Audit 396854

Federal Agency: U.S. Department of Housing and Urban Development Federal Program Name: HOME Investment Partnership Program Assistance Listing Number: 14.239 Pass-Through Agencies: City of Philadelphia, Redevelopment Authority: Venango – Loan Thompson Street – Loan County of Schuylkill - Home Investment Partnerships and Housing Trust Funds Programs: Fountain Springs – Loan Mayor and City of Baltimore: Baltimore Housing - Park Heights Women and Children – Loan Type of Finding:  Material Weakness in Internal Control over Compliance  Other Matters Criteria: 2 CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Award require compliance with the provision of eligibility. The Organization should have procedures and controls in place to ensure that the Organization leases the property to low-income homeless persons and complies with the terms and conditions dictated in the HOME loan agreement. Proper documentation should be maintained demonstrating evidence that residents living at the property meet the HOME loan criteria. Condition: As part of the eligibility requirement for the HOME Investment Partnership program, we are required to review files of client residents who were provided residential drug and alcohol treatment services at the Organization’s locations in Venango (Re-Entry), Fountain Springs, Thompson Street, and Park Heights Women and Children. We sampled a total of 40 resident clients at these four locations covered by HOME loans and requested documentation within client resident files, including proof of residency, proof of income (low income or homeless), and lease or housing agreement (depending on program requirements). Of 40 resident client files reviewed, management could not provide proof of income or residency status for 16 clients, nor signed lease agreements or policies and procedures manuals for 22 clients. Questioned Costs: None identified. Context: The HOME program has income targeting requirements where only low-income or very low-income individuals, as defined in 24 CFR section 92.2, are eligible for housing assistance. Consequently, organizations receiving or using HOME funds must verify the annual income of each household, considering all members. These organizations must maintain records for every family assisted. HOMEassisted units in rental housing projects must be occupied only by households that qualify as low income families and must adhere to specific rent limits. According to 24 CFR Section 92.209(c), participating organizations must select families based on low-income or homeless criteria. Cause: The Organization’s residential program, Philly House, which operated from the Venango location, provided low-intensity residential services for adult men with substance use and co-occurring disorders. This program was relocated to another site within the Organization’s network as it better complied with the requirements specified in the Project HOME Loans due to its nature. In contrast, the Re-Entry House, a halfway house for adult men with substance use and co-occurring disorders offering stable residential housing services, represented a different type of residential program. During the transition, management, at the location, did not prepare policies and procedures to determine income eligibility as outlined in the Project Home Loan agreement and 24 CFR section 92.2. Consequently, no documentation was prepared or provided to the auditors to demonstrate compliance with the eligibility and Project HOME Loan requirements. Effect: Controls over the documentation of income eligibility requirements are not in place to determine if clients receiving residential services at the Venango location meet the criteria for being low income or homeless, as specified by Project HOME loan requirements. Non-compliance with these eligibility requirements could result in the return of funding as described in the Project HOME loan agreements. Repeat Finding: Yes Recommendation: We recommend that management adopt and implement formal policies and procedures to ensure compliance with HOME eligibility requirements. Such policies and procedures should include clear communication of compliance requirements between staff and locations, standardized documentation and processes for determining and verifying income eligibility during intake, and procedures for the redetermination of income eligibility for residential clients residing at a location for more than one year. View of Responsible Officials and Planned Corrective Action: Please refer to Gaudenzia, Inc. and Gaudenzia Foundation, Inc.’s Corrective Action Plan.

Federal Agency: U.S. Department of Housing and Urban Development and U.S. Department of Health and Human Services Federal Program Name: Continuum of Care Program Center for Substance Abuse Treatment - Certified Community Behavioral Health Clinic Assistance Listing Number: 14.267 93.696 Direct Federal Award Program: PA0029L3T002316 - Tioga Arms PA0568L3T002308 - Shelton Court 22TI85374A – Certified Community Behavioral Health Clinic Type of Finding: - Significant Deficiency in Internal Control over Compliance - Other Matters Criteria: Federal regulations at 2 CFR Part 200 require non-Federal entities to follow documented procurement procedures that comply with applicable federal statutes and procurement standards. Under 2 CFR 200.320(a)(2), small purchase procedures must include obtaining price or rate quotations from an adequate number of qualified sources for purchases exceeding the micro-purchase threshold but not exceeding the simplified acquisition threshold. Additionally, 2 CFR 200.319 requires procurement transactions to be conducted in a manner providing full and open competition. Condition: As part of our audit procedures over the Organization’s procurement policy and the small purchase requirements under 2 CFR 200.320(a)(2), we sampled a total of five vendors who incurred costs exceeding $10,000 for each of the two major programs. For two of the five vendors selected, management was unable to provide written documentation demonstrating that price or rate quotations were obtained from an adequate number of qualified sources (generally 2-3 quotes) for purchases above the micro-purchase threshold ($10,000) and below the Simplified Acquisition Threshold ($250,000). This documentation should have included the names of suppliers contacted, prices quoted, and the justification for vendor selection. Questioned Costs: None identified. Context: The Organization is responsible for administering federal funds under the Continuum of Care (CoC) Certified Community Behavioral Health Clinic programs and must adhere to the procurement standards outlined in 2 CFR Part 200. As part of the single audit process, procurement transactions were reviewed to verify that the organization implemented appropriate procurement methods based on total vendor expenditures and maintained all required supporting documentation for purchases exceeding the micro-purchase threshold. Cause: Management’s procedures did not consistently ensure that the required procurement documentation was obtained and retained, and there were limited controls in place to monitor vendor expenditures in the aggregate to help determine the appropriate procurement method. Effect: Controls over the procurement process are not in place to determine that all procurement transactions are conducted in a manner providing full and open competition, in accordance with 2 CFR 200.319. Repeat Finding: N/A: Not a repeat finding Recommendation: We recommend management update its policies and procedures over procurement to ensure compliance with 2 CFR Part 200. This includes requiring and retaining documentation supporting the use of small purchase procedures, obtaining price or rate quotations from an adequate number of qualified sources, and monitoring vendor expenditures on an aggregate basis to ensure the appropriate procurement method is applied. Management should also provide training for staff responsible for procurement activities to promote consistent compliance with federal requirements. View of Responsible Officials and Planned Corrective Action: Please refer to Gaudenzia, Inc. and Gaudenzia Foundation, Inc.’s Corrective Action Plan.