Criteria: Under generally accepted accounting principles and sound financial management practices, all bank accounts should be reconciled on a monthly basis, with reconciliations reviewed timely and retained as part of the accounting records. Condition: The entity was unable to provide bank reconciliations for any month during the audit period for the payroll cash account. No evidence was available to demonstrate that reconciliations were prepared, reviewed, or retained. Cause: The entity did not have adequate procedures in place to ensure that all payroll account bank statements were properly prepared, reviewed and reconciled. Effect: Without regular bank reconciliations, the entity cannot ensure that payroll cash transactions are accurately recorded or that errors or irregularities would be detected and corrected in a timely manner. This increases the risk of misstatements in the financial statements and undermines the reliability of reported cash balances. Recommendation: The entity should implement procedures to ensure that all bank reconciliations for all cash accounts are completed accurately and in a timely fashion. Management’s Response: Management agrees with the finding and has engaged an accounting firm to complete and maintain monthly bank reconciliations.
Criteria: Under 2 CFR §§200.318–200.320, non‑Federal entities must maintain oversight of procurement activities, conduct all procurement transactions in a manner providing full and open competition, and retain documentation supporting the procurement method used. The program’s operating contract further requires, in Section 29, that purchases over $3,000 and under $10,000 include at least three verbal bids; purchases between $10,000 and $25,000 include at least three written bids; and purchases over $25,000 be submitted to the Division of Public Transit for prior review and approval. Condition: For seven transactions exceeding $3,000, the entity was unable to provide documentation of procurement procedures, including evidence of required bidding or board approval. No records were available to show that verbal bids, written bids, or required submissions to the Division of Public Transit occurred as outlined in the operating contract. These exceptions were identified during procurement testing for the federal program. Each transaction exceeded the applicable procurement thresholds, yet no procurement records, approvals, or bid documentation were provided. Cause: The entity does not have adequate internal controls to ensure that procurement actions are conducted and documented in accordance with federal requirements and the operating contract. Procurement activities were not consistently recorded or retained. Effect: Without appropriate procurement documentation, the entity cannot demonstrate that purchases charged to the federal program were competitively procured or compliant with federal and contractual requirements. This exposes the program to the risk of uncompetitive or unreasonable costs. Recommendation: The entity should strengthen procurement controls to ensure all purchases follow 2 CFR §§200.318–200.320 and the operating contract. This includes documenting all bids, retaining procurement files, and obtaining required approvals prior to purchase. Management’s Response: Management agrees with the finding and will ensure all purchasing requirements are met as outlined in the operating contract and federal regulations and documented in applicable policies and procedures. Training on proper purchasing requirements is anticipated through the West Virginia Transit Authority.
Criteria: In accordance with the operating contract, section 6, and federal regulations, entities charging indirect costs to federal programs must prepare, maintain, and make available an Annual Cost Allocation Plan in compliance with 2 CFR §200.414 and 2 CFR §200.416-200.417. The plan must be retained and be made available for audit to support the methodology used to charge indirect costs. Condition: The auditor was unable to obtain the entity’s Annual Cost Allocation Plan. Without this plan, the auditor could not assess whether the entity used the proper indirect cost rate or whether the methodology for calculating and allocation costs complied with federal requirements. Cause: The Annual Cost Allocation Plan could not be obtained to determine if the organization submitted indirect costs using the correct rate. It is unclear whether the plan was never created or whether it was not preserved due to deficiencies in the entity’s record-keeping procedures. Effect: The auditor could not validate the appropriateness or accuracy of indirect costs charged to the federal program. This lack of documentation increases the risk that indirect costs charged may be unallowable, improperly allocated, or inaccurately calculated. Recommendation: The entity should prepare an Annual Cost Allocation Plan in accordance with the program’s operating contract and federal regulations and ensure it is consistently retained and made available for audit. The entity should also establish internal controls over the preparation, approval, and retention of the plan.Management’s Response: Management agrees with the finding and will ensure that the Annual Cost Allocation Plan is completed in a timely manner in accordance with the operating contract and ensure it complied with applicable federal regulations.
Criteria: Federal regulations, in addition to the program’s operating contract, require recipients of federal funds to maintain documentation sufficient to support the allowability, allocability, and reasonableness of costs charged to federal programs. Under 2 CFR §200.302(b)(3), entities must maintain records that adequately identify the source and application of grant funds, and 2 CFR §200.403 provides that a cost is allowable only when it is adequately documented. Additionally, 2 CFR §200.333 establishes federal record retention requirements, obligating entities to retain financial records and supporting documentation for a prescribed period and to ensure such records are available for audit. In addition to the Uniform Guidance, the entity’s operating contract requires that all documentation related to expenditures and activities under the contract be retained for three years from the date of final payment under the contract. Collectively, these regulations require entities to maintain and retain supporting documentation for all expenditures charged to the federal program. Condition: During testing of non‑payroll disbursements, the entity was unable to provide invoices or other supporting documentation for 18 transactions. As a result, the auditor could not determine the nature, purpose, or allowability of the expenditures, nor could allowability testing be performed for any of these transactions. The unsupported disbursements resulted in total of $39,940 in actual and projected questioned costs. The entity was also unable to provide copies of checks for 15 disbursements to verify required dual signatures, and seven non‑payroll disbursements lacked documented approval or signature on the invoice. Additionally, personnel files could not be provided for 20 selected employees, and support for the amount or approval of three pay rates (one bonus and two regular paychecks) was not available, with available supporting documents reflecting amounts higher than the amounts actually paid. Although documentation for certain payroll files and pay‑rate approvals was missing, the auditor was able to verify the allowability of the payroll costs through alternative audit procedures. Cause: The underlying cause appears to be inadequate internal controls over the retention and organization of documentation supporting disbursements and payroll charged to the federal program. The entity does not have effective procedures to ensure that supporting documents—including invoices, approvals, check copies, personnel files, and pay‑rate authorizations—are consistently maintained, reviewed, and retained. Responsibilities for maintaining required records and ensuring compliance with retention requirements do not appear to be clearly assigned or enforced. As a result, the entity’s document retention processes were insufficient to ensure that required supporting documentation was preserved and available for audit. Effect: Failure to maintain accurate and complete financial information for review resulted in the auditor being unable to verify whether a portion of non-payroll disbursements were allowable, allocable, properly authorized, or reasonable under the Uniform Guidance, resulting in $39,940 in questioned costs. Although no questioned costs resulted from payroll testing, the documentation weaknesses related to payroll records indicate deficiencies in internal control that increase the risk of unsupported or unallowable costs being charged to the program in the future. Recommendation: The entity should enhance its internal control procedures to ensure all disbursements and payroll transactions charged to the federal program are supported by complete and properly approved documentation consistent with 2 CFR Part 200 and the operating contract. This includes retaining invoices, approvals, check copies, personnel files, and pay-rate authorizations. Management should assign clear responsibility for recordkeeping, implement periodic reviews for completeness, and provide staff training on documentation and retention expectations. Management’s Response: Management agrees with the findings and will ensure that all original supporting documents are maintained at the organization’s office in a secure location for a minimum of three years after an independent audit, and that every transaction is properly authorized and documented before expending monetary resources.