Audit 400500

Finding Reference Number: SA2023-001 Subrecipient Reimbursement Request Documentation AL Number: 20.507, 20.526 Assistance Listing Title: Federal Transit Cluster, Federal Transit - Formula Grants (Urbanized Area Formula Program) Federal Agency: Department of Transportation Federal Award Identification Number: CA-2020-214-01, CA-2023-225-00 Criteria: The City’s subgrant agreements with the Regents of the University of California on behalf of the Unitrans public transportation system include a provision that “All invoices must include the full supporting documentation required by FTA for reimbursement, including payroll documentation tracking hours worked on the Grant project, vendor/contractor invoicing, and documentation of vendor/contractor payment, such as accounts payable check copies.” Condition: We tested two reimbursement requests from Unitrans to the City: $1,700,000 for grant CA-2020-214-01 and $450,000 for grant CA-2023-225-00. Although the reimbursement requests were supported by schedules with totals by expenditure type in the “Analysis of Direct Operating Expenses” worksheet and summarized general ledger data, the full supporting documentation required by the subgrant agreements was not included. In addition, although we did note that the City monitors the activity of Unitrans on a quarterly basis and Unitrans is subject to a single audit, Unitrans is behind on completing its single audit, so a current report was not available. Effect: The City did not ensure its subrecipient complied with the provisions of the subgrant agreement and requested reimbursement from the grantor without having that detailed supporting documentation on file. Cause: We understand the University’s financial system at the time could not generate appropriate reports and City staff did not require the submission of the detailed information noted in the subgrant agreement. Recommendation: The City should develop procedures to ensure that the required documentation is obtained from Unitrans with each reimbursement request as required by the City’s subgrant agreement with the University, and the documentation should be retained in the City’s grant files. View of Responsible Officials and Planned Corrective Actions: Please see Corrective Action Plan separately prepared by the City.