Finding Text
U.S. Department of Transportation, Federal Railroad Administration Assistance Listing 20.325, CRISI Windsor Extension Systems Agreement Number: 69A36519400600CRSCA, Federal Identifying Number: FR-CRS-0013, Award year: 2019, amended 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency in Internal Control over Compliance Criteria: Title 2 CFR §200.302 requires non‑Federal entities to establish and maintain internal control over Federal awards that provides reasonable assurance that the entity is managing Federal awards in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Title 2 CFR §200.328 and the terms and conditions of the award require recipients to submit financial reports in the form and manner prescribed by the Federal awarding agency, including the Federal Financial Report (SF‑425), prepared in accordance with the form’s instructions. The SF‑425 instructions require federal cash receipts and disbursements to be reported on a cumulative basis and require accurate identification of the basis of accounting. Condition: We identified an instance in which one quarterly SF‑425 did not reflect cumulative federal cash receipts and disbursements as required by the SF‑425 instructions. Instead, the report reflected only current‑quarter federal cash activity. No additional cash reporting errors were identified by the audit, and the other SF-425 lines were prepared correctly. Cause: The condition resulted from limitations in the consistency of review procedures over SF‑425 preparation, particularly during periods of staff absence. While a reporting process was in place, review controls did not consistently ensure that all SF‑425 data elements, including cumulative cash presentation, were verified prior to submission. Effect: The condition resulted in the submission of federal financial reports that did not fully conform to SF‑425 reporting instructions. The errors did not affect allowable costs, cash drawdowns, reimbursements, or the maximum Federal share under the award. However, incomplete or inaccurate reporting increases the risk that federal agencies may rely on information that does not fully reflect the recipient’s financial status for monitoring purposes. Questioned Costs: No questioned costs are associated with this matter. Context/Sampling: No sampling was used. We tested four of four SF-425 reports. Repeat Finding from Prior Year(s): No Recommendation: We recommend that management continue to strengthen review procedures over SF‑425 preparation, including documented review of cumulative cash reporting and verification of all report attributes, particularly during periods when backup personnel are responsible for report preparation. Views of Responsible Officials: See the separately issued Corrective Action Plan.