Finding 1220137 (2025-003)

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.