Finding 2024-003 – Fiscal Management (Material Weakness)
CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities.
Name of Federal Agency: Department of Transportation
Internal Control over Compliance: Cash Management
CFDA Title and Number: 20.509 (53...
Finding 2024-003 – Fiscal Management (Material Weakness)
CFDA Title and Number: 20.513 (5310) Enhanced Mobility of Seniors and Individuals with Disabilities.
Name of Federal Agency: Department of Transportation
Internal Control over Compliance: Cash Management
CFDA Title and Number: 20.509 (5311) Operating Assistance. Formula Grants for Rural.
Name of Federal Agency: Department of Transportation
Internal Control over Compliance: Cash Management
Criteria: 2 CFR Part 200.302(b)(1) The financial management system of each non-federal entity must provide for the following: Identification, in its accounts, of all Federal awards received and expended and the Federal programs under which they were received. 200.302(b)(2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in 200.328 and 200.329.
Condition: During portions of the fiscal year, the District prepared reimbursement calculations relying on an internally developed spreadsheet tool, rather than using amounts solely obtained from the general ledger and supporting documentation. The reimbursement reports were prepared by management with limited review. Conflicts over review and other monitoring procedures occurred, and were not always resolved. Complete supporting documentation for the claimed costs were not always available. Claims and other financial reports due to ODOT were regularly submitted after the due dates. The late and/or unsubstantiated filings have resulted in lost claims for the District, and potential refunding of reimbursements received.
Cause: Internal control procedures assuring timely and accurate preparation of reports and filing of the reimbursement requests were not designed or implemented adequately. Maintaining sufficient and accurate supporting documentation for each report was not possible because original data was not relied upon by management, to complete the reports and reimbursement requests.
Effect or Potential Effect: The lack of effective internal control activities over cash management, including financial reporting, allowed for reporting and claims errors, from simple calculation errors to requests for reimbursements of unauthorized purposes. Improper financial reporting to the ODOT occurred regularly. Lack of timely filing of reimbursement requests for amounts claimed, resulted in lost revenues and claims that may be required to be returned.
Questioned Cost: No
Context: Delays in filing reimbursement claims, delays in filing financial reports to ODOT, and internal disputes regarding completion of grant reimbursement request procedures were evident. Weak or nonexistent controls over cash management, including fiscal management, may result in lost revenues and risks of creating unnecessary liabilities in the form of refunds due to ODOT.
Repeat of a Prior-Year Finding: Yes
Recommendation: The District should design and implement internal control policies and procedures for cash management, including fiscal management and financial reporting. Monitoring, information and communication control activities should also be designed and implemented as part of the effort the reduce the risk of continued matters of noncompliance related to cash management.
District's Response: The District acknowledges the weaknesses and its intention of correcting weaknesses.
Corrective Action Plan: The District’s General Manager resigned effective September 13, 2024. The Board has adopted a plan to procure qualified professional assistance to evaluate and restructure the organization and assist in daily management activities until a new General Manager can be hired and trained. Additional assistance for resolving these deficiencies has been offered by ODOT and accepted by the Board.
Planned Implementation Date: October 31, 2024
Responsible Persons: District Board, Umpqua Public Transit District