WIND YOUTH SERIVCES, INC.Non-Profit

2021-002 Program: Continuum of Care Federal Financial Assistance Listing No.:14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Next Move Homeless Services and Hope Inc. Award Year: 2021 Compliance Requirement: Special Tests and Provisions ? Reasonable Rental Rates Grant Award Number: CA1303L9T032006, CA1646L9T031700 Type of Finding: Material Weakness in Internal Controls Over Compliance and Instance of Noncompliance Criteria: Per the 2021 OMB Compliance Supplement, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month?s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). The Uniform Guidance requires non-Federal entities specifically to develop written procedures related to Conflicts of Interest: ? 2 CFR 200.113 states the Federal awarding agency must establish conflict of interest policies for Federal awards. The non-Federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy. ? 2 CFR 200.318(c)(1) states that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. (2) If the non-Federal entity has a parent, affiliate, or subsidiary organization that is not a State, local government, or Indian tribe, the non-Federal entity must also maintain written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest means that because of relationships with a parent company, affiliate, or subsidiary organization, the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization. Condition: As a result of our audit follow up procedures with respect to the prior year finding number 2020-003, we noted for 60 out of 60 rental payment transactions tested, the Organization did not have policies and procedures in place to ensure the reasonableness of contract rents being paid for individual housing units in relation to rents being charged for comparable units. This should have included an analysis of rents in the immediate area of the participants housing. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 20% to 80% below the 2021 HUD-determined fair market rents. We also noted during the year ending 2021, certain rental payments were made to two separate legal entities in which Wind Youth believes a former officer had a direct financial interest and a conflict of interest. These separate legal entities owned rental properties that received rental income from the Organization. This conflict of interest was not disclosed to Organization management or governance. The payments made to these entities during the year totaled $22,222. Questioned Costs: We noted known questioned costs of $22,222 related to rental payments made to two entities in which the Organization believes a former officer had a direct financial interest and a conflict of interest. Context/Sampling: A nonstatistical sample of 60 of 345 rental payments were selected to test compliance over special tests and provisions ? reasonable rental rates. Repeat Finding from Prior Year(s): Yes, Finding 2020-003 Wind Youth Services, Inc. Schedule of Findings and Questioned Costs Year Ended December 31, 2021 Effect: Rent paid to landlords on behalf of participants may have been higher in comparison to other rental properties in a similar area during the period the reasonableness assessment was not completed. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 20% to 80% below the 2021 HUD-determined fair market rents. Program expenditures claimed against the program related to rents were paid to a former officer and are deemed questionable costs. Cause: The Organization was applying a method of determining reasonable rents that had been allowable under prior awards, prior to migration of the program's funding to the Continuum of Care program under assistance listing number 14.267. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 20% to 80% below the 2021 HUD-determined fair market rents. The Organization?s policies and procedures were not implemented to detect and correct material noncompliance related to a conflict of interest. Recommendation: This is a repeat finding from 2020 and was not corrected by the Organization in 2021. We recommend that the Organization implement policies and procedures to ensure compliance with the program?s Special Tests and Provisions ? Reasonable Rental Rates requirement and 2 CFR 200.318(c)(1) related to Conflict of Interest. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.

2020-003 Program: Continuum of Care CFDA No.:14.267 Federal Agency: U.S. Department of Housing and Urban Development Pass-through: Next Move Homeless Services and Hope Inc. Award Year: 2020 Compliance Requirement: Special Tests and Provisions ? Reasonable Rental Rates Grant Award Number: CA1303L9T031905; CA1646L9T031700 Type of Finding: Material Weakness in Internal Controls Over Compliance and Material Instance of Noncompliance Criteria: Per the 2020 OMB Compliance Supplement, where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space. In addition, the rent may not exceed rents currently being charged by the same owner for comparable unassisted space (24 CFR section 578.49(b)(1)). Where grants are used to pay rent for individual housing units, the rent paid must be reasonable in relation to rents being charged for comparable units taking into account relevant features. In addition, the rents may not exceed rents currently being charged by the same owner for comparable unassisted units, and the portion of rents paid with grant funds may not exceed HUD-determined fair market rents. Grant funds in an amount up to one month?s rent may be used to pay the non-recipient landlord for any damages to leased units by homeless participants (24 CFR sections 578.49(b)(2) and 578.51(g) and (j)). The Uniform Guidance requires non-Federal entities specifically to develop written procedures related to Conflicts of Interest: ? 2 CFR 200.113 states the Federal awarding agency must establish conflict of interest policies for Federal awards. The non-Federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy. ? 2 CFR 200.318(c)(1) states that the non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity. (2) If the non-Federal entity has a parent, affiliate, or subsidiary organization that is not a State, local government, or Indian tribe, the non-Federal entity must also maintain written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest means that because of relationships with a parent company, affiliate, or subsidiary organization, the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization. Condition: As a result of our procedures performed, we noted for 60 out of 60 rental payment transactions tested, the Organization did not have policies and procedures in place to ensure the reasonableness of contract rents being paid for individual housing units in relation to rents being charged for comparable units. This should have included an analysis of rents in the immediate area of the participants housing. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 21% to 79% below the 2020 HUD-determined fair market rents. We also noted during the year ending 2020, certain rental payments were made to two separate legal entities in which the Organization believes a former officer had a direct financial interest and a conflict of interest. These separate legal entities owned rental properties that received rental income from the Organization. This conflict of interest was not disclosed to Organization management or governance. The payments made to these entities during the year totaled $39,078. Questioned Costs: We noted known questioned costs of $39,078 related to rental payments made to two entities in which the Organization believes a former officer had a direct financial interest and a conflict of interest. Context/ Sampling: A nonstatistical sample of 60 out of 345 rental payments were selected to test compliance over special tests and provisions ? reasonable rental rates. Repeat Finding from Prior Year(s): No Effect: Rent paid to landlords on behalf of participants may have been higher in comparison to other rental properties in a similar area during the period the reasonableness assessment was not completed. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 21% to 79% below the 2020 HUD-determined fair market rents. Program expenditures claimed against the program related to rents were paid to a former officer and are deemed questionable costs. Cause: The Organization was applying a method of determining reasonable rents that had been allowable under prior awards, prior to migration of the program's funding to the Continuum of Care program under assistance listing number 14.267. However, we noted the rental payments made using grant funds did not exceed the HUD-determined fair market rents and ranged from 21% to 79% below the 2020 HUD-determined fair market rents. The Organization?s policies and procedures were not implemented to detect and correct material noncompliance related to a conflict of interest. Recommendation: We recommend that the Organization implement policies and procedures to ensure compliance with the program?s Special Tests and Provisions ? Reasonable Rental Rates requirement and 2 CFR 200.318(c)(1) related to Conflict of Interest. Views of Responsible Officials: Management agrees. See separately issued Corrective Action Plan.