We audited EdgeAlliance, Inc.’s Continuum of Care program funds for The Daniel R. Ruscitti Phoenix House (project). The audit was part of the activities in our fiscal year 2015 annual audit plan. We selected the project for review based upon a citizen’s complaint. Our objectives were to determine whether EdgeAlliance complied with Federal requirements in its (1) maintenance of financial management systems for program funds and matching contributions for the project and (2) use of program funds for the project.
EdgeAlliance (1) did not maintain financial management systems that adequately showed how program funds and matching contributions for the project were used, (2) could not provide sufficient documentation to support that program funds were used for eligible project expenses, and (3) used program funds for improper operating expenses. As a result, HUD and EdgeAlliance lacked assurance that nearly $687,000 in program funds was used for eligible project expenses. Further, nearly $88,000 in program funds was not available for eligible project expenses.
We recommend that the Director of HUD’s Chicago Office of Community Planning and Development require EdgeAlliance to (1) support or reimburse its program from non-Federal funds for the program funds drawn down for which it did not provide sufficient documentation to show that the funds were used for eligible project expenses, (2) reimburse HUD from non-Federal funds for the program funds used for improper operating expenses, and (3) implement adequate procedures and controls to address the findings cited in this audit report.