Objective

To determine whether the New York City Department of Homeless Services is effectively monitoring its contract with the Bowery Residents’ Committee (BRC) to ensure reported costs are allowable, supported, and program related. The audit covered the period from July 1, 2016 through June 30, 2019.

About the Program

The New York City Department of Homeless Services (DHS), an administrative unit of the New York City Department of Social Services (DSS), is the 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. In February 2011, DHS contracted with BRC, a City-based not-for-profit organization, to provide emergency shelter and ancillary services for mentally ill and chemically addicted homeless adults at their 200-bed Jack Ryan Residence (JRR) for the period from September 2010 to June 2021. The original contract for $76.1 million was amended five times for a total of $12.7 million during the 2014-15 to 2018-19 fiscal years to an aggregate of $88.8 million. During the three fiscal years ended June 30, 2019, BRC claimed $23.6 million in reimbursable expenses for the contract.

DHS is responsible for monitoring its contract with BRC to ensure reported costs are allowable, supported, and program related. To qualify for reimbursement, BRC’s invoices/expenses must comply with the DHS Human Service Providers Fiscal Manual (Fiscal Manual), the New York City Health and Human Services Cost Policies and Procedures Manual (Cost Manual), and the JRR contract.

Key Findings

DHS is not effectively monitoring its contract with BRC to ensure reported costs are allowable, supported, and program related. DHS did not complete required expenditure reviews or ensure that required year-end closeouts were completed on time. Consequently, for the three fiscal years ended June 30, 2019, we identified $1,428,199 or 6.05% of all reported costs that did not comply with the requirements in the Fiscal Manual, Cost Manual, and contract, including: $535,140 in personal service costs; $831,772 in other than personal service costs; and $61,287 in indirect costs.

Key Recommendations

• Review and recover, as appropriate, $1,428,199 in reported expenses that were not in compliance with the Fiscal Manual, Cost Manual, and JRR contract.
• Review and approve all provider allocation methodologies.
• Provide training to providers to ensure that they are aware of the reimbursement requirements.
• Monitor the JRR contract to ensure that government resources are used only for expenses that are allowable, supported, and program appropriate.