Finding Text
Finding 2023-003 – Material Weakness
AL No: 20.507
Federal Grantor: U.S. Department of Transportation, Federal Transit Administration, Federal Transit Formula
Grants - Direct Award
Compliance Requirements: Activities Allowed or Unallowed and Allowable Costs/Cost Principles.
Condition: The District’s internal controls over compliance requirements did not identify ineligible costs
applied to four separate Federal Transit Administration (FTA) grants as follows.
Section 5307 Grant Award CA-2020-173-01: The District overclaimed Route 42 and Woodland fixed
route operating expenses that should have been reimbursed by a local match as required by other FTA
grants applied to the same routes, resulting in ineligible costs of $1,073,260 being charged to the
program.
Questioned Costs: $1,073,260.
Section 5307 Grant Award CA-2022-140-01: The District overclaimed Route 42 expansion fixed
route operating expenses that should have been reimbursed by a local match as the wrong federal
percentage was applied in the claims, resulting in ineligible costs of $33,129 being charged to the
program.
Questioned Costs: $33,129.
Section 5307 Grant Award CA-2022-147-04: The District overclaimed communication expenses for
Woodland paratransit operating routes, resulting in ineligible costs of $12,513 being charged to the
program.
Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part
200, Subpart F (Uniform Guidance), Section 200.516.
Section 5307 Grant Awards CA-2022-204-01 and CA-2021-162-03: The District claimed engine
overhaul expenses that did not qualify as preventative maintenance costs allowed by the terms and
conditions of the grant, resulting in ineligible costs of $17,902 being charged to the program.
Questioned Costs: Ineligible costs were below the $25,000 floor for questioned costs under 2 CFR Part
200, Subpart F (Uniform Guidance), Section 200.516.
Criteria: 2 CFR Part 200, Subpart E (Uniform Guidance) Section 200.303 states that “The nonfederal entity
must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable
assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes,
regulations, and the terms and conditions of the Federal award.”
Cause: Several federal grants applied to these routes had local match requirements that were not captured by
the District’s review procedures due to recent staff turnover and lack of documented procedures to track
expenses charged to all funding sources combined. Not all paratransit operating expenses were reported and
tracked separately in the allocation spreadsheet leading to expenses being double claimed under different grants
for different purposes. This is due to the allocation spreadsheet not having a summary page totaling all expenses
charged to programs to make sure the total expenses allocated agree to the total population of expenses
allocated.
Effect: Expenses were charged to more than one grant when filing claims and ineligible costs were applied,
resulting in the overclaimed amounts cited above.
Context: The ineligible costs were discovered through reconciliation of the operating expenses and capital
costs from the claims to the general ledger. It was noted that the District did not have any FTA awards for
capital maintenance during the year. The overclaimed amounts of $1,073,260, $33,129, and $12,513 have been removed from revenue as the FTA has currently approved the District claiming the expenses under different
grants. There were potentially additional operating expenses under Paratransit services that could have offset
some of these overclaimed amounts. The ineligible costs of $17,902 have been submitted to the FTA through a
budget revision to allow for capital funding under the two related awards and is currently pending FTA
approval.
Recommendation: We recommend the District develop written procedures for allocating expenses to routes
and purposes used to claim expenses under federal grants and to track the different funding sources applied. A
summary tab should be added to the allocation spreadsheet to sum amounts for each route computed on separate
tabs on the spreadsheet to make it easier to reconcile total operating expenses, preventive maintenance,
insurance, communications and other expenses allocated to the population of expenses in the general ledger.
View of Responsible Officials and Planned Corrective Action: Management’s response and planned
corrective action is included at the Corrective Action Plan end of this report.