Finding 1191217 (2025-004)

Finding Reference 2025-04 Assistance Listing Number Transit Services Programs Cluster 20.513Enhanced Mobility of Seniors and Individuals with Disabilities 20.516Job Access and Reverse Commute Program 20.521 New Freedom Program Name of Federal Agency Department of Transportation Compliance Requirement Subrecipient Monitoring Type of Finding Significant Deficiency on Internal Control and Noncompliance Condition From a sample of nine (9) subrecipients, the auditors identified that for one (1) subrecipient, the Authority, did not perform subrecipient monitoring within the required three (3)-year cycle established in its State Management Plan, as of the audit period ended June 30, 2025. Although monitoring activities were scheduled for a subsequent period (2026), such actions occurred after the audit period and do not address the absence of compliance as of June 30, 2025. Criteria 2 CFR 200.332(d) requires pass-through entities to monitor the activities of subrecipients to ensure compliance with Federal statutes, regulations, and the terms and conditions of the subaward. 2 CFR 200.303 requires non-federal entities to establish and maintain effective internal control over Federal awards. FTA Circular 5010.1E (Chapter 5) states that federal oversight activities (e.g., inspections or reviews) do not relieve the recipient of its responsibility to manage and oversee federally funded projects. The Authority’s State Management Plan establishes a risk-based monitoring approach, including a three (3)- year monitoring cycle for subrecipients. Cause The Authority did not ensure that subrecipient monitoring procedures were performed and documented within the required three-year cycle for all subrecipients. Additionally, management relied on the FTA Triennial Review process as evidence of monitoring, which reflects a misinterpretation of federal requirements regarding the Authority’s responsibilities as a pass-through entity. Effect The failure to perform and document subrecipient monitoring within the established cycle increases the risk that noncompliance with federal requirements by subrecipients may not be identified in a timely manner. In addition, federal funds may not be used in accordance with applicable laws, regulations, and grant requirements. The Authority may be exposed to questioned costs, repayment obligations, or increased federal oversight. Questioned Costs None. Recommendation We recommend that the Authority: Ensure that subrecipient monitoring is performed and documented in accordance with its State Management Plan and within the established three-year cycle. Reinforce internal controls and training to clarify that federal reviews (e.g., FTA Triennial Review) do not replace the Authority’s monitoring responsibilities under 2 CFR 200. Views of Responsible Officials Refer to Management’s unaudited corrective action plan.