We audited Veterans First’s Supportive Housing Program (SHP) based on a referral from the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s Office of Investigation and a hotline complaint, alleging that Veterans First employees were directed to prepare false accounting documents.  Our objective was to determine whether expenditures Veterans First charged to its SHP grants and program fees it charged to its SHP clients were eligible and supported. 

We determined some of the complaint allegations had merit.  Veterans First charged its SHP grants $530,808 in unsupported payroll and other costs.  We also identified $3,245 in ineligible costs.  In addition, Veterans First’s accounting system data were unreliable and unauditable.  Further, Veterans First continued charging clients a 19 percent program fee after a change in regulations disallowed the practice and did not adequately maintain documentation in its client files. 

As a result, we recommended that the Director of HUD’s Los Angeles Office of Community Planning and Development require Veterans First to provide adequate supporting documentation for $530,808 in unsupported costs or repay its program from non-Federal funds and repay its program $3,245 in ineligible costs.  Additionally, we recommended that Veterans First implement accounting system procedures and controls and that HUD suspend its funding until such controls are in place.  We also recommended that Veterans First repay the applicable clients the overcharged program fees, which combined totaled $15,435, and implement additional policies and procedures for the review and maintenance of client income documentation and rent determinations.