Follow-up Audit Report on the Department of Homeless Services’ Controls Over Billing and Payments Made to Aguila, Inc.
Follow-up Audit Report on the Department of Homeless Services’ Controls Over Billing and Payments Made to Aguila, Inc.
October 30, 2013
AUDIT REPORT IN BRIEF
The mission of the Department of Homeless Services (DHS) is to prevent homelessness when possible and to provide short-term, emergency shelter for individuals and families who have no other housing options available. Governed by a unique right to shelter mandate, New York City provides temporary emergency shelter to every man, woman, and child who is eligible for services, every night. Over the last 11 fiscal years, from 2002 through 2013, the number of homeless people served by DHS each night1 has grown 52 percent, from 30,971 to 47,084.
DHS provided temporary emergency shelter and social services to these eligible homeless adults and families through 81 providers at 239 sites in Fiscal Year 2013, including 67 for Single Adults, 18 for Adult Families, and 154 for Families with Children. Aguila, Inc. is one of its providers, currently housing homeless adult families and families with children in more than 40 sites in Manhattan and the Bronx. In Fiscal Year 2012, DHS paid Aguila and its shelters $51.2 million for a total of 462,141 Care Days, an average of $110 per night, to provide housing to homeless families. Over the last two years, payments for Aguila-operated shelters grew $10.8 million (23 percent) from $46.3 million in Fiscal Year 2011 to $57.1 million in Fiscal Year 2013. During the same period, direct payments to Aguila increased $11.7 million to $39.1 million, while direct payments to landlords and other vendors decreased by almost $1 million to $18 million.
This follow-up audit determined whether DHS has implemented the recommendations made in the previous audit, Audit Report on the Department of Homeless Services’ Controls Over Billing and Payments Made to Aguila, Inc. (Audit No. FK10-130A) issued November 4, 2011. The previous audit found inadequate controls in place to ensure that all payments made to Aguila were accurate and sufficiently supported. The audit also found that DHS did not adequately monitor Aguila’s fiscal and operational performance.
Audit Findings and Conclusions
Our review of the implementation status of the 19 recommendations made in a prior audit determined that one recommendation was implemented, 10 recommendations were partially implemented, and eight recommendations were not implemented. A number of issues identified from the previous audit still exist.
IMPLEMENTATION STATUS OF RECOMMENDATIONS FROM PRIOR AUDIT
as of June 30, 2013
|
# |
Recommendation |
Status |
|
1 |
Ensure that it conducts bi-monthly or bi-annual unit inspections and record reviews as required. |
Partially Implemented |
|
2 |
Ensure that Aguila maintains client sign-in logs or attendance records for all facilities. |
Implemented |
|
3 |
Investigate unsupported client-lodging days identified in this report and recoup payments as appropriate. |
NOT Implemented |
|
4 |
Recoup $913,949 from Aguila related to improper expenditures. |
Partially Implemented |
|
5 |
Investigate insufficiently supported expenditures totaling $9.1 million and recoup funds accordingly. |
Partially Implemented |
|
6 |
Periodically review Aguila financial records, including but not limited to inventory procedures and lists, allocation plans, contracts, and invoices, to ensure that reported expenditures are accurate, reasonable, appropriate, and adequately supported. |
Partially Implemented |
|
7 |
Enter into written contracts with Aguila for directly-operated facilities that, at minimum, specify or restrict how funds may be expended, delineate services to be provided, establish minimum performance standards, and detail remedies or termination clauses for failure to meet standards. |
NOT Implemented |
|
8 |
Ensure that sub-contracted services are covered by written contracts that, at a minimum, specify or restrict how funds may be expended, delineate services to be provided, and establish minimum performance standards. |
Partially Implemented |
|
9 |
Establish non-contracted facility per diem rates based upon audited line item operating budgets. |
NOT Implemented |
|
10 |
Review and approve Aguila sub-contracts for the performance of its obligations. |
Partially Implemented |
|
11 |
Ensure that Aguila sub-contracts contain provisions specifying that work performed by sub-contractors must be in accordance with the terms of master contracts between DHS and Aguila. |
Partially Implemented |
|
12 |
Obtain VENDEX questionnaires for vendors, including sub-contractors, whose aggregate annual contract values exceed $100,000. |
NOT Implemented |
|
13 |
Ensure that facilities are inspected in accordance with DHS procedures. |
Partially Implemented |
|
14 |
Ensure that identified conditions are properly reported and followed up on in a timely manner. |
Partially Implemented |
|
15 |
Routinely check whether facilities have open violations and ensure that providers rectify open violations in a timely manner. |
Partially Implemented |
|
16 |
Cease placing clients in facilities with hazardous and unsanitary conditions. |
NOT Implemented |
|
17 |
Ensure that facility program reviews are conducted in accordance with DHS procedures. |
NOT Implemented |
|
18 |
Ensure that identified social service deficiencies are followed up on in a timely manner. |
NOT Implemented |
|
19 |
Require Aguila to develop improvement plans for facilities that do not meet housing placement targets. |
NOT Implemented |
We also identified other issues, which are discussed at the end of this report. Specifically, DHS needs to improve its inspection and review process, including monitoring of the client sign-in process, and current reconciliation process. Aguila needs to obtain written contracts from its suppliers and pay its City fines and water and sewer charges.
Audit Recommendations
The follow-up audit makes 18 recommendations, including that DHS should:
- Ensure that it conducts bi-annual unit inspections and record reviews as required.
- Periodically review Aguila per diem rates, allocation plans, and budget line items to ensure accuracy, reasonableness, and appropriateness, and that items are adequately supported.
- Enter into written contracts with Aguila for directly-operated facilities that, at minimum, specify or restrict how funds may be expended, delineate services to be provided, establish minimum performance standards, and detail remedies or termination clauses for failure to meet standards.
- Ensure that sub-contracted services are covered by written contracts that, at minimum, specify or restrict how funds may be expended, delineate services to be provided, and establish minimum performance standards.
- Document the basis for all non-contracted facility per diem rates, whether based upon audited line item operating budgets or other factors considered.
- Immediately eliminate the practice of placing clients in facilities with hazardous and unsanitary conditions.
- Ensure that its staff reviews the Daily Attendance Rosters and the Monthly Certifications submitted by its shelter providers (not just Aguila) before authorizing payments to providers.
- Ensure that written contracts between Aguila and its suppliers have provisions specifying that all work performed must be in accordance with the terms of its master contracts with DHS.
- Ensure that all Aguila facilities pay their City fines and water and sewer charges.
Agency Response
In its response, DHS agreed with seven of the 18 recommendations, disagreed with five recommendations, and failed to address the remaining six recommendations.