We audited Community Advocates’ Supportive Housing Program and American Recovery and Reinvestment Act Homelessness Prevention and Rapid Re-Housing Program grants.  We selected Community Advocates based on a hotline complaint alleging misuse of Program grant funds.  Our objective was to determine whether Community Advocates properly administered its Program and Recovery Act grants in accordance with U.S. Department of Housing and Urban Development (HUD), Recovery Act, and its own requirements.

Community Advocates did not properly administer its Program and Recovery Act grant funds.  Specifically, it did not (1) ensure that Program funds were used for eligible activities and (2) maintain documentation to support required match contributions.  It also (1) failed to maintain a financial management system that separately tracked the source and application of Recovery Act funds and (2) lacked sufficient documentation to support the allocation of operating costs.  As a result, HUD and Community Advocates lacked assurance that more than $1.7 million in funds for Community Advocates’ Program and Recovery Act grants were used in accordance with Federal requirements.

We recommend that HUD require Community Advocates to provide (1) supporting documentation or reimburse HUD more than $632,000 from non-Federal funds and (2) supporting documentation or reimburse HUD nearly $1.1 million for transmission to the U.S. Treasury.  We further recommend that HUD ensure that Community Advocates implements adequate procedures and controls to address the issues identified.