Dallas County

2025 – 002 Subrecipient Monitoring – Missing Contract Elements

Federal Agency: U.S. Department of Health and Human Services

Federal Program Title: HIV Emergency Relief Project Grants HIV Care Formula Grants

ALN: 93.914 93.917

Pass-Through Agency: Texas Department of State Health Services

Pass-Through Number(s): N/A

Award Number and Period: HIV Emergency Relief Project Grants H89HA00014-34, H89HA00014-35 March 1, 2024 – February 28, 2025, March 1, 2025 – February 28, 2026

HIV Care Formula Grants HHS001122200003 April 1, 2022 – March 31, 2026

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

Section III – Findings and Questioned Costs – Major Federal Programs (Continued)

2025 – 002 Subrecipient Monitoring – Missing Contract Elements (Continued)

Criteria or specific requirement: Per 2 CFR 200.303(a), Dallas County 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 2 CFR section 200.332(a), all pass-through entities must ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the certain required information provided. A pass-through entity must provide the best available information when some of the required information is unavailable. A pass-through entity must provide unavailable information when it is obtained. Required information includes the subrecipient’s unique entity identifier (UEI), federal award identification number (FAIN), federal award date of award to the recipient by the granting agency, and the name of federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity.

Condition: Audit procedures included a review of subaward agreements for required information. We noted the following instances of noncompliance:

HIV Emergency Relief Project Grants – The UEI was not included in any of the five subaward agreements selected for testing. The start and end dates for the agreements were March 1, 2024 – February 28, 2025.

HIV Care Formula Grants – The UEI, FAIN, federal award date of award to the recipient by the granting agency, and the name of federal awarding agency, pass-through entity, and contact information for awarding official of the pass-through entity were not included in any of the five subaward agreements selected for testing. The start and end dates for the agreements were March 1, 2024 – February 28, 2025.

Questioned costs: None.

Context: See “Condition.”

Cause: The current contract review process to ensure all required elements are included per 2 CFR 200 §200.332 prior to execution is not at the correct precision level.

Effect: As required subaward information was left out of contracts, Dallas County increased the risk that subrecipients were not fully informed of the federal award details necessary to properly administer the funds in compliance with the applicable statutes, regulations, and award terms. Missing contract elements may impede subrecipients’ ability to accurately identify the federal program, appropriately report activities, and meet federal requirements, including those related to financial management, performance, subrecipient monitoring, and audit preparation.

Section III – Findings and Questioned Costs – Major Federal Programs (Continued)

2025 – 002 Subrecipient Monitoring – Missing Contract Elements (Continued)

Repeat Finding: No

Recommendation: We recommend management enhance existing controls around the review of all subaward agreements to ensure that all pass-through agreements include each of the required elements noted in 2 CFR §200.332.

Views of responsible officials: See corrective action plan.

2025 – 003 Eligibility

Federal Agency: 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), Dallas County 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 5.233, Dallas County must use HUD's Enterprise Income Verification (EIV) system in its entirety:

• As a third-party source to verify tenant employment and income information during annual and streamlined reexaminations of family composition and income, in accordance with 24 CFR 5.236 and administrative guidance issued by HUD; and • To reduce administrative and subsidy payment errors in accordance with HUD administrative guidance.

Section III – Findings and Questioned Costs – Major Federal Programs (Continued)

2025 – 003 Eligibility (Continued)

Condition: Audit procedures included a review of 40 participants. For three of 40, the EIV system was not used to verify tenant employment and income information during interim and annual reexaminations.

Questioned costs: None.

Context: See “Condition.”

Cause: The issue appears to be due to inadequate internal controls, including lack of formalized procedures, insufficient staff training, and/or lack of supervisory review to ensure consistent use of the EIV system.

Effect: Failure to utilize the EIV system constitutes noncompliance with federal regulations and HUD administrative guidance. The system provides independent, third-party income data that is critical for accurate verification. Without its use, Dallas County must rely more heavily on tenant self-certifications and third-party verifications, which may be incomplete or delayed. As a result, income may be either underreported or overreported, leading to inaccurate rent determinations. This can result in financial losses to the program or tenant grievances due to overcharges.

Repeat Finding: No

Recommendation: Dallas County should strengthen internal controls to ensure full compliance with HUD requirements by utilizing the EIV system in all required reexaminations. Specifically, the County should:

• Develop and implement formal policies mandating EIV use • Provide staff training on proper EIV procedures and discrepancy resolution • Establish supervisory review controls to ensure EIV reports are obtained, reviewed, and retained • Conduct periodic internal monitoring to ensure ongoing compliance

Views of responsible officials: See corrective action plan.

2025 – 004 Special Tests and Provisions: National Standards for the Physical Inspection of Real Estate (NSPIRE) / Housing Quality Standards Inspections

Federal Agency: Department of Housing and Urban Development

Federal Program Title: Housing Voucher Cluster

ALN: 14.871 14.879

Section III – Findings and Questioned Costs – Major Federal Programs (Continued)

2025 – 004 Special Tests and Provisions: National Standards for the Physical Inspection of Real Estate (NSPIRE) / Housing Quality Standards Inspections (Continued)

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), Dallas County 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 § 982.405(a) requires Dallas County to inspect each unit leased to a family prior to the commencement of the initial lease term to ensure the unit meets Housing Quality Standards (HQS). Additionally, the Dallas County Housing Choice Voucher Program (HCVP) Administrative Plan requires that inspections be conducted as promptly as possible, but no later than 15 business days after the unit’s ready date.

24 CFR § 982.405(b) requires Dallas County to inspect each unit at least biennially during the period of assisted occupancy to ensure the unit continues to meet HQS.

Condition: Audit procedures included review of 40 rental unit inspections resulting in the following:

• For one sampled unit, the initial inspection was not completed within 15 business days after the unit’s ready date. • For two sampled units, the most recent inspection performed during the fiscal year was not completed within two years of the previous inspection.

Questioned costs: None.

Context: See “Condition.”

Cause: The delayed inspections were attributable to staffing shortages among housing inspectors, which created scheduling constraints.

Section III – Findings and Questioned Costs – Major Federal Programs (Continued)

2025 – 004 Special Tests and Provisions: National Standards for the Physical Inspection of Real Estate (NSPIRE) / Housing Quality Standards Inspections (Continued)

Effect: Late inspections that do not comply with 24 CFR § 982.405(a) and (b), as well as the Dallas County HCVP Administrative Plan, constitute noncompliance with HUD requirements governing HQS. Specifically, units may be occupied or remain under assistance without confirmation that they meet HQS, thereby increasing the risk that families reside in substandard or unsafe housing conditions. Additionally, Housing Assistance Payments (HAP) may be issued for units that have not been timely inspected or verified as compliant, resulting in potentially ineligible or improper payments.

Repeat Finding: No

Recommendation: Dallas County should strengthen controls over the inspection process to ensure compliance with 24 CFR § 982.405(a) and (b) and the HCVP Administrative Plan. Specifically, Dallas County should:

• Address staffing constraints by evaluating current inspector capacity and hiring additional qualified inspectors or utilizing contracted inspection services, as necessary, to meet required timeframes • Implement scheduling and tracking controls to monitor inspection due dates (initial and biennial) and ensure inspections are completed within required timeframes • Establish supervisory review procedures to regularly monitor inspection timeliness and follow up on overdue inspections • Develop or enhance written procedures requiring timely completion of inspections, including escalation protocols for delays • Perform periodic internal quality control reviews to verify compliance with HUD requirements and the Administrative Plan

Views of responsible officials: See corrective action plan.

2025 – 005 Special Tests and Provisions – HQS Enforcement

Federal Agency: 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 31, 2025

Section III – Findings and Questioned Costs – Major Federal Programs (Continued)

2025 – 005 Special Tests and Provisions – HQS Enforcement (Continued)

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

Criteria or specific requirement: Per 2 CFR 200.303(a), Dallas County 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 982.405(d)(2), when a participant family or government official notifies Dallas County of a potential deficiency, the following conditions apply:

Non-Life-Threatening. If the reported deficiency is non-life-threatening, Dallas County must, within 15 days of notification, both inspect the unit and notify the owner if the deficiency is confirmed. The owner must then make the repairs within 30 days of notification from Dallas County or within any approved extension.

Condition: Audit procedures included a review of 40 inspections (failed). For 20 out of 40 selected, the owner of the rental unit failed to make the repairs within 30 days of notification from Dallas County.

Questioned costs: None.

Context: See “Condition.”

Cause: Dallas County’s automated system appears to have limitations to flag upcoming or overdue repair deadlines which may result in missed enforcement actions or delayed responses by program staff. In addition, the County has been experiencing staff shortages among inspectors which is limiting Dallas County’s ability to timely track, verify, and enforce repair deadlines, leading to delays in ensuring compliance.

Effect: As a result of system limitations and staffing shortages, Dallas County did not timely enforce repair deadlines, leading to noncompliance with federal HQS requirements, increased risk of potential payment of housing assistance for noncompliant units, increased risk to tenant health and safety, and weakened internal controls over program compliance.

Repeat Finding: No

Recommendation: Dallas County should enhance its internal control processes by improving automated tracking of repair deadlines, strengthening enforcement procedures, addressing staffing limitations, and implementing supervisory review to ensure timely correction of HQS deficiencies and compliance with federal requirements.

Views of responsible officials: See corrective action plan.

Finding 2024-002: Reporting – Significant Deficiency in Controls over Compliance and Noncompliance

ALN # 14.871 & 14.879 – Housing Voucher Cluster – Contract # TX559 – Section 8 Housing Choice Vouchers (“HCV Program”)

Criteria – HUD-50058 forms must be submitted no later than 60 calendar days from the effective date of any action recorded on line 2b of the form HUD-50058, according to the guidance outlined in PIH 2011-65.

Condition/Context – The HCV Program personnel complete physical and electronic HUD-50058 forms whenever reportable actions are undertaken by the Public Housing Authority (PHA). Out of a sample of 40 HUD-50058 forms, 40 hard-copy HUD-50058 forms were reviewed and approved by management, the corresponding electronic forms were not subjected to a secondary review to ensure that the coding matched the form. Of the 40 forms reviewed, one was not accepted within the prescribed reporting window. The electronic submission was ultimately rejected by the grantor for incorrect action coding. After this initial rejection, within the 60-calendar day window, the form was resubmitted electronically by Dallas County Health and Human Services (DCHHS), again without secondary review to ensure that the coding matched the hard-copy form. The form was rejected once more. Subsequently, another corrected HUD-50058 form was submitted electronically after the 60-calendar day due date and was finally accepted by the grantor.

Cause - The HCV program did not have a control in place to compare all electronic HUD-50058 forms against the original related hard-copy form.

Effect – Failure to perform proper review of electronic HUD-50058 forms could result in incorrect and untimely reporting to the grantor.

Questioned Cost - None.

Recommendations - HCV Program Management should review all electronic HUD-50058 forms prior to the submission to HUD to ensure the HUD-50058 electronic forms match the hard-copy forms completed by case managers.

View of Responsible Officials - See Corrective Action Plan. New/Repeat Finding - New Finding

Equipment and Real Property Management – Significant Deficiency in Controls over Compliance and Noncompliance

ALN #20.205 – Contract # 18-22XXIA001– Highway Planning and Construction

Criteria – A physical inventory of the property purchased with grant funds must be performed and the results reconciled with the property records at least once every two years.

Condition/Context - The grant program maintains 21 total pieces of equipment all of which are courtesy patrol vehicles used to carry out the purpose of the grant program. Grant management did not perform a complete physical inventory of all vehicles in service during the fiscal year; 13 of the 21 vehicles were improperly excluded from the Courtesy Patrol department on the Sheriff’s Department’s Annual Property Certification. Of the 13 vehicles, 9 were identified as improperly included in a separate department within the Certification and 4 were excluded entirely.

Cause - Management did not maintain a proper control to ensure all courtesy patrol vehicles are included in the Annual Property Certification for the Sheriff's Department or reported within the correct department.

Effect - Failure to perform a proper inventory control could lead to inaccurate and incomplete property records or a misappropriation of assets. Failure to properly track and report inventory could result in a loss of funding.

Questioned Cost - None.

Recommendations - Management should perform a complete inventory of all equipment maintained by the grant program.

View of Responsible Officials - See Corrective Action Plan.

New/Repeat Finding - New Finding

Reporting – Significant Deficiency in Controls over Compliance and Noncompliance

ALN #93.686 – Contract #UT8HA33930 - HIV Emergency Relief Project Grants RW Supplement ALN #93.137 – Contract #CPIMP211284-01-0 - COVID-19 Minority Health Community Programs

Criteria - Under the requirements of the Federal Funding Accountability and Transparency Act, 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).

Condition/Context - A total of $1,117,769 of costs was passed through to selected sub recipients during the year and the subawards were not reported in the FSRS.

HIV Emergency Relief Project Grants RW Supplement Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements There were a total of five subrecipients selected that had awards/expenditures greater than $30,000 that were not reported in the FSRS. Dollar amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,030,818 $1,212,555 $1,212,555 $1,212,555 $1,212,555

COVID-19 Minority Health Community Programs Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements There were two subrecipients that had awards/expenditures greater than $30,000 that were not reported in the FSRS. Dollar amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $86,951 $99,300 $99,300 $99,300 $99,300

Cause - Grant Management was not aware of the subaward reporting requirement.

Effect - Failure to report subaward data could potentially constitute an event of noncompliance with the award contract, which may result in the early termination of the grant award, non-reimbursement of grant funding, or cessation of future funding.

Questioned Cost - None.

Recommendations - Management should ensure that they have a mechanism for reporting subaward data completely and accurately in the FSRS on a timely basis.

View of Responsible Officials - See Corrective Action Plan.

New/Repeat Finding – This finding is repeat from prior year’s finding #2022-004 ALN #14.218– Community Development Block/Entitlement Grants.

Recommendations - Management should ensure that they have a mechanism for reporting subaward data completely and accurately in the FSRS on a timely basis.

View of Responsible Officials - See Corrective Action Plan.