Finding Text
SA 2025-001: Allowable Costs – Non-Payroll Assistance Listing Number: 20.509 Federal Program/Cluster Name: Formula Grants for Rural Areas and Tribal Transit Federal Agency: U.S. Department of Transportation – Federal Transit Administration Federal Award Number: 64BA24-02507/64CA17-02442/64HC22-02180/64RO21-01648/64TO21-01865/64MO21-01910/64HC21-01500 Federal Award Year: July 1, 2024 to June 30, 2025 Compliance Requirement Allowable Costs Criteria Except where otherwise authorized by statute, cost must meet the following general criteria in order to be allowable under federal awards; 1. Be necessary and reasonable for the performance of the federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E. 2. Conform to any limitations or exclusions set forth in 2 CFR Part 200, Subpart E or in the federal award as to types or amount of cost items. 3. Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-federal entity. 4. Be accorded consistent treatment. A cost may not be assigned to a federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the federal award as an indirect cost. 5. Be determined in accordance with generally accepted accounting principles (GAAP), except for state and local governments and Indian tribes only as otherwise provided for in 2 CFR Part 200. 6. Not be included as a cost or used to meet cost-sharing or matching requirements of any other federally financed program in either the current or a prior period. 7. Be adequately documented. Condition During the audit of non-payroll expenses charged to the program, an invoice dated May 1, 2025 was approved by the Director of Operations & Maintenance during the General Manager’s absence. The related purchase order was subsequently signed by the General Manager on June 10, 2025, after the invoice had already been received and approved. The procurement policy does not specify the required timing of purchase order approval relative to invoice receipt or approval. Cause The procurement policy lacks clear guidance on the timing of purchase order authorization. The Director of Operations & Maintenance approved the invoice to avoid delays, but the purchase order was not signed until the General Manager’s return. Effect This practice increases the risk of: • Commitments are being made without proper prior authorization. • Noncompliance with federal procurement standards requiring documented procedures that ensure approvals before obligations are incurred. • Potential questioned costs if federal funds were used for expenditures not properly authorized in advance. Questioned Costs None Repeat Findings No Recommendation MARTA should revise the procurement policy to explicitly require purchase order approval prior to invoice receipt or payment. Establish a clear delegation of authority for situations when the General Manager is absent, ensuring that approvals are documented and consistent with federal requirements. Views of Responsible Officials and Planned Corrective Action MARTA recognizes the importance of ensuring all expenses are approved before they are incurred. To address this finding, MARTA is updating its internal procurement rules to clearly state that a purchase order must be signed prior to ordering any items or initiating any services. This measure will prevent the receipt of invoices for costs that have not been officially authorized. Additionally, MARTA is creating a formal backup approval plan. Under this plan, if the General Manager is unavailable, another designated leader will have the documented authority to approve purchases immediately, eliminating the need to wait for the General Manager’s return to complete the necessary paperwork. Finally, MARTA’s finance team will implement a new check-and-balance step in the payment process. Moving forward, the team will verify that the date on the approved purchase order comes before the date on the vendor's invoice. If the dates are out of sequence, the payment will be flagged for review. In addition, MARTA will conduct a training session for all department heads to reinforce that verbal orders are not permitted and that written authorization must always be obtained first. This plan is designed to ensure full compliance with federal grant requirements and prevent any future delays in the approval process. Personnel responsible: Sandra Benson, General Manager Anticipated completion date: October 2026