Mecklenburg County failed to properly oversee and hold accountable a nonprofit that handled more than $1.7million in federal dollars the past two years for a program that provided housing to people who were homeless, according to documents released Thursday.

A federal agency faulted Mecklenburg Open Door with not keeping adequate documents about its work, citing deficiencies "so numerous" that officials recommended the county immediately suspend its contract with the nonprofit, according to a summary of an on-site review conducted last month.

The county ended its work with the agency for the Shelter Plus Care program and plans to terminate its relationship with the nonprofit altogether by Nov. 30. The agency runs several programs with the Area Mental Health department.

County Manager Harry Jones said Thursday that one county employee has been terminated, and another reprimanded, for what has been cited so far in the federal review. He declined to identify the workers, citing personnel law, but said they worked in the county's area mental health and finance departments.

Jones and Jim Cook, president of Mecklenburg Open Door's board of directors, said the organizations are conducting their own investigations into the housing program.

"We are looking to determine to what extent the issues are a failure to report appropriately, or a failure to act appropriately," Cook said. "Either is a problem, but they require different responses."

County Commissioners Chair Jennifer Roberts stressed Thursday the new review wasn't a case involving missing money and that services were delivered. But she said the contractor failed to provide documentation.

"We had some oversight there and should have caught it earlier than we did," she said. "We should make sure documentation is done correctly, whether it's the county or an outside contractor."

The HUD and local probes mark the second time in the past year that concerns have been raised about record-keeping and oversight of programs tied to the county. A 2009 study of the now-defunct Giving Tree charity and other spending in the Department of Social Services identified lax fiscal controls and prompted broad reforms by the county, including doubling the size of its Internal Audit department. A former county employee pleaded guilty to embezzling from the Giving Tree charity.

Information about the federal review was disclosed earlier this week. But documents released by the county Thursday shed more light on concerns raised from the Department of Housing and Urban Development. Auditors plan to spend several weeks reviewing the past two years of the program. The county could be fined up to $500,000, said county commissioner Bill James.

The Shelter Plus Care program pays for housing and other assistance for people who are homeless and have mental illness, addiction or HIV/AIDS. Mecklenburg has received millions in federal dollars for the effort, including more than $1.7million the past two years. More than 200 people are served though the program.

The federal review summary stated the county is serving more people than originally proposed, something it listed as positive. Cook said the effort and other services from Mecklenburg Open Door work with people "who would otherwise be in jail ... in a state hospital, or on the streets."

Cook and county officials said the nonprofit has made rent and utility payments. But the federal review said the nonprofit lacks support documents for its work, including having incomplete housing inspections and not having leases or rent calculations on file.

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At least three nonprofit employees have left recently, including former Executive Director Ed Payton and a worker who ran the Shelter Plus Care program. Cook declined to discuss the departures further, also citing personnel issues.

The county was faulted for, among other issues, "giving in to demands of contractor and not holding them accountable," the summary stated.

Jones said Area Mental Health bore responsibility for monitoring the grant, and said more details of shortcomings and problems would be revealed as the reviews continue.

The county is running the shelter program in-house. HUD officials directed the county to submit a plan on how it will manage the program.

James said the county has no experience with housing and should get out of the business. He said he agreed with a comment Jones told commissioners earlier this week that the county should "stick to what our core business is."

"The county's inability to manage this is related to the fact that we don't know the (housing) business," James said.

The county has worked with Mecklenburg Open Door for about 25 years, Cook said, and the agency receives the bulk of its funding from government sources. He was cautious in describing the future of the nonprofit without a relationship with the county.

"The board is taking every step possible to make sure that our clients are continued to be served in the best way possible," Cook said. "We believe that our staff are doing a good job of serving those clients."