CITY OF GARLAND, TEXAS

Finding 2024-001: Known questioned costs related to eligibility Major Program: Housing Choice Voucher Program Federal Agency: U.S. Department of Housing and Urban Development Assistant Listing Number: 14.871 Criteria: The OMB Compliance Supplement for the Housing Choice Voucher Program (HCVP) states that the HCVP regulations are found in 24 CFR parts 5, 982, 983, and 985. 24 CFR 982.306(d) states that “The PHA must not approve a unit if the owner is the parent, child, grandparent, grandchild, sister, or brother of any member of the family, unless the PHA determines that approving the unit would provide reasonable accommodation for a family member who is a person with disabilities. This restriction against PHA approval of a unit only applies at the time a family initially receives tenant-based assistance for occupancy of a particular unit but does not apply to PHA approval of a new tenancy with continued tenant-based assistance in the same unit.” 2 CFR 200.516(a)(3) requires an audit finding to be reported for known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program. Condition: As a result of our audit of the HCVP eligibility compliance requirement, it was noted that one (1) out of forty (40) participants reviewed did not meet the eligibility requirement because the tenant was a relative of the owner of the unit. Homeowner’s may apply for a reasonable accommodation for a family member who is a person with disabilities, however the owner did not request a reasonable accommodation. The owner and tenant were approved in May 2018, and payments began in June 2018. Cause: The City approved a housing choice voucher to a tenant that was ineligible due to being a relative of the owner because the City was unaware of the relationship between the owner and tenant upon approval of the housing choice voucher. The was unaware of the unallowed relationship because the owner and tenant certified that they were not related by signing the HUD-52517 form Request for Tenancy Approval that includes an owner’s certification that the owner is not the parent, child, grandparent, grandchild, sister or brother of any member of the family, unless the PHA has determined (and has notified the owner and the family of such determination) that approving leasing of the unit, notwithstanding such relationship, would provide reasonable accommodation for a family member who is a person with disabilities. Effect or Potential Effect: The City issued payments for a housing choice voucher to an ineligible owner and tenant since June 2018. Known Questioned Costs: $69,019 from June 2018 through September 2024. Current fiscal year known questioned costs were $11,712. The questioned costs are all payments made to the owner on behalf of the tenant mentioned above. Context: The auditor believes that the audit finding is an isolated instance and not a systemic problem. The City has appropriate internal controls, including inquiry of applicants as to whether they are related and obtains signed certifications that the owner and tenant are not related. In addition, the relationship was discovered through procedures that are not required by the Department of Housing and Urban Development. The finding was due to misrepresentations provided by the owner and tenant, and through other audit procedures there were no indications that this was a systematic issue. The sample selected was a valid sample and the City is still in overall compliance with the eligibility requirement for the HCVP major program. Repeat finding: No Recommendation: We recommend the City continue to clearly communicate to housing owners that they cannot rent to relatives, and to implement additional procedures over eligibility compliance on a sample basis going forward with regards to potential ineligible relationships between the owner and tenant. Examples of potential additional procedures include internet searches of the owner and tenant. View of Responsible Officials: See corrective action plan on page 9

Planned Corrective Action: The Garland Housing Agency (GHA) relies on the certifications of the tenant and landlord, which states that there is not a familial relationship between the two parties. GHA will review applications for unusual items that could be indicative of a familial relationship and use online, public records to try to identify whether or not there is a familial relationship. GHA maintains a log of potential issues with the participants and will include potential familial relationships between the tenant and landlord in the log. Responsible officials: Steve Fitch, Director of Housing Planned completion date: September 30, 2025

2019-001 ? Highway Planning and Construction Cluster Special Tests: Wage Rate Requirements ? Significant Deficiency in Controls over Compliance and Compliance Criteria ? All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by Federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor. Condition ? Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and the DOL regulations. This includes a requirement for the contractor or subcontractor to submit to the non-Federal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls). Questioned Costs ? None Context ? The employee in charge of the program was not storing the certified payrolls. Effect or Potential Effect ? The certified payrolls could not be obtained to ensure compliance with the Wage Rate Requirements and therefore, it could not be understood that the certified payrolls were reviewed. Repeat finding ? No Recommendation ? We recommend ensuring the certified payrolls are retained for compliance with the Wage Rate Requirements. View of Responsible Officials ? See corrective action plan

Finding 2019-001 ? Special Tests: Wage Rate Requirements ? Significant Deficiency in Controls over Compliance and Compliance 20.205 Highway Planning and Construction Corrective Action Plan ? The City has assigned responsibility to the Parks Special Projects Administrator, for ensuring certified payrolls are obtained from contractors, and are reviewed and stored by City Management. The Parks Special Projects Administrator has since coordinated with TXDoT to ensure that all required action has been taken by the City to ensure the successful completion of this project. Contact Person ? Ziad Kharrat Implementation Date ? Implemented May 2019

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