Audit 403186

Finding No.: 2025-001 Federal Agency: Environmental Protection Agency AL No. and Title: 66.039 Diesel Emission Reduction Act (DERA) National Grants 98T80301 Federal Award No.: Area: Procurement and Suspension and Debarment Criteria: 2 CFR 180.300 requires entities entering into a covered transaction with another person at the next lower tier to verify that the person with whom they intend to do business is not excluded or disqualified. Such verification can be made by (a) checking SAM.gov Exclusions, or (b) collecting a certification from that person; or (c) adding a clause or condition to the covered transaction with that person. 2 CFR 180.220 (b) (1) states that a contract for goods and services is a covered transaction if the contract is awarded by a participant in a nonprocurement transaction covered under §180.210, and the contract amount is expected to equal or exceed $25,000. 2 CFR 200.303 requires that a non-federal entity must “(a) establish, document, and maintain effective internal control over the federal award that provides reasonable assurance that the recipient or subrecipient is managing the federal award in compliance with Federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Condition: For one covered transaction during fiscal year 2025, the Authority represented that it performed verification of suspension or debarment from SAM.gov Exclusions, however, no formal documentation is kept on file to demonstrate compliance at the time of procurement. Cause: The Authority does not have formal policy requiring documentation of procedures performed to verify that the person in a covered transaction with whom they intend to do business is not excluded or disqualified. Effect or potential effect: The Authority lacked the formal documentation of procedures performed to demonstrate compliance to 2 CFR 180.300. Finding No.: 2025-001, continued Federal Agency: Environmental Protection Agency AL No. and Title: 66.039 Diesel Emission Reduction Act (DERA) National Grants 98T80301 Federal Award No.: Area: Procurement and Suspension and Debarment Questioned costs: None Context: There was only one covered transaction. The audit team verified that vendor is not excluded or disqualified. Recommendation: The Authority should formalize its policies and procedures in documenting procedures performed in verifying that the person in a covered transaction with whom they intend to do business is not excluded or disqualified. Views of responsible officials: The Authority agrees to the finding. Refer to the corrective action plan.

Finding No.: 2025-002 Federal Agency: Environmental Protection Agency AL No. and Title: 66.039 Diesel Emission Reduction Act (DERA) National Grants 98T31601 Federal Award No.: Area: Reporting Criteria: 2 CFR 200.302(a) states that each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.328(c) states that recipient must submit financial reports as required by the Federal award. Condition: For one grant award during fiscal year 2025, the Authority did not submit the required federal financial report (SF-425) due on December 30, 2024. Cause: The Authority did not maintain an internal monitoring of financial reports required to be submitted during the fiscal year. Effect or potential effect: The Authority failed to submit the required federal financial report during the year and was not in compliance with applicable reporting requirements. Questioned costs: None Finding No.: 2025-002, continued Federal Agency: Environmental Protection Agency AL No. and Title: 66.039 Diesel Emission Reduction Act (DERA) National Grants 98T31601 Federal Award No.: Area: Reporting Context: The Authority did not submit one of the two required SF-425 during the year ended September 30, 2025. The Authority has not incurred any expenditure as of the report submission due date. Recommendation: The Authority should enforce monitoring controls over compliance with applicable reporting requirements. Responsible personnel should maintain a monitoring of financial reports required to be submitted for each grant award. Views of responsible officials: The Authority agrees to the finding. Refer to the corrective action plan.