Audit of the contract between the salvation army and the department of homeless services for the operation of the carlton house

Audit Report In Brief

This audit determined whether the Salvation Army complied with the contract with the Department of Homeless Services (DHS) to operate and manage the Carlton House. Specifically, we examined whether the Salvation Army: maintained the Carlton House in a safe and sanitary condition, and carried out required inspections; provided adequate services to residents; had appropriate payroll, personnel, timekeeping, purchasing, and inventory procedures; maintained complete and accurate records to support all expenditures and amounts billed to DHS; and spent program funds on expenses that were reasonable and necessary for the operation of the Carlton House. The scope of this audit covered July 1, 2003, through June 30, 2004-Fiscal Year 2004.

Audit Findings and Conclusions

The Salvation Army generally maintained adequate records to support expenses and amounts billed to DHS for the operation of the Carlton House, and generally spent program funds on expenses that were reasonable and necessary. In addition, the Salvation Army complied with contract provisions for providing child care services, establishing evacuation procedures, and providing appropriate security services.

However, the Salvation Army did not comply with other contract terms. Specifically, the Salvation Army did not ensure that the Carlton House was maintained in a safe and sanitary condition and that it maintained documentation indicating that tenants’ units were inspected regularly. In addition, the Salvation Army commingled funds received from DHS with funds from other Salvation Army programs; made payments from its general account that were not fully supported by the documentation; paid for items that were not delivered to the Carlton House; paid employees $77,820 for undocumented hours; and did not maintain an inventory list of equipment or affix tags to the equipment.

In addition, DHS did not amend the contract and submit the amendment to the Comptroller for registration when it chose to increase the daily rate it paid the Salvation Army, contrary to the City’s Procurement Policy Board (PPB) rules.

Audit Recommendations

To address these issues, we make seven recommendations, including that DHS should ensure that:

•  All contractors operating temporary emergency shelters maintain safe and sanitary conditions in the facilities.

•  Contractors operating emergency shelters develop and implement formal procedures for inspecting residential units and should ensure that inspections are carried out in accordance with these procedures.

•  Funds disbursed to contractors are not commingled with funds disbursed to contractors for non-related programs.

Contractors maintain adequate documentation to support all wages paid to employees.