Finding 1062057 (2021-002)

Findings and Questioned Costs for Federal Awards (continued) U.S. Department of Transportation Program Name: Railroad Rehabilitation and Improvement Financing Program CFDA# 20.316 Finding 2021-2 Material noncompliance Failure to meet Financial Test requirement 4.7 Criteria: Per the agreement with Federal Railroad Administration for the Railroad Rehabilitation and Improvement Financing Loan, GRTA must maintain a Fixed Charge Coverage Ratio of not less than 1.05 at the end of each fiscal year. Condition: GRTA did not maintain a fixed charge coverage ratio of greater than 1.05. Questioned costs: Not applicable Context: GRTA’s fixed coverage ratio was less than 1.05 at the end of the fiscal year. Effect: No definitive effect of not maintaining the ratio was noted. Cause: GRTA had a net loss from operations at the end of the fiscal year, resulting in a fixed coverage ratio of less than 1.05. Recommendation: We recommend that GRTA work with the Administrator to obtain an amendment to the agreement with achievable financial ratios. View of responsible officials and planned corrective actions: GRTA acknowledges that the required fixed coverage ratio of not less than 1.05 is not currently attainable and will contract the FRA to determine whether an amendment to the agreement can be made.