External auditor issues clean opinion on Garland's 2024 financial statements; single-audit flags questioned housing voucher costs

Weaver LLP gave Garland an unmodified ("clean") opinion on the city's financial statements for the year ended Sept. 30, 2024, the city's external audit partner told the Audit Committee at its March 25 meeting. Auditor Sarah Dempsey said the firm identified no material weaknesses or significant deficiencies in the city's financial reporting.

The opinion covers both the government-wide financial statements and the three major federal programs Weaver tested as part of the single audit: Community Development Block Grant (CDBG), the Housing Choice Voucher program, and American Rescue Plan Act (ARPA) funds. Dempsey told the committee those three programs comprised about 91% of Garland's federal expenditures for the audit period. "We had an unmodified opinion on your financial statements, with no material weaknesses identified and no significant deficiencies," Dempsey said.

The single-audit testing identified a questioned-cost finding in the Housing Choice Voucher testing after auditors and internal audit identified an instance in which a tenant and landlord were related, a condition that federal program rules prohibit. Dempsey said the auditors classified roughly $65,000 in questioned costs across multiple years, of which about $11,000 applied to the single fiscal year under audit. "We have to report anything over $25,000," she said, describing how the cumulative amount triggered reporting requirements. The auditors said the matter concerned certifications provided by both tenants and landlords and that the control process functions as designed; the potential understatement of control stems from falsified certifications rather than a process control failure.

Councilman William asked whether the landlord or tenant would be required to reimburse the funds and whether the tenant's ongoing eligibility for assistance would be affected. Dempsey said she did not expect automatic repayment but that the Department of Housing and Urban Development (HUD) would likely provide recommendations; she said repayment remained a possibility depending on HUD's review. Councilman William followed up by requesting a status update to be reported back to the committee. Audit director Jets Johnson said staff would coordinate with the housing department and provide an update at the next audit committee meeting.

Dempsey summarized the audit approach as a risk-based review that included journal-entry testing for management override risks, IT controls testing, and estimates such as allowances for doubtful accounts and pension/postemployment liabilities. She reported no difficulties obtaining information during fieldwork and no independence issues for Weaver. The audit team noted they obtained and reviewed Garland component-unit audit reports (for example, the Garland Housing Finance Corporation) and used external valuation and actuarial support where applicable.

Committee members and staff took time to recognize internal audit and finance staff for timely support during the audit. Audit director Jets Johnson and committee members singled out Patricia Moore of internal audit for identifying the tenant-landlord relationship that led to the questioned costs, and finance employee Catherine Ritchie was acknowledged for long service and support to the audit process.

The committee did not take formal action on the auditor's report itself; members instead asked staff to track and report progress on the Housing Choice Voucher question-cost remediation and any HUD guidance.

A separate procedural motion to approve the committee's December minutes was moved, seconded and carried without recorded dissent earlier in the meeting.