Purpose

To determine whether the New York City Department of Homeless Services (DHS) is adequately monitoring the security expenses at single adult and adult family homeless shelters and whether security equipment inventory records are adequately maintained. Our audit covered the period from July 1, 2014 through September 14, 2017.

Background

The New York City (City) Department of Homeless Services (DHS), an administrative unit of the New York City Department of Social Services (DSS), is the primary agency responsible for providing transitional housing and services for eligible homeless families and individuals in the City and for providing fiscal oversight of the homeless shelters. Governed by a “right to shelter” mandate, the City provides temporary emergency shelter to every eligible person who requests services. Homeless shelters provide security to ensure the safety and security of all residents. Shelter providers can use their own security employees, procure contracted security services, or use a combination of both. In addition, both DHS and providers procure security-related equipment (e.g., metal detectors, security cameras).

DHS is responsible for monitoring shelters’ security expenses to ensure they are appropriate and in compliance with contract requirements. DHS relies on various internal and external resources to guide its oversight, such as the New York City Department of Homeless Services’ Human Service Providers Fiscal Manual and the New York City Procurement Policy Board (PPB) rules. For DHS monitoring purposes, among other provisions, providers are required to:

• Submit annual budgets, including security expenses, to DHS for review and approval for the upcoming fiscal year;
• Maintain proper and sufficient documentation of expenditures (e.g., vouchers, bills, receipts) as evidence of their propriety and necessity;
• Keep DHS contract-related records (e.g., contract proposals, personnel time sheets) for at least six years, and make records available for review by auditors and government officials;
• Follow the Request for Proposal process when procuring security services to ensure competitive bidding; and
• Develop standard operating procedures (SOPs) to ensure that adequate controls over timekeeping and payroll processes are in place.

In addition, DHS is also responsible for the proper accounting of City-owned security equipment in the possession of shelter providers. Toward this end, DHS requires providers to submit inventory maintenance procedures within periods ranging from 10 to 30 days of contract commencement to ensure that providers maintain accurate records to account for all equipment, furnishings, and supplies purchased with DHS funds.

As of June 27, 2017, DHS held 93 registered contracts (140 locations) for single adult and adult family shelters with security budgets totaling $88.5 million for City fiscal years 2015 through 2017. As of July 1, 2017, the number of residents in adult family shelters and single adult shelters totaled 18,972.

In August 2016, DHS and the New York City Human Resources Administration began integrating into a single management structure under DSS. Under this plan, shelter system management is provided by DHS. During this audit, DHS officials advised us that they were in the midst of a large-scale reorganization and, as a result, had undertaken a significant examination and reform of many of the policies and processes under review in this audit. Additionally, DHS entered into a memorandum of understanding with the New York City Police Department to deploy a Management Team to oversee DHS’ security personnel (peace officers) and DHS-contracted security personnel. However, DHS retained responsibility for providing fiscal oversight of all security-related expenditures.

Key Findings

• DHS did not have adequate written SOPs to guide staff on how to perform and document the required oversight reviews and inventory record-keeping practices at shelter locations.
• DHS did not consistently comply with its own policies to perform periodic reviews of shelter providers’ security expenditures. During our review, we found significant compliance-related issues that accounted for $2.2 million in insufficiently documented and/or questionable security expenses.
• DHS did not ensure that providers complied with competitive bidding requirements and maintained adequate supporting documentation.
• DHS did not maintain inventory records of shelter security equipment. In addition, DHS did not ensure that providers established and submitted inventory maintenance procedures and security equipment inventory records, increasing the risk of loss, theft, or misuse of valuable and vulnerable assets. For the four sampled providers, we estimate that $229,507 in City owned equipment was not being properly accounted for.
• According to DHS officials, all security equipment purchased for providers using City funds is owned by DHS. However, DHS did not ensure that contract clauses were consistent with requirements regarding the ownership interest of security equipment and submission of inventory records.

Key Recommendations

• Establish clear, written SOPs for required expenditure reviews and complete monthly expenditure reviews, as required.
• Ensure that providers comply with their contractual requirements to retain sufficient documentation supporting proper procurement and payment of security services.
• Maintain a current inventory of security equipment at all shelter locations and ensure that providers comply with all contractual inventory requirements.
• Maintain consistency in contract clauses, including ownership interest of security equipment and submission of inventory records.

Other Related Audits/Reports of Interest

Office of Temporary and Disability Assistance: Oversight of Homeless Shelters (2015-S-23)
New York City Department of Homeless Services: Oversight of Selected Fiscal Aspects of Homeless Shelter Services (2016-N-1)