Finding Text
Funding agency: U.S. Department of Transportation, Federal. Highway Administration. Title: Highway Planning and Construction. CFDA number: 20.205. Award year and number: 2025 – PO-73000-00034057. Condition: In the process of performing our audit, we noted expenditures on the SEFA were overstated due to the Council including state grant expenditures as federal. Criteria: The Code of Federal Regulations (CFR) requires recipients of federal awards with expenditures greater than $750,000 in a fiscal year prepare a SEFA for the period covered by the financial statements that accurately reports federal expenditures by federal program and includes required elements. Cause: Based on our review and interviews with key finance personnel, it appears that staff believed the funds provided by the state were considered pass-through funds similar to other funding. Effect: The Schedule of Expenditures of Federal Awards would have been materially misstated and incorrect or insufficient major programs could have been selected. Identification of Repeat Finding: This is not a repeat finding. Auditor’s Recommendations: We recommend the Council develop sufficient policies and procedures to ensure only federal expenditures are reported on the schedule of expenditures of federal awards. Management’s Response: All available information on the overstatement pointed to funds originating from the federal COVID bill. With only the side reference in an email from three years ago, did we find any indication that perhaps the funds would be considered state funded. Due to staffing changes since that time, it took several inquiries to find the appropriate person at the state of Oregon who could verify that the funds had met the test for non-federal. It was through an abundance of caution that we chose to include the expenditures on the SEFA report. Better file tracking mechanisms now exist through the agency’s use of OneDrive, Teams, and other centralized Microsoft filing tools. Better communication also exists between the programs, contracts unit, and finance departments.