2025-002 U.S. Department of Transportation – Highway Planning and Construction (20.205) – Matching, Level of Effort, and Earmarking Criteria: 2 CFR Part 200 requires non-federal entities to ensure that all matching requirements are verifiable from the non-federal entity’s records and properly accounted for in the determination of the federal share to be requested for reimbursement. Under the terms of the City’s Highway Planning and Construction awards, the City is required to provide a 20% non-federal match for eligible project costs, while the remaining 80% is funded by the federal award. Condition/Context: Out of ten (10) reimbursements tested, we noted one instance in which project costs totaling $136,716 were not reduced by the required 20% match prior to reimbursement, resulting in an overreimbursement of $27,343. The correct federal share to be requested should have been $109,373. Cause: The City’s internal controls over compliance with the requirements of federal awards were not sufficiently operating to prevent the noncompliance with the terms of the grant award. Questioned Costs: $27,343. Effect: The City is not in compliance with the matching requirements of its federal award. Recommendation: We recommend that the City reassess its internal controls over the reimbursement process for its federal grants with matching requirements, and find opportunities for an additional review prior to submissions. A checklist requiring information from the requestor, and signature lines for both the requestor and the reviewer, can be used to help ensure that reimbursable project costs are accurate and in accordance with the grant agreement. Views of Responsible Officials and Planned Corrective Action: Management concurs with the finding. To incorporate both the City Finance Department as well as a new Grant Writer position hired earlier this year, the City will update its internal control policy as it pertains to grant reimbursements. The City will define a workflow to allow for opportunities for the Grant Writer and Finance to review draw requests prior to submission for reimbursement, especially for those grants with matching requirements. This workflow will include a checklist of required items, to include an accurate accounting of the required match, as well as signature lines for approval.