Reporting – Material Noncompliance and Material Weakness in Internal Control Over Compliance Agency/Passthrough Grantor Agency: Department of Transportation; Sub-tier: Federal Aviation Administration ALN and Program Name ALN 20.106 – Airport Improvement Program Award # 3-02-0015-073-2018, 3-02-0015-077-2018, 3-02-0015-074-2019, 3-02-0015-080-2020, 3-02-0015-087-2023, 3-02-0015-079-2020, 3-02-0015-086-2022 Criteria or Specific Requirement The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Anchorage was required to file Federal Aviation Administration (FAA) form 5100-127, Operating and Financial Summary, as well as FAA form 5100-126, Financial Government Payment Report. Condition The required reports were not submitted during the year. Controls were not in place to evaluate the applicability of the reporting requirement and ensure the reports were submitted timely. Cause Anchorage was not aware of the reporting requirement until 2025. Effect or potential effect Anchorage was not in compliance with reporting requirements. Questioned Costs None noted. Context The auditor requested the 5100-126 and 5100-127 reports from Anchorage. Anchorage was unable to provide the requested support until they were filed in 2025. Identification as a Repeat Finding Not a repeat finding. Recommendation Anchorage should implement internal control procedures to evaluate applicability of grant reporting requirements, especially when funding sources or nature of grant awards change. Views of responsible officials Management concurs with the finding and has begun implementing an enterprise-wide corrective action strategy to strengthen grant administration and reporting processes.
Equipment and Real Property Management – Material Noncompliance and Material Weakness in Internal Control Over Compliance Agency/Passthrough Grantor Agency: Department of Transportation; Passed through: State of Alaska Department of Transportation & Public Facilities ALN and Program Name 20.205 – Highway Planning and Construction Award # CFHWY00959, AMATS UPWP, CFHWY00387/TA18004 Criteria or Specific Requirement The regulations in 2 CFR 200.313(d) includes the following provisions: (1) equipment and real property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the federal award identification number), who holds title, the acquisition date, cost of the property, percentage of federal participation in the project costs for the federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sales price of the property. (2) A Physical Inventory of the property must be taken and the results reconciled with the property records at least once every two years (3) A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Condition We reviewed a sample of 14 items owned by Anchorage and identified 10 instances in which management’s internal controls were not functioning as designed, and in which equipment records were not properly maintained. Furthermore, there was no documentation of a physical inventory being performed that was subsequently reconciled to the property records. An inventory count was not performed at least once every two years. Cause Controls to review, inventory, and track equipment and real property funded by federal awards are not properly maintained by program personnel. In addition, there is no reconciliation from the program equipment and real property lists to the general ledger detail to ensure all equipment and/or real property is being recorded and properly capitalized, if applicable. Effect or potential effect Anchorage was not in compliance with Equipment and Real Property requirements outlined in 2 CFR 200.313. Anchorage could be exposed to a reduction or elimination of funds by the Federal awarding agency. Questioned Costs Not applicable. Context When requested, Anchorage did not provide supporting documentation that an inventory count had been performed for equipment and real property in the most recent two reporting periods. Anchorage’s inventory listing was obtained and tested for completeness. The completeness test identified 6 vehicles with an acquisition value of $916,072 were improperly marked as disposed in the listing. Four additional fixed assets purchased in prior years, with a total acquisition value of $103,452, were also improperly excluded from the listing. Identification as a Repeat Finding Yes. This finding was reported as Finding 2022-012 in the prior audit. Recommendation We recommend an inventory is completed at least annually to compare items purchased with federal funds to counts and the values recorded in the general ledger. Views of responsible officials Management concurs with the finding and has begun strengthening internal controls over federally funded equipment and real property.
Subrecipient Monitoring – Material Noncompliance and Material Weakness in Internal Control Over Compliance Agency/Passthrough Grantor Department of the Treasury ALN and Program Name 21.027 - Coronavirus State and Local Fiscal Recovery Funds – COVID 19 Award # 1505-0271 Criteria or Specific Requirement The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.332 requires pass-through entities to ensure that subrecipients comply with the terms and conditions of 2 CFR 200.501 related to audit requirements. This includes ensuring that every subaward is (1) clearly identified to the subrecipient as a subaward; (2) includes the necessary information at the time of the subaward for subrecipient reporting on federal awards (2 CFR 200.332) and (3) includes requirement to follow 2 CFR 200.501 if expenditure thresholds are met. This also includes verifying that every subrecipient is audited as required by 2 CFR Subpart F if the subrecipient’s Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2 CFR 200.501. Condition During our testing of subrecipient monitoring, we noted all 10 of the subrecipient agreements tested did not include language clearly identifying the federal program from which the subaward originated, or the applicable requirements from 2 CFR 300.332 and Subpart F. We also noted for all 10 subrecipients tested that Anchorage did not verify whether subrecipients were audited in accordance with 2 CFR 200.501 where applicable. Cause The issuance of subrecipient agreements for these grants related to new funding streams in response to the COVID-19 pandemic. Significant amounts of funding were provided in a short period of time, and systems to distribute these monies were newly created and implemented. The standard award agreements were not reviewed in advance to ensure adherence to federal requirements. Staff were not fully trained on the informational requirements and monitoring responsibilities related to audit requirements. Effect or Potential Effect Subrecipients may be unaware and not in compliance with the requirements of 2 CFR Part 200. Questioned Costs Not applicable. Context A sample of 24 subawards were selected for testing totaling current year expenditures of $8,379,572 from a population of 24 subawards totaling $11,674,690. Exceptions were identified for all 10 subrecipient agreements tested. All samples tested were selected using nonstatistical sampling methods and were not statistically valid samples. Identification as a Repeat Finding Yes. This finding was reported as Finding 2022-009 in the prior year audit. Recommendation Management should establish policies to ensure subawards contain required federal award information. In addition, procedures should be established to monitor subrecipient compliance with audit requirements of 2 CFR 200.501. Views of Responsible Officials Management concurs with the finding and has begun revising policies and procedures related to subrecipient monitoring.
Finding 2023-012 Reporting - Deadline for Federal Single Audit - Noncompliance and Material Weakness in Internal Control Over Compliance Agency/Passthrough Grantor Department of Transportation passed through the State of Alaska Department of Transportation and Public Facilities, Department of the Treasury, and Department of Health and Human Services passed through the State of Alaska Department of Health and Social Services and the State of Alaska Department of Military and Veterans Affairs ALN and Program Name Finding 2023-012 is applicable to all grant awards issued for the following major programs: 20.106 – Airport Improvement Program 20.205 – Highway Planning and Construction Cluster 20.500 & 20.507 & 20.526 - Federal Transit Cluster 21.027 - Coronavirus State and Local Fiscal Recovery Funds – COVID-19 97.036 – Disaster Grants - Public Assistance – COVID-19 Criteria or Specific Requirement The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR 200.512, Report Submission, establishes that the audit must be completed and the data collection form and reporting package submitted to the Federal Audit Clearinghouse (FAC) within the earlier of 30 days after receipt of the auditor's report or 9 months after the end of the audit period. Condition Anchorage did not comply with the required submission date of the data collection form and reporting package to the FAC for the fiscal year ended December 31, 2023. Cause Anchorage did not have controls in place to ensure the audit was completed timely so that the reporting package could be submitted to the FAC within the required timeframe. Effect or Potential Effect Anchorage is not compliant with 2 CFR 200.512. Anchorage could be exposed to a reduction or elimination of funds by the Federal awarding agencies. Questioned Costs Not applicable. Context This is a condition identified per review of Anchorage’s compliance with the specified requirements. Identification as a Repeat finding Yes. This finding was reported as Finding 2022-008 in the prior year audit. Recommendation We recommend Anchorage establish controls to ensure the audit is completed timely and the reporting package is submitted to the FAC within the required timeframe. Views of Responsible Officials Management concurs with the finding and has begun updating year-end financial reporting to support the timely completion of future federal single audits.
Allowable Costs – Noncompliance and Significant Deficiency in Internal Control Over Compliance Agency/Pass-through Grantor Agency: U.S. Department of Homeland Security; Pass-through Grantor: State of Alaksa Department of Military and Veterans Affairs ALN and Program Name ALN: No. 97.036 Disaster Grants, Public Assistance Award Number Various Award Year 2020, 2021 Criteria or Specific Requirement The Uniform Guidance in 2 CFR Section 200.303 requires that non-Federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonably ensure compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR Subtitle A Chapter II Part 200 Subpart E states that a non-Federal entity must provide for adequate documentation to support costs charged to the Federal Award. Condition Testwork over a sample of payroll transactions identified five transactions, where the direct rate of pay utilized to request reimbursement for hours worked did not match the approved rate. Cause Internal controls did not ensure that proper supporting documentation was retained in accordance with 2 CFR. Effect or potential effect Direct payroll and fringe benefit costs that were submitted for reimbursement for five transactions were not accurately calculated. Questioned Costs None reported. Context BDO tested a sample of forty payroll transactions for a total of $36,849 of a population 2,832 payroll transactions totaling $2,059,757. Five employees were identified whose supporting documentation did not support the rate of pay, which resulted in $134 unsupported cost for the payroll transactions selected. For these five employees, this resulted in $1,923 in payroll charged to the program more than approved rates. Repeat Finding Not a repeat finding. Recommendation Management should ensure that payroll policies and procedures are properly implemented to ensure adequate documentation is retained to support costs charged. Views of responsible officials and planned corrective actions Management concurs with the finding and has begun implementing enhanced procedures to ensure the allowability of expenditures.