CITY OF AMARILLO

Reporting – HUD 50058

Federal Agency: U.S. Department of Housing and Urban Development

Federal Program Title: Housing Voucher Cluster

ALN: 14.871 14.879

Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: October 1, 2024 – September 30, 2025

Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance

Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Per HUD PIH guidance (e.g., Notice PIH 2011 65), Public Housing Agencies are required to submit Form HUD 50058 data to HUD’s PIC system in a timely manner, within 60 days of the effective date of the transaction, to ensure accurate and current program reporting.

Condition: Of the 40 HUD 50058 transactions tested, three were not submitted to the HUD Public and Indian Housing Information Center (PIC) system within 60 days of the effective date, as required by HUD PIH guidance (e.g., Notice PIH 2011 65), resulting in untimely reporting of program data.

Questioned costs: None.

Context: See “Condition.”

Cause: Lack of automated controls and monitoring over submission deadlines, combined with insufficient staff awareness and resource constraints, resulted in untimely HUD 50058 submissions.

Effect: Untimely submission of HUD 50058 reports results in outdated or inaccurate data in HUD’s PIC system, which may impair HUD’s ability to effectively monitor program performance and compliance, and increases the risk of noncompliance with HUD PIH reporting requirements.

Repeat Finding: No

Recommendation: The City should implement procedures and controls to ensure timely submission of HUD 50058 transactions, including establishing a tracking mechanism for due dates, enhancing supervisory review of submission timeliness, and providing training to staff on HUD PIH reporting requirements to ensure compliance with the 60 day standard.

Views of responsible officials: See management response on corrective action plan.

Reporting - SEMAP

Federal Agency: U.S. Department of Housing and Urban Development

Federal Program Title: Housing Voucher Cluster

ALN: 14.871 14.879

Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: October 1, 2024 – September 30, 2025

Type of Finding: Significant Deficiency in Internal Control over Compliance

Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Per 24 CFR 985.101(a), SEMAP certifications must be formally approved by the City’s governing board (or authorized official) and signed by appropriate management prior to submission. Additionally, in accordance with 2 CFR 200.303(a), the City must maintain effective internal controls, including documented review and approval, to ensure the accuracy and completeness of reports submitted to HUD.

Condition: The City did not maintain documentation evidencing that the SEMAP certification report was reviewed and approved prior to submission to HUD; therefore, we were unable to determine whether the review and approval controls were performed before submission.

Questioned costs: None.

Context: See “Condition.”

Cause: The condition occurred because the City had not formalized procedures requiring documentation and retention of SEMAP review and approval prior to submission.

Effect: Without documented review and approval, there is an increased risk that inaccurate, incomplete, or unsupported SEMAP certifications could be submitted to HUD, which could affect HUD’s assessment of the City’s Housing Choice Voucher program performance and result in noncompliance with SEMAP certification requirements.

Repeat Finding: No.

Recommendation: The City should formalize SEMAP review and approval procedures, require documented evidence of supervisory or authorized official approval prior to submission, and retain such documentation to support compliance with SEMAP certification and internal control requirements.

Views of responsible officials: See management response on corrective action plan.

Special Test – Reasonable Rent

Federal Agency: U.S. Department of Housing and Urban Development

Federal Program Title: Housing Voucher Cluster

ALN: 14.871 14.879

Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Period: October 1, 2024 – September 30, 2025

Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance

Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Per 24 CFR 982.507(a)(1), the City must determine that the rent to owner is reasonable prior to approving the lease and executing the HAP contract; therefore, housing assistance payments should not be made before a rent reasonableness determination is completed.

Condition: For one of 40 samples tested, the City issued a housing assistance payment before completing and documenting the required rent reasonableness determination. As a result, the City did not demonstrate compliance with Housing Choice Voucher program requirements requiring rent reasonableness to be determined prior to approval of the lease and execution of the HAP contract.

Questioned costs: None.

Context: See “Condition.”

Cause: The City did not have sufficient control procedures in place to ensure rent reasonableness determinations were completed, documented, and reviewed before housing assistance payments were issued.

Effect: Failure to complete rent reasonableness determinations prior to payment increases the risk that housing assistance payments may be made for units with rents that are not properly supported as reasonable, which could result in improper payments and noncompliance with Housing Choice Voucher program requirements.

Repeat Finding: No.

Recommendation: The City should strengthen controls over the lease-up and payment process to ensure rent reasonableness determinations are completed, documented, and reviewed before lease approval, HAP contract execution, and issuance of housing assistance payments. This may include using a formal checklist or workflow control, requiring supervisory review, and providing staff training on program requirements.

Views of responsible officials: See management response on corrective action plan.

Special Test – Utility Allowance Schedule

Federal Agency: U.S. Department of Housing and Urban Development

Federal Program Title: Housing Voucher Cluster

ALN: 14.871 14.879

Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: October 1, 2024 – September 30, 2025

Type of Finding: Significant Deficiency in Internal Control over Compliance

Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

24 CFR 982.517 requires the City to maintain and update utility allowance schedules based on current data, further implying the need for accurate and reliable calculations supported by effective internal controls.

Condition: The City updated and finalized the utility allowance schedule without documented independent review of the underlying utility rate data, assumptions, and calculations. As a result, duties over preparation and approval of the schedule were not adequately segregated.

Questioned costs: None.

Context: See “Condition.”

Cause: The City had not established a formal control requiring documented independent review and approval of the utility allowance schedule prior to finalization.

Effect: Without documented independent review, errors in utility rate data, assumptions, or calculations may not be prevented or detected timely, increasing the risk of inaccurate utility allowances, improper housing assistance payments, and noncompliance with Housing Choice Voucher program requirements.

Repeat Finding: No.

Recommendation: The City should establish and implement a formal review and approval control over the utility allowance schedule. The review should be performed by an individual independent of preparation, documented prior to finalization, and include verification of utility rate data, assumptions, calculations, and compliance with applicable Housing Choice Voucher program requirements.

Views of responsible officials: See management response on corrective action plan.

Equipment and Real Property Management

Federal Agency: U.S. Department of Transportation

Federal Program Title: Airport Improvement Program

ALN: 20.106

Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3-48-0007-056-2024, 3-48-0007-057-2024, 3-48-0007-058-2024, 3-48-0007-059-2024, 3-48-0007-060-2025, 3-48-0007-061-2025 December 29, 2023 – December 29, 2027, December 27, 2023 – December 27, 2027, August 16, 2024 – August 16, 2028, August 16, 2024 – August 16, 2028, September 18, 2025 – September 18, 2029, September 10, 2025 – September 10, 2029

Type of Finding: Material Weakness in Internal Control over Compliance and Material Noncompliance

Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Pursuant to 2 CFR 200.313(d), the City is required to maintain property records for equipment acquired with federal funds that include, among other elements, the source of funding and the percentage of federal participation.

Condition: The City’s fixed asset ledger does not identify or distinguish assets acquired with federal award funds from assets acquired with other funding sources. As a result, the City’s property records do not readily identify the source of funding or percentage of federal participation for individual assets, as required by 2 CFR 200.313(d).

Questioned costs: None.

Context: See “Condition.”

Cause: The City’s fixed asset system was not configured to capture funding source and federal participation information, and related procedures did not require this information to be recorded when assets were added to the ledger.

Effect: Without complete property records, the City cannot readily demonstrate compliance with federal property management requirements. This increases the risk that federally funded assets may not be properly identified, safeguarded, reported, or disposed of in accordance with federal requirements.

Repeat Finding: No

Recommendation: The City should configure its fixed asset system, or implement an equivalent tracking mechanism, to identify assets acquired with federal award funds and document the related funding source and percentage of federal participation. The City should also update written procedures and perform periodic reviews to ensure property records remain complete, accurate, and compliant with federal requirements.

Views of responsible officials: See management response on corrective action plan.

Reporting – FAA Form 5100-127

Federal Agency: U.S. Department of Transportation

Federal Program Title: Airport Improvement Program

ALN: 20.106

Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3-48-0007-056-2024, 3-48-0007-057-2024, 3-48-0007-058-2024, 3-48-0007-059-2024 December 29, 2023 – December 29, 2027, December 27, 2023 – December 27, 2027, August 16, 2024 – August 16, 2028, August 16, 2024 – August 16, 2028

Type of Finding: Significant Deficiency in Internal Control over Compliance and Noncompliance

Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Pursuant to 49 U.S.C. § 47107(a)(15) and Federal Aviation Administration (FAA) guidance, including AC 150/5100-19, requires airport sponsors to prepare FAA Form 5100-127 using financial information that is accurate, complete, and supported by underlying accounting records. Additionally, in accordance with 2 CFR 200.302(b)(3), the City must maintain financial management systems and internal controls that ensure reported data is complete, accurate, and reconcilable to the general ledger.

Condition: During testing of FAA Form 5100-127 submitted in March 2025, which reported financial information for the fiscal year ended September 30, 2024, with comparative amounts for the fiscal year ended September 30, 2023, we noted that several line items did not agree to the City’s general ledger or supporting documentation. As a result, certain amounts reported on the form were not fully supported by the underlying accounting records. The specific line items and variances are summarized in the table below. The large variances noted were attributable primarily to reporting input/mapping errors and did not result in questioned costs; however, the errors indicate that the reconciliation and review controls did not operate at a sufficient level of precision. Questioned costs: None.

Context: See “Condition.”

Cause: The condition occurred because reconciliation procedures were not sufficiently detailed or consistently documented, supporting general ledger documentation was not maintained for all reported amounts, and the review process was not performed at a level of precision sufficient to identify variances prior to submission.

Effect: As a result, the FAA may rely on financial information that is inaccurate or not fully supported by the City’s accounting records, which could impair monitoring of airport financial operations and compliance with grant assurances. The condition also increases the risk of future reporting errors and additional FAA oversight.

Repeat Finding: No.

Recommendation: The City should enhance its existing reconciliation and review procedures by requiring documented tie-outs of FAA Form 5100-127 amounts to the general ledger, retention of supporting documentation for all reported amounts, and evidence of supervisory review prior to submission.

Views of responsible officials: See management response on corrective action plan.

Special Tests and Provisions – Revenue Diversion

Federal Agency: U.S. Department of Transportation

Federal Program Title: Airport Improvement Program

ALN: 20.106

Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: 3-48-0007-056-2024, 3-48-0007-057-2024, 3-48-0007-058-2024, 3-48-0007-059-2024, 3-48-0007-060-2025, 3-48-0007-061-2025 December 29, 2023 – December 29, 2027, December 27, 2023 – December 27, 2027, August 16, 2024 – August 16, 2028, August 16, 2024 – August 16, 2028, September 18, 2025 – September 18, 2029, September 10, 2025 – September 10, 2029

Type of Finding: Significant Deficiency in Internal Control over Compliance

Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Per 49 U.S.C.47107(b), The Secretary of Transportation may approve a project grant application under this subchapter for an airport development project only if the Secretary receives written assurances, satisfactory to the Secretary, that local taxes on aviation fuel (except taxes in effect on December 30, 1987) and the revenues generated by a public airport will be expended for the capital or operating costs of— • the airport; • the local airport system; or • other local facilities owned or operated by the airport owner or operator and directly and substantially related to the air transportation of passengers or property.

Condition: The City did not maintain a formal written policy or documented procedure to ensure airport-generated revenues are used only for allowable airport-related purposes in accordance with federal revenue-use restrictions.

Questioned costs: None.

Context: See “Condition.”

Cause: The City had not formalized its process for translating federal airport revenue-use requirements into written policies and control procedures.

Effect: The absence of a written policy increases the risk that airport revenues could be used for unallowable purposes or that federal revenue-use requirements may be applied inconsistently. Although no specific instances of revenue diversion were identified, the lack of formalized guidance and related controls increases the risk of noncompliance with 49 U.S.C. § 47107(b).

Repeat Finding: No

Recommendation: The City should develop, formally adopt, and implement a written airport revenue policy that defines allowable and unallowable uses of airport-generated revenues, aligns with federal revenue-use requirements and applicable FAA guidance, establishes expenditure review and approval procedures, and requires periodic monitoring for compliance. Relevant personnel should be trained on the policy.

Views of responsible officials: See management response on corrective action plan.

Reporting – Semi-Annual Performance Report

Federal Agency: U.S. Department of Homeland Security

Federal Program Title: Staffing for Adequate Fire and Emergency Response (SAFER)

ALN: 97.083

Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: EMW-2022-FF-01428 February 26, 2024 – February 25, 2027

Type of Finding: Significant Deficiency in Internal Control over Compliance

Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The City should have controls designed to ensure proper financial and performance reporting, including adequate review prior to submission.

Condition: The City did not maintain documented evidence of an independent review and approval of the semi-annual SAFER Hiring Performance Progress Report prior to submission. The same individual prepared, reviewed, and submitted the report, which limited segregation of duties and independent oversight over the reporting process.

Questioned costs: None.

Context: See “Condition.”

Cause: The City had not established a formal review and approval procedure requiring independent supervisory review of SAFER performance reports prior to submission.

Effect: Without documented independent review, there is an increased risk that errors, omissions, or unsupported information in the SAFER performance report may not be detected and corrected before submission, which could reduce the reliability of information reported to FEMA.

Repeat Finding: No.

Recommendation: The City should establish and document a formal review and approval process for SAFER performance reports prior to submission. The process should require independent review by an individual other than the preparer, or, if staffing limitations prevent full segregation of duties, a documented compensating supervisory review.

Views of responsible officials: See management response on corrective action plan.

Reporting – FFATA Subawards

Federal Agency: U.S. Department of Housing and Urban Development

Federal Program Title: Community Development Block Grants/Entitlements Grants

ALN: 14.218

Pass-Through Agency: N/A Pass-Through Number(s): N/A Award Number and Period: B-18-MC-48-0002, B-19-MC-48-0002, B-20-MC-48-0002, B-21-MC-48-0002, B-22-MC-48-0002, B-23-MC-48-0002, B-24-MC-48-0002 October 1, 2018 – September 1, 2025, October 1, 2019 – September 1, 2026, October 1, 2020 – September 1, 2027, October 1, 2021 – September 1, 2028, October 1, 2022 – September 1, 2029, October 1, 2023 – September 1, 2030, October 1, 2024 – September 1, 2031

Type of Finding: Material Weakness in Internal Control over Compliance and Noncompliance

Criteria or specific requirement: Per 2 CFR 200.303(a), the City of Amarillo (the City) must establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that it is managing the Federal award in compliance with federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Pub. L. No. 110-252, hereafter referred as the “Transparency Act” that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). As of March 8, 2025, fsrs.gov was retired, and all subaward reporting data and functionality are now on SAM.gov.

Condition: During the fiscal year, the City issued multiple first-tier subawards under the Community Development Block Grants/Entitlement Grants program that exceeded the $30,000 reporting threshold. However, the City did not report any of the applicable subawards in the FFATA Subaward Reporting System/SAM.gov as required.

Questioned costs: None.

Context: See “Condition.”

Cause: The City had not established sufficient procedures or oversight controls to identify first-tier subawards subject to FFATA reporting requirements and ensure the required subaward information was submitted timely. Additionally, personnel responsible for grant administration were not sufficiently aware of the applicable FFATA reporting requirements.

Effect: Failure to report required subaward information resulted in noncompliance with federal transparency reporting requirements and reduced public visibility into the use of federal funds. The lack of reporting may also subject the City to increased federal monitoring, enforcement actions, or other administrative remedies.

Repeat Finding: No.

Recommendation: The City should establish and implement formal procedures to identify subawards subject to FFATA reporting, track applicable reporting deadlines, and ensure required submissions are completed timely in SAM.gov. The City should also provide training to grant administration personnel and perform corrective reporting for previously omitted subawards, as applicable.

Views of responsible officials: See management response on corrective action plan.

Program: American Rescue Plan ALN 21.027 Program Requirement: Reporting Criteria: Reports should agree to supporting documentation that has been reconciled and reviewed. Condition: Retainage payable of $47,878 was incorrectly reported in the program expenditures as of September 30, 2024. Context: One of two construction projects tested reports was incorrect Cause: Lack of proper review and reconciliation of expenditures. Effect: Incorrect reporting Questioned Costs: No Repeat Finding: No Recommendation: The City needs to file an amended report and perform proper review of the reports which should include a reconciliation to properly reflect retainage payable. Views of Responsible Officials: The City agrees with the recommendation. See the City’s corrective action plan.