Detroit — Part of an $11 million grant intended to provide business attire to 400 low-income job-seekers instead helped only two people, an audit of the city's Department of Human Services has found.
The audit, conducted by the city's auditor general for the period from July 2009 to September 2011, found the department failed to control the operations and finances of a boutique that was to provide the clothes.
The department did not safeguard grant funds or create an inventory for the clothing, the audit found.
Among the most telling findings, which will be discussed today during a City Council committee meeting, is that a third-party contractor advanced $148,000 to a downtown Detroit clothing store and opened an account, but did not include the city on the account.
"It's just another example that money is not as much of an issue than managing the money, whether it's grant or general fund dollars that we have," said Council President Pro Tem Gary Brown. "We have to find a better way to manage the resources and give Detroiters the value for the tax dollars they deserve."
The audit is the latest finding against the city's Department of Human Services, which has been under scrutiny for chronic mismanagement of federal funds. Many of the department's leaders have departed since an internal investigation was launched last year, including an inquiry into the purchase of $182,000 worth of high-end furniture for a department office. In 2009, the department received more than $11 million in stimulus funding and created a service center.
The center, at 1970 Larned, included the Customer Choice Pantry, the New Beginnings Clothing Boutique and a call center that had the capacity to service 60,000 families in need. The boutique was to provide business attire for low-income residents for job interviews.
To receive clothing, residents were required to have a job interview scheduled. According to the audit, the DHS was supposed to help 400 people between October 2010 and September 2011 but instead served only two.
"The DHS was only able to provide the auditors with two referral forms signed by two clients documenting that they received clothing from the boutique," the audit said. "Eligible Detroiters are not being served with available clothing being stocked in the boutique."
The department did not give a reason for not reaching the goal of providing 400 people with clothes.
The audit found the Department of Human Services hired a contractor to run the boutique. The contractor negotiated the purchase of clothing without involving city officials and did not give them keys to the center.
The contractor also did not provide proof of the receipt of the clothing to auditors.
"The potential loss of thousands of dollars exists because controls have not been established for the boutique," the audit said. "…failure to maintain an adequate inventory system results in the inability to efficiently monitor and safeguard inventory and to identify inventory losses from theft and damages."
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