FAC Explorer

Audit 301808

FY End
2023-06-30
Total Expended
$191.43M
Findings
14
Programs
14
Organization: Puerto Rico Highways and Transportation Authority (PR)
Year: 2023 Accepted: 2024-04-01
Auditor: Crowe Pr Psc

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
391191 2023-002 Significant Deficiency - P
391192 2023-002 Significant Deficiency - P
391193 2023-002 Significant Deficiency - P
391194 2023-002 Significant Deficiency - P
391195 2023-002 Significant Deficiency - P
391196 2023-003 Significant Deficiency - L
391197 2023-004 Significant Deficiency Yes G
967633 2023-002 Significant Deficiency - P
967634 2023-002 Significant Deficiency - P
967635 2023-002 Significant Deficiency - P
967636 2023-002 Significant Deficiency - P
967637 2023-002 Significant Deficiency - P
967638 2023-003 Significant Deficiency - L
967639 2023-004 Significant Deficiency Yes G

Programs

ALN Program Spent Major Findings
20.205 Highway Planning and Construction (federal-Aid Highway Program) $149.22M Yes 1
20.507 Federal Transit - Formula Grants (urbanized Area Formula Program) $26.97M - 1
20.525 State of Good Repair Grants Program $4.72M - 1
20.505 Metropolitan Transportation Planning Grants $2.57M - 1
20.509 Formula Grants for Rural Areas and Tribal Transit Program $2.43M Yes 0
20.500 Capital Investment Grants (fixed Guideway Capital Investment Grants) $1.59M - 1
21.027 Covid-19: Coronavirus State and Local Fiscal Recovery Funds $1.50M Yes 1
20.509 Covid-19 Formula Grants for Rural Areas and Tribal Transit Program $1.06M Yes 0
20.527 Public Transportation Emergency Relief Program $672,792 - 0
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $426,869 - 0
20.933 National Infrastructure Investments $212,794 - 0
14.228 Community Development Block Grants/state's Program and Non-Entitlement Grants $31,765 - 0
20.513 Enhanced Mobility of Seniors and Individuals with Disabilities $14,913 - 1
20.526 Buses and Bus Facilities Formula, Competitive, and Low Or No Emissions Programs (buses and Bus Facilities Program) $2,109 - 0

Contacts

Name Title Type
LLHHFKQLNAL4 Luis K Santiago Auditee
7877218787 Jose Penabaz Auditor
No contacts on file

Notes to SEFA

Title: BASIS OF PRESENTATION Accounting Policies: Expenditures reported on the Schedule are reported using the accrual basis of accounting. The financial transactions are recorded by the Authority in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No Indirect cost rate used by the Auditee. The accompanying Schedule of Expenditures of Federal Awards (the “Schedule") includes the federal award expenditures of the Puerto Rico Highways and Transportation Authority (the “Authority") for the year ended June 30, 2023. The information in the Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). The Schedule presents only a selected portion of the financial activities of the Authority. Therefore, it is not intended to, and does not present the net deficit, changes in net deficit, or cash flows of the Authority.
Title: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Policies: Expenditures reported on the Schedule are reported using the accrual basis of accounting. The financial transactions are recorded by the Authority in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No Indirect cost rate used by the Auditee. Expenditures reported on the Schedule are reported using the accrual basis of accounting. The financial transactions are recorded by the Authority in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
Title: FEDERAL ASSISTANCE LISTING NUMBERS Accounting Policies: Expenditures reported on the Schedule are reported using the accrual basis of accounting. The financial transactions are recorded by the Authority in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No Indirect cost rate used by the Auditee. The Assistance Listing numbers included in this Schedule are determined based on the program name, review of grant contract information and the Office of Management and Budget’s Catalogue of Federal Domestic Assistance. Pass-through entity identifying numbers are presented where available and applicable.
Title: RELATIONSHIP TO THE FINANCIAL STATEMENTS Accounting Policies: Expenditures reported on the Schedule are reported using the accrual basis of accounting. The financial transactions are recorded by the Authority in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No Indirect cost rate used by the Auditee. Federal awards revenues and expenses are reported in the Authority’s statement of revenues, expenses, and changes in net deficit in accordance with standards issued by the Government Accounting Standards Board (“GASB”) No. 34. Because the Schedule presents only federal activities of the Authority, it is not intended to and does not present the financial deficit, assets, liabilities, net deficit, revenues, expenses, changes in net deficit, and cash flows of the Authority, as a whole.
Title: CLUSTER PROGRAMS Accounting Policies: Expenditures reported on the Schedule are reported using the accrual basis of accounting. The financial transactions are recorded by the Authority in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No Indirect cost rate used by the Auditee. The Uniform Guidance defines a cluster of programs as a group of closely related programs that share common compliance requirements. According to this definition, the Federal Transit Cluster and the Transit Services Programs Cluster were deemed to be cluster programs.
Title: INDIRECT COSTS Accounting Policies: Expenditures reported on the Schedule are reported using the accrual basis of accounting. The financial transactions are recorded by the Authority in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No Indirect cost rate used by the Auditee. The Authority has elected not to use the ten percent de minimis indirect cost rate allowed by the Uniform Guidance.
Title: CONTINGENCIES Accounting Policies: Expenditures reported on the Schedule are reported using the accrual basis of accounting. The financial transactions are recorded by the Authority in accordance with the terms and conditions of the grants, which are consistent with accounting principles generally accepted in the United States of America. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. De Minimis Rate Used: N Rate Explanation: No Indirect cost rate used by the Auditee. The Authority receives funds under various federal award programs and such awards are to be expended in accordance with the provisions of each award. Compliance with the awards is subject to audit by various government agencies, which may impose sanctions in the event of non-compliance. Management believes that it has complied with all aspects of award provisions and the results of adjustments, if any, relating to such audits would not have a material impact on the programs nor the accompanying Schedule.

Finding Details

Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-003
Assistance Listing Number: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency – Department of Treasury Compliance Requirement – Reporting Finding Type: Significant Deficiency on Internal Control Condition During the audit, it was observed that the Authority lacks sufficient personnel designated to the oversight and review of the reporting process. This has resulted in the reporting procedure being conducted by a single individual without any formal oversight or review by additional staff or management, leading to a lack of checks and balances in this compliance area. Criteria The Uniform Guidance section 200.303 regarding internal controls, requires non-Federal entities to establish and maintain effective internal control over Federal awards that provide reasonable assurance that the management of Federal awards is in compliance with Federal statutes, regulations, and terms and conditions of the Federal awards. This includes accurate financial reporting and proper segregation of duties to prevent any individual from both preparing and reviewing the same transaction or report. Cause Lack of sufficient personnel designated for oversight roles. This shortage has resulted in the absence of formal review and oversight, as there are inadequate human resources to fulfill these critical control functions. Effect The lack of management review and oversight in the reporting process increases the risk of non-compliance with federal requirements and inaccuracies in reporting over federal funds. Questioned Costs None   Recommendation To resolve these issues and prevent future occurrences, the Authority should consider the following actions: • Strengthen Internal Controls: Implement stronger internal control procedures to ensure accurate financial reporting and supervision. This should include establishing clear protocols for the preparation and review of financial reports, with distinct roles assigned to different individuals to maintain segregation of duties. • Address Staffing Issues: Take steps to address the employee shortage, either by hiring additional staff or by training existing staff to take on multiple roles, ensuring that duties can be adequately segregated even with limited personnel. • Regular Training and Awareness: Conduct regular training sessions for all relevant staff on compliance with Federal program requirements and the importance of internal controls, including the need for segregation of duties in financial reporting.
Finding 2023-004
Assistance Listing No. 20.205 Highway Planning and Construction (Federal-Aid Highway Program) Name of Federal Agency Department of Transportation Compliance Requirement Matching Type of Finding Significant Deficiency on Internal Control and Non-Compliance Condition: From a sample of forty federal construction projects examined, we noticed that for three projects, the toll credit usage reported in the Authority’s Toll Credits Report differed from the amounts reported in the Federal-Aid Project Agreements as approved by the Federal Highway Administration (FHWA). In addition, the Authority was unable to provide sufficient evidence for the auditors to validate the toll credit usage amounts for seven projects during the fiscal year. Furthermore, it was observed that the Authority lacks sufficient personnel designated to the oversight and review of the toll credits reporting process. This has resulted in the reporting procedure being conducted by a single individual without any formal oversight or review by additional staff or management, leading to a lack of checks and balances in this compliance area. A similar finding was reported during the prior year’s single audit as finding number 2022-02. Criteria: In accordance with the signed Memorandum of Understanding (MOU) between the Authority and FHWA (signed on February 25, 2016), the Authority shall implement modifications to its processes for approving, tracking, and reconciling toll credits as identified by the FHWA and submit a report (i.e., Toll Credits Report) and a certification to FHWA ascertaining that it has implemented these modifications. FHWA shall accurately identify the amount of toll credits available for use by the Authority and identify the modifications that the Authority must make to its processes for approving, tracking, and reconciling toll credit usage, as applicable. Cause: The causes for this finding include: 1) Recordkeeping Issues: The Authority does not have adequate recordkeeping systems for tracking toll credit usage. This could lead to discrepancies between the reported amounts in the Toll Credits Report and those in the Federal-Aid Project Agreements. 2) Lack of Adequate Internal Controls: The Authority does not have adequate internal control mechanisms in place to ensure the accuracy and completeness of the toll credit usage reporting. This includes the failure to reconcile amounts reported in the Toll Credits Report with those approved in the Federal-Aid Project Agreements. Effect: Non-compliance with the toll credits matching requirement per the MOU requirements. In addition, the Authority could inadvertently use toll credits for a federal project that may lack toll credits balances. Questioned Costs: Could not be determined. Recommendation: To address the identified compliance issues related to the discrepancies in toll credit usage reporting and the lack of sufficient evidence for certain projects, the auditors recommend the following: • Strengthen Internal Controls: Enhance internal control procedures to ensure accurate and compliant reporting of toll credit usage. This includes establishing clear guidelines for documentation, reporting, and verification processes related to federal construction projects. • Implement a Review Process: Introduce a formal review process for the toll credits reporting procedure. This review should be conducted by an individual or a team that is independent of the initial reporting process to ensure objectivity. The review should verify the accuracy of the reported toll credit usage against project agreements and supporting documentation. • Enhance Documentation Practices: Develop and enforce rigorous documentation practices. Ensure that all relevant documents supporting the toll credit usage, such as agreements, approvals, and calculations, are systematically collected, filed, and readily available for audit purposes. • Training and Awareness: Conduct training sessions for staff involved in the reporting and management of federal construction projects. The training should cover the requirements for toll credit usage, the importance of accurate reporting, and the procedures for ensuring compliance with federal guidelines, • Regular Reconciliation: Implement regular reconciliation procedures between the toll credits reported in the Authority’s Toll Credits Report and the amounts in the Federal-Aid Project Agreements. Any discrepancies identified should be investigated and resolved promptly. • Leverage Technology: Consider the use of accounting or project management software that can help track and report toll credit usage accurately. Automation can reduce human errors and improve the efficiency of the reporting process.
Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-002
Assistance Listing Numbers: 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants), 20.507 Federal Transit – Formula Grants (Urbanized Area Formula), 20.525 State of Good Repair Grants, 20.505 Metropolitan Transportation Planning Grants, and 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities Federal Agency – Department of Transportation Finding Type: Significant Deficiency and Non-Compliance Condition During the audit, it was found that the auditee incorrectly classified the following: • Assistance Listing Number 20.500 Capital Investment Grants (Fixed Guideway Capital Investment Grants) – Management reported $2,455,795 as federal awards expended instead of $1,589,748, which were the amounts validated by the auditors. • Assistance Listing Number 20.507 Federal Transit – Formula Grants (Urbanized Area Formula) – Management reported $25,222,452 as federal awards expended instead of $21,372,923, which were the amounts validated by the auditors. • Assistance Listing Number 20.525 State of Good Repair Grants – Management did not report federal awards expended instead of $4,715,576, which was the amount validated by the auditors. • Assistance Listing Number 20.505 Metropolitan Transportation Planning Grants – Management reported $2,279,469 as federal awards expended instead of $2,210,082, which were the amounts validated by the auditors. • Assistance Listing Number 20.513 Enhanced Mobility of Seniors and Individuals with Disabilities – Management reported $15,848.93 as federal awards expended instead of $14,912.93, which were the amounts validated by the auditors. Criteria Under 2 CFR 200.510(b), auditees are required to prepare a Schedule of Expenditures of Federal Awards (SEFA) and must include accurate information about expenditures for each federal program, including the correct Assistance Listing number. In addition, the auditee must provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. Cause The misclassification appears to have resulted from a misunderstanding of the program guidelines and a lack of adequate internal controls to ensure the accurate reporting of federal expenditures. Effect This misclassification could result in noncompliance with federal regulations and may impact the federal agency's ability to accurately monitor and allocate funding. Furthermore, it may lead to incorrect conclusions about the auditee's compliance with specific program requirements.   Questioned Costs None Recommendation It is recommended that the auditee: • Review and revise its procedures for classifying federal expenditures to ensure accurate alignment with assistance listing numbers. • Implement additional training for staff responsible for preparing the SEFA. • Conduct a thorough review of all federal program expenditures for the current and previous years to identify and correct any similar misclassifications.
Finding 2023-003
Assistance Listing Number: 21.027 Coronavirus State and Local Fiscal Recovery Funds Federal Agency – Department of Treasury Compliance Requirement – Reporting Finding Type: Significant Deficiency on Internal Control Condition During the audit, it was observed that the Authority lacks sufficient personnel designated to the oversight and review of the reporting process. This has resulted in the reporting procedure being conducted by a single individual without any formal oversight or review by additional staff or management, leading to a lack of checks and balances in this compliance area. Criteria The Uniform Guidance section 200.303 regarding internal controls, requires non-Federal entities to establish and maintain effective internal control over Federal awards that provide reasonable assurance that the management of Federal awards is in compliance with Federal statutes, regulations, and terms and conditions of the Federal awards. This includes accurate financial reporting and proper segregation of duties to prevent any individual from both preparing and reviewing the same transaction or report. Cause Lack of sufficient personnel designated for oversight roles. This shortage has resulted in the absence of formal review and oversight, as there are inadequate human resources to fulfill these critical control functions. Effect The lack of management review and oversight in the reporting process increases the risk of non-compliance with federal requirements and inaccuracies in reporting over federal funds. Questioned Costs None   Recommendation To resolve these issues and prevent future occurrences, the Authority should consider the following actions: • Strengthen Internal Controls: Implement stronger internal control procedures to ensure accurate financial reporting and supervision. This should include establishing clear protocols for the preparation and review of financial reports, with distinct roles assigned to different individuals to maintain segregation of duties. • Address Staffing Issues: Take steps to address the employee shortage, either by hiring additional staff or by training existing staff to take on multiple roles, ensuring that duties can be adequately segregated even with limited personnel. • Regular Training and Awareness: Conduct regular training sessions for all relevant staff on compliance with Federal program requirements and the importance of internal controls, including the need for segregation of duties in financial reporting.
Finding 2023-004
Assistance Listing No. 20.205 Highway Planning and Construction (Federal-Aid Highway Program) Name of Federal Agency Department of Transportation Compliance Requirement Matching Type of Finding Significant Deficiency on Internal Control and Non-Compliance Condition: From a sample of forty federal construction projects examined, we noticed that for three projects, the toll credit usage reported in the Authority’s Toll Credits Report differed from the amounts reported in the Federal-Aid Project Agreements as approved by the Federal Highway Administration (FHWA). In addition, the Authority was unable to provide sufficient evidence for the auditors to validate the toll credit usage amounts for seven projects during the fiscal year. Furthermore, it was observed that the Authority lacks sufficient personnel designated to the oversight and review of the toll credits reporting process. This has resulted in the reporting procedure being conducted by a single individual without any formal oversight or review by additional staff or management, leading to a lack of checks and balances in this compliance area. A similar finding was reported during the prior year’s single audit as finding number 2022-02. Criteria: In accordance with the signed Memorandum of Understanding (MOU) between the Authority and FHWA (signed on February 25, 2016), the Authority shall implement modifications to its processes for approving, tracking, and reconciling toll credits as identified by the FHWA and submit a report (i.e., Toll Credits Report) and a certification to FHWA ascertaining that it has implemented these modifications. FHWA shall accurately identify the amount of toll credits available for use by the Authority and identify the modifications that the Authority must make to its processes for approving, tracking, and reconciling toll credit usage, as applicable. Cause: The causes for this finding include: 1) Recordkeeping Issues: The Authority does not have adequate recordkeeping systems for tracking toll credit usage. This could lead to discrepancies between the reported amounts in the Toll Credits Report and those in the Federal-Aid Project Agreements. 2) Lack of Adequate Internal Controls: The Authority does not have adequate internal control mechanisms in place to ensure the accuracy and completeness of the toll credit usage reporting. This includes the failure to reconcile amounts reported in the Toll Credits Report with those approved in the Federal-Aid Project Agreements. Effect: Non-compliance with the toll credits matching requirement per the MOU requirements. In addition, the Authority could inadvertently use toll credits for a federal project that may lack toll credits balances. Questioned Costs: Could not be determined. Recommendation: To address the identified compliance issues related to the discrepancies in toll credit usage reporting and the lack of sufficient evidence for certain projects, the auditors recommend the following: • Strengthen Internal Controls: Enhance internal control procedures to ensure accurate and compliant reporting of toll credit usage. This includes establishing clear guidelines for documentation, reporting, and verification processes related to federal construction projects. • Implement a Review Process: Introduce a formal review process for the toll credits reporting procedure. This review should be conducted by an individual or a team that is independent of the initial reporting process to ensure objectivity. The review should verify the accuracy of the reported toll credit usage against project agreements and supporting documentation. • Enhance Documentation Practices: Develop and enforce rigorous documentation practices. Ensure that all relevant documents supporting the toll credit usage, such as agreements, approvals, and calculations, are systematically collected, filed, and readily available for audit purposes. • Training and Awareness: Conduct training sessions for staff involved in the reporting and management of federal construction projects. The training should cover the requirements for toll credit usage, the importance of accurate reporting, and the procedures for ensuring compliance with federal guidelines, • Regular Reconciliation: Implement regular reconciliation procedures between the toll credits reported in the Authority’s Toll Credits Report and the amounts in the Federal-Aid Project Agreements. Any discrepancies identified should be investigated and resolved promptly. • Leverage Technology: Consider the use of accounting or project management software that can help track and report toll credit usage accurately. Automation can reduce human errors and improve the efficiency of the reporting process.