Audit 361316

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.

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.

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.

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.

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.

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.

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 Reference 2023-05 Assistance Listing Number 20.205 Highway Planning and Construction (Federal-Aid Highway Program) Name of Federal Agency Department of Transportation Compliance Requirement Special Tests and Provisions – Wage Rate Requirements Type of Finding Significant Deficiency on Internal Control and Non-Compliance Condition: From a sample of fifteen work weeks examined, we noted that three certified payroll weeks were not certified within the required weekly period as required by federal regulations. The delays in certifications ranged from four days to thirty-three days in excess of the required weekly timeframe. Criteria: Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). Cause: The delays in the certification of payroll weeks may be due to inefficient payroll processing procedures within the contractor or subcontractor's system. Effect: The failure to certify payrolls on a weekly basis as required by federal regulations can lead to noncompliance with federal regulations, specifically the Davis-Bacon Act and related Department of Labor (DOL) regulations. However, the fact that the Authority discharges its obligation by withholding payment to the contractor or subcontractor until the certified payroll is received and reviewed, mitigates all economic risks. Questioned Costs: None. Recommendation: To address the identified issues, the following corrective actions are recommended: • Enhance Oversight and Compliance Reviews: Designate a compliance officer or team responsible for verifying that certified payrolls are submitted timely. Include within the internal audit functions to test compliance with this requirement and recommend corrective actions promptly. • Request a non-compliance waiver from the FHWA: The Authority should request the FHWA for a 20% non-compliance waiver, as it is impracticable for the Authority to ascertain that all contractors or subcontractors comply timely with this requirement. Views of Responsible Officials Refer to Management’s unaudited corrective action plan. -

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.

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.

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.

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.

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.

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.

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 Reference 2023-05 Assistance Listing Number 20.205 Highway Planning and Construction (Federal-Aid Highway Program) Name of Federal Agency Department of Transportation Compliance Requirement Special Tests and Provisions – Wage Rate Requirements Type of Finding Significant Deficiency on Internal Control and Non-Compliance Condition: From a sample of fifteen work weeks examined, we noted that three certified payroll weeks were not certified within the required weekly period as required by federal regulations. The delays in certifications ranged from four days to thirty-three days in excess of the required weekly timeframe. Criteria: Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements (which still may be referenced as the Davis-Bacon Act) a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). Cause: The delays in the certification of payroll weeks may be due to inefficient payroll processing procedures within the contractor or subcontractor's system. Effect: The failure to certify payrolls on a weekly basis as required by federal regulations can lead to noncompliance with federal regulations, specifically the Davis-Bacon Act and related Department of Labor (DOL) regulations. However, the fact that the Authority discharges its obligation by withholding payment to the contractor or subcontractor until the certified payroll is received and reviewed, mitigates all economic risks. Questioned Costs: None. Recommendation: To address the identified issues, the following corrective actions are recommended: • Enhance Oversight and Compliance Reviews: Designate a compliance officer or team responsible for verifying that certified payrolls are submitted timely. Include within the internal audit functions to test compliance with this requirement and recommend corrective actions promptly. • Request a non-compliance waiver from the FHWA: The Authority should request the FHWA for a 20% non-compliance waiver, as it is impracticable for the Authority to ascertain that all contractors or subcontractors comply timely with this requirement. Views of Responsible Officials Refer to Management’s unaudited corrective action plan. -