Finding Text
Finding 2024-002: Review of Compliance Matrices and Narratives
Program Name: 1. Rail and Transit Security Grant Program Assistance Listing No. 97.075
2. Railroad Development Assistance Listing No. 20.314
Federal Award No.: 1. EMW-2022-RA-00032
EMW-2021-RA-00048
EMW-2020-RA-00014
2. 69A36524400010MEGDC
Federal Agency: 1. U.S. Department of Homeland Security
2. U.S. Department of Transportation
Criteria
The code of federal regulations – 2 CFR 200.302 Financial management requires that:
(a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State’s funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award.
The code of federal regulations – 2 CFR 200.303 Internal controls requires that recipients and subrecipients:
(a) Establish, document, and maintain effective internal control over the Federal award that provides reasonable assurance that the recipient or subrecipient is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should align with the guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
(b) Comply with the U.S. Constitution, Federal statutes, regulations, and the terms and conditions of the Federal award.
(c) Evaluate and monitor the recipient’s or subrecipient’s compliance with statutes, regulations, and the terms and conditions of Federal awards.
Condition
The following exceptions to the criteria were observed during the performance of the audit procedures:
1. For the compliance matrix that is maintained for the Assistance Listing #97.075, we have identified that for nine provisions, the wording contained withing the matrix did not match in its entirety to the respective grant agreement. Additionally, we noted that two provisions that were present in the grant agreements were not included in the matrix.
2. For the compliance matrix that is maintained for the Assistance Listing #20.314, we have identified that for nine provisions, the wording contained withing the matrix did not match in its entirety to the respective grant agreement.
3. Specific compliance requirements as it relates to the earmarking provisions of the respective grants of the Assistance Listing #97.075 were not detailed out within the respective compliance matrix, nor within the compliance narrative that is documented by Amtrak to assess the applicability and relevance of individual compliance requirements contained within the Compliance Supplement.
Cause
In reviewing management’s controls, the key controls identified by management are not designed such that consistent and timely proactive monitoring and/or review occurs to ensure that all the compliance requirements and any changes to the wording of specific provisions are updated and reviewed within the compliance matrices and the compliance narrative.
Effect
Amtrak is not in compliance with the 2 CFR 200.302 (a) and 2 CFR 200.303. This may also put Amtrak at greater risk of non-compliance with specific provisions in accordance with the federal awards.
Questioned Costs
None.
Context
We have reviewed the federal awards in scope and the compliance matrices and compliance narrative maintained by the Company as part of the audit procedures in connection with testing of earmarking and special tests and provisions compliance requirements.
Identification as a Repeat Finding
Not a repeat finding. However, we have noted similar control deficiencies related to completeness of the compliance matrices in prior years.
Recommendation
We recommend that Amtrak establishes a more defined timeline for the events that would trigger the update and review of the compliance matrices and compliance narrative, which could include execution of any new federal awards or amendments to existing federal awards. Additionally, Amtrak should establish a process where the modifications to the provisions are assessed for materiality/applicability and include documentation of the respective conclusions as part of the review process.
Views of Responsible Officials
Amtrak acknowledges the need to augment process documentation around the controls over the preparation and updates to the compliance matrices. The company is in the process of updating these controls now and will incorporate the identified findings in developing more robust controls. The company specifically notes the need to add more documentation on considerations for what provisions are updated in the compliance matrices and the evidence of review. The review procedures and controls are being enhanced to include a checklist to improve the review. This checklist will be completed by both the compliance matrix creator (upon creation) and the compliance matrix reviewer/approver (upon review and final approval).