2024-005: Federal Transit Cluster – AL# 20.507, Cash Management – Material Noncompliance/Material
Weakness in Controls over Compliance
Condition
A lack of cash flow and grant management oversight resulted in contractors and vendors not being paid timely during FY2024. We noted 14 instances where contractors and vendors were not paid for over 30 days. We also noted four vendors were not paid for over 90 days.
Criteria
All grant activities should include management level oversight to ensure timeliness, accuracy, and compliance with
specified grant requirements.
Cause
Lack of proactive cash flow and grant management occurred when invoices were received.
Effect
Multiple contractors and vendors were not paid for over 30 days after receipt of invoice. Four vendors were not paid for over 90 days.
Recommendation
A designated management level individual should have oversight to require timely drawdowns of capital grants and timely payment of invoices.
View of Responsible Officials
Issues with the implementation of new Federal and Commonwealth transportation grant portals hindered staff from being able to submit grant draw requests in a timely manner. Management is addressing these issues as they arise. The Interim Director of Finance and Accounting Supervisor are currently reviewing operating procedures and implementing methods to streamline work and eliminate duplicate activity. A Monthly Close Checklist is under development, which will create consistency in the timing and manner of recording financial activities. Additionally, detailed spreadsheets tracking grant activity have been developed, which will allow staff members to better monitor reimbursement requests and ensure vendors are paid timely moving forward.
2024-006: Federal Transit Cluster – AL# 20.507, Period of Performance – Significant Deficiency, Controls
over Compliance
Condition
There were numerous grants awarded to the Company that had award end dates prior to June 30, 2024 that had not been appropriately closed out at year-end.
Criteria
All grants that are not active should be closed out within the grant awards management system after their award end date.
Cause
Lack of proactive cash flow and grant management.
Effect
Out of 18 federal grant awards tested, 6 had award end dates prior to June 30, 2024. All 6 were still marked as active in the grant award management system as of June 30, 2024, with total remaining funds on these awards totaling $673,179. Two of these grant awards had award beginning dates over 15 years old, had no activity during FY2024, and had not been closed out by June 30, 2024.
Recommendation
A designated management level individual should close out all grant awards whose period of performance has expired within the grants management system.
View of Responsible Officials
Five FTA grants are in Active Award/Ready for Closeout (as of August 13, 2024), including VA-2021-038-01, VA-2016-009-01, VA-2021-037-01, VA-2016-016-01 and VA-04-0027-01. Additionally, an inquiry was sent to the FTA on August 19, 2024 on what could be done with the remaining funds in VA-2019-018. Grant VA-2023-002-00 has experienced delays due to the all-electric vehicle demand and supply chain issues. GRTC has been in communications with the FTA regarding this situation. All other active FTA grants have end of performance dates in 2025.
2024-007: Federal Transit Cluster – AL# 20.507, Procurement – Finding, Non-material Non-compliance
Condition
As award recipients of Federal Transit Administration (FTA) funds, the Company is required to include certain clauses in contracts funded by FTA funds. We noted that the Company did not include the required “prohibition on certain telecommunications and video surveillance services or equipment” clause and the “notification of legal matters” clause as required clauses in their procurement manual and did not contain these clauses in one contract tested.
Criteria
The FTA mandates that contracts funded with FTA awards must contain certain clauses related to prohibited vendors
under the Code of Federal Regulations section 200.216 and requires contractors to notify the Company and the FTA of any current legal matters.
Cause
Lack of compliance with FTA contract regulations.
Effect
Contracts do not meet FTA contract regulations and are non-compliant.
Recommendation
We recommend that the Company incorporate these required FTA clauses in their procurement manual and their standard contracts to properly incorporate in any future FTA funded contracts.
View of Responsible Officials
Missing FTA clauses will be addressed via revisions/updates to all of GRTC’s solicitation and contract templates. As
templates can often be edited by mistake, another tool to proof contracts is the “FTA Clause Matrix 2023 Applicability of Third Party Contract Provisions”. The current version of this matrix includes provision from 2 CFR 200, Master Agreement 30 (FY 23) and Circular 4220.1F. Procurement received this matrix during an NTI Procurement 101 training course December 2023. Referencing this matrix has been added as a step in project checklists.
2024-005: Federal Transit Cluster – AL# 20.507, Cash Management – Material Noncompliance/Material
Weakness in Controls over Compliance
Condition
A lack of cash flow and grant management oversight resulted in contractors and vendors not being paid timely during FY2024. We noted 14 instances where contractors and vendors were not paid for over 30 days. We also noted four vendors were not paid for over 90 days.
Criteria
All grant activities should include management level oversight to ensure timeliness, accuracy, and compliance with
specified grant requirements.
Cause
Lack of proactive cash flow and grant management occurred when invoices were received.
Effect
Multiple contractors and vendors were not paid for over 30 days after receipt of invoice. Four vendors were not paid for over 90 days.
Recommendation
A designated management level individual should have oversight to require timely drawdowns of capital grants and timely payment of invoices.
View of Responsible Officials
Issues with the implementation of new Federal and Commonwealth transportation grant portals hindered staff from being able to submit grant draw requests in a timely manner. Management is addressing these issues as they arise. The Interim Director of Finance and Accounting Supervisor are currently reviewing operating procedures and implementing methods to streamline work and eliminate duplicate activity. A Monthly Close Checklist is under development, which will create consistency in the timing and manner of recording financial activities. Additionally, detailed spreadsheets tracking grant activity have been developed, which will allow staff members to better monitor reimbursement requests and ensure vendors are paid timely moving forward.
2024-006: Federal Transit Cluster – AL# 20.507, Period of Performance – Significant Deficiency, Controls
over Compliance
Condition
There were numerous grants awarded to the Company that had award end dates prior to June 30, 2024 that had not been appropriately closed out at year-end.
Criteria
All grants that are not active should be closed out within the grant awards management system after their award end date.
Cause
Lack of proactive cash flow and grant management.
Effect
Out of 18 federal grant awards tested, 6 had award end dates prior to June 30, 2024. All 6 were still marked as active in the grant award management system as of June 30, 2024, with total remaining funds on these awards totaling $673,179. Two of these grant awards had award beginning dates over 15 years old, had no activity during FY2024, and had not been closed out by June 30, 2024.
Recommendation
A designated management level individual should close out all grant awards whose period of performance has expired within the grants management system.
View of Responsible Officials
Five FTA grants are in Active Award/Ready for Closeout (as of August 13, 2024), including VA-2021-038-01, VA-2016-009-01, VA-2021-037-01, VA-2016-016-01 and VA-04-0027-01. Additionally, an inquiry was sent to the FTA on August 19, 2024 on what could be done with the remaining funds in VA-2019-018. Grant VA-2023-002-00 has experienced delays due to the all-electric vehicle demand and supply chain issues. GRTC has been in communications with the FTA regarding this situation. All other active FTA grants have end of performance dates in 2025.
2024-007: Federal Transit Cluster – AL# 20.507, Procurement – Finding, Non-material Non-compliance
Condition
As award recipients of Federal Transit Administration (FTA) funds, the Company is required to include certain clauses in contracts funded by FTA funds. We noted that the Company did not include the required “prohibition on certain telecommunications and video surveillance services or equipment” clause and the “notification of legal matters” clause as required clauses in their procurement manual and did not contain these clauses in one contract tested.
Criteria
The FTA mandates that contracts funded with FTA awards must contain certain clauses related to prohibited vendors
under the Code of Federal Regulations section 200.216 and requires contractors to notify the Company and the FTA of any current legal matters.
Cause
Lack of compliance with FTA contract regulations.
Effect
Contracts do not meet FTA contract regulations and are non-compliant.
Recommendation
We recommend that the Company incorporate these required FTA clauses in their procurement manual and their standard contracts to properly incorporate in any future FTA funded contracts.
View of Responsible Officials
Missing FTA clauses will be addressed via revisions/updates to all of GRTC’s solicitation and contract templates. As
templates can often be edited by mistake, another tool to proof contracts is the “FTA Clause Matrix 2023 Applicability of Third Party Contract Provisions”. The current version of this matrix includes provision from 2 CFR 200, Master Agreement 30 (FY 23) and Circular 4220.1F. Procurement received this matrix during an NTI Procurement 101 training course December 2023. Referencing this matrix has been added as a step in project checklists.