Finding Text
Finding Number: 2021-007
Prior Year Finding Number: N/A
Compliance Requirement: Activities Allowed or Unallowed/Allowable Costs/Cost
Principles
Program:
U.S. Department of Transportation
COVID-19 Airport Improvement Program
ALN: 20.106
Award #: 3-78-0001-043-2020
Award Period: 5/12/2020 – 5/12/2024
Criteria – Per the grant award, funds may be used to reimburse operational and maintenance expenses directly related to the Sponsor-owned and operated Airports, incurred no earlier than January 20, 2020.
Further, the Uniform Guidance in 2 CFR Section 200.303, Internal Controls, requires the non-federal entities receiving Federal awards (i.e., auditee management) establish and maintain internal control designed to reasonable ensure compliance with Federal statutes, regulations, and other terms and conditions of the Federal award.
Condition – During our testing of payroll expenditures incurred throughout the year, we noted for one pay period, the Authority sought and received reimbursement for payroll activities unrelated to Sponsor-owned and operated Airports. The total reimbursement amount of $632,113 exceeded the actual payroll expenditures for Sponsor-owned and operated airports, which totaled $553,075. The difference of $79,038 was related to the operations of the Authority’s Marine division.
Cause – The Authority does not appear to have adequate policies and procedures to ensure compliance with applicable cost principles or to ensure that an appropriate level of review and approval is completed prior to charging costs to a federal program.
Effect or Potential Effect – An ineffective control system for reviewing transactions to ensure that only allowable costs and allowable activities are allocated to federal programs can result in noncompliance with federal statutes, regulations, and the provisions of grant agreements, which could ultimately lead to disallowed costs for major programs.
Questioned Costs – $79,038.
Context – This is a condition identified per review of the Authority’s compliance with the specified requirements. The exception noted was not part of a statistically valid sample.
Recommendation – We recommend that the Authority reevaluate and improve internal controls to ensure adherence to federal regulations related to the fiscal administrative requirements for expending and accounting for payroll, and to ensure proper and accurate allocation of payroll costs.
Views of Responsible Officials - The Authority concurs with the auditor’s findings and recommendations. The Authority will implement measures to ensure proper monitoring and review are completed prior to charging costs to a federal program. The planned corrective actions are presented in the Authority’s Corrective Action Plan, which is attached as Appendix B.