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Seattle’s Human Services Department played fast and loose with millions of dollars in federal grants in 2013 despite repeated warnings over several years by the state auditor’s office, a new report says.

The department, which spent almost $38 million in federal grants last year, “does not have adequate internal controls to effectively monitor service providers for grant compliance,” says the report by the auditor’s office.

In 2013, according to the report, the department failed to consistently document its payments to service providers, failed to consistently verify the information it received from providers and failed to monitor changes made to grants it shared with other city agencies.

“Similar conditions were also identified in our 2010, 2011 and 2012 audits,” the report says.

The auditor’s office looked at three types of United States Department of Housing and Urban Development grants that the city made to providers in 2013 and identified $2.7 million in costs “without adequate supporting documentation.”

Supportive Housing Program, Continuum of Care Program and Community Development Block grants are mostly awarded by the Human Services Department to agencies that provide homelessness assistance.

The auditor’s office report says the department is struggling with compliance in part because, in some cases, a single employee is assigned to analyze community needs, select a provider, negotiate a contract with that provider and then crunch the numbers to make sure the provider stays in compliance.

That means the employee must serve as social worker, grant specialist and accountant all at once.

“These duties are not compatible,” the report says.

The department signing multiple contracts with a single provider is another problem, according to the report.

“In 2013 the department had 468 contracts with 173 difference service providers and 77 of those providers had multiple contracts,” the report says.

The department, in a response that is part of the auditor’s office report, says it will verify the questioned costs by the end of this year and launch a new manual to provide its staff with guidance as they deal with provider contracts.

Next year, the department will revamp the way it deals with contracts and will implement a new compliance plan.

The exact nature of the services and providers associated with the 2013 questioned costs were not immediately available.

In a speech last week unveiling his proposed budget for 2015 and 2016, Mayor Ed Murray expressed frustration with how the city measures the impact of the money it spends and promised a new performance-based accounting system.

Murray didn’t at the time say how much he planned to spend on the new system, but spokesman Jason Kelly later said the mayor is proposing a $3.8 million allocation for next year.

When the system will be completed is another question. For years, city officials have been talking about its development.

In response to a scathing 2012 auditor’s office report, City Councilmember Tim Burgess, now the council’s president, said it would be “another year or two” before the system was ready.