HOMEfires - Vol. 4 No. 4, September 2002
Q: What are a Participating Jurisdiction's (PJ's) responsibilities for monitoring with respect to entities using its HOME funds?
A: The HOME Final Rule at 24 CFR 92.504 (a) (http://edocket.access.gpo.gov/cfr_2004/aprqtr/24cfr92.504.htm) states that the PJ is responsible for managing the day to day operations of its HOME program, ensuring that HOME funds are used in accordance with all program requirements and written agreements. This responsibility includes regular review of the performance of entities participating in the PJ's HOME program, including state recipients, subrecipients, contractors, and Community Housing Development Organizations (CHDOs). The PJ must review the performance of each entity at least annually. This review may consist of a remote assessment or an on-site review.
While the annual review process is a requirement of the HOME program, it is also a helpful tool the PJ can use toward achieving program compliance and effectiveness. Performing regular monitoring helps the PJ:
- Ensure accountability and compliance with HOME requirements:
- HOME funds must be used to provide housing or tenant-based rental assistance to low- and very-low income residents
- Housing produced with HOME funds must meet quality standards and must be decent, safe, and sanitary
- Units developed with HOME funds must remain affordable, pursuant to written agreements, over a period of time
- Compliance with all deadlines and written agreements involving HOME funds is required.
- Respond to community needs and priorities identified in the PJ's Consolidated Plan
- Use HOME funds efficiently and effectively, determining that the program is functioning well and delivering housing at a reasonable cost
Monitoring involves reviewing organizations the PJ has entrusted with HOME funds (such as subrecipients and CHDOs) as well as internal monitoring, to ensure that the PJ's own administration of its program is effective and complies with HOME requirements. When performing external monitoring, the PJ must assess compliance of the entity and its projects with HOME requirements, cross-cutting federal requirements, and applicable OMB circulars. The PJ should also assess the entity's efficiency, timeliness, and adherence to the terms of its written agreements with the PJ during project development and throughout the period of affordability.
Annual monitoring can consist of internal audits, remote or desk reviews and on-site visits. The steps to annual monitoring are:
- Assess risk of non-compliance by each entity
- Develop an annual monitoring strategy
- Perform reviews of projects and entities
- Communicate results and indicate the need for any corrective action
- Follow-up with findings
The staff and financial resources available to a PJ are generally insufficient to permit an on-site review of each entity participating in its HOME program each year. Therefore the PJ should develop a risk assessment process by which it can determine which HOME recipients have the highest probability of non-compliance.
A risk assessment is a qualitative analysis of relevant factors that can help the PJ determine the relative compliance and performance risk for each organization. Developing a risk assessment protocol is the first step in establishing an annual review process. It is a cost- and time-effective way to perform an initial review of each entity receiving HOME funding. Each year, this protocol can be used to help the PJ decide how it will use its limited resources by focusing its monitoring efforts on the organizations most in need of on-site visits while performing a remote or desk audit on the remaining organizations.
To develop a risk assessment protocol, the PJ must identify important factors to measure an organization's capacity and performance. Some factors the PJ might include in a risk assessment protocol are: level of previous experience/ track record of the entity, amount of commitment of HOME funds, timeliness/productivity of project, and staff turnover. The PJ then assigns points to each factor and totals them to provide a final score indicating the organization's level of potential risk. PJs should document the results of the risk assessment and its decisions with respect to the reviews to be conducted.
When HUD field staff monitor a PJ for HOME compliance, they assess the frequency and quality of the PJ's oversight of the entities participating in its program. Failure to comply with the annual review requirement is the basis for a finding of non-compliance. Consequently, the PJ should document each step of its annual review process.
For more information and resources regarding monitoring and risk assessment see:
OAHP HOME Program Model: Monitoring HOME Program Performance
The Model can be ordered by calling Community Connections at 1-800-998-9999.
CPD Training Course: Monitoring HOME: Ensuring Program Compliance
Go to the website (http://www.icfhosting.com/hcd/cpd/hcdcpd.nsf/webpages/MonitoringHOMEDesc.html) for course information and registration.