City of Seattle Edward B. Murray, Mayor Human Services Department Catherine Lester, Director December 1, 2015 Michele Marchand Organizer Seattle Housing and Resource Effort PO Box 2548 Seattle, WA 98111 Dear Ms. Marchand: I would like to thank you for your cooperation during the Seattle Human Services Department?s (HSD) recent ?scal review of Seattle Housing and Resource Effort (SHARE). The purpose of the comprehensive ?scal review, conducted by HSD Fiscal Auditor Efren Agmata, is for HSD to gain understanding of the fiscal health of your agencv and get a level of assurance that contract funds are being expended in a manner consistent with our contract agreement, relevant to federal regulations, and Office of Management and Budget Circulars. It is our hope that this level of HSD monitoring culminates in positive conclusions regarding our contract recipients? handling of the involved funds. The HSD ?scal review was conducted on October 20, 2015. The entrance interview was held with you, Mr. Neal Blum, Administrator, Mr. Jarvis Capucion, Boardmember, and Mr. Gary Everlv, SHARE ll member. During the visit, documentation were provided that allowed Mr. Agmata to review a number of areas, including organization administration, reporting requirements, ?nancial systems, documentation, allowabilitv, allocabilitv and compliance with the funding sources and contract agreements. The result of the review is summarized on the table below: AREAS EXAMINED SATISFACTORY YES I NO NA OrganRation/Administration A. Organizational Structure Yes B. Board of Directors/ Governance Yes C. Organizational Policies and Procedures . Yes Reporting Requirements A. Contract Reporting Yes Human Services Department 'l'el (20b) 386-1001 700 Fifth Avenue, Suite 5800 Fax: {206) 233-5119 PO Box 34215 Seattle, Washington 98124-4215 - B. Insurance Yes Financial Systems A. Organizational Activity Yes B. Accounting Systems Yes C. Budgetary Controls Yes D. Cost Allocation/Indirect Cost Plan Yes E. Cash Management Yes F. Bank Reconciliations Yes G. Payroll Disbursements Yes H. Disbursement Process Yes I. Petty Cash Yes J. Travel Yes K. Consultant/(Subcontracting - Yes L. Purchasing and Procurement Yes M. Fixed Assets (Property and Equipment} Yes Information 8: Communications A. Accounting Methods Yes B. Financial Statements and Reports Yes C. Monitoring?the Controls Yes Compliance Requirements A. Activities Allowed or Un-allowed Yes B. Allowable Costs/Cost Principles Yes C. Matching Yes D. Reporting Yes E. Program Income Yes In 2015, SHARE received general funds, per two HSD-funded contracts, for the programs detailed in the table below. PROGRAM NAME SERVICES SHARE Shelter Program SHARE Shelter Program includes a network of indoor shelter programs, a locker storage program and the SHARE II Program. SHARE shelters are located throughout Seattle and utilize space at faith based and community organizations. The program utilizes a self-management model intended to promote dignity, self-respect, empowerment and leadership development among participants. WHEEL Women?s Shelter The Women?s Shelter is operated by the Women?s Housing Equality and Enhancement League (WHEEL) and provides basic mat on floor emergency shelter for women, many of whom face multiple challenges. The two HSD-funded contracts were: CONTRACT PROGRAM CONTRACT NUMBER PROGRAM CONTRACT PERIOD SPECIALIST AMOUNT SHARE Shelter Program 01/01f15-12/31f 15 Mary Flowers $308,581.00 WHEEL Women's SheIter 01/01/15-12f31/ 15 Mary Flowers $266,995.00 $575,576.00 I. SUMMARY OF FINDINGS: Contract Agreement Review: The results of the contracts examined were no concerns were noted. CONTRACT CONTRACT HSD CONTRACT PAYMEN NUMBER CONTRACT AMOUNT PAYMENT BALANCE AS OF DA15-1392 01701/15-12/31/15 $308,581.00 523387845 $74,702.55 15 DA15-1524 01/01/15-12/31/15 $266,995.00 $199,699.50 $67,295.50 09/30,! 15 $575,576.00 433,577.95 $141,998.05 Review of Board Minutes: SHARE Board members discusses a variety of topics ranging from shelter reports, prOgram updates, ?nance and infrastructure concerns, grant writing and proposals, encampment issues and other topics on a weekly basis. Review of Master Agency Services Agreement: HSD has 2009 signed MASA on word. SHARE indicated that they submitted a 2012 MASA agreement, however there is no record available from either HSD or SHARE. As discussed with Mr. Agmata, you concurred with reporting requirement as stated in Section 240 ofthe MASA on audit reporting requirements. Review of Financial Statements Reports: 1. H50 has SHARE's December 31, 2011, financial statements report, as prepared by Steven A. lssacson, CPA, which was conducted in accordance with Statements on Standards for Accounting and Review Services issued by the American institute of Certi?ed Public Accountants (AICPA). At the time of the review, there were no reportable conditions or instances of noncompliance required to be reported. 3 2. HSD did not receive an audited financial report from SHARE. SHARE did not conduct an audit for ?scal year ending December 31, 2012. 3. HSD received the December 31, 2013 audited financial statements report and 2014 unaudited balance sheet and income statement reports on September 24, 2015. a. A review of the 2013 audit report indicated that SHARE was distressed financially with a de?cit cash and unrestricted assets balances. b. A review of the 2014 unaudited balance sheet and income statement reports indicated that financial health became worse. SHARE continued to operate in the red with a deficit cash balance of $67,000, debt of $35,000 and no liquidity to speak of. 4. HSD received the December 31, 2014 draft audited financial statements report and Form 990 on October 20, 2015. As stated previously, SHARE ?nancial health as of December 31, 2014 was unstable with de?cit cash and unrestricted net asset balances. 5. HSD received the unaudited October 2015 balance sheet, dated October 27', 2015, and income statement dated October 29, 2015. SHARE's is fully aware of their financial health and continues to address it amidst declining revenues and increasing debt. a. Loss of revenue: SHARE has experienced funding cuts and loss of revenue the past few years. i. 2015 King County funding was cut; ii. 2015 FEMA funds has not been available; In 2015, anticipated receiving $50,000, approved by City Council, of funding for existing encampment shelters; iv. Despite ongoing efforts, partnership with United Way has not materialized; v. 2015 Satterberg Foundation grant ended; vi. 2015 fundraising efforts has not been as successful as expected; intends to conduct direct mail and a Christmas event to generate funds; vii. 2015 grant applications has yet to generate results b. Debt balances: Due to funding cuts and loss of revenue, SHARE has struggled to make ends meet to pay expenses resulting in increase of debt balances. i. Honeybucket balance: SHARE has restructured this debt balance by paying $5,000, in addition to its existing balance. This debt balance is expected to be satisfied and fully paid by December 31, 2015. ii. Payroil taxes: SHARE has addressed the deficit balance in payroll taxes and is current to date. Loan payable to Catholic Community Services: SHARE has an existing $10,000 loan balance which they need to settle and satisfy. iv. Other existing debt balances: vendor balances and operational expenses are satisfactory. II. RECOMMENDATIONS AND CORRECTIVE ACTIONS: Recommendations: 1. HSD to update SHARE Master Agency Services Agreement. 2. SHARE to continue mitigating loss of revenue streams and funding cuts; inform HSD program staff as necessary. 3. SHARE to continue fundraising efforts and compete for grants. SHARE to address increase in operational costs to avoid incurring additional debt. 5. SHARE to submit Form 990 as a placeholder until the current ?scal year audit is completed. Corrective Actions: No corrective actions at this time. HSD appreciates the assistance and cooperation provided by you and the SHARE members during the fiscal review process. If you have any questions or need further clari?cation, please contact Efren Agmata at 206-684-0649 or efren.agmata@seattlegov. 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