Audit 55684

Title: Definition of the Reporting Entity Accounting Policies: The accompanying schedule of expenditures of federal awards has been prepared on the cash basis of accounting and includes federal expenditures. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Massachusetts Bay Transportation Authority (the Authority) is a component unit of the Commonwealth of Massachusetts (the Commonwealth) formed pursuant to Commonwealth law to, among other things, hold and manage mass transportation facilities and equipment, and to enter into agreements for its operation, construction and use.The U.S. Department of Transportation (DOT) has been designated as the Authoritys cognizant Federal agency for the Single Audit.

Title: Approved Federal Grant Programs - FTC Accounting Policies: The accompanying schedule of expenditures of federal awards has been prepared on the cash basis of accounting and includes federal expenditures. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Authoritys Federal Transit Capital Investment Grants and Formula Grants Programs, Public Transportation Emergency Relief Program, Transportation Investment Generating Economic Recovery Program (TIGER), State of Good Repair Grants Program, Buses and Bus Facilities Formula, and Public Transportation Research for the year ended June 30, 2022 consisted primarily of capital grants under contracts with the Federal Transit Administration (FTA). These grants provide for the acquisition of land, buses, equipment, the construction of service extensions, stations, and maintenance facilities, state of good repair activities, and Research, development, demonstration and deployment projects.In 2015, a Full Funding Grant Agreement (FFGA), between the MBTA and the U.S. Department of Transportation Federal Transit Administration (FTA) was signed to establish the scope of federal participation in the Green Line Extension (GLX) project. Under the FFGA, federal dollars will fund approximately $996 million of the newly revised budget of $2.3 billion. As of June 30, 2022, the FFGA funded $765 million of the $996 million. The GLX project will extend the existing MBTA Green Line north of its current terminus at Lechmere Station to further service the communities of Somerville, Cambridge, and Medford and involves construction of six new Green Line stations along two branches (the Medford Branch and Union Square Branch) along with the relocation and reconstruction of Lechmere Station. As of June 30, 2022, the Union Square Branch was opened and fully operational. Subsequent to June 30, 2022, the MBTA GLX Medford Branch was opened and become fully operational in December 2022.According to the terms of the FTA contracts, the Authority will be reimbursed from 75% to 100% of the allowable project costs as defined in the grant agreement. The terms of those federal grant contracts require the Authority to, in part, utilize the equipment and facilities for the purpose specified in the grant agreement, maintain these items in operation for a specified time period, which normally approximates the useful life of the equipment, and comply with the Equal Opportunity and Affirmative Action programs as required by the Moving Ahead for Progress in the 21st Century Act (MAP 21).

Title: Approved Federal Grants Program - CRRSAA and ARPA Accounting Policies: The accompanying schedule of expenditures of federal awards has been prepared on the cash basis of accounting and includes federal expenditures. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. On December 27, 2020, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSAA), established a second round of economic stimulus assistance in the amount of $2.3 trillion. The CRRSAA is providing approximately $301.4 million to the MBTA and is available to support the Authoritys revenue loss as well as all operating expenses generally eligible under the program. As of June 30, 2022, a total of $301.4 million has been received by the MBTA for operating assistance that occurred from October 1, 2020 through June 30, 2022.On March 11, 2021, the American Rescue Plan Act of 2021 (ARPA), established a third round of economic stimulus assistance in the amount of $1.9 trillion. The package includes $30 billion of direct federal aid to transportation agencies. The ARPA is providing approximately $859.7 million to the MBTA and is available to support the Authority's revenue loss as well as all operating expenses generally eligible under the program. As of June 30, 2022, a total of $859.7 million has been received by the MBTA for operating assistance that occurred through June 30, 2022.

Title: Approved Federal Grants Programs - FEMA and Other Accounting Policies: The accompanying schedule of expenditures of federal awards has been prepared on the cash basis of accounting and includes federal expenditures. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. The Authority also received program funding from the U.S. Department of Homeland Security for the Department of Homeland Securitys Rail and Transit Security Grant Program. According to the terms of the Rail and Transit Security grants, the Authority will be reimbursed for 100% of the allowable project costs as defined in the grant agreements. These grants provide for the acquisition of equipment and other enhancements to the transit systems security.During the year ended June 30, 2022, the MBTA received a $23.5 million public assistance (PA) grant from the Federal Emergency Management Agency (FEMA). The FEMA program supports communities recovery from major disasters and emergencies by providing financial assistance for eligible expenses. Public assistance grants are meant to serve as a last resort after exhausting other sources of funding such as insurance and other federal grant programs. Local governments, states, tribes, territories and certain private nonprofit organizations are eligible to apply. The FEMA PA program in Massachusetts is administered by the Massachusetts Emergency Management Agency (MEMA).From time to time, the Authority also receives funding from other federal or pass through sources. Failure to comply with the terms and conditions of its various funding sources may jeopardize future funding and require the Authority to refund a portion of these grants to their funding agencies. In managements opinion, no events have occurred which would result in the termination of these grants or which would require the refund of a significant amount of funds received under these grants.

Title: Subrecipients Accounting Policies: The accompanying schedule of expenditures of federal awards has been prepared on the cash basis of accounting and includes federal expenditures. De Minimis Rate Used: N Rate Explanation: The auditee did not use the de minimis cost rate. For the year ended June 30, 2022, the Authority did not provide federal awards to subrecipients.