[Audit & Finance Committee on December 12, 2024.]
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AND WELCOME TO THE DECEMBER 12TH, 2024 MEETING OF THE AUDIT AND FINANCE COMMITTEE AT TDHCA.
AND SO WE'LL NOT TO HOLD UP THE AGENDA.
WE'RE GOING TO JUST TAKE THE ACTION ITEMS AT THE END AND FLIP FLOP IT.
AND WE'LL START WITH THE REPORT ITEMS TODAY.
LET'S SEE. SO MOVING TO OUR REPORT ITEMS. THE FIRST REPORT ITEM ON THE AGENDA IS THE PRESENTATION AND DISCUSSION OF THE INTERNAL AUDIT OF COMPLIANCE MONITORING SECTION OF THE COMPLIANCE DIVISION.
AND IT WILL BE PRESENTED BY MR. MARK SCOTT OR DIRECTOR OF AUDIT.
SHE IS PRESENT AND ACCOUNTED FOR, AND I, THE CHAIRMAN, ARE PRESENT AS WELL.
AND THEN WE'LL TAKE A FORMAL ROLL CALL TO TACKLE THE ACTION ITEMS ONCE MEMBER VASQUEZ JOINS US.
THE THE COMPLIANCE MONITORING SECTION WAS IDENTIFIED DURING THE FISCAL YEAR 2024 RISK ASSESSMENT AND RATED HIGH ON THE RISK ASSESSMENT MATRIX DUE TO ITS IMPORTANCE IN ENSURING ADHERENCE TO THE RULES AND REGULATIONS BY PARTICIPATING INDIVIDUALS AND ORGANIZATIONS.
THE COMPLIANCE MONITORING SECTION WAS LAST AUDITED BY INTERNAL AUDIT DIVISION IN FISCAL YEAR 2016.
WE INTERVIEWED MANAGEMENT AND SERVED IN SEVERAL DIVISION STAFF, AND PERFORMED TESTING AND REVIEWS ON A SAMPLE OF 20 MONITORINGS THAT WERE CONDUCTED BETWEEN SEPTEMBER 2023 AND JUNE 2024.
WE ALSO ACCOMPANIED THE STAFF ON ONE OF THEIR MONITORING SITE VISITS.
THE SCOPE OF THIS AUDIT DID NOT INCLUDE SUBRECIPIENT MONITORING.
BASED ON OUR REVIEW, EVALUATIONS AND OBSERVATIONS OF THE COMPLIANCE OF THE COMPLIANCE MONITORING SECTION APPEARS TO BE OPERATING EFFECTIVELY IN MONITORING PROPERTIES THAT ARE FUNDED THROUGH ONE OR MORE OF THE PROGRAMS ADMINISTERED BY TDHCA.
OUR AUDIT INDICATED THAT OPPORTUNITIES FOR IMPROVEMENT EXIST TO STRENGTHEN AND IMPROVE THE INTERNAL POLICIES AND PROCEDURES, AND TO ACHIEVE HIGHER STANDARD OF CONSISTENCY AS IT RELATES TO ISSUING TIMELY MONITORING REPORTS.
THAT INCLUDES. THAT CONCLUDES MY PRESENTATION ON THE COMPLIANCE MONITORING AUDIT.
ANY QUESTIONS FOR MR. SCOTT ON THAT REPORT ITEM? ONE QUESTION I HAD, MR. SCOTT FOR YOU IS ON THIS IS THIS PARTICULAR REPORT ITEM.
IF I REMEMBER CORRECTLY, YOU DON'T HAVE THE MATERIAL IN FRONT OF ME.
BUT THIS WAS THE ITEM THAT WAS AUDITED.
THE LAST AUDIT WAS CONDUCTED ALMOST NEARLY EIGHT YEARS AGO.
YEAH. THE COMPLIANCE DIVISION IS IS A BIG DIVISION.
THIS PARTICULAR FUNCTION IN THE COMPLIANCE SECTION OF THE TAX CREDIT PROPERTIES.
THIS WAS MORE PAPERWORK, ADMINISTRATIVE TYPE AUDITING.
SO, SO BUT THERE WAS NO, LIKE, UNUSUAL DELAY BECAUSE OF THE PANDEMIC OR ANYTHING LIKE THAT, RIGHT? NO, SIR. OKAY. PERFECT.
ANY OTHER QUESTIONS FOR MR. SCOTT ON THIS REPORT ITEM.
GREAT. IF NOT, WE'LL MOVE ON TO THE NEXT REPORT ITEM.
AND AGAIN, THIS REPORT WILL BE PRESENTED BY MR. SCOTT. MARK. YES.
THIS IS A REPORT THAT'S REQUIRED ADMINISTRATIVELY BY INTERNAL AUDIT SHOPS.
WE REVIEWED THE IMPLEMENTATION STATUS OF ALL OF OUR AUDIT FINDINGS AND THE EXTERNAL AUDIT FINDINGS, AND HAPPY TO REPORT THAT THEY HAVE ALL BEEN CLOSED AND THE DETAILS ARE IN THE REPORT IN YOUR PACKET.
GREAT. DO WE HAVE ANY QUESTIONS FOR MR. SCOTT ON THIS REPORT ITEM? THANK YOU MARK.
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WELCOME. THE ACTION ITEM.WHAT WE'LL DO AT THIS POINT IS I WILL BREAK AND TAKE A OFFICIAL ROLL CALL SO THAT WE CAN TACKLE THE THE ACTION ITEMS WHEN WE COME UP TO THAT POINT IN OUR MEETING.
AND THE CHAIRMAN IS PRESENT, WHICH GIVES US A QUORUM.
THANK YOU. GLAD TO HAVE YOU WITH US.
LET'S SEE. LET'S GO ON TO THE NEXT REPORT ITEM ON OUR AGENDA THIS MORNING IS THE INTERNAL AUDIT ANNUAL REPORT FOR FISCAL YEAR 2024. MR. SCOTT WILL BE PRESENTING THIS REPORT TO US AS WELL.
MARK. YES. THIS IS STATUTORILY REQUIRED REPORT THAT IS SUBMITTED TO ALL OVERSIGHT BODIES ANNUALLY.
TO AVOID INTERFERENCE WITH AUDITS PERFORMED BY SAO AND CLIFTONLARSONALLEN, WE WILL REEVALUATE AND DETERMINE IF FURTHER REVIEW IS NECESSARY IN FISCAL YEAR 25. THAT'S BASICALLY THAT CONCLUDES MY REPORT ON THE ANNUAL AUDIT PLAN ON THE ANNUAL AUDIT REPORT.
ANY QUESTIONS FOR MR. SCOTT FROM MEMBERS ON THIS REPORT ITEM? VERY GOOD. LET'S SEE, THE NEXT REPORT ITEM WE HAVE ON TODAY'S AGENDA IS AND THE LAST REPORT ITEM WILL BE THE REPORT ON THE STATUS OF INTERNAL AND EXTERNAL AUDIT ACTIVITIES.
SO WE COMPLETED THE INTERNAL AUDIT PEER REVIEW WHICH WAS CONDUCTED BY ÖZNUR AMPER.
THEY ALSO HAD SOME RECOMMENDATIONS FOR INCREASED DOCUMENTATION OF AUDIT STEPS, WHICH WE PLAN TO DO.
WE HAVE OTHER ONGOING PROJECTS.
WE DO AND WE I DO THE CONSULTATION ON THE SINGLE AUDITS.
AND WE FINISHED THE AUDIT OF MULTIFAMILY COMPLIANCE AND THE OTHER AUDITS ON THE PLAN.
ON AS FAR AS EXTERNAL AUDIT ACTIVITY.
THE USUAL, ANNUAL STATEWIDE AUDITS ARE BEING CONDUCTED AND FINALIZED.
THE SAO WILL ISSUE THEIR OPINIONS ON THE AGENCY FINANCIAL STATEMENTS, USUALLY IN LATE DECEMBER.
THOSE SHOULD BE UNQUALIFIED OPINIONS ON THE FEDERAL COMPLIANCE COMPONENTS OF THE STATEWIDE AUDIT.
THEY HAVE. THEY REVIEWED LIHEAP AND ERA.
LAHEY. IS ENERGY PROGRAM ENERGY ASSISTANCE PROGRAM THE TEXAS THE. BY THE WAY THE TREASURY DEPARTMENT IS STILL REVIEWING ERA AND THE TREASURY AND THE TEXAS COMPTROLLER'S OFFICE ARE WORKING WITH TDHCA ON RESOLUTIONS OF 2022.
THEY'RE JUST STANDARD, YOU KNOW, RESOLUTION OF MINOR FINDINGS ON THE FINANCIAL STATEMENTS.
AND THE OIG FOR THE FEDERAL HEALTH AND HUMAN SERVICES IS GOING TO CONDUCT A REVIEW OF LIGHTTUP.
ANY QUESTIONS FROM MEMBERS ON THIS LAST REPORT ITEM THAT MR. SCOTT PRESENTED TO US THIS MORNING? THANK YOU, MR. SCOTT.
THAT CONCLUDES TODAY'S REPORT.
OFFICIAL REPORT ITEMS ON THE AGENDA.
IN THAT MEETING, MR. JOE GUEVARA, DIRECTOR OF FINANCIAL ADMINISTRATION, PRESENTED THE FISCAL YEAR 2025 TDHCA OPERATING BUDGET AND THE FISCAL YEAR 2025 HOUSING FINANCE DIVISION BUDGET.
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FUNCTION. THE INTERNAL AUDIT REPORT ON THE MULTIFAMILY ASSET MANAGEMENT DIVISION, AMENDMENTS AND CONSTRUCTION STATUS REPORTS, FUNCTIONS AND THE REPORT ON THE STATUS OF THE INTERNAL AND EXTERNAL AUDIT ACTIVITIES.MEMBERS. THE MINUTES ARE IN YOUR PACKETS.
MAY I HAVE A MOTION TO APPROVE THE MINUTES FROM THE JUNE 13TH, 2024 AUDIT AND FINANCE COMMITTEE MEETING? MR. CHAIRMAN, I MOVE THAT WE APPROVE THE MINUTES OF THE JUNE 13TH COMMITTEE MEETING FOR THE AUDIT COMMITTEE.
I HAVE A MOTION FROM MEMBER FRIAS.
MAY I HAVE A SECOND? SECOND. SECOND.
AYE. ANY OPPOSED? MOTION PASSES.
OUR NEXT ACTION ITEM FOR TODAY IS THE PRESENTATION, DISCUSSION AND POSSIBLE RECOMMENDATION OF APPROVAL TO THE FULL BOARD OF THE FISCAL YEAR 2025 INTERNAL AUDIT ANNUAL WORK PLAN.
MR. SCOTT WILL PRESENT THE AUDIT PLAN AND OFFER TO ANSWER ANY QUESTIONS.
INTERNAL AUDIT STANDARDS REQUIRE THAT WE AUDIT THE HIGHEST RISK AREAS.
THE FOLLOWING ARE THE AUDIBLE UNITS THAT RATED HIGH ON OUR RISK ASSESSMENT MATRIX.
THE REAL ESTATE ANALYSIS DIVISION PROVIDES THE TDHCA GOVERNING BOARD AND STAFF WITH COMPREHENSIVE ANALYTICAL REPORTS NECESSARY TO MAKE WELL INFORMED DECISIONS FOR FUNDING AND FOR AFFORDABLE HOUSING DEVELOPMENT.
ARIA PERFORMS VARIOUS ANALYSIS ACTIVITIES FOR MULTIFAMILY PROJECTS, INCLUDING OPERATION, OPERATING FEASIBILITY, INCOME, RENTS, RENTS AND MISCELLANEOUS INCOMES ADJUSTED FOR VACANCY AND COLLECTION LOSSES, EXPENSES, WHICH IS GENERAL AND ADMINISTRATIVE EXPENSE, MANAGEMENT FEES, PAYROLL EXPENSE, ETC., AND OTHER UNDERWRITING CONSIDERATIONS.
UNDER ARIA ALSO HAS OTHER RIGHTS.
CONDUCTS OTHER UNDERWRITING ACTIVITIES.
THE REAL ESTATE ANALYSIS DIVISION RATED HIGH ON THE RISK ASSESSMENT, AGAIN BECAUSE OF THE COMPLEXITY OF ITS OPERATIONS AND THAT THE DIVISION HAS NOT UNDERGONE ANY RECENT INTERNAL AUDITS.
THE NEXT ITEM IS SINGLE FAMILY MORTGAGE REVENUE BOND.
OUR MRP PROGRAMS PROVIDE BELOW MARKET INTEREST RATE FUNDS FOR SINGLE FAMILY HOME BUYERS, AND MULTIFAMILY MORTGAGE LOANS MADE TO QUALIFYING RECIPIENTS.
THE BOND FINANCE DIVISION IS CHIEFLY RESPONSIBLE FOR STRUCTURING, RESTRUCTURING, ADMINISTERING AND MONITORING THE DEPARTMENT'S SINGLE FAMILY MORTGAGE REVENUE BONDS ISSUES THAT WE.
WE WILL REVIEW THE VARIOUS AREAS AND ROLES IN THE PROGRAM AND DETERMINE AREAS FOR TESTING.
THE NEXT AUDIT IS THE HOME NSP NTF RENT APPROVAL.
ASSET MANAGEMENT IS RESPONSIBLE FOR OVERSIGHT OF DEVELOPMENT PERFORMANCE FOR ALL MULTIFAMILY PROPERTIES HOME, HOME, AARP, NH, TPH, NSP AND TCAAP DEVELOPMENTS COMMITTED FUNDS ON OR AFTER AUGUST 23RD, THIRD, 2013.
RENTS WILL BE EVALUATED AND APPROVED BASED ON SUBMISSION OF THE ANNUAL RENT APPROVAL REQUEST PACKET.
RENTS WILL BE REVIEWED AND APPROVED WITHIN 30 DAYS, AS LONG AS THE FORM AND ALL EXHIBITS HAVE BEEN RECEIVED, AND THIS FUNCTION HAS NOT BEEN AUDITED IN RECENT YEARS. THE.
WE WILL EVALUATE THE PROCESSES OF THIS FUNCTION AND DETERMINE AREAS FOR TESTING.
THE AMOUNT OF REIMBURSEMENT IS SUBJECT TO CERTAIN LIMITATIONS AS PRESCRIBED BY CHAPTER SIX, 60 OF THE TEXAS GOVERNMENT CODE, THE GENERAL APPROPRIATIONS ACT, AND RULES ADOPTED BY THE COMPTROLLER.
THE DEPARTMENT'S TRAVEL POLICY IS DESIGNED TO COMPLY WITH ADOPTED RULES OF THE TEXAS PROCUREMENT AND SUPPORT DIVISION RELATING TO THE STATE TRAVEL MANAGEMENT PROGRAM.
THIS WILL BE MAINLY A COMPLIANCE AUDIT ENSURING COMPLIANCE WITH STATE RULES.
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STANDARDS REQUIREMENTS AND HOUSING AND COMMUNITY DEVELOPMENT PROGRAMS SUCH AS THE US HOUSING ACT OF 1937, THE NATIONAL HOUSING ACT, AND HOUSING, THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974, THE NATIONAL AFFORDABLE HOUSING ACT OF 1990, AND THE NATIVE AMERICAN HOUSING ASSISTANCE AND SELF-DETERMINATION ACT OF 1996. THESE REGULATIONS ENSURE THAT MECHANISMS AND LABORERS EMPLOYED BY CONSTRUCTION WORK UNDER FEDERALLY ASSISTED CONTRACTS ARE PAID WAGES AND BENEFITS EQUAL TO THOSE THAT PREVAIL IN THE LOCALITY WHERE THE WORK IS PERFORMED.DAVIS-BACON COVERS HUD COMMUNITY PLANNING AND DEVELOPMENT PROGRAMS SUCH AS HOME, HOME, AARP AND SPP AND SECTION 811 PROJECT RENTAL ASSISTANCE. THE ACT REQUIRES PROPER PAYMENT OF WAGES AND ALSO ADDRESSES PROPER CLASSIFICATION OF WORKERS BY SKILLS AND TYPE OF WORK.
IN THE SIXTH NEW AUDIT IS THE AMY YOUNG BURIAL REMOVAL PROGRAM.
THE AMY YOUNG BURIAL REMOVAL PROGRAM PROVIDES ONE TIME GRANTS OF UP TO $22,500 FOR QUALIFIED HOUSEHOLDS WITH PERSONS WITH DISABILITIES WHO NEED MODIFICATIONS TO INCREASE ACCESSIBILITY AND ELIMINATE HAZARDOUS CONDITIONS IN THEIR HOME.
NOTICE OF FUNDS AVAILABILITY ON A REGULAR BASIS.
TDCA CONTRACTS WITH NONPROFIT ORGANIZATIONS AND LOCAL GOVERNMENTS TO ADMINISTER THE A, B, R PROGRAM.
WE WILL REVIEW THE PROCESSES AND DETERMINE WHAT TESTING IS NECESSARY.
AND WITH THAT, I AM REQUESTING I'LL VOTE TO RECOMMEND APPROVAL OF THE 2025 INTERNAL AUDIT PLAN TO THE FULL BOARD. I'LL BE HAPPY TO ANSWER ANY QUESTIONS.
DO ANY OF THE COMMITTEE MEMBERS HAVE QUESTIONS REGARDING THE FISCAL YEAR 2025 INTERNAL AUDIT WORK PLAN, AS PRESENTED BY MR. SCOTT THIS MORNING? ONE QUESTION I HAD FOR YOU, MR. SCOTT, WAS ON THE ITEMS THAT YOU SELECTED FOR AUDIT BASED ON THE RISK ASSESSMENT, AND THOSE WERE THEY CAME THROUGH OR RATED AS THE HIGHER RISK ASSESSMENT ITEMS. DO THOSE TYPICALLY STAY CONSISTENT BECAUSE THOSE ARE JUST PART OF THE NATURE OF THE PROGRAMS OR THE AREA FUNCTIONS OF THE AGENCY, OR DO WE DO THOSE? DO YOU SEE THOSE SHAPE SHIFT AROUND, YOU KNOW? AUDIT TO AUDIT. WELL, LIKE WITH THE PANDEMIC, THERE WAS A BIG SHIFT IN RISK ASSESSMENT.
SO THEY THOSE THINGS STAY PRETTY MUCH THE SAME AMONG THE PROGRAMS. THERE IS SOME DEGREE OF CYCLING.
IF YOU DID THAT, YOU'D KIND OF HAVE A RIDICULOUS THING WHERE YOU'D AUDIT THE SAME THING EVERY YEAR.
SO THE ONES THAT WE'VE ALREADY AUDITED, WE MOVED TO THE WE SHUFFLE TO THE BOTTOM OF THE DECK.
AND SO SO WE DON'T OVERDO AUDITS OF HIGHER RISK AREAS.
ANY OTHER QUESTIONS FROM MEMBERS THIS MORNING? YOU KNOW, I WANT TO TAKE A MOMENT AND JUST SAY, YOU KNOW, I THINK BASED ON MY EXPERIENCE AND MY PROFESSIONAL LIFE, WORKING WITH DIFFERENT HOUSING AGENCIES AROUND THE COUNTRY AND JUST SEEING WHAT WE DO AND HAVING BEEN PART OF THIS PROCESS WITH THE AUDIT AND FINANCE COMMITTEE, I WANT TO COMMEND YOU, MR. SCOTT, AND PARTICULARLY OUR EXECUTIVE DIRECTOR.
SO I WANT TO COMMEND STAFF AND AND YOU FOR YOUR ROLE IN THAT.
AND MR. CHAIRMAN, I TOO I MET WITH THEM YESTERDAY AND I TOO WANTED TO CONGRATULATE HIM AND THE EXECUTIVE DIRECTOR, BOBBY, BECAUSE I KNOW WE KNOW THAT IN THE YEARS TO COME, THE MONTHS TO COME, ALL WE'RE GOING TO HEAR IS AUDITS, ACCOUNTABILITY, SCANDALS, AND TEXAS IS GOING TO LOOK DARN GOOD BECAUSE TEXAS HAS ALREADY ANTICIPATED WHAT THEY NEED TO DO, AND THEY HAVE BEEN DOING IT.
AND I WANT TO CONGRATULATE YOU.
THERE ARE A LOT OF PEOPLE THAT ARE NOT BREATHING RIGHT NOW.
YES. YOU KNOW, WITH THAT, I WANT TO.
THIS IS OUR LAST, LAST OFFICIAL AUDIT AND FINANCE COMMITTEE OF 2024.
IT'S HARD TO BELIEVE WE'VE GONE THROUGH A WHOLE CALENDAR YEAR ALREADY.
BUT I WANT TO THANK EVERYONE FOR THEIR ENGAGEMENT.
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THIS IS AN IMPORTANT FUNCTION THAT THE BOARD TAKES SERIOUSLY AND AS PART OF THE AGENCY, AND WE APPRECIATE EVERYBODY'S INVOLVEMENT AND PARTNERSHIP AND ENGAGEMENT IN THE PROCESS.WITH THAT, WE'VE CONCLUDED OUR OFFICIAL AGENDA FOR THE AUDIT AND FINANCE COMMITTEE THIS MORNING.
IF. OH, THAT'S RIGHT, WE DO HAVE TO VOTE ON THAT LAST ITEM.
THANK YOU, MR. SCOTT. APPRECIATE THAT.
LET'S SEE THE SINCE THERE ARE NO OTHER QUESTIONS ON THE LAST ITEM PRESENTED BY MR. SCOTT, I WILL.
THE CHAIR WILL ASK FOR A MOTION TO APPROVE A RECOMMENDATION TO THE FULL BOARD FOR APPROVAL OF THE FISCAL YEAR 2025 INTERNAL AUDIT WORK PLAN AS PRESENTED BY MR. SCOTT.
I SO MOVE, MR. CHAIRMAN. THANK YOU.
MEMBER FOR YES. HAVE A MOTION.
HAVE A SECOND, SECOND, SECOND BY MEMBER VAZQUEZ.
THE MOTION PASSES AND WE WILL TAKE THIS UP AT THE FULL BOARD MEETING.
WITH NO OTHER QUESTIONS AND NO OTHER ITEMS ON THE AGENDA THIS MORNING.
THIS CONCLUDES THE DECEMBER 12TH MEETING OF THE AUDIT AND FINANCE COMMITTEE.
THE MEETING IS NOW ADJOURNED AT 9:57 A.M..
THANK YOU.
* This transcript was compiled from uncorrected Closed Captioning.