City of Dallas Coronavirus Relief Fund Desk Review (OIG-CA-23-028) — Treasury OIG, July 20, 2023

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OFFICE OF
INSPECTOR GENERAL
DEPARTM ENT OF THE TREASURY
WASHINGTON, D.C.  20220

July 20, 2023

MEMORANDUM FOR MS. JENNIFER MILANO, ACTING CHIEF RECOVERY
OFFICER, DEPARTMENT OF THE TREASURY

FROM:

Deborah L. Harker /s/
Assistant Inspector General for Audit

SUBJECT:
Desk Review of City of Dallas, Texas’s Use of
Coronavirus Relief Fund Proceeds (OIG-CA-23-028)

Please find the attached desk review memorandum1 on the City of Dallas, Texas’
(Dallas) use of Coronavirus Relief Fund (CRF) proceeds. The CRF is authorized
under Title VI of the Social Security Act, as amended by Title V, Division A of the
Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Under a contract
monitored by our office, Castro & Company, LLC (Castro), a certified independent
public accounting firm, performed the desk review. Castro performed the desk
review in accordance with the Council of the Inspectors General on Integrity and
Efficiency Quality Standards for Federal Offices of Inspector General standards of
independence, due professional care, and quality assurance.

In its desk review, Castro personnel reviewed documentation for a non-statistical
selection of 19 transactions reported in the quarterly Financial Progress Reports
(FPR) and found that Dallas personnel could not provide the necessary
documentation to support 1 of 19 transactions resulting in total unsupported
expenditures of $2,211,593.67 (see attached schedule of monetary benefits).

Specifically, Castro determined that the expenditures related to Aggregate
Payments to Individuals2 obligation type did not comply with the CARES Act and
Department of the Treasury (Treasury) Guidance and that the risk of unallowable
use of funds was moderate. As such, Castro is recommending Treasury Office of
Inspector General (OIG) pursue obtaining documentation from Dallas
management and ensure that expenditures reported are properly supported.
Further, based on Dallas’ responsiveness to Treasury OIG’s requests and its ability

1 The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) assigned the Department of
the Treasury Office of Inspector General with responsibility for compliance monitoring and
oversight of the receipt, disbursement, and use of Coronavirus Relief Fund (CRF) payments. The
purpose of the desk review is to perform monitoring procedures of the prime recipient’s receipt,
disbursement, and use of CRF proceeds as reported in the grants portal on a quarterly basis.
2 Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the grants portal to prevent inappropriate disclosure of
personally identifiable information.

Page 2

to provide documentation, we recommend Treasury OIG determine if a focused
audit on Aggregate Payments to Individuals is feasible. Castro and Treasury OIG
met with Dallas management to discuss the questioned costs and reporting
issues. Dallas management stated that they would provide Treasury OIG
documentation to support the use of the $2,211,593.67 in questioned costs.

In connection with the contract, we reviewed Castro’s desk review memorandum
and related documentation and inquired of its representatives. Our review, as
differentiated from an audit performed in accordance with generally accepted
government auditing standards, was not intended to enable us to express an
opinion on Dallas’ use of the CRF proceeds. Castro is responsible for the attached
desk review memorandum and the conclusions expressed therein. Our review
found no instances in which Castro did not comply in all material respects, with
Quality Standards for Federal Offices of Inspector General.

We appreciate the courtesies and cooperation provided to Castro and our staff
during the desk review. If you have any questions or require further information,
please contact me at (202) 486-1420, or a member of your staff may contact Lisa
DeAngelis, Deputy Assistant Inspector General for Audit, at (202) 487-8371.

cc:
Michelle. A. Dickerman, Deputy Assistant General Counsel, Department of
the Treasury

Victoria Collin, Chief Compliance & Finance Officer, Office of Recovery
Programs, Department of the Treasury

Christopher Sun, Director of Data and Reporting, Office of Recovery
Programs, Department of the Treasury

Jack Ireland, Chief Financial Officer, City of Dallas, Texas
Wayne Ference, Partner, Castro & Company, LLC

Page 3

Attachment

Schedule of Monetary Benefits

According to the Code of Federal Regulations,3 a questioned cost is a cost that is
questioned due to a finding:

(a) which resulted from a violation or possible violation of a statute,
regulation, or the terms and conditions of a Federal award, including for
funds used to match Federal funds;

(b) where the costs, at the time of the review, are not supported by
adequate documentation; or

(c) where the costs incurred appear unreasonable and do not reflect the
actions a prudent person would take in the circumstances.

Questioned costs are to be recorded in the Department of the Treasury’s
(Treasury) Joint Audit Management Enterprise System (JAMES).4 The amount will
also be included in the Office of Inspector General (OIG) Semiannual Report to
Congress. It is Treasury management's responsibility to report to Congress on the
status of the agreed to recommendations with monetary benefits in accordance
with 5 USC Section 405(b) of the Inspector General Act of 1978.

Recommendation

Questioned Costs
Recommendation No. 1

           $2,211,593.67

The questioned cost represents amounts provided by Treasury under the
Coronavirus Relief Fund. As discussed in the attached desk review, $2,211,593.67
is Dallas’ expenditures reported in the grant-reporting portal that lacked
supporting documentation.

3 2 CFR § 200.84 – Questioned Cost
4 JAMES is Treasury’s audit recommendation tracking system.

Desk Review of the City of Dallas, Texas
1

1635 King Street
Alexandria, VA 22314
Phone: 703.229.4440
Fax: 703.859.7603
www.castroco.com

July 20, 2023

OIG-CA-23-028

MEMORANDUM FOR DEBORAH L. HARKER,
ASSISTANT INSPECTOR GENERAL FOR AUDIT

FROM:
Wayne Ference

Partner, Castro & Company, LLC

          SUBJECT:
Desk Review of the City of Dallas, Texas

On June 13, 2022, we initiated a desk review of the City of Dallas’ (Dallas) use of
the Coronavirus Relief Fund (CRF) authorized under Title VI of the Social Security
Act, as amended by Title V Division A of the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act).1 The objective of our desk review was to
evaluate Dallas’ documentation supporting its uses of CRF proceeds as reported
in the GrantSolutions2 portal and to assess the risk of unallowable use of funds.
The scope of our desk review was limited to obligation and expenditure data for
the period of March 1, 2020 through March 31, 2022 as reported in Cycles 13
through 84 in the GrantSolutions portal.

As part of our desk review, we performed the following:
1) reviewed Dallas’ quarterly Financial Progress Reports (FPRs) submitted in
the GrantSolutions portal through March 31, 2022;
2) reviewed the Department of the Treasury’s (Treasury) Coronavirus Relief
Fund Guidance as published in the Federal Register on January 15, 2021;5

1 P.L. 116-136 (March 27, 2020).
2 GrantSolutions, a grant and program management Federal shared service provider under the
U.S. Department of Health and Human Services, developed a customized and user-friendly
reporting solution to capture the use of CRF payments from recipients.
3 Calendar quarter ending June 30, 2020.
4 Calendar quarter ending March 31, 2022.
5 Coronavirus Relief Fund Guidance as published in the Federal Register (January 15, 2021)
https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf

Desk Review of the City of Dallas, Texas
2

3) reviewed Treasury’s Office of Inspector General (OIG) Coronavirus Relief
Fund Frequently Asked Questions Related to Reporting and
Recordkeeping;6
4) reviewed Treasury OIG’s monitoring checklists7 of Dallas’ quarterly FPR
submissions for reporting deficiencies;
5) reviewed other audit reports issued, such as Single Audit reports, and
those issued by the Government Accountability Office and other applicable
Federal agency OIGs for internal control or other deficiencies that may
pose risk or impact Dallas’ uses of CRF proceeds;
6) reviewed Treasury OIG Office of Investigations (OI), the Council of the
Inspectors General on Integrity and Efficiency Pandemic Response
Accountability Committee (PRAC),8 and Treasury OIG Office of Counsel
input on issues that may pose risk or impact Dallas’ uses of CRF proceeds;
7) interviewed key personnel responsible for preparing and certifying Dallas’
GrantSolutions portal quarterly FPR submissions, as well as officials
responsible for obligating and expending CRF proceeds;
8) made a non-statistical selection of Contracts, Grants, Direct Payments,
Aggregate Reporting,9 and Aggregate Payments to Individuals10 data
identified through GrantSolutions reporting; and
9) evaluated documentation and records used to support Dallas’ quarterly
FPRs.

Based on the results of our desk review, we determined that the expenditures
related to Aggregate Payments to Individuals did not comply with the CARES Act
and Treasury’s Guidance, which resulted in total questioned costs of

6 Department of the Treasury Office of Inspector General Coronavirus Relief Fund Frequently Asked
Questions Related to Reporting and Recordkeeping OIG-20-028R; March 2, 2021
7 The checklists are used by Treasury OIG personnel to monitor the progress of prime recipient
reporting in the GrantSolutions portal. GrantSolutions quarterly submission reviews are designed
to identify material omissions and significant errors, and where necessary, include procedures for
notifying prime recipients of misreported data for timely correction. Treasury OIG follows the CRF
Prime Recipient Quarterly GrantSolutions Submissions Monitoring and Review Procedures Guide,
OIG-CA-20-029R to monitor the prime recipients quarterly.
8 Section 15010 of P.L. 116-136 established the Pandemic Response Accountability Committee
within the Council of the Inspectors General on Integrity and Efficiency to promote transparency
and conduct and support oversight of covered funds (see Footnote 17 for a definition of covered
funds) and the coronavirus response to (1) prevent and detect fraud, waste, abuse, and
mismanagement; and (2) mitigate major risks that cut across program and agency boundaries.
9 Recipients are required to report CRF transactions greater than or equal to $50,000 in detail in the
GrantSolutions portal. Transactions less than $50,000 can be reported as an aggregate lump-sum
amount by type (contracts, grants, loans, direct payments, and transfers to other government
entities).
10 Obligations and expenditures for payments made to individuals, regardless of amount, are
required to be reported in the aggregate in the GrantSolutions portal to prevent inappropriate
disclosure of personally identifiable information.

Desk Review of the City of Dallas, Texas
3

$2,211,593.67. Additionally, we determined that Dallas’ risk of unallowable use of
funds to be moderate. As such, Castro recommends Treasury OIG pursue
obtaining documentation from Dallas management and ensure expenditures
reported are properly supported. Further, based on Dallas’ responsiveness to
Treasury OIG’s requests and its ability to provide documentation, we recommend
Treasury OIG determine if a focused audit on Aggregate Payments to Individuals
is feasible.

Non-Statistical Transaction Selection Methodology

Treasury issued a CRF payment to Dallas of $234,443,127.60. As of March 31, 2022
(Cycle 8), Dallas’ cumulative obligations and expenditures were $234,443,127.60.
Dallas’ cumulative obligations and expenditures by payment type, as reported in
GrantSolutions through Cycle 8, are summarized below:

Payment Type
Cumulative
Obligated Amount
Cumulative
Expenditure Amount
Contracts >= $50,000
$    100,795,501.92
$     100,795,501.92
Grants >= $50,000
$        8,566,596.26
$         8,566,596.26
Loans >= $50,000
$                           -
$                            -
Transfers >= $50,000
$                           -
$                            -
Direct Payments >= $50,000
$      14,741,667.06
$       14,741,667.06
Aggregate Reporting < $50,000
$        9,280,022.57
$         9,280,022.57
Aggregate Payments to Individuals (in any
amount)
$    101,059,339.79
$     101,059,339.79
Totals
$    234,443,127.60
 $    234,443,127.60

Castro made a non-statistical selection of Contracts greater than or equal to
$50,000, Grants greater than or equal to $50,000, Direct Payments greater than or
equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals. Selections were made using auditor judgment based on
information and risks identified in reviewing audit reports, the GrantSolutions
portal reporting anomalies11 identified by the Treasury OIG CRF monitoring team,
and review of Dallas’ FPR submissions. Castro noted Dallas did not obligate or
expend CRF proceeds to Loans greater than or equal to $50,000, or
Transfers12 greater than or equal to $50,000, therefore, we did not make a
selection of transactions from these categories.

11 Treasury OIG has a pre-defined list of risk indicators that are triggered based on data submitted
by recipients in the FPR submissions that meet certain criteria. Castro reviewed these results
provided by Treasury OIG for Dallas.
12 A transfer to another government entity is a disbursement or payment to a government entity
that is legally distinct from the prime recipient.

Desk Review of the City of Dallas, Texas
4

The number of transactions (19) we selected to test were based on Dallas’ total
CRF award amount and our overall risk assessment of Dallas. To allocate the
number of transactions (19) by obligation type (Contracts greater than or equal to
$50,000, Grants greater than or equal to $50,000, Direct Payments greater than or
equal to $50,000, Aggregate Reporting less than $50,000, and Aggregate
Payments to Individuals), we compared the obligation type dollar amounts as a
percentage of cumulative obligations for Cycle 8.13 Additionally, Treasury OIG
identified one potential duplicate payment and two outliers.14 We included the
potential duplicate payment from the Contracts greater than or equal to $50,000
payment type in Castro’s selection. The two outlier payments were related to the
Contracts greater than or equal to $50,000 obligation type, and did not result in
any additional selections.
Background

The CARES Act appropriated $150 billion to establish the CRF. Under the CRF,
Treasury made payments for specified uses to States and certain local
governments; the District of Columbia and U.S. Territories, including the
Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern Mariana Islands; and Tribal
governments. Treasury issued a CRF payment to Dallas for $234,443,127.60. The
CARES Act stipulates that a recipient may only use the funds to cover costs that—

(1) are necessary expenditures incurred due to the public health emergency
with respect to the coronavirus disease 2019 (COVID-19);
(2) were not accounted for in the budget most recently approved as of
March 27, 2020; and
(3) were incurred between March 1, 2020 and December 31, 2021.15

13 Calendar quarter ending March 31, 2022.
14 The two outliers for the Contracts greater than or equal to $50,000 payment type related to funds
used for public health expenses and costs associated with improving telework capabilities for
public employees during the Pandemic. These were identified by the Treasury OIG CRF monitoring
team as outliers because the transactions were identified as having a high dollar amount relative
to transactions at similar points in time, with similar award descriptions, and that were disbursed
by the same prime recipient.
15 P.L. 116-260 (December 27, 2020). The period of performance end date of the CRF was extended
through December 31, 2021 by the Consolidated Appropriations Act, 2021. The period of
performance end date for tribal entities was further extended to December 31, 2022 by the State,
Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act,
Division LL of the Consolidated Appropriations Act, 2023, P.L. 117-328, December 29, 2022, 136
Stat. 4459.

Desk Review of the City of Dallas, Texas
5

Section 15011 of the CARES Act, requires each covered recipient16 to submit to
Treasury and the PRAC, no later than 10 days after the end of each calendar
quarter, a report that contains (1) the total amount of large covered funds17,18
received from Treasury; (2) the amount of large covered funds received that were
expended or obligated for each project or activity; (3) a detailed list of all projects
or activities for which large covered funds were expended or obligated; and (4)
detailed information on any level of sub-contracts or sub-grants awarded by the
covered recipient or its sub-recipients.

The CARES Act assigned Treasury OIG the responsibility for compliance
monitoring and oversight of the receipt, disbursement, and use of CRF proceeds.
Treasury OIG also has authority to recoup funds in the event that it is determined
a recipient failed to comply with requirements of subsection 601(d) of the Social
Security Act, as amended, (42 U.S.C. 801(d)).

Desk Review Results

Dallas’ quarterly FPR submissions through March 31, 2022 were timely submitted
to Treasury. Other than Aggregate Payments to Individuals, transactions selected
for detailed review were supported by documentation and were allowable
expenditures in accordance with the CARES Act and Treasury’s guidance. We also
found that Contracts greater than or equal to $50,000, Grants greater than or equal
to $50,000, Direct Payments greater than or equal to $50,000, and Aggregate
Reporting less than $50,000 were necessary expenditures due to the COVID-19
public health emergency, were not accounted for in the budget most recently
approved as of March 27, 2020, and were incurred during the covered period. The
transactions selected for testing were not selected statistically, and therefore
results cannot be extrapolated to the total universe of transactions.

The following table includes the total cumulative expenditure population and the
expenditure amount tested. This table also includes a summary of Castro’s testing
results over expenditure transaction balances. Within the “Exception Noted: IPA
[Independent Public Accountant] Recommended for Treasury OIG Follow-up”
section of this table, we have included a summary of unsupported and ineligible
exceptions identified as questioned costs. These exceptions do not comply with

16 Section 15011 of P.L. 116-136 defines a covered recipient as any entity that receives large
covered funds and includes any State, the District of Columbia, and any territory or possession of
the United States.
17 Section 15010 of P.L. 116-136 defines covered funds as any funds, including loans, that are made
available in any form to any non-Federal entity, not including an individual, under Public Laws 116-
123, 127, and 136, as well as any other law which primarily makes appropriations for Coronavirus
response and related activities.
18 Section 15011 of P.L. 116-136 defines large covered funds as covered funds that amount to more
than $150,000.

Desk Review of the City of Dallas, Texas
6

the CARES Act and Treasury’s Guidance. Additionally, in the far-right column, we
have identified the expenditures that Castro tested without exception. See the
Desk Review Results section below this table for a detailed discussion of
questioned costs and other issues identified.

Summary of Expenditure Testing and Recommended Results – As of Cycle 819
Payment Type
Cumulative
Expenditure
Population
Amount
Cumulative
Expenditure
Tested Amount
Unsupported
Exception
Ineligible
Exception
Amount Reviewed
Without Exception
Contracts >=
$50,000
$  100,795,501.92
$  39,168,441.95
$                   -    $            -
$     39,168,441.95
Grants >=
$50,000
$      8,566,596.26
$    4,468,459.97
$                   -
$            -
$       4,468,459.97
Loans >=
$50,000
$                         -        $                       -        $                   -
$            -
$                            -
Transfers to
Other
Government
Agencies >=
$50,000
$                         -        $                       -
$                   -
$            -    $                            -
Direct Payments
>= $50,000
$    14,741,667.06
$    6,629,702.40
$                   -    $            -
$       6,629,702.40
Aggregate
Reporting <
$50,000
$      9,280,022.57
$         33,148.00
$                   -
$            -
$              33,148.00
Aggregate
Payments to
Individuals (in
any amount)
$  101,059,339.79
$  74,894,522.11
$2,211,593.67
$            -
$     72,682,928.44
Totals
$  234,443,127.60
$125,194,274.43
$2,211,593.67
$            -
$  122,982,680.76

Aggregate Payments to Individuals (API)

We determined Dallas’ API did not comply with the CARES Act and Treasury’s
Guidance. Of the 10 API transactions tested, we identified exceptions in one
transaction resulting in unsupported costs of $2,211,593.67. The transaction was
for costs not related to a public health and safety unit. The transaction was the
highest aggregate dollar expenditure amount reported by Dallas management as
allocation code (2) - Payroll Costs for Non-Public Health and Safety Employees.
Specifically, Dallas management submitted a request to their Information
Technology (IT) department to pull the data from their legacy timekeeping system,
which took four weeks to obtain and review before Dallas was able to provide

19 Calendar quarter ending March 31, 2022.

Desk Review of the City of Dallas, Texas
7

Castro documentation for a small subset (four) of the transactions selected within
the Non-Public Health and Safety Employees allocation code. After multiple
requests, Dallas management was unable to provide adequate and/or sufficient
supporting documentation of payroll reimbursement amounts using CRF
proceeds during our fieldwork procedures. Specifically, Dallas management was
unable to provide general and subsidiary ledgers used to account for the receipt
of CRF payments and subsequent disbursements to reconcile to our transaction
selection in relation to payroll expenses for employees whose work duties were
not substantially dedicated to mitigating or responding to the COVID-19 public
health emergency.
In June of 2020, Dallas completed their implementation of a new payroll system.
Dallas management told us that due to this change in payroll systems, it was
unable to provide the requested API supporting documentation during our
fieldwork. Overall, based on Dallas management’s utilization of the old payroll
system during the CRF program, our additional requests were significantly
delayed. We asked Dallas management to provide the procedures used to
calculate and report the amounts reimbursed to the non-public health and safety
unit. Dallas provided their documented procedures; however, we were unable to
re-perform those procedures to calculate the amounts reported in GrantSolutions.
Dallas management stated the reimbursement payroll costs assigned to their
COVID-19 Fund would not reconcile to the transaction selected for testing due to
the underlying financial data being allocated across multiple pay periods. In
conclusion, Dallas management did not comply with the reporting and record
retention requirements criteria of the CRF program, including Treasury OIG
Guidance OIG-CA-20-021,20 Coronavirus Relief Fund Reporting and Record
Retention Requirements.
Conclusion
We determined that certain expenditures related to Aggregate Payments to
Individuals did not comply with the CARES Act and Treasury’s Guidance. As such,
we question $2,211,593.67 of expenditures due to a lack of supporting
documentation. We found that uses of CRF proceeds for Contracts greater than or
equal to $50,000, Grants greater than or equal to $50,000, Direct Payments greater
than or equal to $50,000, and Aggregate Reporting less than $50,000 complied
with the CARES Act and Treasury’s Guidance.

20 https://oig.treasury.gov/sites/oig/files/2021-01/OIG-CA-20-021.pdf

Desk Review of the City of Dallas, Texas
8

Based on the totality of the work performed and due to the exceptions identified
above, we determined Dallas’ risk of unallowable use of funds to be moderate.
Castro recommends that Treasury OIG pursue obtaining documentation from
Dallas management related to the Aggregate Payments to Individuals and ensure
that expenditures reported are properly supported. Further, based on Dallas’
responsiveness to Treasury OIG’s requests and its ability to provide
documentation, we recommend Treasury OIG determine if a focused audit on
Aggregate Payments to Individuals is feasible.

*****

All work completed with this letter complies with the Council of the Inspectors
General on Integrity and Efficiency’s Quality Standards for Federal Offices of
Inspectors General, which require that the work adheres to the professional
standards of independence, due professional care, and quality assurance to
ensure the accuracy of the information presented.21 We appreciate the courtesies
and cooperation provided to our staff during the desk review.

Sincerely,

Wayne Ference
Partner, Castro & Company, LLC

21 https://www.ignet.gov/sites/default/files/files/Silver%20Book%20Revision%20-%208-20-12r.pdf

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