We audited New Image Emergency Shelter’s Housing Opportunities for Persons With AIDS (HOPWA) program based on a referral from the U.S. Department of Housing and Urban Development, Office of Inspector General’s (HUD OIG) Office of Investigation and a citizen complaint, alleging that New Image lacked adequate documentation to support program expenditures and employee salaries. Our objective was to determine whether New Image administered and expended HOPWA grant funds in accordance with HUD regulations.

We found that some of the allegations in the complaint had merit. New Image did not adequately support its cost allocations to its HOPWA program activities in accordance with applicable HUD requirements. It was also unable to properly support $183,642 in operating expenditures and lease costs and $82,563 in employee salaries allocated to its HOPWA program activities. We recommend that the Director of HUD’s Los Angeles Office of Community Planning and Development require New Image and the City of Los Angeles Housing and Community Investment Department to provide adequate supporting documentation for (1) the $82,563 in unsupported salary costs and (2) the $183,642 in operating expenditures and lease costs or repay the HOPWA program from non-Federal funds.