FAC Explorer

Audit 319641

FY End
2022-09-30
Total Expended
$7.58M
Findings
8
Programs
5
Organization: Gulf Coast Transit District (TX)
Year: 2022 Accepted: 2024-09-16
Auditor: Heinfeld Meech & CO PC

Organization Exclusion Status:

Findings

ID Ref Severity Repeat Requirement
496894 2022-001 Significant Deficiency Yes AB
496895 2022-001 Significant Deficiency Yes AB
496896 2022-002 Material Weakness Yes I
496897 2022-002 Material Weakness Yes I
1073336 2022-001 Significant Deficiency Yes AB
1073337 2022-001 Significant Deficiency Yes AB
1073338 2022-002 Material Weakness Yes I
1073339 2022-002 Material Weakness Yes I

Programs

ALN Program Spent Major Findings
20.507 Covid-19 Federal Transit_formula Grants $4.31M Yes 2
20.507 Federal Transit_formula Grants $1.67M Yes 2
20.526 Buses and Bus Facilities Formula, Competitive, and Low Or No Emissions Programs $783,880 Yes 0
20.509 Formula Grants for Rural Areas and Tribal Transit Program $148,707 - 0
20.509 Covid-19 Formula Grants for Rural Areas and Tribal Transit Program $46,768 - 0

Contacts

Name Title Type
RQMDJ55MTQM3 Theodore Ross Auditee
4093597887 Christopher W. Heinfeld, CPA Auditor
No contacts on file

Notes to SEFA

Title: Assistance Listing Numbers Accounting Policies: The accompanying Schedule of Expenditures of Federal and State Awards (Schedule) includes the federal and state grant activity of Gulf Coast Transit District (Transit District) under programs of the federal  and  state  government  for  the  year  ended  September  30,  2022.  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)  and  the  State  of  Texas  Single  Audit  Circular.   Because  the  Schedule  presents only a selected portion of the operations of the Transit District, it is not intended to and does not present the financial position, changes in net position or cash flows of the Transit District. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance and the State of Texas Single Audit Circular, wherein certain types of expenditures are not allowable or  are  limited  as  to  reimbursement.  Any  negative  amounts  shown  on  the  Schedule  represent  adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass‐through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis indirect cost rate. The program titles and Assistance Listing numbers were obtained from the federal or pass‐through grantor or through sam.gov. If the three‐digit Assistance Listing extension is unknown, there is a U followed by a two‐digit number in the Assistance Listing extension to identify one or more Federal award lines from that program. The first Federal program with an unknown three‐digit extension is indicated with U01 for all award lines associated with that program, the second is U02, etc.
Title: Unreported Expenditures Accounting Policies: The accompanying Schedule of Expenditures of Federal and State Awards (Schedule) includes the federal and state grant activity of Gulf Coast Transit District (Transit District) under programs of the federal  and  state  government  for  the  year  ended  September  30,  2022.  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)  and  the  State  of  Texas  Single  Audit  Circular.   Because  the  Schedule  presents only a selected portion of the operations of the Transit District, it is not intended to and does not present the financial position, changes in net position or cash flows of the Transit District. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance and the State of Texas Single Audit Circular, wherein certain types of expenditures are not allowable or  are  limited  as  to  reimbursement.  Any  negative  amounts  shown  on  the  Schedule  represent  adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass‐through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis indirect cost rate. The Transit District incurred expenditures totaling $1,500,170, which are recognized as expenditures in  the  prior  year  financial  statements.  Most  of  the  expenditures  totaling  $1,405,482  is  for  the  reimbursement of transit administration, operations, maintenance, and planning expenditures and Lake  Jackson  Maintenance  and  Operations  Facility  construction  expenditures  paid  by  Gulf  Coast  Center during the transition period. Additionally, another $94,688 was incurred and payable to a vendor for oversight activities of the Lake Jackson Maintenance and Operations Facility construction. Due  to  deobligation  of  the  transit  grants  by  Gulf  Coast  Center,  the  Center  was  not  able  to  seek  reimbursement for these expenditures from grantors and now the Transit District is responsible for payment  of  the  expenditures.  The  Transit  District  is  developing  repayment  plans  and  evaluating  funding sources to reimburse Gulf Coast Center and pay the Transit District's vendor, which may include  a  combination  of  federal/state  grants  and  local  monies.  These  expenditures  are  not  recognized on the Schedule of Expenditures of Federal and State Awards in the current fiscal year but may be in future years.
Title: State Award Guidelines Accounting Policies: The accompanying Schedule of Expenditures of Federal and State Awards (Schedule) includes the federal and state grant activity of Gulf Coast Transit District (Transit District) under programs of the federal  and  state  government  for  the  year  ended  September  30,  2022.  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)  and  the  State  of  Texas  Single  Audit  Circular.   Because  the  Schedule  presents only a selected portion of the operations of the Transit District, it is not intended to and does not present the financial position, changes in net position or cash flows of the Transit District. Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance and the State of Texas Single Audit Circular, wherein certain types of expenditures are not allowable or  are  limited  as  to  reimbursement.  Any  negative  amounts  shown  on  the  Schedule  represent  adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. Pass‐through entity identifying numbers are presented where available. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis indirect cost rate. State awards are subject to the State of Texas Single Audit Circular. Such guidelines are consistent with those required under the Single Audit Act of 1996, the  Uniform Guidance, and Government  Auditing Standards, issued by the Comptroller General of the United States.

Finding Details

Finding 2022-001
Finding Number: 2022‐001 Repeat Finding: Yes, 2021‐001 Federal Program Name/Assistance Listing Title: COVID‐19 Federal Transit Cluster Federal Assistance Listing Number: 20.507 Federal Agency: U.S. Department of Transportation Federal Award Number: N/A Federal Pass‐Through Agency: N/A State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Criteria Transit District management is responsible for establishing and maintaining effective internal controls over federal awards, and specifically, disbursements that are adequate to ensure that all financial activities are properly processed, supported, allowable, and allocable to federal grants in compliance with 2 CFR Part 200. Condition The Transit District lacked proper internal controls over disbursements. Cause The Transit District’s internal controls over federal awards, and specifically, disbursements were not adequate. Effect The Transit District was not in compliance with Federal regulations and guidelines and Transit District policies related to federal awards, and specifically, disbursements. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of disbursements we noted the following: - The Transit District does not have a formal system of approval of purchases such as a purchase requisition/purchase order before goods and services are received or rendered. - The Transit District does not account for grant expenditures separately in the general ledger. Additionally, the Transit District should lock down months after cash is reconciled and all adjusting entries have been posted. - For one of 40 disbursements reviewed, the disbursement was not supported by invoices or other supporting documentation. - For two of 40 disbursements reviewed, the payment requisition form was not signed by the Executive Director. - For two of 40 disbursements reviewed, the coding was incorrect. - For two of 40 disbursements reviewed, the check was not signed in accordance with the Transit District's policies. - For one of 40 disbursements reviewed, the Transit District paid late fees on an invoice of $29.59. In reviewing this vendor's file there were numerous late fees paid. - For three of 15 credit card transactions reviewed, the disbursement was not supported by invoices or receipts. - For one of 15 credit card transactions reviewed, the disbursement did not have a payment requisition form. - For one of 15 credit card transactions reviewed, the purchase exceeded the $1,000 limit set in the Transit District’s credit card policy. Additionally, upon scanning the credit card statements for the fiscal year, several purchases exceeded the policy limit. - The Transit District did not maintain all monthly supporting documentation for the reimbursements requested from FTA/TxDOT. Recommendation The Transit District should put a purchase approval process in place before the Transit District’s funds are obligated. The Transit District should ensure the rationale for allocation of expenditures to grants is well documented. Alternatively, the Transit District could record expenditures directly to the grants using a system of fund accounting. Adherence to Transit District policies should be monitored. Noncompliance with policies and procedures should be addressed with employees through additional training. Invoices should be paid in a timely manner to ensure late fees are avoided. If late fees are incurred, they should not be charged to grant funds. Finally, the Transit District should ensure all monthly reports are maintained to support reimbursement requests. Views Of Responsible Officials See Corrective Action Plan.
Finding 2022-001
Finding Number: 2022‐001 Repeat Finding: Yes, 2021‐001 Federal Program Name/Assistance Listing Title: COVID‐19 Federal Transit Cluster Federal Assistance Listing Number: 20.507 Federal Agency: U.S. Department of Transportation Federal Award Number: N/A Federal Pass‐Through Agency: N/A State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Criteria Transit District management is responsible for establishing and maintaining effective internal controls over federal awards, and specifically, disbursements that are adequate to ensure that all financial activities are properly processed, supported, allowable, and allocable to federal grants in compliance with 2 CFR Part 200. Condition The Transit District lacked proper internal controls over disbursements. Cause The Transit District’s internal controls over federal awards, and specifically, disbursements were not adequate. Effect The Transit District was not in compliance with Federal regulations and guidelines and Transit District policies related to federal awards, and specifically, disbursements. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of disbursements we noted the following: - The Transit District does not have a formal system of approval of purchases such as a purchase requisition/purchase order before goods and services are received or rendered. - The Transit District does not account for grant expenditures separately in the general ledger. Additionally, the Transit District should lock down months after cash is reconciled and all adjusting entries have been posted. - For one of 40 disbursements reviewed, the disbursement was not supported by invoices or other supporting documentation. - For two of 40 disbursements reviewed, the payment requisition form was not signed by the Executive Director. - For two of 40 disbursements reviewed, the coding was incorrect. - For two of 40 disbursements reviewed, the check was not signed in accordance with the Transit District's policies. - For one of 40 disbursements reviewed, the Transit District paid late fees on an invoice of $29.59. In reviewing this vendor's file there were numerous late fees paid. - For three of 15 credit card transactions reviewed, the disbursement was not supported by invoices or receipts. - For one of 15 credit card transactions reviewed, the disbursement did not have a payment requisition form. - For one of 15 credit card transactions reviewed, the purchase exceeded the $1,000 limit set in the Transit District’s credit card policy. Additionally, upon scanning the credit card statements for the fiscal year, several purchases exceeded the policy limit. - The Transit District did not maintain all monthly supporting documentation for the reimbursements requested from FTA/TxDOT. Recommendation The Transit District should put a purchase approval process in place before the Transit District’s funds are obligated. The Transit District should ensure the rationale for allocation of expenditures to grants is well documented. Alternatively, the Transit District could record expenditures directly to the grants using a system of fund accounting. Adherence to Transit District policies should be monitored. Noncompliance with policies and procedures should be addressed with employees through additional training. Invoices should be paid in a timely manner to ensure late fees are avoided. If late fees are incurred, they should not be charged to grant funds. Finally, the Transit District should ensure all monthly reports are maintained to support reimbursement requests. Views Of Responsible Officials See Corrective Action Plan.
Finding 2022-002
Finding Number: 2022‐002 Repeat Finding: Yes, 2021‐002 Federal Program Name/Assistance Listing Title: COVID‐19 Federal Transit Cluster Federal Assistance Listing Number: 20.507 Federal Agency: U.S. Department of Transportation Federal Award Number: N/A Federal Pass‐Through Agency: N/A State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement, Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Transit District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the Transit District did not follow federal guidelines for purchases exceeding the small purchases threshold. Cause The Transit District’s internal controls over procurement of goods and services were not adequate. Effect The Transit District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: - For seven procurements over $25,000 reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. - For five vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. - For three vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation The Transit District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the Transit District’s funds are obligated. Views of Responsible Officials See Corrective Action Plan.
Finding 2022-002
Finding Number: 2022‐002 Repeat Finding: Yes, 2021‐002 Federal Program Name/Assistance Listing Title: COVID‐19 Federal Transit Cluster Federal Assistance Listing Number: 20.507 Federal Agency: U.S. Department of Transportation Federal Award Number: N/A Federal Pass‐Through Agency: N/A State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement, Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Transit District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the Transit District did not follow federal guidelines for purchases exceeding the small purchases threshold. Cause The Transit District’s internal controls over procurement of goods and services were not adequate. Effect The Transit District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: - For seven procurements over $25,000 reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. - For five vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. - For three vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation The Transit District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the Transit District’s funds are obligated. Views of Responsible Officials See Corrective Action Plan.
Finding 2022-001
Finding Number: 2022‐001 Repeat Finding: Yes, 2021‐001 Federal Program Name/Assistance Listing Title: COVID‐19 Federal Transit Cluster Federal Assistance Listing Number: 20.507 Federal Agency: U.S. Department of Transportation Federal Award Number: N/A Federal Pass‐Through Agency: N/A State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Criteria Transit District management is responsible for establishing and maintaining effective internal controls over federal awards, and specifically, disbursements that are adequate to ensure that all financial activities are properly processed, supported, allowable, and allocable to federal grants in compliance with 2 CFR Part 200. Condition The Transit District lacked proper internal controls over disbursements. Cause The Transit District’s internal controls over federal awards, and specifically, disbursements were not adequate. Effect The Transit District was not in compliance with Federal regulations and guidelines and Transit District policies related to federal awards, and specifically, disbursements. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of disbursements we noted the following: - The Transit District does not have a formal system of approval of purchases such as a purchase requisition/purchase order before goods and services are received or rendered. - The Transit District does not account for grant expenditures separately in the general ledger. Additionally, the Transit District should lock down months after cash is reconciled and all adjusting entries have been posted. - For one of 40 disbursements reviewed, the disbursement was not supported by invoices or other supporting documentation. - For two of 40 disbursements reviewed, the payment requisition form was not signed by the Executive Director. - For two of 40 disbursements reviewed, the coding was incorrect. - For two of 40 disbursements reviewed, the check was not signed in accordance with the Transit District's policies. - For one of 40 disbursements reviewed, the Transit District paid late fees on an invoice of $29.59. In reviewing this vendor's file there were numerous late fees paid. - For three of 15 credit card transactions reviewed, the disbursement was not supported by invoices or receipts. - For one of 15 credit card transactions reviewed, the disbursement did not have a payment requisition form. - For one of 15 credit card transactions reviewed, the purchase exceeded the $1,000 limit set in the Transit District’s credit card policy. Additionally, upon scanning the credit card statements for the fiscal year, several purchases exceeded the policy limit. - The Transit District did not maintain all monthly supporting documentation for the reimbursements requested from FTA/TxDOT. Recommendation The Transit District should put a purchase approval process in place before the Transit District’s funds are obligated. The Transit District should ensure the rationale for allocation of expenditures to grants is well documented. Alternatively, the Transit District could record expenditures directly to the grants using a system of fund accounting. Adherence to Transit District policies should be monitored. Noncompliance with policies and procedures should be addressed with employees through additional training. Invoices should be paid in a timely manner to ensure late fees are avoided. If late fees are incurred, they should not be charged to grant funds. Finally, the Transit District should ensure all monthly reports are maintained to support reimbursement requests. Views Of Responsible Officials See Corrective Action Plan.
Finding 2022-001
Finding Number: 2022‐001 Repeat Finding: Yes, 2021‐001 Federal Program Name/Assistance Listing Title: COVID‐19 Federal Transit Cluster Federal Assistance Listing Number: 20.507 Federal Agency: U.S. Department of Transportation Federal Award Number: N/A Federal Pass‐Through Agency: N/A State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Questioned Costs: N/A Type of Finding: Noncompliance, Significant Deficiency Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Criteria Transit District management is responsible for establishing and maintaining effective internal controls over federal awards, and specifically, disbursements that are adequate to ensure that all financial activities are properly processed, supported, allowable, and allocable to federal grants in compliance with 2 CFR Part 200. Condition The Transit District lacked proper internal controls over disbursements. Cause The Transit District’s internal controls over federal awards, and specifically, disbursements were not adequate. Effect The Transit District was not in compliance with Federal regulations and guidelines and Transit District policies related to federal awards, and specifically, disbursements. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of disbursements we noted the following: - The Transit District does not have a formal system of approval of purchases such as a purchase requisition/purchase order before goods and services are received or rendered. - The Transit District does not account for grant expenditures separately in the general ledger. Additionally, the Transit District should lock down months after cash is reconciled and all adjusting entries have been posted. - For one of 40 disbursements reviewed, the disbursement was not supported by invoices or other supporting documentation. - For two of 40 disbursements reviewed, the payment requisition form was not signed by the Executive Director. - For two of 40 disbursements reviewed, the coding was incorrect. - For two of 40 disbursements reviewed, the check was not signed in accordance with the Transit District's policies. - For one of 40 disbursements reviewed, the Transit District paid late fees on an invoice of $29.59. In reviewing this vendor's file there were numerous late fees paid. - For three of 15 credit card transactions reviewed, the disbursement was not supported by invoices or receipts. - For one of 15 credit card transactions reviewed, the disbursement did not have a payment requisition form. - For one of 15 credit card transactions reviewed, the purchase exceeded the $1,000 limit set in the Transit District’s credit card policy. Additionally, upon scanning the credit card statements for the fiscal year, several purchases exceeded the policy limit. - The Transit District did not maintain all monthly supporting documentation for the reimbursements requested from FTA/TxDOT. Recommendation The Transit District should put a purchase approval process in place before the Transit District’s funds are obligated. The Transit District should ensure the rationale for allocation of expenditures to grants is well documented. Alternatively, the Transit District could record expenditures directly to the grants using a system of fund accounting. Adherence to Transit District policies should be monitored. Noncompliance with policies and procedures should be addressed with employees through additional training. Invoices should be paid in a timely manner to ensure late fees are avoided. If late fees are incurred, they should not be charged to grant funds. Finally, the Transit District should ensure all monthly reports are maintained to support reimbursement requests. Views Of Responsible Officials See Corrective Action Plan.
Finding 2022-002
Finding Number: 2022‐002 Repeat Finding: Yes, 2021‐002 Federal Program Name/Assistance Listing Title: COVID‐19 Federal Transit Cluster Federal Assistance Listing Number: 20.507 Federal Agency: U.S. Department of Transportation Federal Award Number: N/A Federal Pass‐Through Agency: N/A State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement, Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Transit District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the Transit District did not follow federal guidelines for purchases exceeding the small purchases threshold. Cause The Transit District’s internal controls over procurement of goods and services were not adequate. Effect The Transit District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: - For seven procurements over $25,000 reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. - For five vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. - For three vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation The Transit District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the Transit District’s funds are obligated. Views of Responsible Officials See Corrective Action Plan.
Finding 2022-002
Finding Number: 2022‐002 Repeat Finding: Yes, 2021‐002 Federal Program Name/Assistance Listing Title: COVID‐19 Federal Transit Cluster Federal Assistance Listing Number: 20.507 Federal Agency: U.S. Department of Transportation Federal Award Number: N/A Federal Pass‐Through Agency: N/A State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas State Agency: Texas Department of Transportation Questioned Costs: N/A Type of Finding: Noncompliance, Material Weakness Compliance Requirement: Procurement, Suspension and Debarment Criteria Non‐federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR §§200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable State and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR part 200. Additionally, non‐federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. When a non‐federal entity enters into a covered transaction with an entity at a lower tier, the non‐federal entity must verify that the entity, as defined in 2 CFR §180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the System of Award Management (SAM) maintained by the General Services Administration (GSA) or (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR §180.300). Condition The Transit District did not meet the requirement to verify that covered transactions were only made to an entity that was not suspended or debarred or otherwise excluded. Additionally, the Transit District did not follow federal guidelines for purchases exceeding the small purchases threshold. Cause The Transit District’s internal controls over procurement of goods and services were not adequate. Effect The Transit District was not in compliance with Federal regulations and guidelines related to suspension and debarment or procurement. Context The sample was not intended to be, and was not, a statistically valid sample. During our review of purchasing, we noted the following: - For seven procurements over $25,000 reviewed, documentation demonstrating a vendor check for suspension and debarment was not retained. - For five vendors reviewed with total expenditures below the Simplified Acquisition threshold, no documentation of quotes was maintained. - For three vendors reviewed with total expenditures that exceeded the Simplified Acquisition threshold, no documentation of a sealed procurement issued in accordance with federal guidelines was maintained. Recommendation The Transit District should maintain documentation of procurement actions in the vendor file including sealed procurements issued, quotes and suspension and debarment checks. Review of procurement compliance should occur before the Transit District’s funds are obligated. Views of Responsible Officials See Corrective Action Plan.