive rental costs. Based on our audit, the County planned to initiate actions to
address the identified deficiencies.

Recommendations
We recommend that the Director of the Miami Office of Community Planning and Development
require the County to

       1A.     Provide documentation to justify the rent amount charged from the 2012 grant or
               repay HUD from non-Federal funds the $57,906 in excess rents plus the $2,932 in
               administrative fees totaling $60,838.

       1B.     Develop, implement, and enforce procedures to comply with rent reasonableness
               requirements to prevent an estimated $195,975 in excess rents from being charged
               to the program.

       1C.     Repay HUD from non-Federal funds the $16,805 in duplicate payments plus the
               $588 in administrative fees totaling $17,393.

       1D.     Develop, implement, and enforce detailed procedures for County staff to detect
               double billing and prevent duplicate payments of grant funds.




                                                6
Finding 2: Broward County Did Not Comply With Some Match
Requirements

The County generally ensured that its projects complied with HUD’s match requirements.
However, our review showed noncompliance with certain match requirements that need
correcting. Specifically, the County did not ensure that a sponsor executed conforming
agreements with the third parties providing in-kind services and did not ensure the reporting of
accurate match amounts to HUD. These deficiencies occurred because the County did not have
an adequate control process to ensure compliance. These issues could result in the project
sponsor not meeting the use or source of match requirements or making decisions on the
approval or funding of a project without complete and accurate information.

No Agreement or Nonconforming Agreements With Service Providers
We reviewed eight projects to address whether the County maintained sufficient documentation
to support that funds or in-kind contributions used to match the Continuum of Care grant funds
were eligible. Five of the eight projects, which were administered by the same project sponsor,
used in-kind supportive services to match the grant funds. Four third-party service providers
provided the in-kind supportive services to the homeless clients for the five projects.

For in-kind contributions, 24 CFR 578.73(c)(3) requires that before grant execution, services to
be provided by a third party be documented by a memorandum of understanding between the
recipient or subrecipient and the third party that will provide the services. Further, the
requirements state that the memorandum of understanding must establish (1) the unconditional
commitment by the third party to provide the services, (2) the specific service to be provided, (3)
the profession of the persons providing the service, and (4) the hourly cost of the service to be
provided. The project sponsor did not always enter into a memorandum of understanding or
similar agreement in compliance with HUD requirements. For example, no agreement was
entered into with one of the third-party providers that served the clients of two projects. For the
agreements that were executed, none contained all of the required provisions.

This deficiency existed because the County did not have an adequate control process in place to
ensure that it complied with the requirements, such as having a proper agreement between the
project sponsor and service provider. By not executing an agreement with the service provider to
detail the specific responsibilities or the cost of each service, there was a risk that the types of
services to be provided would not be eligible for the match requirement or that the amount of the
in-kind service contributed would not be adequate to meet the match requirement. The County
stated that it had since required the project sponsor to execute a memorandum of understanding
with all supportive service providers.




                                                 7
Match Amounts Reported to HUD Not Accurate
We reviewed 10 projects to determine whether match amounts reported to HUD were accurate.
Six of the projects reviewed showed that the match amounts reported in the annual performance
report (APR) 3 and submitted to HUD were not accurate or supported by the documentation
provided. In the grant agreement executed with HUD, the County agreed to monitor the
subrecipient’s match requirement and report on the match amount to HUD through its APR as
required by 24 CFR 578.103(e). In addition, the e-snaps CoC [Continuum of Care] APR
Guidebook 4 requires the County to record all cash and in-kind matches spent on the project. The
table below lists the match amounts reported to HUD for the six projects and the amounts
supported by the documentation reviewed.

                                                        Table 1
                                                           Amount reported              Amount supported
     #                 Project name
                                                              in APR                    by documentation
     1    Health Screening Unit                                $53,832 (original)                     $94,139
                                                               $65,267 (revised)
     2    Samaritan 2008                                                $95,032                       $79,780

     3    Broward II                                          $118,324 (original)                    $102,783
                                                              $103,453 (revised)
     4    S+C Permanent Housing 16 Units                               $212,075                      $223,287
     5    S+C Permanent Housing 29 Units                                 $353,471                    $449,014
     6    S+C Permanent Housing 18 Units                                 $278,158                    $277,158


The supported match amounts are from the invoice packages submitted by the sponsor to the
County to request for reimbursement as well as documentation and explanations provided by the
project sponsor. For example, the initial review of the invoice packages for the Health Screening
Unit project showed the $53,832 match amount, but this amount met only 23 percent of the
required 25 percent match requirement, 5 and there was no documentation in the invoice packages
to identify what detailed costs comprised the amount. County officials stated that the amount in
the invoice package was based on a formula of the requested amount and did not realize the
calculated amount did not meet the 25 percent match. During the review, the County revised the
match amount reported in its APR. However, our review of the financial documentation and
explanations obtained from the project sponsor indicated that the sponsor used $94,139 in other
grant funds to match the Continuum of Care funds. The information supported an amount that




3
  HUD uses the APR to track the progress and accomplishments of projects it funds. All CoC Program recipients
must complete an APR in e-snaps. Recipients have 90 days from the end of their operating year to submit their APR
to HUD through e-snaps. E-snaps is HUD’s electronic homeless assistance application and grants management
system that supports the annual CoC program application and annual performance reporting.
4
  The e-snaps CoC APR Guidebook, issued March 2015, assists the recipient with the data entry into e-snaps for all
Supportive Housing Program, Shelter Plus Care, Single Room Occupancy, and CoC grants.
5
  HUD regulations at 24 CFR 578.73(a) require the recipient or subrecipient to match all grant funds, less the leasing
funds, with no less than 25 percent of funds or in-kind contributions from other sources.



                                                          8
exceeded the 25 percent match requirement, but the amount did not agree with the match
amounts the County reported in its APR to HUD.
This deficiency occurred because the County did not ensure that the match amount reported in its
APR was supported by the match documentation submitted by the project sponsors and to obtain
clarification when the amounts did not agree. Toward the end of the 2012 grant, the County
hired an accountant, who it believed was an added resource to ensure that projects met the 25
percent match requirement and that match amounts were consistent and supported. By not
ensuring that the amount reported was supported, HUD and the County did not have the correct
information to make decisions that could affect the approval or funding of later projects
administered by the project sponsors.
The County has been proactive and taken certain steps to address the issues identified during our
review. It shared that it has revised the contract addendum with subrecipients to include
requirements to report match sources and uses with each invoice, planned to develop a new
workflow to reconcile and validate the match amounts before submitting its APR, and stated that
it would revise its monitoring tools to record match review results.
Conclusion
The County generally ensured that its projects complied with HUD’s match requirements.
However, it did not ensure that a sponsor using in-kind services to match the grant funds
executed conforming agreements with the third party providing the services and did not ensure
the reporting of accurate match amounts to HUD. These deficiencies occurred because the
County did not have an adequate control process in place to ensure compliance. These issues
could cause the project sponsor to not meet the use or source of match requirements or make
decisions on the approval or funding of a project without complete or accurate information.
Based on our review, the County had initiated actions to address the issues identified.

Recommendations
We recommend that the Director of the Miami Office of Community Planning and Development
require the County to

       2A.     Ensure that project sponsors using in-kind contributions to match the Continuum
               of Care grant funds execute a memorandum of understanding or similar
               agreement with the third party providing services for the project funded with the
               2013 Continuum of Care grant and future grants in compliance with 24 CFR
               578.73(c)(3).




                                                9
2B.   Develop, implement, and enforce detailed procedures for staff and project
      sponsors to ensure that they comply with HUD’s match requirements. Procedures
      and accompanying guidance should include (1) tracking the cash or in-kind match
      amounts monthly or consistently to ensure that the match amount reported in its
      APR to HUD is accurate and supported by the documentation provided by the
      project sponsors, (2) providing to project sponsors a list of the types of
      documentation that may be sufficient to ensure the eligibility of the use and
      source of the match funds, and (3) reviewing the documentation from project
      sponsors to ensure that the sources of the funds used to match the grant funds are
      eligible and sufficiently supported to comply with 24 CFR 578.73.




                                       10
Scope and Methodology
The audit period covered the operating year of the projects awarded from the fiscal year 2012
grant funds, March 1, 2013, to December 31, 2014. 6 The audit period was expanded as needed
to achieve our objectives. We performed most of our audit fieldwork from November 2014 to
May 2015 at the County’s main office and the Miami HUD Office of Inspector General (OIG),
Office of Audit. We performed the following audit work to accomplish our objective:
    •   Reviewed Federal regulations relevant to our objective;
    •   Reviewed the project files to include the contract file and invoice packages, grant
        applications and agreements, and monitoring reports prepared by the County;
    •   Interviewed County and project sponsor officials to obtain explanations;
    •   Interviewed homeless clients to verify information in tenant files;
    •   Reviewed documents provided by project sponsors and their contractor, such as financial
        reports, supporting invoices, lease agreements, rent rolls, and utility bills; and
    •   Discussed results and recommendations with HUD officials.


HUD awarded the Broward County Continuum of Care more than $21 million during the 2011
through 2013 grant years. Specifically, the County received $7.8 million in 2012 grant funds to
administer 17 projects. To test the eligibility of program expenditures during the survey, we
selected expenditures from two projects whose award totaled more than $1.4 million, or 19
percent of the total funds awarded. The projects were selected because one had the highest
awarded grant amount and the other was high risk because it was a newly funded project and had
a low spending rate. For the first project, we reviewed the expenditures related to rental
assistance. For the second project, we reviewed the expenditures related to operating costs.

Survey results showed that the County did not maintain or provide sufficient documentation to
support that the operating costs disbursed to the second project were eligible. Thus, in the audit
phase, we extended the review to the project’s leasing costs. 7 We found that grant funds were
spent to pay for rent amounts that exceeded rent reasonableness standards for the grant-assisted
units. To perform our calculation of the excess rent, we used the January 2014 through April
2015 rent rolls, which listed the rents of both the grant-assisted and non-grant-assisted tenants,
for the five buildings resided in by the grant-assisted tenants.
We used the non-grant-assisted units from the five buildings as comparable units, and thus, relied
on the monthly rent rolls to determine the rent amounts charged to the non-grant-assisted tenants.



6
  The projects managed by the County had varying operating years. The earliest operating year started March 1,
2013, and ended February 28, 2014, and the latest operating year started January 1, 2014, and ended December 31,
2014.
7
  Our review did not include a test of tenant eligibility.



                                                        11
To assess whether the rent amounts for the non-grant-assisted tenants listed on the monthly rent
rolls were reliable, we selected 6 non-grant-assisted units for review. At least 1 unit was selected
from each of the 5 buildings that had occupancy of 11 months or more in 2014, with 2 being
selected from the building with the most units. We compared the rent amounts on the monthly
rent rolls to the lease agreements and found the data to be consistent. Thus, we concluded that
the rent amounts listed on the rent rolls were accurate and could be relied upon to support the
questioned costs in the audit report.

The rent rolls showed 27 comparable units in 2014 and 22 comparable units in 2015. 8 The
monthly rents for these comparable units ranged between $450 and $700 in 2014 and between
$500 and $700 in 2015 for one- and two-bedroom units. The grant-assisted tenants were charged
monthly rents of $988 for a one-bedroom, and $1,187 for a two-bedroom unit. The City and the
Authority reasoned that the grant-assisted units had a higher rent because the rent included
electric utility costs. Therefore, we included the $64 average monthly electric utility cost
incurred for the grant-assisted units in 2014 to our calculation. The $57,906 in excess rent for
the 2014 calculation (paid from the 2012 grant) is the difference between the rent amount for the
grant-assisted units and the average rent amount of a comparable unit in each of the five
buildings taking into consideration the electric utility cost and the portion of rent paid by the
grant-assisted tenant.

During the first 2 months of 2015, two grant-assisted tenants were relocated to another
Authority-owned building that was recently acquired and vacant. To obtain the rent
reasonableness for the units in this building, which consisted of only one-bedroom units, we
identified three comparable properties using the GoSection8 and Realtor Web sites. 9 The
adjusted monthly rent for the three comparable properties ranged from $780 to $793, which
included a $74 electric utility adjustment. We used the midpoint of the rent range to arrive at
$786 as our rent reasonableness rate. The grant-assisted tenants were charged $994. The
$17,020 in excess rent approved to be paid for the 2015 calculation (from the 2013 grant) was
the sum of (1) the difference between the rent amount for the grant-assisted units plus the
average utility cost over the average rent amount of a comparable unit in the five buildings and
(2) the difference between the rental charge of $994 over the $786 rent reasonableness rate for
the recently acquired building. We also accounted for the tenant’s portion of the rent, which
reduced the rent amount charged to the grant.

The $195,975 in funds to be put to better use is comprised of the following amounts:

    January – February 2015         March – December 2015 January – December 2016                         Total




8
  The 27 comparable units are those with rent charges for 11 or more months in 2014, and the 22 comparable units
are those with rent charges for the first 4 months in 2015.
9
  GoSection8.com is the largest rental-listing service for the Section 8 housing market, allowing families to locate
and compare affordable rental homes, affording landlords a platform for reaching Section-8-eligible families, and
providing housing authorities with area-specific Internet portals and rent reasonableness certifications. Realtor.com
provides listings on the houses for sale, apartments for rent, and property and neighborhood details for identified
areas.



                                                          12
                        From 2013 grant                                  From 2014 grant
             $17,020                          $81,371                        $97,584                  $195,975

The $81,371 consists of (1) the calculated excess rent for March and April 2015 based on the
charged rents and considering the same factors used in the $17,020 calculation and (2) the
estimated excess rent for the remaining 8 months (May - December 2015) based on the April
2015 rents considering that all factors remain the same. The $97,584 calculated for 2016 is the
estimated excess calculated by multiplying the $8,132 in excess rent for April 2015 by 12
months.

We performed due diligence to ensure that the comparable units from the five buildings were
unassisted units in that the units were not occupied by subsidized tenants and the units were not
subsidized or subject to rent restrictions. To do so, we reviewed HUD’s Public and Indian
Housing Information Center data for Region 4 to determine whether the non-grant-assisted units
were identified as units occupied by Section 8 tenants and whether the non-grant-assisted units
were located in public housing developments. We also confirmed with Authority officials that
the other units and tenants for the five buildings were not subsidized and the buildings were not
low-income tax credit buildings subjected to rent restrictions.

In addition, to test the County’s compliance with the match requirement, we selected 3 of the 17
projects for review during the survey. One was selected because the County’s APR showed that
the project did not meet the 25 percent match requirement. The other two projects were selected
from the top three project sponsors receiving the most grant funds. During the survey, we
determined whether the project met the 25 percent match requirement, the match funds were
used for program eligible costs, and the source of the match funds was eligible. Based on survey
results, we selected an additional five projects to address the audit objective. These five projects
were administered by one sponsor that received the most grant funds. The eight projects were
awarded more than $5.1 million, or 66 percent of the total award. We also reviewed 10
projects 10 to determine whether match amounts reported to HUD were accurate and supported,
selecting them based on the dates their APRs were due and the project sponsor. Except for one
project because its report was not yet submitted, we selected at least one project from each
sponsor. The 10 projects were awarded more than $3.7 million, or 48 percent of the total award.

The results from our reviews apply only to the expenditures and match data reviewed and cannot
be projected to the universe of the expenditures or match data for other projects.

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(s). We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objectives.




10
  The 10 projects reviewed for reporting accuracy included 5 of the 8 projects selected for matching compliance,
along with 5 other projects.



                                                         13
14
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 objectives:

•   Effectiveness and efficiency of program operations – Controls over program operations
    include policies and procedures that the audited entity has implemented to provide reasonable
    assurance that a program meets its objectives, while considering cost effectiveness and
    efficiency.
•   Relevance and reliability of information – Controls over the relevance and reliability of
    information include policies and procedures that management of the audited entity has
    implemented to reasonably ensure that operational and financial information used for
    decision making and reporting externally is relevant, reliable, and fairly disclosed in reports.
•   Compliance with laws and regulations – Controls over compliance include policies and
    procedures that the audited entity has implemented to reasonably ensure that program
    implementation is in accordance with provisions of laws, regulations, contracts, and grant
    agreements.
•   Safeguarding of assets – Controls over the safeguarding of assets and resources include
    policies and procedures that the audited entity has implemented to reasonably prevent or
    promptly detect unauthorized acquisition, use, or disposition of assets and resources.
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 Deficiency
Based on our review, we believe that the following item is a significant deficiency:



                                                  15
•   The County did not implement controls to reasonably ensure that (1) rents charged to the
    grant complied with rent reasonableness requirements and (2) grant funds were not charged
    more than once for the same expenditures (see finding 1).




                                               16
Appendixes

Appendix A


            Schedule of Questioned Costs and Funds To Be Put to Better Use


     Recommendation                              Unreasonable or       Funds to be put to
                             Ineligible 1/        unnecessary 2/         better use 3/
         number
            1A                                          $60,838
            1B                                                                $195,975
            1C                    $17,393

          Totals                  $17,393               $60,838               $195,975



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/    Unreasonable or unnecessary costs are those costs not generally recognized as ordinary,
      prudent, relevant, or necessary within established practices. Unreasonable costs exceed
      the costs that would be incurred by a prudent person in conducting a competitive
      business.
3/    Recommendations that funds be put to better use are estimates of amounts that could be
      used more efficiently if an 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. Based
      on our review, if the County implements the recommendation to ensure that the rents
      charged for the grant-assisted units are reasonable and comply with 24 CFR 578.49(b),
      $195,975 in grant funds can be available to assist other homeless clients or needs.




                                               17
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




Comment 1




                               18
             Auditee Comments
Ref to OIG
Evaluation




Comment 2


Comment 1




Comment 3




Comment 4




                                19
             Auditee Comments
Ref to OIG
Evaluation




Comment 4




                          20
                                 OIG Evaluation of Auditee Comments


Comment 1        The County agreed that grant funds were paid for rents which appear to exceed
                 rent reasonableness standards. On June 11, 2015, it requested that the City of Fort
                 Lauderdale provide justification on the process or factors used to establish the
                 rents for project recipients during the 2012 and 2013 grants. Absent a response
                 from the City, on July 7, 2015, the County suspended reimbursement of
                 expenditures to the City. In addition, the County advised that for the
                 administrative fee included in the $61,959 excess rent amount cited in finding 1 of
                 the draft audit report, it did not draw its portion of the administrative fee (of 3.5
                 percent) from September through December 2014.

                 We acknowledge the County’s efforts in beginning the process to resolve this
                 issue. If the City provides documentation, HUD will work with the County to
                 determine the sufficiency of such documentation to justify the rent amounts
                 charged to the grant program. The amount determined to be in excess of the
                 reasonable rent will need to be repaid to HUD from non-Federal funds to address
                 recommendation 1A. Also, we reviewed the documents provided and revised the
                 administrative fee amount collected on the $57,906 in excess rent and reflected
                 the change in finding 1 and recommendation 1A of the report.

Comment 2        The County concurred that duplicate rent charges were paid. It stated that it
                 issued a letter dated April 27, 2015, to the City requiring reimbursement for
                 ineligible expenses and followed up with a June 5, 2015 letter 11 identifying
                 additional ineligible expenses requiring reimbursement by June 15, 2015. The
                 County indicated that no payment has been received but intends to pursue
                 resolution of the repayment of the ineligible expenses.

                 We acknowledge the County’s proactive efforts in seeking reimbursement from
                 the City. HUD will work with the County to establish the target completion date
                 to address recommendation 1C.

Comment 3        The County concurred that the subrecipient for the 5 projects mentioned in
                 finding 2 did not execute conforming agreements with third parties providing in-
                 kind services. It has been working with the subrecipient to identify elements
                 needed in the Memorandum of Understanding, received technical assistance from
                 HUD, and notified the sponsor to submit executed memorandums by July 31,
                 2015.




11
   The repayment noted in the County’s June 5, 2015 letter includes the duplicate rental and maintenance charges
cited in finding 1.



                                                         21
                    We acknowledge the County’s efforts in correcting this issue. The receipt of
                    executed memorandums that comply with 24 CFR 578.73(c)(3) will address
                    recommendation 2A.

Comment 4           The County highlighted several procedural changes it has or will implement to
                    address the issues identified in the findings. Specifically, it was drafting rent
                    reasonableness policies and procedures for subrecipients to determine reasonable
                    rent and to be aware of the documentation to submit to the County to be
                    maintained. Additionally, the County indicated that it was strengthening its
                    process for reviewing invoices by incorporating additional client level detail on
                    the tracking tool, including a review by the accountant, and implementing a
                    quality assurance process. Further, it said it would revise its monitoring tool to
                    improve its subrecipient monitoring. The County included with its written
                    comments a table outlining the actions (Action of Matrix 12) it has implemented
                    and plan to implement to address the findings and other issues.

                    OIG agrees with the County that the procedural changes, when implemented and
                    enforced, will help ensure its compliance with HUD requirements and will
                    address recommendations 1B, 1D, and 2B.




12
     We did not include the Action of Matrix in Appendix B.



                                                          22
     Appendix C
                     List of 2012 Continuum of Care-Funded Projects by Project Sponsor


#                 Project sponsor                 Project name          Operating year        Award          Award
                                                                                              amount        amount to
                                                                                                             sponsor
1         Broward County Housing Authority     S+C 88 Units             11/01/13 - 10/31/14   $ 1,005,317
                                               HHOPE Chronic
2         Broward County Housing Authority     Homeless Initiative      06/01/13 - 05/31/14   $   925,438
3         Broward County Housing Authority     S+C 29 Units             06/01/13 - 05/31/14   $   410,945
4         Broward County Housing Authority     S+C 18 Units             10/01/13 - 09/30/14   $   275,130
5         Broward County Housing Authority     S+C 16 Units             06/01/13 - 05/31/14   $   250,905   $ 2,867,735
          Broward County Elderly and Veteran
6         Services Division                    Inverrary Station        12/01/13 - 11/30/14   $   966,606
          Broward County Family Success
7         Administration Division              NewHart Project          12/01/13 - 11/30/14   $   368,896
          Broward County Family Success
8         Administration Division              HART & Home              03/01/13 - 02/28/14   $   254,260
          Broward County Homeless Initiative
9         Partnership Section                  Dedicated HMIS 13        12/01/13 - 11/30/14   $   220,149
          Broward County Homeless Initiative
10        Partnership Section                  CoC Planning             12/01/13 - 11/30/14   $   124,012   $ 1,933,923
11        Broward Housing Solutions            Broward II               08/01/13 - 07/31/14   $   977,561
12        Broward Housing Solutions            Samaritan 2008           11/01/13 - 10/31/14   $   254,615   $ 1,232,176
                                               Ft. Lauderdale Chronic
                                               Homelessness Housing
13        City of Fort Lauderdale              Collaborative            01/01/14 - 12/31/14   $   455,000   $   455,000
14        HOPE South Florida, Inc.             HOPE4Families            07/01/13 - 06/30/14   $   293,719   $   293,719
15        Henderson Behavioral Health, Inc.    Chalet Apartments        06/01/13 - 05/31/14   $   289,452   $   289,452
                                               Independent Living
16        Covenant House Florida               Program                  07/01/13 - 06/30/14   $   395,951   $   395,951
          Broward Partnership for the
17        Homeless                             Health Screening Unit    03/01/13 - 02/28/14   $   347,234   $   347,234

                                                Total                                         $ 7,815,190   $ 7,815,190




     13
          HMIS = homeless management information system



                                                              23
Appendix D
                                           List of Excess Rents Charged

     #        Unit             Client                  Excess rent charged                         Total
            identifier          ID #
                                                to 2012 grant         to 2013 grant 14
     1     1103-132190          3806                     $ 3,879                   $ 732                   $ 4,611
     2     1103-132191        24886 15                   $ 1,166                      $0                   $ 1,166
     3     1103-132191         23008                     $ 3,157                   $ 732                   $ 3,889
     4     1103-132194          421                      $ 2,423                   $ 732                   $ 3,155
     5     1103-132195         23003                     $ 2,231                   $ 732                   $ 2,963
     6     1103-132202         20034                     $ 3,971                 $ 1,144                   $ 5,115
     7     1103-132206         18267                     $ 4,183                   $ 510                   $ 4,693
     8     1103-132207         22153                     $ 3,043                   $ 732                   $ 3,775
     9     1103-132208         16727                     $ 1,084                 $ 1,018                   $ 2,102
     10    1103-132210          3960                     $ 4,389                   $ 510                   $ 4,899
     11    1103-132214          3129                     $ 2,607                   $ 732                   $ 3,339
     12    1103-132216         25757                     $ 3,418                   $ 732                   $ 4,150
     13    1103-132217         21972                     $ 3,588                   $ 732                   $ 4,320
     14    1103-132219         30458                     $ 2,578                 $ 1,080                   $ 3,658
     15    1103-132220         27421                     $ 2,826                   $ 748                   $ 3,574
     16    1103-132224         32076                     $ 1,506                   $ 748                   $ 2,254
     17    1103-132225          4638                       $ 981                   $ 748                   $ 1,729
     18    1103-132227          3950                       $ 483                   $ 748                   $ 1,231
     19    1103-132228         25420                     $ 1,658                   $ 748                   $ 2,406
     20    1103-132250          3809                     $ 2,257                   $ 598                   $ 2,855
     21    1103-132255          349                      $ 3,105                   $ 782                   $ 3,887
     22    1103-132256         22938                       $ 805                   $ 782                   $ 1,587
     23    1103-132266          4974                     $ 2,568                   $ 748                   $ 3,316
     24    1103-132276        18267 16             Not applicable                  $ 126                    $ 126
                                      17
     25    1103-132283         3960                Not applicable                  $ 126                    $ 126
                                                        $ 57,906                $ 17,020                $ 74,926




14
   The excess rents are calculated from the January and February 2015 rent charges. The $17,020 total is included in
the $195,975 amount reported as funds to be put to better use in recommendation 1B.
15
   The tenant moved out of the unit in April 2014.
16
   The tenant moved from unit 1103-132206 (item 7) to unit 2554-1 in February 2015.
17
   The tenant moved from unit 1103-132210 (item 10) to unit 2554-8 in February 2015.



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