APRIL 2006 14.231 EMERGENCY SHELTER GRANTS PROGRAM State Project/Program: EMERGENCY SHELTER GRANTS PROGRAM U. S. Department of Housing and Urban Development Federal Authorization: 24 Code of Federal Regulations (CFR) Section 576 State Authorization: North Carolina Administrative Code (NCAC) T10A-C97-S97F N. C. Department of Health and Human Services Office of Economic Opportunity Agency Contact Person- Program & Financial: Lawrence D. Wilson (919) 715-5850 Lawrence.Wilson@ncmail.net N. C. DHHS Confirmation Reports: SFY 2006 audit confirmation reports for payments made to Counties, Area Programs, Boards of Education, Councils of Government, District Health Departments, DCD State Level Contractors and HRSA Bioterrorism Grant Subrecipients will be available by around late August to early September at the following web address: http://www.dhhs.state.nc.us/control/ At this site, page down to Letters/reports/forms for ALL Agencies and click on Audit Confirmation Reports (State Fiscal Year 2005-2006). Additionally, audit confirmation reports for Nongovernmental entities receiving financial assistance from the DHHS are found at the same website except select Non-Governmental Audit Confirmation Reports (State Fiscal Years 2003-2005). The auditor should not consider the Supplement to be safe harbor for identifying audit procedures to apply in a particular engagement, but the auditor should be prepared to justify departures from the suggested procedures. The auditor can consider the Supplement a safe harbor for identification of compliance requirements to be tested if the auditor performs reasonable procedures to ensure that the requirements in the Supplement are current. The grantor agency may elect to review audit working papers to determine that audit tests are adequate. I. PROGRAM OBJECTIVES The purpose of the North Carolina Emergency Shelter Grants Program (ESGP) is to help improve the quality of emergency shelters and transitional housing for the homeless; to make available additional shelters; to provide essential social services to homeless individuals (assistance in obtaining permanent housing, medical and psychological counseling and supervision, employment and nutrition counseling, substance abuse treatment and counseling, assistance in obtaining Federal, State and local assistance, Veteran s benefits, and income support assistance such as Supplemental Security Income benefits and Food Stamps, other services such as child care, transportation, job placement, and job training); and to help prevent homelessness (24 CFR Section 576.1(b)). 14.231 1
II. PROGRAM PROCEDURES ESGP is administered by the North Carolina Department of Health and Human Services, Office of Economic Opportunity, 222 North Person Street, Raleigh, North Carolina 27601, (919) 715-5850. Funds are provided to units of general local government and private non-profit organizations who meet basic eligibility requirements. Grants are made to eligible organizations after receipt from the U.S. Department of Housing and Urban Development (HUD). Interested applicants are required to submit pre-applications to determine their eligibility to receive funds. Eligible nonprofit agencies must be 501(c)(3) organizations, have tax-exempt status, have a volunteer board, have operated a shelter for at least one year, and have an acceptable accounting system. Applicants who are determined eligible to receive funds are provided an allocation based on the average number of individuals served by their homeless facility daily during the previous year. Eligible applicants submit grant applications identifying how funds are to be utilized. These applications are reviewed to ensure compliance with state and federal rules. After application approval, the grant recipient must sign a grant agreement with the department that will incorporate various terms and conditions including the following: period of award, amount of award, termination provisions, amendment procedures, record retention requirements, property management requirements, audit requirements, terms of pay back of disallowed costs, disallowance of lobbying costs, work program, approved budget, and assurance of compliance with applicable federal state and local laws and regulations. Grantees are required to submit monthly financial expenditure reports during the grant period and a mid-year and annual performance report. Grant funds expended are reimbursed by the Office of the Controller to grantees on a monthly basis. On-site monitoring visits are made to selected grantees by the Office of Economic Opportunity (OEO) staff to verify program compliance, to review financial records, and to review administrative structures and practices. Correspondence summarizing the results of on-site monitoring visits is shared with the grantee board chairperson and the agency executive director. III. COMPLIANCE REQUIREMENTS A. Activities Allowed or Unallowed Eligible Activities: Emergency shelter grant amounts may be used for one or more of the following activities relating to emergency shelter for the homeless: 1. Providing essential services, including (but not limited to) services concerned with employment, physical health, mental health, substance abuse, education, food, or staff salaries necessary to provide the essential services. Grant amounts provided to a unit of general local government or private non-profits may be used to provide an essential 14.231 2
service only if the service is (1) a new service or (2) a quantifiable increase in the level of a service above that which was provided during the 12 calendar months immediately before the grant amounts were received; and not more than 30 percent of any grant provided to a unit of general local government or private non-profit can be used for these services. 2. Developing and implementing homeless prevention activities to include assisting families that have received eviction notices or notices of termination of utility services, provided the following conditions have been met: a. The inability of the family to make the required payments must be the result of a sudden reduction in income, b. The assistance must be necessary to avoid eviction of the family or termination of services to the family, c. There must be a reasonable prospect that the family will be able to resume payments within a reasonable period of time, and d. The assistance must not supplant funding for pre-existing homeless prevention activities from any other source. 3. Payment of operating costs of homeless facilities including maintenance, rent, repairs, security, fuel, equipment, insurance, utilities, food and furnishings. Not more than 10 percent of the grant amount may be used for costs of staff (salaries and fringe benefits). Ineligible Activities: Emergency shelter grant amounts may not be used for activities other than those specified above. B. Allowable Costs/Costs Principles All grantees that expend State funds (including federal funds passed through the N. C. Department of Health and Human Services) are required to comply with the cost principles described in the N. C. Administrative Code at 09 NCAC 03M.0201. C. Cash Management Funds expended by grantees are reimbursed on a monthly basis. No cash management testing is required at the local level. F. Equipment and Real Property Title to equipment purchased by a local grantee vests in the local grantee. Local governments shall follow the A-102 Common Rule for equipment acquired. Non-profit grantees shall follow the provisions of OMB Circular A-110 for equipment acquired. G. Matching, Level of Effort, Earmarking Each grantee must match its emergency shelter grant amount with an equal amount of funds from sources other than those provided by the ESGP. These funds must be provided after the date of the grant award to the grantee. A grantee may comply with this requirement by providing the supplemental funds itself, or through supplemental funds or voluntary efforts 14.231 3
provided by any nonprofit subrecipient. These matching funds may be calculated according to 24 CFR Section 576.51 (b). H. Period of Availability of Federal Funds Compliance Requirement - ESGP funds awarded must be obligated within the grant period stipulated in the grant agreement. Funds are obligated when the recipient or subrecipient has placed orders, awarded contracts, or performed similar transactions that require payment from the ESGP grant amount. Audit Objective - To determine whether funding was obligated within the prescribed time frames of the grant award. Suggested Audit Procedure - Determine the time periods for which funds must be obligated and review records to determine the dates funds were obligated. I. Procurement and Suspension and Debarment Grantees are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include procurement contracts for goods or services equal to or in excess of $100,000 and all non-procurement transactions (e.g. subawards to subrecipients). All grantees that expend federal funds (received either directly from a federal agency or passed through the N. C. Department of Health and Human Services) are required to conform with federal agency codifications of the grants management common rule accessible on the Internet at http://www.whitehouse.gov/omb/grants/chart.html. All grantees that expend State funds (including federal funds passed through the N. C. Department of Health and Human Services) are required to comply with the procurement standards described in the North Carolina General Statutes and the North Carolina Administrative Code, which are identified in the State of North Carolina Agency Purchasing Manual accessible on the Internet at http://www.doa.state.nc.us/pandc/agpurman.htm#p6_65 J. Program Income Local ESGP grantees are required to adhere to program income requirements of the A-102 Common Rule and OMB Circular A-110. K. Real Property Acquisition and Relocation Assistance Real property acquisition and relocation assistance is not an activity allowed in the North Carolina ESGP and no local testing is required. L. Reporting Grantees are required to submit the following reports to the Department: 1. Grantee Financial Status Report (OEO Form 286) is required to be submitted monthly by the tenth working day of the month to cover the preceding month s expenditures. 14.231 4
2. Mid-year performance report is required to be submitted 30 days after December 31 of each program year. 3. ESGP Annual Performance Report is required to be submitted annually within 30 days after the end of the grant period (June 30). M. Subrecipient Monitoring Local ESGP grantees are not allowed to subgrant funds therefore testing is only required to insure no subgrants have been issued. N. Special Tests and Provisions Compliance Requirement - Conflict of Interest Nonprofit Organizations All non-state entities (except those entities subject to the audit and other reporting requirements of the Local Government Commission) that receive, use or expend State funds (including federal funds passed through the N. C. Department of Health and Human Services) are subject to the financial reporting requirements of G. S. 143-6.2 for fiscal years beginning on or after July 1, 2005. These requirements include the submission of a Notarized Conflict of Interest Policy (see G. S. 143-6.2(b1)) and a written statement (if applicable) that the entity does not have any overdue tax debts as defined by G. S. 105-243.1 at the federal, State or local level (see G. S. 143-6.2(b2)). All non-state entities that provide State funding to a non-state entity (except any non- State entity subject to the audit and other reporting requirements of the Local Government Commission) must hold the subgrantee accountable for the legal and appropriate expenditure of those State grant funds. This policy statement is expected to address situations in which any of the above referenced individuals may directly or indirectly benefit from the entity s disbursement of funds received from the State. In addition, the policy should specify actions to be taken by the entity or individuals or both to avoid either actual conflicts of interest or the appearance of an impropriety. Before a private, not-for-profit entity receives and disburses State funds, the entity should have adopted and have on file a copy of the policy statement. Audit Objective - Determine whether the grantee has adopted and has on file a conflict of interest policy before receiving and disbursing State funds. Suggested Audit Procedures Ascertain that the grantee has a conflict of interest policy. Check the policy and verify through board minutes that the policy was adopted before the grantee received and disbursed State funds. 14.231 5