County of Hidalgo, Texas

Criteria and Condition: As outlined in the grant agreements, 24 CFR 75.25 requires quarterly reports to be submitted documenting the actions taken to comply with the employment, training and contracting requirements of Section 3 of the Housing and Urban Development Act of 1968. Section 3 quarterly reports are due on the 10th day of the month following the quarter close. We noted the following Section 3 quarterly reports were not submitted timely: Contract No. Quarter Due Date Date Submitted 22-082-005-D200 Sep – Nov 12/10/2024 10/23/2025 22-082-005-D200 Dec – Feb 03/10/2025 10/23/2025 22-082-005-D200 Mar – May 06/10/2025 10/23/2025 22-082-005-D200 Jun – Aug 09/10/2025 10/23/2025 22-083-004-D209 Sep – Nov 12/10/2024 09/24/2025 22-083-004-D209 Dec – Feb 03/10/2025 09/24/2025 22-083-004-D209 Mar – May 06/10/2025 09/24/2025 22-083-004-D209 Jun – Aug 09/10/2025 09/24/2025 Cause and Effect: Personnel turnover contributed to the delay in the submission of Section 3 quarterly reports. As the reports were not submitted by their required due dates, Hidalgo County Urban County was not in compliance with the conditions of its grant agreements. Questioned Costs: None noted. Repeat Finding from Prior Year(s): N/A Recommendation: We recommend controls be strengthened to ensure all reports are submitted by the required due dates. These controls should include a reporting calendar with all applicable due dates, assigning responsibility for report preparation, review and submission. In addition, we recommend cross training personnel to mitigate the impact of personnel turnover and ensure continuity in compliance activities.

Views of Responsible Officials: See management’s corrective action plan.

Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) – COVID-19 ALN 21.027

Activities Allowed or Unallowed Allowable Costs/Cost Principles

Criteria and Condition: A key control in the payroll process is an employee and supervisor’s approval of an employee’s timesheet certifying the employee’s time worked. To ensure the control is effective, these approvals should occur after the end of the pay period and before payroll is processed/paid. In a sample of 40 payroll transactions, we noted the exceptions as summarized below:

• 2 instances where the timesheet did not include the employee’s self-certification. • 1 instance where the timesheet did not include either the employee self-certification approval supervisor approval.

Cause and Effect: The controls as described above are not consistently applied. The self-certification by the employee and supervisor approval of timesheets is a key control over the payroll process to ensure employees are compensated only for time worked and costs charged to the program. Not following this control may create an opportunity for incorrect time postings from going unnoticed and for unallowable costs to be charged to the program.

Questioned Costs: None noted.

Repeat Finding from Prior Year(s): N/A

Recommendation: We recommend all approvals be made after the end of the pay period and before timesheets are due to ensure the control is effective in preventing errors.

Views of Responsible Officials: See management’s corrective action plan.