Audit 16070

FY End

2022-06-30

Total Expended

$31.86M

Findings

2

Programs

6

Organization: Metropolitan Transit Authority (TN)

Year: 2022 Accepted: 2024-02-07

Auditor: Crosslin PLLC

Organization Exclusion Status:

Checking exclusion status...

ID	Ref	Severity	Repeat	Requirement
11993	2022-001	-	-	I
588435	2022-001	-	-	I

ALN	Program	Spent	Major
20.507	Federal Transit_formula Grants	$21.22M	Yes
20.513	Enhanced Mobility of Seniors and Individuals with Disabilities	$839,121	-
20.526	Buses and Bus Facilities Formula, Competitive, and Low Or No Emissions Programs	$782,955	Yes
20.530	Public Transportation Innovation	$291,809	-
20.205	Highway Planning and Construction	$157,395	-
20.505	Metropolitan Transportation Planning and State and Non-Metropolitan Planning and Research	$101,973	-

Contacts

Name	Title	Type
JCKQY7NM1EX1	Ed Oliphant	Auditee
6158624167	Erica Saeger	Auditor
No contacts on file

Notes to SEFA

Title: Program Clusters Accounting Policies: The schedule of expenditures of federal awards and state financial assistance are prepared on the accrual basis of accounting. The information in the schedule of expenditures of federal awards is presented in accordance with the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule of expenditures of federal awards and state financial assistance present only a selected portion of MTA’s operations, they are not intended to and do not present the financial position, changes in net position, or cash flows of MTA. The schedules of expenditures of federal awards and state financial assistance include the grant activity of the Metropolitan Transit Authority (“MTA”) and its blended component unit, Davidson Transit Organization (“DTO”). DTO is a legally separate 501(c)(3) not-for-profit organization which was formed to provide the necessary labor to operate MTA’s transit system. Accordingly, certain federal, state and local awards received by MTA are used to reimburse labor costs incurred by DTO. Such funds received by MTA and used to reimburse DTO are reported in the accompanying schedules of federal, state and local awards by the receiving agency to avoid duplication of the aggregate level of federal awards expected by MTA, the reporting entity. Accordingly, such funds are included only once. Such funds are subject to the compliance requirements that could have a direct and material effect on a major program and are subject to audit under Uniform Guidance. The detail of federal awards passed from MTA to DTO, included in the accompanying schedule of expenditures of federal awards, is as follows: (See chart in the notes to the SEFA). As the funds above are passed within the same financial reporting entity, they are not included as pass-through funds reported separately in the schedule of expenditures of federal awards. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. Uniform Guidance defines a cluster of programs as a grouping of closely related programs that share common compliance requirements. According to this definition, similar programs deemed to be a cluster of programs are reported and tested accordingly.

Title: Contingency Accounting Policies: The schedule of expenditures of federal awards and state financial assistance are prepared on the accrual basis of accounting. The information in the schedule of expenditures of federal awards is presented in accordance with the Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule of expenditures of federal awards and state financial assistance present only a selected portion of MTA’s operations, they are not intended to and do not present the financial position, changes in net position, or cash flows of MTA. The schedules of expenditures of federal awards and state financial assistance include the grant activity of the Metropolitan Transit Authority (“MTA”) and its blended component unit, Davidson Transit Organization (“DTO”). DTO is a legally separate 501(c)(3) not-for-profit organization which was formed to provide the necessary labor to operate MTA’s transit system. Accordingly, certain federal, state and local awards received by MTA are used to reimburse labor costs incurred by DTO. Such funds received by MTA and used to reimburse DTO are reported in the accompanying schedules of federal, state and local awards by the receiving agency to avoid duplication of the aggregate level of federal awards expected by MTA, the reporting entity. Accordingly, such funds are included only once. Such funds are subject to the compliance requirements that could have a direct and material effect on a major program and are subject to audit under Uniform Guidance. The detail of federal awards passed from MTA to DTO, included in the accompanying schedule of expenditures of federal awards, is as follows: (See chart in the notes to the SEFA). As the funds above are passed within the same financial reporting entity, they are not included as pass-through funds reported separately in the schedule of expenditures of federal awards. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The grant revenue amounts received are subject to audit and adjustment. If any expenditures are disallowed by the grantor agencies as a result of such an audit, any claim for reimbursement to the grantor agencies would become a liability of MTA. In the opinion of management, all grant expenditures are in compliance with the terms of the grant agreements and applicable federal and state laws and regulations.

Finding Details

Finding 2022-001

2022 - 001 – PROCUREMENT AND SUSPENSION AND DEBARMENT Federal Transit Administration Formula Grants Assistance Listing No. 20.507 U.S. Department of Transportation Criteria Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include procurement contracts for goods or services that are expected to equal or exceed $25,000 and all non-procurement transactions (e.g., subawards to subrecipients). Condition and Context We performed testwork on 40 vendors and noted that for one out of 40 vendors tested, there was no Suspension & Debarment certification in the files or any evidence that a review had been performed to verify that the vendor or the vendor’s principals had not been suspended or debarred. Upon discussion with MTA, they obtained the required signed certifications from the vendor prior to the issuance of the fiscal year 2022 audit report. Questioned Costs The cost associated with the one item selected for testing was for one month’s lease payment of $11,333. MTA paid this vendor for six months from a federal grant during fiscal year 2022; therefore, the total questioned cost for the six months totaled $67,988. Federal Transit Administration Formula Grants Assistance Listing No. 20.507 U.S. Department of Transportation Cause The amounts paid to the vendor in question were related to a land lease. MTA was unaware that payments for a land lease fell under the federal suspension and debarment requirements. Effect MTA may have entered into an agreement with a vendor that has been suspended or debarred. Recommendation We recommend that MTA ensure compliance with this regulation as it relates to federal programs for all vendors and should include a requirement that suspension/debarment certifications be obtained and placed in all contract files for all vendors regardless of the type of goods or services provided. Views of Responsible Officials and Planned Corrective Actions See management’s corrective action plan.

Finding 2022-001

2022 - 001 – PROCUREMENT AND SUSPENSION AND DEBARMENT Federal Transit Administration Formula Grants Assistance Listing No. 20.507 U.S. Department of Transportation Criteria Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principals are suspended or debarred. Covered transactions include procurement contracts for goods or services that are expected to equal or exceed $25,000 and all non-procurement transactions (e.g., subawards to subrecipients). Condition and Context We performed testwork on 40 vendors and noted that for one out of 40 vendors tested, there was no Suspension & Debarment certification in the files or any evidence that a review had been performed to verify that the vendor or the vendor’s principals had not been suspended or debarred. Upon discussion with MTA, they obtained the required signed certifications from the vendor prior to the issuance of the fiscal year 2022 audit report. Questioned Costs The cost associated with the one item selected for testing was for one month’s lease payment of $11,333. MTA paid this vendor for six months from a federal grant during fiscal year 2022; therefore, the total questioned cost for the six months totaled $67,988. Federal Transit Administration Formula Grants Assistance Listing No. 20.507 U.S. Department of Transportation Cause The amounts paid to the vendor in question were related to a land lease. MTA was unaware that payments for a land lease fell under the federal suspension and debarment requirements. Effect MTA may have entered into an agreement with a vendor that has been suspended or debarred. Recommendation We recommend that MTA ensure compliance with this regulation as it relates to federal programs for all vendors and should include a requirement that suspension/debarment certifications be obtained and placed in all contract files for all vendors regardless of the type of goods or services provided. Views of Responsible Officials and Planned Corrective Actions See management’s corrective action plan.