Audit 329303

Title: Reconciliation of Federal Expenditures Reported in the SEFA to the Authority’s Basic Financial Statements Accounting Policies: 1. Summary of Significant Accounting Policies: a) Basis of Presentation: The accompanying schedule of expenditures of federal awards (SEFA) includes the federal grant award activity of the Washington Metropolitan Area Transit Authority (Authority) under programs of the federal government for the year ended June 30, 2024. The information in this SEFA 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). Because the SEFA presents only a selected portion of the operations of the Authority, it is not intended to and does not present the financial position, changes in net position or cash flows of the Authority. b) Basis of Accounting: Expenditures reported on the SEFA are reported on the accrual basis of accounting. 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. Negative amounts shown on the SEFA represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The categorization of expenditures by program included in the SEFA is based on the Federal Assistance Listing number. Federal expenditures are reported in the Authority’s basic financial statements as follows: a) Grant expenditures that meet capitalization criteria are recorded as capital assets on the Statements of Net Position. b) All other grant expenditures are reported in the Statements of Revenues, Expenses, and Changes in Net Position. Costs are included in the SEFA to the extent they are aligned to a federal grant in the current period and included in the federal financial reports, which is the source for the data presented in the SEFA. c) Indirect Costs: The Authority has elected not to use the 10% de minimus indirect cost rate discussed in Section 200.414 of the Uniform Guidance. d) Pre-award Authority: The majority of the Department of Transportation grants awarded to the Authority contain pre-award authority approved by the Federal Transit Administration (FTA). FTA’s policy on pre-award authority states that costs may remain eligible for reimbursement or count towards the local match, regardless of the date incurred, provided that the funds were expended in accordance with all federal requirements and would have been allowable if incurred after the date of award, and the grantee is otherwise eligible to receive the funding. Pre-award authority allows the Authority to incur project costs prior to grant approval and retain the eligibility of those costs for subsequent periods. As such, the Authority may align expenditures that were originally incurred in prior fiscal years and included in prior year financial statements and may report them as current year expenditures in the SEFA. e) Pass-Through Grants and Subrecipients: The Authority does not have pass-through grants or subrecipients. De Minimis Rate Used: N Rate Explanation: The Authority has elected not to use the 10% de minimus indirect cost rate discussed in Section 200.414 of the Uniform Guidance. The following is a reconciliation of the federal expenditures reported in the SEFA to the amounts reported in the basic financial statements for the fiscal year ended June 30, 2024: “See the Notes to the SEFA for first table”. The differences between the federal expenditures reported in the current year SEFA and basic financial statements primarily represent costs incurred in prior fiscal years and aligned to federal grants with preaward authority in the current year. Additional adjustments represent costs in the previous year’s reporting that were aligned to, but not billed to, federal grants and were subsequently assigned to other nonfederal funding sources during the current year. Below is a summary of the net expenditure adjustments by the fiscal year that the costs were originally incurred and reported in the basic financial statements and by the federal grant program or cluster impacted in the current year’s SEFA: “See the Notes to the SEFA for second table”.