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CHAPTER 6. ON-SITE MONITORING

6.1 OVERVIEW

HUD or RHS GTRs/GTMs are responsible for monitoring the

performance of grantees and projects that receive CHSP

assistance. Monitoring grantee drawdown activities using LOCCS

is described in Chapter 5. Periodic, on-site monitoring is also

required to ensure compliance with CHSP requirements.

HUD and RHS monitor their direct grantees. State, Indian tribe

and local government grantees, who have been delegated

responsibility and provided with one percent of funds to monitor

multi-project grants, must also follow the procedures identified

below to conduct their on-site monitoring activities. However,

PHA/IHAs (or other nonprofits) that own and are approved for more

than one project under the CHSP will be reviewed by HUD; they are

NOT delegated self-monitoring responsibility.

6.2 MONITORING GOALS

The primary goal of grant monitoring is to identify deficiencies

in program policies and operations and to determine the

corrective actions needed to rectify any problems that are

identified. A secondary goal is to use the on-site visit as an

opportunity to provide technical assistance to the grantee and to

identify other technical assistance needs.

a\. Program Compliance. On-site monitoring allows the GTR to

ensure program compliance by:

1\. Comparing on-site activities to the \"paper trail\" of

documents.

2\. Validating program and financial reports submitted by the

grantee to HUD.

b\. Technical Assistance. On-site monitoring is also an

opportunity to provide technical assistance and identify

technical assistance needs through:

1\. Identification of problems and concerns when they are in

the early stages,

2\. Review of management controls set up by the grantee,

and

3\. Provision of support and information for the annual

program and budget review.

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6.3 IDENTIFYING GRANTEES FOR MONITORING

Each state or area office should incorporate CHSP monitoring visits

into the annual monitoring strategy developed for that office.

GTRs should use a risk analysis to determine the priority and order

in which grantees will be monitored.

a\. Monitoring Frequency. New grantees must receive an on-site

monitoring visit during the first year of operations.

The overall monitoring schedule for the state or area office

should assume that CHSP grantees will be monitored every three

years. However, well-performing Housing and RHS grantees may

be monitored on a less frequent schedule and grantees with

performance problems or outstanding issues from a previous

monitoring review should be monitored as needed. In general,

PHA grantees should be monitored in accordance with Handbook

7460.7, Rev.2, \"Field Office Monitoring of Public Housing

Agencies\", subject to Section 6.3 (b).

b\. Risk Assessment. To determine the order in which grantees

will be reviewed (or when staffing is insufficient to monitor

all projects), GTRs should conduct a risk assessment to

determine which and in what order projects will be reviewed.

Key risk factors include:

\(1\) the size and complexity of past and present activities,

\(2\) known problems with past or current performance

\(3\) period of time that has elapsed since the last monitoring

review

\(4\) capacity of grantee staff

\(5\) whether the grantee directly manages the CHSP or works

through subrecipients

c\. Project Visits

\(1\) Single Project Grants. The GTR should visit both the

headquarters operations and the project location. This

is true even in those cases in which the grantee and

project owner are not the same entity (e.g., a state,

Indian tribe, or local government grantee that provides

funding to a single project).

\(2\) Multi-project Grants. The GTR should visit the

headquarters operations and at least one project

location. The GTR should schedule rotating visits to

projects so that at least one of the sites in a multi-project

grant is visited each time the

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GTR monitors the grantee. The headquarters visit may be

omitted if headquarters operations were satisfactory at

a prior visit.

6.4 COMPLIANCE AREAS

GTRs use form HUD-90003, Congregate Housing Services Program

Grantee Review Form (see Appendix 10) as a guide for the monitoring

visit and to record the information received during the on-site

visit. Key compliance areas reviewed include:

a\. Participation. The GTR should review and record basic

information about who participates in the program, including

demographic information on applicants, participants and those

rejected for program participation.

b\. Services. The GTR should review provided services to confirm

that proposed services are being offered and used; that

minimum services standards are being met; and that the HUD

share of the cost of services is appropriate.

c\. Organization and Staffing. The GTR should review current

staffing and consider whether staffing is consistent with the

approved budget, sufficient for the program, and adequately

trained.

d\. Service Coordination. The GTR should review the performance of

the service coordinator including carrying out of case

management and referral duties and maintaining documentation

such as case files and a service provider directory; the

grantee should also review the service coordinator\'s contract

and qualifications.

e\. Fees. The GTR should review financial records to confirm that

fees in use are the approved fees and whether program rules

concerning limitations on fees are being followed.

f\. Professional Assessment Committee (PAC). The GTR should review

documentation to determine that current PAC members have been

approved by HUD, that PAC operating procedures are in place,

that PAC meetings are being documented and that the PAC is

practicing nondiscrimination in the selection of CHSP

participants.

g\. Documentation of Program Participation. The GTR should review

a sample of case files to determine whether individual files

are secure, with limited access, and that appropriate and

adequate information is kept in each participant\'s file.

h\. Community Involvement. The GTR should review whether the

owner/grantee is maintaining a relationship with the Area

Agency on Aging and the state or local agency serving people

with disabilities.

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i\. Financial Management. The GTR should review the grantee\'s

books, records, and accounts for the CHSP to ensure that they

are kept separate from other sets of records and accounts,

that they contain adequate and appropriate information, and

that the grantee has established adequate controls over and

accountability for all CHSP funds and property.

j\. Nondiscrimination and Equal Opportunity. The GTR should

monitor grantee performance for compliance with

nondiscrimination and equal opportunity requirements. Since

the GTR may not be qualified to pursue an investigation of

compliance violations, he/she should report any violations to

the appropriate fair housing staff in the field office for

further investigation and follow-up to assure that the grantee

makes the necessary corrections.

Exhibit 6-1 provides examples of non-compliance.

Exhibit 6-1

EXAMPLES OF NON-COMPLIANCE

1\. Matching funds documented by the grantee are not new supportive

services resources but existing supportive services that were

available on or off-site to residents by arrangement through

contract or other agreement with project management at the time the

grant award was made.

2\. Ineligible project residents are being served as CHSP participants,

with CHSP fees.

3\. Non-residents are being served as CHSP participants with CHSP fees.

4\. Participants are receiving services for which they have not been

approved.

5\. Funds are being used for services and/or administrative activities

that are not in the approved budget.

6\. Funds are consistently being spent at rates higher than budgeted.

7\. Records do not support the funds spent nor indicate that the

residents being served are eligible.

8\. Matching funds received and/or fees collected are lower than

approved in the budget, but CHSP funds are being spent at budgeted

levels.

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6.5 THE ON-SITE VISIT

a\. Notice to Grantees. Grantees must be given reasonable advance

notice, generally at least two weeks in advance of the planned

on-site visit. Notice may be given by telephone and confirmed

in writing before or at the on-site visit. The notice should

include:

\(1\) areas to be monitored;

\(2\) names of the HUD/RHS participants;

\(3\) dates and times of the visit; and

\(4\) files of information that will be reviewed.

b\. GTR Preparation for the Visit. Prior to the visit, the GTR

should:

\(1\) review all available information about the grantee

including previous monitoring reports, data available

from the LOCCS/BLI system, and biannual and annual

reports submitted by the grantee.

\(2\) develop an agenda for the visit that specifies the

activities to be reviewed.

\(3\) meet or talk with other HUD/RHS staff who have contacts

with the grantee.

\(4\) complete as much of form HUD-90003 as possible from file

documents.

c\. Grantee Preparation for Monitoring Visit. Prior to the visit,

the grantee should:

\(1\) make sure that all needed staff are available for the

visit.

\(2\) arrange for access to key program documents and files.

\(3\) inform project residents and program participants that

monitoring staff will visit the project and arrange for

any resident/program participant interviews requested

by the GTR.

d\. Initial Meeting. The GTR should meet with the executive

director/administrator/ CHSP Project/site director and

resident council representative (if existing) to introduce

HUD/RHS or grantee staff, explain the review methods and

breadth/depth of coverage, answer questions of the grantee

or project site and solicit ideas/insights on apparent or

actual problems that may already have been identified.

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e\. Conducting the Review. The on-site review should include

the following activities:

\(1\) Interview key staff and resident representatives to

discuss grantee performance. Potential interviewees

include: the CHSP coordinator, the project manager, and

the service coordinator; and representatives of the

following groups: CHSP participants, service providers,

PAC members, Area/State Agency on Aging staff,

state/local staff serving the elderly and non-elderly

disabled, other project residents and CHSP staff who do

financial recordkeeping for the grant.

\(2\) Review random samples of participant and applicant

files (at least 10% or a minimum of 3 of each per

site).

\(3\) Observe and participate in a CHSP meal, if possible.

\(4\) Observe CHSP grantee or project-level staff at work.

\(5\) Review minutes of PAC meetings.

\(6\) Review financial records, including any sub-grants or

sub-contracts, and accounting procedures.

\(7\) Complete the CHSP On-site Review Form (form HUD-90003).

NOTE: If the response to any of the questions on the CHSP On-site Re

view Form indicates that a grant amendment is

necessary and appropriate, the grantee must send a

modification request to the GTR in writing, within 10

days of the on-site review. GTR processing of such a

modification (amendment) request is discussed in

Paragraph 7.4 below.

f\. Close-Out Meeting. Upon completion of the review, the GTR

holds a close-out meeting with the CHSP Director/Coordinator

to discuss review findings, advising that a written report

with recommendations will follow.

6.6 MONITORING REPORT

The monitoring report with its findings and conclusions must be

an addendum to the form HUD-90003. It is important that the

report stress the positive areas in which the grantee is doing a

good job or has shown significant improvement since the last

review, as well as any problems identified. The disclosure of

major findings and observations, suitably detailed, should be

accompanied by recommendations or offers of technical assistance

directed toward fixing the cause of the deficient performance.

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The most important part of the report will be the corrective

actions cited, and the timetable for completion. Corrective

actions are to, first, prevent a continuation of the deficiency;

second, mitigate any adverse effects or consequences of the

deficiency to the extent possible under the circumstances; and,

third, prevent a recurrence of the same or a similar deficiency.

There may be several ways to correct a deficiency; the GTR must

involve the grantee in the discussion of a proposed solution.

a\. Documentation of Findings. On-site monitoring must be well

documented. The monitoring package will include the HUD-90003,

findings memorandum, copies of any materials picked up

from the grantee or project site and copies of working papers

used in any analysis.

b\. Supervisory Review. Prior to sending out the report, review

by the GTR\'s supervisor is required to consider the following:

1\. Handbook and review requirements have been followed;

2\. Documentation is correct;

3\. Conclusions are correct; and,

4\. Recommendations are appropriate.

c\. Memorandum to Grantee. The GTR drafts the monitoring report

for his/her supervisor\'s signature. It contains all

findings and recommendations, and the HUD-90003 and is sent

to the grantee or the project site within 30 days of the

review.

The report should include an overall assessment of the CHSP

operation and what the grantee or project site must do to

improve operations, including specific timetables for action

related to specific deficiencies. Exhibit 6-2 present

several examples of CHSP non-compliance (deficiencies) and

appropriate corrective actions.

d\. Follow-up

\(1\) Grantees must respond in writing to the GTR regarding

any negative findings within the timetable set in the

communication to them. The GTR must send the original

of this response to the Grant Officer for the master

file.

\(2\) When the grantee response has been received, it must be

reviewed by the GTR or other appropriate staff to

determine that the response is satisfactory. This

review must be completed within 10 calendar days. In

some cases, a follow-up visit by the GTR may be

required.

\(3\) If review indicates that the response is

unsatisfactory, a letter from the Grant Officer

requesting further corrective

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steps must be sent to the senior executive official of

the grantee within five days of the determination that

the response was unsatisfactory.

For RHS projects, a copy of this letter must be sent to the

RHS Headquarters.

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EXHIBIT 6-2

4640.1 REV-1

Exhibit 6-2

CHSP ON-SITE MONITORING

EXAMPLES OF FINDINGS AND RECOMMENDATIONS

FOR APPROPRIATE ACTIONS AND GRANTEE RESPONSES

Example 1: Deficiency: 6 of the 25 participant files are

incomplete, thus it is not possible to determine if

these participants are eligible and/or are receiving

appropriate services.

Corrective Action: The PAC and the service coordinator

must review the six files and reconstruct/locate and

insert all missing information.

Response: The grantee or project must submit a

certification to the requesting agency within 30 days

of the date of the memorandum stating the deficiency

certifying that all files have been competed and are up

to date.

Example 2: Deficiency: Three ineligible residents are receiving

CHSP services on an ongoing-basis, but only paying CHSP

fees, not the full cost of the services received.

Corrective Action: The PAC and/or the service

coordinator must notify these individuals immediately

that they are to either (1) discontinue the services

effective with receipt of the letter from the grantee,

or (2) begin paying for what ever services they wish to

continue to receive at full cost.

Additionally, the letter must state that the grantee or

project may be liable to HUD/RHS for any HUD funds

utilized to pay for services to ineligible people. The

grantee may not retroactively charge ineligible

participants.

The GTR must discuss with the HUD state or area office

Grant Officer/RHS state office Director the question of

audit (or the grantee should discuss with the GTR) to

determine if repayment of funds is appropriate, and how

much.

Response: The grantee or the project must provide to

the requesting agency a copy of the letter to the

individual(s) and a statement regarding final

resolution, within 14 calendar days of the date of the

initial letter to the grantee or project site. The GTR,

with the HUD state or area office Grant Officer/RHS

state office director will determine the question of

repayment of funds.

Example 3: Deficiency: The grantee or the project is paying for a

preventive health screening clinic and recreational

services with CHSP funds. Neither of these are in the

approved CHSP budget.

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Corrective Action: The grantee or project must be

instructed to stop providing for such services

immediately with CHSP funds and provide an accounting

to the GTR or grantee of how much has been spent on

such activities. This amount must be reimbursed to the

grant.

Response: The grantee or project must submit a

certification to the requesting agency within 30 days

certifying that it has terminated the aforementioned

services, and providing an accounting of the amount of

funds misspent, subject to future audit.

Follow-up: The requesting agency will discuss the

response regarding recovery of the funds with the GTR

regarding whether or not the grant will be in jeopardy.

Example 4: Deficiency: The grantee or the project was determined

to have extremely inaccurate-to-non-existent records

regarding CHSP expenditures.

Corrective Action: The grantee or project must be

instructed to reconstruct all records, as appropriate,

with evidence to the grantee that the records are now

maintained in an accurate fashion, e.g., within 30 days

of notification.

Additionally, the letter must state that the grantee or

project may not receive further reimbursements until

the records are in order, and may be liable for

refunding to HUD/RHS of any HUD funds utilized for

which appropriate accounting can not be made.

Response: The grantee must provide the GTR (or project

must provide the grantee) with a certification that the

record systems are in accordance with HUD/RHS

procedures within 60 days of the date of initial

notification from the grantee, AND copies of the

relevant receipts to show that the records have been

reconstructed for the period in question.

Follow-up: The GTR (or grantee staff) must make a

follow-up visit within a stated time period (e.g.90

days) to determine that the records have in fact been

reconstructed and systems properly set up. Also, the

grantee must discuss with the GTR the question of audit

to determine ff repayment of funds is necessary, how

much, and, if appropriate, discontinuance of the site.

Example 5: Deficiency: Grantee or project was found to be using

existing supportive services as match for the CHSP,

rather than new funds.

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Response: Grantee must recalculate budget for the next

year based upon the amount of new match funds actually

received. If it was determined that all match in the

initial year of the grant was existing funds rather

that new resources, the GTR should advise the state or

area office Grant Officer/RHS state office Director.

If, under any set of calculations in later years, the

proportion of HUD funds would decrease to an amount

that would not enable the grantee or project to

continue, the GTR should advise the HUD state or area

office Grant Officer/RHS state office Director so that

a determination can be made regarding the feasibility

of continuing the CHSP grant.

The GTR for a HUD project should file a copy of the

findings and recommendations memorandum, and the HUD-90003

(with any other material collected during the

review).

The GTR for a RHS project should file these documents;

send a copy of the findings and recommendations memo to

the appropriate HUD state or area office with a request

to modify the HUD 1044 if appropriate, and send a copy

of all material to advise RHS Headquarters of the

determination regarding the grant.

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6.7 SANCTIONS FOR NON-COMPLIANCE

In the event that problems are uncovered in the operations of the

grant, the grantee must be given an opportunity and time frame to

correct the problem; sanctions may be applied if the problem is

not corrected. Sanctions may range from withholding one or more

reimbursements to termination of the grant.

a\. Sanctions

GTRs may recommend and Grant Officers approve any of the

following sanctions:

\(1\) temporary withholding of reimbursements or further

extensions or renewals, pending correction of the

deficiency by the grantee;

\(2\) disallowing (i.e., denying both use of funds and

matching amounts) all or part of the cost of the

activity or action not in compliance;

\(3\) wholly or partially suspending the award;

\(4\) withholding (or disallowing) further awards under the

CHSP;

\(5\) attaching conditions to the grant that may trigger its

termination, ff the conditions are not met within

specified time frames; or

\(6\) taking other remedies that may be legally available.

b\. Termination of CHSP Grant

It is possible that working with a grantee to resolve

program or administrative deficiencies is not successful,

and the grant must be terminated. The steps for termination

of a CHSP grant are discussed in Chapter 8.

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