Audit 390191

2024 – 004 INTERNAL CONTROLS OVER CASH MANAGEMENT Federal Agency: Department of Transportation Federal Program: Formula Grants for Rural Areas and Tribal Transit Program Assistance Listing Number: 20.509 Federal Award Identification Number and Year: MN-2020-020-01, MN-2023-045-00 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number: MN-2020-020-01, MN-2023-045-00 Award Period: Year Ended December 31, 2024 Compliance Requirement Affected: Cash Management Type of Finding: Significant Deficiency in Internal Controls over Compliance Criteria or specific requirement: Title 2 U.S. Code of Federal Regulations § 200.303 states that the auditee must establish and maintain effective internal control over the federal award that provides reasonable assurance that the auditee is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Transit Board did not have adequate internal controls over the cash management reports. Questioned Costs: None Context: The Transit Board did not have anyone internally reviewing the quarterly reports being submitted. Cause: Limited personnel. Effect: The Transit Board could be reporting inaccurate information effecting the status of cash management. Repeat Finding: No Recommendation: We recommend the Transit Board designate qualified personnel for conducting the quarterly reporting review. The review should be performed and documented. Formal procedures should be documented to ensure consistency and effectiveness of the quality review process. Views of responsible officials: There is no disagreement with the audit finding.

2024 – 005 Uniform Guidance Audit Reporting Requirements Federal Agency: Department of Transportation Federal Program: Formula Grants for Rural Areas and Tribal Transit Program Assistance Listing Number: 20.509 Federal Award Identification Number and Year: MN-2020-020-01, MN-2023-045-00 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number: MN-2020-020-01, MN-2023-045-00 Award Period: Year Ended December 31, 2024 Compliance Requirements Affected: Cash Management Type of Finding: Material Weakness in Internal Control over Compliance and Other Matters Criteria or specific requirement: The deadline for filing an audit report with the Federal Clearinghouse is 30 days after receiving the audit report or 9 months after year-end, whichever occurs first. Condition: The audit report was not completed and submitted within the required timeframe. Questioned Costs: None Context: The Transit Board did not complete and submit the audit report within the required timeframe. Cause: Employee turnover in the Transit Director position. Effect: They are not in compliance with the Uniform Guidance audit requirements. Repeat Finding: Yes 2023-003 Recommendation: We recommend that prior to year-end, the operation board annually approve an audit schedule timeline. Views of responsible officials: There is no disagreement with the audit finding.

2024 – 006 Uniform Guidance Audit Reporting Requirements Federal Agency: Department of Transportation Federal Program: Formula Grants for Rural Areas and Tribal Transit Program Assistance Listing Number: 20.509 Federal Award Identification Number and Year: MN-2020-020-01, MN-2023-045-00 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number: MN-2020-020-01, MN-2023-045-00 Award Period: Year Ended December 31, 2024 Compliance Requirements Affected: Property and Equipment Type of Finding: Significant Deficiency in Internal Control over Compliance and Other Matters Criteria or specific requirement: Equipment acquired under federal awards needs to have proper maintenance of records including description, source of funding, who holds title, acquisition date, cost, percentage of Federal agency participation in the cost, location, use and condition, and any disposition data. Condition: There is no policy or procedure in place for proper maintenance of records. Questioned Costs: None Context: The Transit Board does not have a policy or procedure in place. Cause: Employee turnover in the Transit Director position. Effect: They are not in compliance with the Uniform Guidance audit requirements. Repeat Finding: No Recommendation: We recommend the Transit Board puts policies and procedures in place around proper maintenance of records for equipment acquired under federal awards. Views of responsible officials: There is no disagreement with the audit finding.