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THERE'S THREE OF US, SO. GOOD MORNING AND
[Audit & Finance Committee on March 6, 2025.]
WELCOME TO THE MARCH 6TH MEETING OF THE AUDIT AND FINANCE COMMITTEE.APPRECIATE EVERYBODY BEING HERE THIS MORNING.
BEFORE WE BEGIN, I WANT TO WELCOME A NEW MEMBER TO THE COMMITTEE.
WHILE SHE'S BEEN ON THE BOARD FOR FOR A FEW, FEW MEETING SESSIONS, THIS WILL BE HER FIRST OFFICIAL MEETING ON THE AUDIT AND FINANCE COMMITTEE. SO I WANTED TO TAKE THE TIME TO WELCOME MEMBER CONROY TO THE COMMITTEE.
THANK YOU. THANK YOU VERY MUCH. MORE THAN WELCOME.
THANK YOU. GLAD. GLAD TO HAVE YOU ON THE COMMITTEE.
WE DO HAVE A FULL QUORUM TODAY. WE'VE GOT A PRETTY, PRETTY GOOD SIZE AGENDA.
WE'LL GET THROUGH IT. LET'S GO AHEAD AND TAKE AN OFFICIAL ROLL.
I, AS CHAIR AM HERE. MEMBER VASQUEZ HERE. MEMBER FARIAS IS UNEXCUSED ABSENCE TODAY. MEMBER CONROY. WE HEARD FROM HER OFFICIALLY HERE, CORRECT? YES. OFFICIALLY. VERY GOOD. WE HAVE TWO ACTION ITEMS AND TWO REPORT ITEMS ON TODAY'S AGENDA.
IN THAT MEETING, MR. MARK SCOTT, GENTLEMAN TO MY RIGHT, THE DIRECTOR OF INTERNAL AUDIT PRESENTED THE INTERNAL AUDIT ANNUAL WORK PLAN FOR FISCAL YEAR 2025 AS AN ACTION ITEM FOR RECOMMENDATION TO THE FULL BOARD FOR APPROVAL.
THE PLAN WAS VOTED FOR RECOMMENDATION TO APPROVE AFTER DISCUSSION WITH COMMITTEE MEMBERS, MR. SCOTT ALSO PRESENTED FOUR REPORT ITEMS, WHICH WERE ONE.
THE AUDIT REPORT ON COMPLIANCE MONITORING SECTION OF THE COMPLIANCE DIVISION.
MEMBERS. THE MINUTES ARE IN YOUR PACKETS. MAY I HAVE A MOTION TO APPROVE THE MINUTES FROM THE DECEMBER 12TH, 2024 AUDIT AND FINANCE COMMITTEE MEETING? I MOVE TO APPROVE.
I HAVE A MOTION FROM MEMBER VAZQUEZ. DO I HAVE A SECOND? SECOND. SECOND BY MEMBER CONROY. ALL IN FAVOR, SAY AYE.
AYE. NONE OPPOSED. MOTION PASSES. OUR NEXT ACTION ITEM FOR TODAY IS THE PRESENTATION, DISCUSSION, AND POSSIBLE RECOMMENDATION FOR APPROVAL OF THE STATE AUDITOR'S OFFICE.
AUDIT OF THE TDHCA FINANCIAL STATEMENTS FOR 2024.
WELCOME, GENTLEMEN. GOOD MORNING. GOOD MORNING, MR. CHAIRMAN AND MEMBERS. I'M MICHAEL CLAYTON. I'M AN AUDIT MANAGER WITH THE STATE AUDITOR'S OFFICE.
HOW WAS THE AUDIT MANAGER FOR THIS YEAR'S FISCAL YEAR 24 AUDIT OF THE DEPARTMENT OF HOUSING, COMMUNITY AFFAIRS FINANCIAL STATEMENTS. WITH ME, I HAVE ALEX SUMNERS, WHO IS THE IS A PROJECT MANAGER FOR OUR OFFICE, AND HE WAS A PROJECT MANAGER ON THE AUDIT OF THE FY 24 HOUSING COMMUNITY FAIR FINANCIAL STATEMENTS.
YOU KNOW, THE COMPTROLLER SHORTENED THE PERIOD TO GET ALL THIS DONE THIS YEAR. WE'RE ABOUT A WEEK, AND I THINK WE APPRECIATE ALL THEIR EFFORTS TO MAKE THAT HAPPEN SO THAT WE CAN GET AN OPINION DONE BY THE REQUIRED DUE DATE. AND, YOU KNOW, I USED TO BE ON THE OTHER SIDE OF THIS DESK.
SO I'D REALLY LIKE TO SEE AN APPRECIATION OUT TO EVERYBODY FOR THEIR ASSISTANCE DURING THE AUDIT.
SO WITH THAT, I'LL TURN IT OVER TO ALEX TO KIND OF GIVE AN OVERVIEW OF WHAT WE DETERMINED.
WE ISSUED TWO UNMODIFIED OPINIONS AS PART OF THE AUDIT.
ADDITIONALLY, WE CONCLUDED THAT THE DEPARTMENT OF HOUSING FINANCE DIVISION'S COMPUTATION OF UNENCUMBERED FUND BALANCES COMPLIES WITH TEXAS GOVERNMENT CODE SECTION 23, 06.204 AND 23 06.205. WE ALSO ISSUED A REPORT ON THE DEPARTMENT'S COMPLIANCE WITH THE PUBLIC FUNDS INVESTMENT ACT FOR THE FISCAL YEAR ENDED AUGUST 31ST, 2024.
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THE RESULTS OF THAT WORK DISCLOSED NO ISSUES OF NONCOMPLIANCE AND OTHER OR OTHER MATTERS THAT ARE REQUIRED TO BE REPORTED UNDER GOVERNMENT AUDITING STANDARDS PRIOR TO THE FISCAL YEAR 2024. FINANCIAL STATEMENTS. AUDIT WORK.WE ALSO ISSUED AN UNMODIFIED OR CLEAN OPINION ON THE DEPARTMENT'S FISCAL YEAR 2023 FINANCIAL DATA SCHEDULE AS IT RELATED TO THE FISCAL YEAR 2023 BASIC FINANCIAL STATEMENTS. ADDITIONALLY, WE PERFORMED AGREED UPON PROCEDURES AND DETERMINED THAT THE ELECTRONIC SUBMISSION OF CERTAIN INFORMATION TO THE US DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT'S REAL ESTATE ASSESSMENT CENTER AGREED WITH RELATED HARD COPY DOCUMENTS, AND HAD ACCEPTED THE DEPARTMENT'S SUBMISSION IN OCTOBER.
LASTLY, I WOULD LIKE TO THANK THE FINANCIAL ADMINISTRATION AND ACCOUNTING DEPARTMENTS AND MR. SCOTT AND INTERNAL AUDIT FOR THEIR ASSISTANCE AND COOPERATION THROUGHOUT THIS AUDIT.
THAT CONCLUDES MY COMMENTS, AND I'D BE HAPPY TO ADDRESS ANY QUESTIONS THAT YOU HAVE.
A KIND OF A GENERAL QUESTION. SO. ASSUMING NUMBERS MATCH UP ON OUR NUMBERS AND THEN WHAT GETS SENT TO HUD, FOR INSTANCE, IS THERE ANY WAY THAT WE CAN ACTUALLY MESS THIS UP? NOT NOT THAT I'M AWARE OF UNLESS THE A NUMBER GETS ENTERED WRONG.
BUT, YOU KNOW, WE HAVE OUR OWN PROCESSES TO MAKE SURE THAT THINGS ARE ENTERED CORRECTLY.
SO. AND I THINK THAT'S A TRICK QUESTION. RIGHT.
THERE'S ALWAYS SOMEBODY. YEAH. IT'S EASY FOR SOMEBODY TO EXCUSE THE EXPRESSION FAT FINGER OR SOMETHING, AS WE SAY IN THE ACCOUNTING PROFESSION. BUT, YOU KNOW, I THINK THE LIKELIHOOD OF THAT IS VERY LOW IN THE GRAND SCHEME OF THINGS FROM A RISK STANDPOINT. SO YEAH. AND YOU ALL MIGHT NOT HAVE SEEN OR BEEN SEARCHING, IS THERE ANY RISK POINTS FOR FRAUD OR, YOU KNOW, JUST INTENTIONAL MISREPORTING OF THINGS JUST BECAUSE THERE'S SO MANY CHECKS AND BALANCES, THERE'S ALMOST HOW CAN YOU DO THAT? YEAH. I'M NOT AWARE OF ANY OFF THE TOP OF MY HEAD, BUT, WELL, YOU KNOW, THERE IS ALWAYS A RISK, AND WE ARE REQUIRED BY OUR STANDARDS TO ACTUALLY CONSIDER THOSE RISKS. AND IF WE THINK THERE'S A SIGNIFICANT RISK TO PUT SOME PROCEDURES IN PLACE SPECIFICALLY TO, TO, TO ADDRESS THOSE. BUT, YOU KNOW, AS YOU SAY, WITH THE CONTROLS IN PLACE AND SEGREGATION OF DUTIES, IT WOULD ALMOST TAKE COLLUSION, WHICH IS QUITE HONESTLY VERY DIFFICULT FOR AUDITORS TO FIND.
YEAH. OKAY. GREAT. THANKS. THANK YOU. THANK YOU.
MR.. MEMBER. VASQUEZ. MEMBER. CONROY. ANY ANY QUESTIONS FROM YOU? THANK YOU. JUST WANT TO MAKE ONE COMMENT, MR. CLAYTON, THAT ADDRESSING YOUR YOUR INITIAL COMMENTS.
I DO WANT TO RECOGNIZE STAFF FOR, YOU KNOW, PULLING TOGETHER ALL THE INFORMATION, BEING COOPERATIVE, OBVIOUSLY WITH THE SOS EFFORTS WITH THE ABBREVIATED TIMELINE AND SUCH OF.
AND IT'S IT'S JUST IT'S PRETTY AWESOME. IN THE STATE GOVERNMENT PROCESS.
SO CONGRATULATIONS TO ALL OF THEM AND THANK YOU FOR WORKING WITH THEM AS EFFICIENTLY AND DILIGENTLY AS YOU ALL DO AS WELL, AND PROVIDING THE REPORT TO US. AND SO I KNOW THAT MY COLLEAGUES ON THE COMMITTEE SHARE THAT VIEW AND ON THE BROADER BOARD AS WELL.
SO THANK YOU FOR THAT. NO OTHER QUESTIONS. I WILL NOW, AT THIS POINT, ASK FOR A MOTION TO APPROVE THE RECOMMENDATION OF THE STATE AUDITOR'S OFFICE. REPORT TO THE FULL BOARD LATER THIS LATER TODAY.
I. I KNOW, BUT I DON'T HAVE MY NOTES. SO I SO MOVE.
I HAVE A I HAVE A MOTION TO APPROVE THE RECOMMENDATION FROM MEMBER CONROY.
DO I HAVE A SECOND? SECOND. SECOND BY MEMBER VAZQUEZ.
ALL IN FAVOR, SAY AYE. I. MOTION PASSES. MOVING TO OUR REPORT ITEMS. THE FIRST REPORT ITEM IS THE PRESENTATION AND DISCUSSION OF THE INTERNAL AUDIT REPORT OF AMY YOUNG BARRIER REMOVAL PROGRAM AND IT WILL BE PRESENTED BY MR. SCOTT. THANK YOU. MARK. YES. THE THE AMY YOUNG BURIAL REMOVAL PROGRAM WAS IDENTIFIED DURING THE FISCAL YEAR 2025 RISK ASSESSMENT AND RATED HIGH ON THE RISK ASSESSMENT MATRIX DUE TO LACK OF RECENT AUDITS OF THE PROGRAM AND ITS IMPORTANCE IN HELPING LOW INCOME INDIVIDUALS WITH DISABILITIES TO LIVE IN A SAFE AND HAZARD FREE HOME. OUR SCOPE FOR THIS AUDIT INCLUDED A REVIEW OF THE APPLICABLE TEXAS ADMINISTRATIVE CODES PROGRAM, MANUAL AND PROGRAM SOPS, AND INTERNAL CONTROLS RELATED SPECIFICALLY TO THE ABER PROGRAM.
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FROM THE APPROVAL PROCESS OF ADMINISTRATORS TO APPROVAL AND FUNDING OF INDIVIDUAL PROJECTS.THE PROGRAM IS REIMBURSEMENT SO THAT FUNDS ARE PAID AFTER PROJECTS ARE COMPLETE.
FOR THIS AUDIT, WE RANDOMLY SELECTED SIX ADMINISTRATIVE FILES FROM A TOTAL OF 54 ACTIVE ADMINISTRATORS WHO SERVED DIFFERENT COUNTIES IN TEXAS, AND EIGHT APPLICANTS FILES FROM A TOTAL OF 73 APPLICATIONS THAT WERE APPROVED AND OR FUNDED DURING FISCAL YEAR 2020.
BASED ON OUR REVIEW AND TESTING, THE AMONG BURIAL REMOVAL PROGRAM SEEMS TO BE OPERATING EFFECTIVELY AND ASSISTING LOW INCOME TEXANS TO LIVE IN SAFE AND HAZARD FREE HOMES. WE HAD NO FINDINGS FOR THIS PROGRAM.
IT WAS A CLEAN AUDIT. AS ALWAYS, EXCELLENT NEWS.
THANK YOU FOR THAT REPORT. MR. SCOTT. ANY QUESTIONS OR COMMENTS FROM MEMBERS FOR THE REPORT YOU HEARD TODAY ABOUT THE PROGRAM? HEARING NONE. I JUST HAD ONE QUESTION. MR.. SCOTT, SO THE PROGRAM WAS INITIALLY IN ITS FORM IN IT'S BEEN AROUND FOR FOR QUITE SOME TIME, ABOUT A DECADE OR SO. IS THIS THE FIRST TIME THAT WE'VE GONE THROUGH A RANDOM AUDIT, OR IS IT'S THE FIRST TIME I'VE AUDITED IT? THE THERE WERE SOME THERE WERE SOME INTERESTING ISSUES WITH THE PROGRAM BEFORE.
BEFORE ABIGAIL TOOK IT OVER. ALL THE PROGRAMS, I AUDITED HER.
WE DON'T HAVE ANY FINDINGS. SO I KNOW GENERALLY, WHICH IS A GOOD THING.
ABIGAIL'S PROGRAMS TEND TO BE BORING, SO THAT'S A GOOD.
IT'S A GOOD THING. YEAH. APPRECIATE THAT. WELL.
VERY GOOD. IF THERE'S NO OTHER COMMENTS OR QUESTIONS REGARDING THIS REPORT, WE'LL MOVE ON TO THE NEXT REPORT ITEM ON TODAY'S AGENDA, WHICH IS THE REPORT ON THE STATUS OF THE EXTERNAL AND INTERNAL AUDIT ACTIVITIES.
MR. SCOTT WILL BE PRESENTING THIS REPORT TO US AS WELL.
THANK YOU. YES. AS JUST PRESENTED, THE SAO COMPLETED THE AUDIT OF THE TDCJ FINANCIAL STATEMENTS, ALONG WITH THE FINANCIAL STATEMENT PORTION OF THE STATEWIDE AUDIT, WHICH INCLUDED TDCJ EIGHT.
BOTH RESULTED IN UNQUALIFIED OR CLEAN OPINION.
THE FEDERAL COMPLIANCE COMPONENT OF THE STATEWIDE AUDIT WAS CONDUCTED BY CLIFTONLARSONALLEN.
CLA. CLA HAD AUDITED AS MAJOR PROGRAMS LOW INCOME HOME ENERGY ASSISTANCE PROGRAM, EMERGENCY RENTAL ASSISTANCE ERA, AND HOMEOWNERS ASSISTANCE FUND HAVE AND DID FOLLOW OUR WORK THIS YEAR TO CLEAR PRIOR YEAR FINDINGS.
ALL THE PRIOR YEAR FINDINGS WERE CORRECTED SLASH CLEARED AND FOR THIS YEAR, THEY HAD MINOR FINDINGS ON LIHEAP AND THE HOME PROGRAM, WHICH THE AGENCY IS WORKING ON. THAT. AND JUST TO NOTE JUST IN CASE SOME PEOPLE AREN'T FAMILIAR WITH THIS MAJOR PROGRAM DESIGNATION FOR SINGLE AUDITS IS DETERMINED BASED ON PROGRAM SIZE AND RISK. THEY HAVE A THEY HAVE A MODEL THEY USE TO PICK ON THE KEY COMPLIANCE REQUIREMENTS TESTED FOR SINGLE AUDITS TYPICALLY INCLUDE ACTIVITIES ALLOWED OR UNDER ALLOWED ALLOWABLE COST PRINCIPLES, ELIGIBILITY MATCHING, LEVEL OF EFFORT, EARMARKING, PERIOD OF PERFORMANCE, SUBRECIPIENT MONITORING, CASH MANAGEMENT, AND OTHERS.
THERE'S STILL SOME REVIEW WORK BY FEDERAL OIG IN PROCESS ON THE INTERNAL AUDIT ACTIVITIES.
ON THE AUDIT PLAN FOR 2025. AS NOTED, WE COMPLETED THE AMY AND BURIAL REMOVAL PROGRAM AUDIT.
WE STARTED THE AUDIT OF THE DAVIS-BACON ACT ACTIVITIES AND THE AUDIT OF RENT APPROVAL PROCESSES.
THANK YOU, MR. SCOTT, FOR THAT THOROUGH REPORT.
SO FROM MY FROM MY PERSPECTIVE, CLEAN AUDIT, NO PROBLEMS. INTERNAL EXTERNAL REPORTS. ALL GOOD. CORRECT.
THE WELL ON THE ON THE. THERE'S SOME NEW FINDINGS ON THE CLA AUDIT, BUT BUT THAT'S A ROUTINE.
GENERALLY WE'LL FIND NEW THINGS AND TRY TO MITIGATE THOSE AND SUCH.
BUT THE PRIOR YEAR FINDINGS WERE CLEAR. EXCELLENT.
ANY QUESTIONS FROM MEMBERS ON MR. SCOTT'S LATEST REPORT? I HAVE A QUICK QUESTION. OKAY. RIGHT BEFORE YOU GOT TO YOUR STATEMENT ON INTERNAL AUDIT ACTIVITIES, TOWARDS THE END, YOU MUTTERED SOMETHING ABOUT OH, AND THERE'S STILL SOME OTHER THINGS BY OIG THAT HUD,
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OIG THAT'S BEING LOOKED AT. YEAH. AND THAT OKAY, SO ABOUT A YEAR OR SO AGO, THEY SENT US A LETTER SAYING THEY WERE GOING TO AUDIT THAT PROGRAM. AND THEY'VE BEEN I HAVE I HAVEN'T SEEN ANY INDICATION THAT THEY FINISHED.AND MY UNDERSTANDING IS THEY'RE GOING TO FINISH IN A FEW MONTHS.
I HAVEN'T GOTTEN ANY UPDATE ON THE FINDINGS FROM THEM.
WERE THERE ANY INITIAL FINDINGS THAT. WELL, AS WE DISCUSSED A COUPLE OF YEARS AGO ON THAT RENTAL ASSISTANCE, THERE WAS ALL KINDS OF RECIPIENT FRAUD TYPE STUFF.
OKAY. BUT NOT ON OUR REGULAR ACTIVITIES. IT'S NOT ALL STRAIGHTFORWARD.
CORRECT. OKAY. ALL RIGHT. JUST JUST FOR THOSE LETTERS, OIG.
YEAH. GOOD. GOOD TO GET CLARIFICATION. THANK YOU.
MEMBER VAZQUEZ, ANY OTHER QUESTIONS FOR MR. SCOTT ON THIS REPORT? HEARING NONE IF THERE ARE NO OTHER QUESTIONS.
AND THAT CONCLUDES TODAY'S BUSINESS AND TODAY'S MEETING OF THE AUDIT AND FINANCE COMMITTEE.
THE MEETING IS OFFICIALLY ADJOURNED AT 9:47 A.M..
THANK YOU, EVERYBODY, FOR ATTENDING. AND WE'LL BE MOVING SHORTLY TO OUR FULL BOARD MEETING.
THANK YOU. THANK YOU.
* This transcript was compiled from uncorrected Closed Captioning.