Finding Text
Finding 2023-001: Noncompliance with Matching Requirement
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program: Continuum of Care Program (Northern PSH Combo and Piedmont)
Assistance Listing Number: 14.267
Award Period: Northern PSH Combo (Grant no. NC 0045) April 1, 2022 to March 31, 2023 Piedmont (Grant no. NC 0221) June 1, 2022 to May 31, 2023
Type of Finding: Noncompliance
Condition and Criteria: Matching requirement is 25% of all grant funds except for leasing funds. However, for Grant no. NC 0045 we noted that the Organization provided matching funds at approximately 5% and for Grant no. NC 0221 we noted that the Organization provided matching funds at approximately 6%. Total expenditures of federal awards was approximately $1.1 million for each of these grants.
Cause: The Organization and HUD were both aware of the Organization’s past difficulties in securing sufficient matching funds for both of these grant programs. Accordingly, in the prior year HUD waived the matching requirement in order to provide the Organization with more time to attempt to secure sufficient matching funds. However, the Organization was not successful in that effort and HUD declined to provide a waiver that would extend past June 30, 2022.
Effect: The Organization has not provided sufficient matching funds and as a result is not in compliance with the 25% matching requirement. This condition could result in the Organization losing funding due to noncompliance. However, as further discussed below the Organization is already in discussions with HUD regarding its potential discontinuance with these specific programs.
Recommendation: It is our understanding that the Organization has been involved in on going discussions with HUD regarding its difficulty in securing sufficient matching funds for these two grant award programs. This has included discussions regarding amending the terms of the award agreements that would enable the Organization to become the direct lease which would result in a large portion of the funds related to these awards to become leasing funds which would not require a 25% match. However, completing such an amendment would require an extended amount of time as underlying leases currently with individual participants in the program would need to expire first before the Organization could become the lessee. Accordingly, the Organization has recently determined that these awards have become too costly to administer and is now in discussions with HUD regarding the objective of transferring these award programs to another entity. We recommend that the Organization continue these discussions with HUD in order to end its responsibilities for award programs that it has determined it is unable to comply with.
View of Responsible Officials and Planned Corrective Actions: The Organization agrees with the finding. The Organization will continue working with HUD to transfer these award programs to another entity that has more capacity of complying with all requirements.
Name of the Contact Person Responsible for the Corrective Action: Tameka Gunn, President and Chief Executive Officer
Planned Completion Date for the Corrective Action Plan: March 2024