Audit 24662

Finding 2022-001 ? Significant Deficiency ? Internal Control Over Compliance AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Award Nos.: All awards under Assistance List (AL) Number 20.507 Condition: The rate per revenue mile and rate per revenue hour as well as the actual billable hours and billable miles for one route used in the spreadsheet to compute eligible expenses under grant agreements were not consistently updated to agree to the transit contractor bills during the year, which resulted in hours and mileage based fixed costs, fuel, insurance, and communication expenses to be misallocated to eligible routes when calculating expenses eligible for reimbursement. In addition, fare revenues were allocated to routes using different denominators, resulting in a misallocation of fares subtracted from operating costs among routes when determining net expenses eligible for reimbursement. These issues were not identified by the District?s review procedures. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that ?The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Cause: The differences in the allocation spreadsheet were not identified by the District?s review procedures due to recent staff turnover and lack of documented procedures to allocate expenses to grant agreements. Effect: Expenses were misallocated to individual routes and purposes, resulting in an overclaim of Woodland preventative maintenance expenses of $12,268 under grant CA-2022-204. Context: The District revised its allocation spreadsheet to use the correct rate per revenue mile, rate per revenue hour as well as the actual billable hours and billable miles during the audit and determined that the eligible expenses claimed for all federal awards was appropriate except for the Woodland preventative maintenance under grant CA-2022-204 where it was determined that the claim exceeded the allowable expenses by $12,268, which is under the questioned cost threshold specified by the Uniform Guidance. The grant extended into the subsequent year and expenses for the year ended June 30, 2023 could be claimed under the grant agreement. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants, including what data should be input into the allocation spreadsheet, the formulas used to allocate each type of expense to routes, which expenses should be allocated to each route and purpose (operating, preventive maintenance, etc.) and which expenses may not be allocated to certain routes and purposes. A summary tab should be added to the spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses to the general ledger. The District should also contact the FTA to discuss how to address the $12,268 amount overclaimed. View of Responsible Officials and Planned Corrective Action: Management?s response and planned corrective action is included at the Corrective Action Plan end of this report.

Finding 2022-001 ? Significant Deficiency ? Internal Control Over Compliance AL No: 20.507 Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula Grants - Direct Award Award Nos.: All awards under Assistance List (AL) Number 20.507 Condition: The rate per revenue mile and rate per revenue hour as well as the actual billable hours and billable miles for one route used in the spreadsheet to compute eligible expenses under grant agreements were not consistently updated to agree to the transit contractor bills during the year, which resulted in hours and mileage based fixed costs, fuel, insurance, and communication expenses to be misallocated to eligible routes when calculating expenses eligible for reimbursement. In addition, fare revenues were allocated to routes using different denominators, resulting in a misallocation of fares subtracted from operating costs among routes when determining net expenses eligible for reimbursement. These issues were not identified by the District?s review procedures. Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that ?The nonfederal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Cause: The differences in the allocation spreadsheet were not identified by the District?s review procedures due to recent staff turnover and lack of documented procedures to allocate expenses to grant agreements. Effect: Expenses were misallocated to individual routes and purposes, resulting in an overclaim of Woodland preventative maintenance expenses of $12,268 under grant CA-2022-204. Context: The District revised its allocation spreadsheet to use the correct rate per revenue mile, rate per revenue hour as well as the actual billable hours and billable miles during the audit and determined that the eligible expenses claimed for all federal awards was appropriate except for the Woodland preventative maintenance under grant CA-2022-204 where it was determined that the claim exceeded the allowable expenses by $12,268, which is under the questioned cost threshold specified by the Uniform Guidance. The grant extended into the subsequent year and expenses for the year ended June 30, 2023 could be claimed under the grant agreement. Recommendation: We recommend the District develop written procedures for allocating expenses to routes and purposes used to claim expenses under federal grants, including what data should be input into the allocation spreadsheet, the formulas used to allocate each type of expense to routes, which expenses should be allocated to each route and purpose (operating, preventive maintenance, etc.) and which expenses may not be allocated to certain routes and purposes. A summary tab should be added to the spreadsheet to sum amounts for each route computed on separate tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance, insurance, communications and other expenses to the general ledger. The District should also contact the FTA to discuss how to address the $12,268 amount overclaimed. View of Responsible Officials and Planned Corrective Action: Management?s response and planned corrective action is included at the Corrective Action Plan end of this report.