Finding 1105170 (2024-002)

Finding 2024-002: Matching Major Federal Program – Federal Transit Cluster Compliance Requirements: Allowable Costs and Cost Principles, Cash Management, Matching Criteria: In accordance with the grant agreement and Uniform Guidance, effective internal controls must be in place to prevent and detect noncompliance. This requirement extends to costs requested for reimbursement under federal grants. Condition: (X) Compliance Finding (X) Significant Deficiency ( ) Material Weakness Context/Cause: Grant agreements were not reviewed in enough detail to assess appropriateness of rate being charged to the major program prior to submission of request for reimbursement. Request for reimbursement was up to 51% of total expenses incurred but instead a reimbursement rate of 80% was used for grant 2017-001. Effect and Questioned Costs: The absence of detailed review related to cost reimbursement rates significantly increases the risk that misstatements due to error or fraud may occur and not be detected timely. Known questioned costs are $613,075. Likely questioned costs are indeterminable. Recommendation: Management should reinforce the internal controls in place to ensure all reimbursement rates are reviewed on a monthly basis as part of the month end close process prior to grant billing. Responsible Official’s Response: See Corrective Action Plan