Table Of ContentSAN FRANCISCO PUBLIC LIBRARY
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3 1223 07661
DEPARTMENT OF CHILDREN,
YOUTH AND THEIR FAMILIES:
San Francisco Neighbors Resource
San Francisco PublicLibrary Center Could Not Account for All Its
Grant Expenditures
Government Information Center
San Francisco Pubik; Library DOCUMENTS DEPT.
100 Larkln Street, 5th Floor
SanFrancisco, CA 94102 FEB - 8 2007
REFERENCE BOOK
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Financial Audits
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DEPARTMENT OF CHILDREN,
YOUTH AND THEIR FAMILIES:
San Francisco Neighbors Resource
Center Could Not Account for All Its
Grant Expenditures
DOCUMENTS DEPT.
FEB - 8 2007
SAN FRANCISCO
PUBLIC LIBRARY
o
Financial Audits
February 2007
1,
City and County of San Francisco
Office of the Controller - City Services Auditor
Department of Children, Youth andTheir Families:
San Francisco Neighbors ResourceCenterCould Not Accountfor All Its February 1, 2007
Grant Expenditures
Purpose oftheAudit
At the request of the mayor of the City and County of San Francisco, we investigated the use of cityfunds by
the nonprofit San Francisco Neighbors Resource Center.
Highlights Recommendations
Results The audit report includes four
recommendations forthe
The center's inadequate financial records prevented us from Department of Children, Youth and
completing afull audit, and we could not determine whetherthe Their Families to ensure thatthe
center improperly used cityfunds for political purposes. However, center accounted forthe use of city
based on the records provided to us, we were able to conclude funds, including the following:
that the center misspent some cityfunds and has not maintained
adequate documents as required by its grants with the city. The • Require the center and its
audit identified the following deficiencies where the center: president, Julie Lee, to provide
documentation to support
• Did not have sufficient supporting records in the form of expenses totaling $155,493 for
invoices, time sheets, and otherfinancial records for which the audit did not find
$155,493 of the $167,998 (93 percent) in grant funds the adequate support. If the center
center received from the department. cannot provide these records,
the department should recover
• Received $6,666 as an advance that it did not use and the funds from the center.
should return to the department.
• Determine if the San Francisco
• Claimed and received $2,000 more in salary payments than Neighbors Resource Center is a
it paid to a center employee. viable non-profit and request the
center and its president, Julie
• Did not obtain from its vendors detailed invoices to Lee, to return $6,666 for the
substantiate the reasonableness of some vendor charges, cash that the department
including radio advertising and computer database services. advanced to the center but which
the center did not use.
• Did not keep adequate records of the clients it served under
the grants.
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CITY AND COUNTY OF SAN FRANCISCO
OFFICE OF THE CONTROLLER Ed Harrington
Controller
Monique Zmuda
Deputy Controller
February 2007
1 ,
Margaret Brodkin, Director
Department of Children, Youth and Their Families
1390 Market Street, Ste. 900
San Francisco, CA 94102
Dear Ms. Brodkin:
The Office of the Controller presents its report concerning the review of the San Francisco
Neighbors Resource Center (center), a nonprofit organization, and its compliance with
requirements for the use of city funds. The nonprofit received city funding, under a grant
with the Department of Children, Youth and Their Families (department), to provide
community referral services. Because the nonprofit was alleged to have made improper
campaign contributions using state funds, we investigated whether the nonprofit made
improper campaign contributions using city funds.
Because of on-going investigations by various state and local agencies, we could not gain
access to the center's original records; instead, the center's attorneys provided copies of
documents pertaining to the city grant. However, those documents only covered $41 ,655
of the $167,998 (25 percent) in grant funds the center received from the department.
Based on these records, the auditors could not determine conclusively if the center
improperly used city funds for political activities. Nevertheless, from the available records,
the auditors identified at least $8,666 in overpayment from the department to the center.
The response from the department is attached to this report. The City Services Auditor-
Financial Audits will be working with the department to follow up on the status of the
recommendations made in this report.
Controller
CityHall•1 Dr.CarltonB.GoodlettPlace•Room316•SanFranciscoCA94102-4694 FAX415-554-7466
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INTRODUCTION
BACKGROUND
In August 2004, the San Francisco Chronicle reported that the
San Francisco Neighbors Resource Center (center) and its
principal founder, Julie Lee, allegedly used a $500,000 state grant
to the center to make improper campaign contributions for the
2002 campaign of former California Secretary of State Kevin
Shelley. The newspaper also reported that the center received
$200,000 in funds from the City and County of San Francisco
(City), but that the center provided few services in return. In
response to the newspaper articles, the City's mayor requested
the Office of the Controller to conduct an audit of the center to
determine if the center had improperly spent any city funds.
The center is a California non-profit organization whose stated
mission was to bridge the information gap between the people
with needs and the resources available to those people with
needs. According to materials published by the center, due to
language and geographic barriers, many of these people are
unable to find the information and resources they need to resolve
their problems. According to the center, it provided referral
services, activities and daycare for the youth of the community,
and facilitated medical and other services for the senior
community.
To further assist its clientele, the center indicated it intended to
construct a service center to provide a low cost, or free, facility for
other public benefit agencies to locate their services within the
center's service area.
In June 2000, the City granted the center a lease for a city-owned
parcel of property located at 2350 19th Avenue at an annual rent of
$1 .00 to facilitate the center's proposed services to the
community. The lease gave the center options to renew the lease
each year for $1.00 with the City's concurrence.
In July 2000, the center received a grant from the City's
Department of Children, Youth and Their Families (department) to
provide a referral program for community services known as the
Community Resource and Referral Program. The center was to
research and compile a database of both public and private
organizations that provide programs and services to children,
youth and families located throughout San Francisco, such as
child care, after-school programs, extracurricular education
programs, and high risk youth counseling. The center was to
establish a call-in line to provide referral services and to market
and advertise the call-in line to create awareness of the service.
1
For fiscal year 2000-2001 the department granted the center
,
$50,000 to operate the referral program, and the City renewed the
grant for the next three and a half years, funding the center for a
total of $167,998. According to the grant, the center was to
provide referral services to parents for programs to help their
children and families and to serve 150 children and youth, ranging
in age from to 17 years of age, during the year.
SCOPE AND METHODOLOGY
The purpose of our review was to determine whether the center
used city funds in accordance with the provisions of its grants from
the City. To conduct the financial review, we examined applicable
terms of the nonprofit's grants with the City and various programs
and financial records, including payroll records, bank statements,
We
and expenditure vouchers. then selected and analyzed
payments made by the City. To evaluate whether the center
provided the services required under the grant, we reviewed client
intake logs and log sheets used by the center. To evaluate the
center's compliance with other requirements in the city grants, we
compared a sample of invoices submitted by the center for
reimbursement of expenditures, and we traced the charges to
supporting documents. In our review, we mainly relied on
documents provided by the center's attorneys and we cannot be
certain that the center provided all relevant records.
We
performed a detailed examination of invoices that the nonprofit
submitted to the City for reimbursement by examining, on a
sample basis, the financial records and documentation the
nonprofit maintained in support of the invoiced amounts. However,
the nonprofit did not have, or make available to us, all of the
financial statements, general ledgers, check registers, bank
statements, and supporting documentation that we requested to
complete the review. Our analysis was based solely on records
and documents submitted by the center's attorneys.
2
