Objective

To determine whether the New York City Department of Homeless Services is effectively monitoring its contract with the Institute for Community Living, Inc. (ICL) 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 New York City (City) and for providing fiscal oversight of the homeless shelters. In March 2014, DHS contracted with ICL, a City-based not-for-profit organization, to provide temporary housing, case management, housing referrals, placement services, and on-site medical and mental health services for women with mental illness and co-morbid substance abuse disorders at their 200-bed Tillary Street Women’s Shelter (Tillary) for the period from December 2013 to December 2021. The original contract for $15.2 million was renewed twice and amended twice for a total of $35.6 million during the 2015-16 to 2019-20 fiscal years to an aggregate cost of approximately $50.8 million. During the 3 fiscal years ended June 30, 2019, ICL claimed $24.5 million in reimbursable expenses for the contract.

DHS is responsible for monitoring its contract with ICL to ensure reported costs are allowable, supported, and program related. To qualify for reimbursement, ICL’s invoices/expenses must comply with 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 Tillary contract.

Key Findings

DHS is not effectively monitoring its contract with ICL to ensure reported costs are allowable, supported, and program related. DHS did not complete required expenditure reviews or ensure that year-end closeouts were completed timely. Consequently, for the 3 fiscal years ended June 30, 2019, we identified $2,376,462, or 9.7% of all reported costs, that did not comply with the requirements in the Fiscal Manual, Cost Manual, and contract, including: $1,234,488 in personal service costs, $925,932 in other than personal service costs, and $216,042 in indirect costs. We also estimate that ICL may have discarded approximately 155,760 meals (valued at $444,690) over the audit period.

Key Recommendations

• Review and recover, as appropriate, $2,376,462 in reported expenses that were not in compliance with the Fiscal Manual, Cost Manual, and Tillary contract.
• Ensure that providers comply with their contractual requirements to retain sufficient documentation to support proper procurement and maintenance of required inventories.
• Review ICL’s food service operations and ensure that actions are taken to reduce excessive food waste.
• Provide training to providers and DHS staff members to ensure that they are aware of the reimbursement requirements.