Finding Text
Type: Significant deficiency in internal control over compliance and noncompliance. Criteria: The Uniform Guidance as described in 2 CFR, Part 200.303, non-federal entities receiving federal awards to establish and maintain effective 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. Condition: The Road Commission did not have formal written federal policies and procedures that document the processes and controls used to administer federal awards, including procedures for compliance with applicable federal program requirements under Uniform Guidance (2 CFR, Part 200.303). Cause: The Road Commission has historically relied on state compliance requirements and MDOT oversight, and has not formalized Federal Uniform Guidance requirements into its written policies and procedures. Management was not fully aware that Uniform Guidance requires entity-specific documented procedures in addition to compliance with state procurement laws. Effect: Without written federal policies and procedures, there is an increased risk that federal award requirements may not be consistently applied, monitored, or retained as institutional knowledge, particularly during changes in personnel or program responsibilities. Perspective: As a condition of accepting a federal award, the Road Commission should have required policies and procedures in place. Questioned Costs: None noted. Initial Year of Finding: 2025 Recommendation: We recommend the Road Commission develop and implement written federal policies and procedures addressing the administration of federal awards to ensure compliance with Uniform Guidance (2 CFR, Part 200). The policies should address the following key compliance areas; allowable costs, cash management, procurement, and conflicts of interest. In addition, we recommend that management review and modify the procedure policy to include all the necessary items outlined in the Uniform Guidance. View of Responsible Officials and Planned Corrective Plan: See corrective action plan.