Finding Text
Federal Program: 20.509 Formula Grants for Rural Areas and Tribal Transit Program Grant No: Grant Period: Year ended June 30, 2024 Condition: The program, operated as a fund of the county, leases transit vehicles from another fund of the county. At the inception of the lease, the County sought proposals for the lease of transit vehicles from businesses engaged in transit vehicle leasing activity and determined that purchasing transit vehicles would be the most cost effective option. However, the County structured the agreement for transit vehicles to be purchased by another fund and lease the vehicles to the transit program at an increased price with substantial benefit to the transit program. Criteria: 2 CFR 200.318(c) requires the county officials avoid participation in selection, award, or administration of contract when a conflict of interest is present. Cause: County management has responsibility to effectively manage resources for the entire County. It appears the County’s judgement was impaired when weighing the cost of the lease to the transit program with the benefit to County. Effect: The cost of current, past and future lease payments are not in compliance with 2 CFR 200.318(c). Context and Questioned Cost: All transit vehicles are leased by the Transit Service Fund under one lease. Total payments to be made by the Transit Service fund for the duration of the lease term is $1,588,774. Total payments to be made for the purchase of vehicles by the General fund under a lease/purchase contract is $1,143,986. As of June 30, 2024, lease payments made for the purchase of the transit vehicles by the General Fund have not exceeded the amounts paid and charged to expense by the Transit Service Fund. As such, there is no questioned cost. Repeat Finding: No Recommendation: We recommend the county review and modify the terms of the lease between the transit program and the county fund. We also recommend consulting with the program oversight agency to determine any necessary correction action. Views of Responsible Officials: The County reviewed acceptable all possibilities for the acquisition of transit vehicles for the transit program and sought advise and acceptance for the method and structure chosen from the County’s program oversight agency. We believed these lease transactions to be in compliance with program requirements. We will further review the matter, discuss further with the oversight agency, and any issues determined by the oversight agency.