Objective

To determine the extent of implementation of the six recommendations included in our initial audit report, New York City Department of Homeless Services – Oversight of Contract Expenditures of Samaritan Daytop Village, Inc. (Report 2022-N-6).

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 July 2013, DHS contracted with Samaritan Daytop Village, Inc. (Samaritan), 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 men with mental illness at its 160-bed Myrtle Avenue Men’s Shelter (Myrtle) for the period from August 2013 to June 2018. The original $30.1 million contract was renewed and increased during the period from July 1, 2018 through June 30, 2022 to an aggregate cost of approximately $44 million. During the COVID-19 pandemic, per DHS directives, Myrtle operations were moved to an alternative site (in Long Island City) from mid-May 2020 to early July 2021. During the 2 fiscal years ended June 30, 2021, Samaritan claimed $15.1 million in reimbursable expenses for the contract.

DHS is responsible for monitoring its contract with Samaritan to ensure reported costs are allowable, supported, and program-related. To qualify for reimbursement, Samaritan’s invoices/expenses must comply with the requirements in 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 Myrtle contract.

The objective of our initial audit, issued on February 6, 2024, was to determine whether DHS was effectively monitoring its contract with Samaritan to ensure reported costs were allowable, supported, and program-related. The audit—which covered expenses claimed by Samaritan for fiscal years ended June 30, 2020 and June 30, 2021 and limited aspects of DHS’ claim expense monitoring for the three fiscal years ended June 30, 2022—found DHS was not effectively monitoring its contract with Samaritan. It was also unclear whether DHS completed the required expenditure reviews. Additionally, DHS did not ensure that year-end close-outs were completed timely. Consequently, for the 2 fiscal years ended June 30, 2021, we identified $566,556 of all reported costs that did not comply with the requirements in the Fiscal Manual, Cost Manual, and Myrtle contract.

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 six audit recommendations, five were partially implemented and one was not implemented.

Key Recommendation

DHS 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.