Objective

To assess the extent of implementation of the nine recommendations included in our initial audit report, New York City Department of Homeless Services – Oversight of Contract Expenditures of Institute for Community Living, Inc. (Report 2020-N-4).

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 and for providing fiscal oversight of the homeless shelters. In March 2014, DHS contracted with the Institute for Community Living, Inc. (ICL), a New York 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 its 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 invoice/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 Tillary contract. The objective of our initial audit, issued on September 16, 2022, was to determine whether DHS was effectively monitoring its contract with ICL to ensure reported costs were allowable, supported, and program-related.

The audit, which covered the period from July 1, 2016 through June 30, 2019, found DHS was not effectively monitoring its contract with ICL to ensure reported costs were 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 estimated that ICL may have discarded approximately 155,760 meals (valued at $444,690) over the audit period.

Key Findings

DHS officials have made some progress in addressing the issues we identified in the initial audit report; however, more work needs to be done. Of the initial report’s nine audit recommendations, one was implemented, five were partially implemented, and three were not implemented.

Key Recommendation

Officials are requested, but not required, to provide information about any actions planned to address the unresolved issues discussed in this follow-up within 30 days of the report’s issuance.