A San Francisco nonprofit that received $1.5 million in city grants to help the homeless hasn’t kept a clear record of where the money is going and could be in danger of losing its nonprofit status.

An audit released Monday by the city controller found several severe problems at the United Council of Human Services, which offers hot meals at its Mother Brown’s Dining Room on Jennings Street and supportive permanent housing in 35 Hope Houses scattered throughout the Bayview.

Among the issues the report cited were $88,140 in expenditures that were either misclassified, undocumented or submitted with ineligible receipts, along with a board whose members didn’t seem to understand how the organization was run.

But a top city official defended the organization and said it’s working to correct the deficiencies.

“They’ve been very cooperative and committed to making changes,” said Jeff Kositsky, director of the city’s Department of Homelessness and Supportive Housing.

Kositsky’s department has overseen the nonprofit since last year. In prior years, it fell under the city’s Human Services Agency, which requested the audit in 2015.

The most significant change came this spring, when the Department of Homelessness enlisted a new fiscal sponsor — Public Health Foundation Enterprises — to manage the nonprofit’s finances. That job had previously been done by the Bayview Hunters Point YMCA, which didn’t have as strong a role, and lacked access to critical financial records.

The YMCA also struggled with accounting, and overbilled the city’s Human Services Agency $715 for payroll-related costs that should have been the responsibility of other funders, not the city, the audit said.

With a new outside agency now controlling its money, United Council of Human Services is working to fill holes on its board of directors. It had five vacancies on what was supposed to be a 13-member board, the audit found. Kositsky said it’s starting to fill those positions.

“In some ways, I feel this is kind of a success story,” said Kositsky, adding that the timing of the audit was “unfortunate.” He said the United Council of Human Services, like many other organizations in San Francisco’s southeast corridor, offers vital services to a population that desperately needs them. But it lacks the political and philanthropic connections that have helped ensure success for charities like Glide Memorial Church in the Tenderloin.

Tonia Lediju, director of city audits at the controller’s office, was also optimistic after meeting with the board a couple of weeks ago.

Its members “were extremely interested in mitigating the audit’s findings,” she said. “I think the intentions to do a good job are there.”

United Council of Human Services CEO Gwendolyn Westbrook was not available for comment Monday. She acknowledged receiving the audit in a brief letter to Lediju.

Westbrook wrote that her group is “diligently working to make the necessary changes as recommended in your report.”

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com Twitter: @rachelswan