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City auditor: Two grants not in compliance

Thursday, August 30, 2012 by Michael Kanin

Two federal grants monitored by the city’s Heath and Human Services Department were not adequately monitored “to ensure full compliance with certain grant requirements,” according to a report penned by the office of City of Austin Auditor Ken Mory.


Though city officials believe that the situation can and will be corrected, Mory suggested in remarks Wednesday before the Council’s Audit and Finance Committee that the issue, if not fixed, could mean that Austin would have to return an undetermined amount of money to the federal government.


“If you don’t meet certain grant requirements … you’re required to report (them),” Mory told Council members. “Then there’s a determination whether you met (those requirements) or not by the federal government, and whether there will be claw back for some of the funds provided.”


The grants in question are $3.06 million for the Homelessness Prevention and Rapid Re-housing Program and $1.43 million for the Community Services Block Grant. Each of the grants was funded by the American Recovery and Reinvestment Act – the program known colloquially as the President Barrack Obama’s economic stimulus package.


The homelessness prevention dollars are aimed at keeping individuals and families off the streets and getting affected parties back into housing as quickly as possible. The block grant money is to “address the needs of youth in low-income communities.”


According to the audit, 14 of 46 reviewed transactions under the Homelessness Prevention program lacked the support documents to “demonstrate (the department’s) compliance with grant requirements.”


“As a result,” the audit says, “there is a risk that (the department) overpaid (homelessness prevention) benefits for the transactions tested by auditors.” The audit continues on to note that six of the 14 questionable transactions did not adequately document the fact that “rent paid on behalf of clients is reasonable.” The report adds that seven of the transactions “did not contain sufficient documentation to demonstrate eligibility for the payments.”


Further, auditors found that at least one client’s utility bill had been paid twice – to the tune of more than $400.


In it’s review of the block grant, the Auditor’s Office found that a Health and Human Services Department employee “both initiated and approved four of the payments.” According to the audit, “(t)his violated (the department’s) policies regarding separation of duties and the department took disciplinary action against the employee when the error was discovered prior to this audit.”


Auditors also found a lack of supporting documentation in the block grant section.


Assistant City Auditor Walt Persons told Council members that even though some of these mistakes had been revealed during a separate audit of the programs by the firm that the city hires to perform external audits, it appears Health and Human Services officials corrected only the problems identified by that audit and not similar problems found in other files. “As a result, we found the same type of errors that the external auditors had found,” Persons said.


Errors in the Health and Human Services files included the use of Wite-Out correction fluid and mistakes in arithmetic, the audit showed.


For his part, Carlos Rivera, the director of the Austin/Travis County Health and Human Services Department, told Council members that his department “(doesn’t) deny that there are things that we need to continue to improve on.” However, he added that U.S. Department of Housing and Urban Development gave the department a clean audit. Rivera also noted that Health and Human Services has added a “contract compliance unit.”


The Health and Human Services department has been plagued by fiscal concerns since allegations first surfaced that it had generally slackened its monitoring of contracts.

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