We audited Homes for Life Foundation (Foundation) as a result of on-site audit work performed as part of a separate audit of the Los Angeles Homeless Services Authority's (Authority) administration of Supportive Housing Program funds. Our audit objective was to determine whether the Foundation applied and tracked its HUD Supportive Housing Program cash match in accordance with applicable requirements. The Foundation did not administer its Supportive Housing Program grants in compliance with HUD requirements. Specifically, it could not adequately support that it met the statutory 25 percent cash match requirement of $389,291 for all 12 grants reviewed. Further, it inappropriately charged $112,852 in duplicate costs. We attribute these deficiencies to the Foundation's inadequate understanding of the cash match record-keeping rules and regulations, its inadequate financial management system, its failure to implement a cost allocation plan to distribute shared costs among its multifunded projects, and the Authority's failure to monitor the Foundation's cash match operations.

We recommend that HUD require the Foundation and/or the Authority to (1) provide adequate supporting documentation to substantiate that the cash match of $389,291 was met or repay more than $2 million in grant funds expended from nonfederal funds, (2) implement a financial management system that adequately identifies the source and application of all cash match funds for federally sponsored activities, (3) support or repay $112,852 in duplicate costs from nonfederal funds, and (4) establish and implement a cost allocation plan that allocates program expenditures for its multifunded projects equitably.