Finding Text
Finding Number: 2022‐001
Repeat Finding: Yes, 2021‐001
Federal Program Name/Assistance Listing Title: COVID‐19 Federal Transit Cluster
Federal Assistance Listing Number: 20.507
Federal Agency: U.S. Department of Transportation
Federal Award Number: N/A
Federal Pass‐Through Agency: N/A
State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas
State Agency: Texas Department of Transportation
Questioned Costs: N/A
Type of Finding: Noncompliance, Significant Deficiency
Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles
Criteria
Transit District management is responsible for establishing and maintaining effective internal controls
over federal awards, and specifically, disbursements that are adequate to ensure that all financial
activities are properly processed, supported, allowable, and allocable to federal grants in compliance
with 2 CFR Part 200.
Condition
The Transit District lacked proper internal controls over disbursements.
Cause
The Transit District’s internal controls over federal awards, and specifically, disbursements were not
adequate.
Effect
The Transit District was not in compliance with Federal regulations and guidelines and Transit District
policies related to federal awards, and specifically, disbursements.
Context
The sample was not intended to be, and was not, a statistically valid sample. During our review of
disbursements we noted the following:
- The Transit District does not have a formal system of approval of purchases such as a purchase
requisition/purchase order before goods and services are received or rendered.
- The Transit District does not account for grant expenditures separately in the general ledger.
Additionally, the Transit District should lock down months after cash is reconciled and all
adjusting entries have been posted.
- For one of 40 disbursements reviewed, the disbursement was not supported by invoices or
other supporting documentation.
- For two of 40 disbursements reviewed, the payment requisition form was not signed by the
Executive Director.
- For two of 40 disbursements reviewed, the coding was incorrect.
- For two of 40 disbursements reviewed, the check was not signed in accordance with the Transit
District's policies.
- For one of 40 disbursements reviewed, the Transit District paid late fees on an invoice of $29.59.
In reviewing this vendor's file there were numerous late fees paid.
- For three of 15 credit card transactions reviewed, the disbursement was not supported by
invoices or receipts.
- For one of 15 credit card transactions reviewed, the disbursement did not have a payment
requisition form.
- For one of 15 credit card transactions reviewed, the purchase exceeded the $1,000 limit set in
the Transit District’s credit card policy. Additionally, upon scanning the credit card statements
for the fiscal year, several purchases exceeded the policy limit.
- The Transit District did not maintain all monthly supporting documentation for the
reimbursements requested from FTA/TxDOT.
Recommendation
The Transit District should put a purchase approval process in place before the Transit District’s funds
are obligated. The Transit District should ensure the rationale for allocation of expenditures to grants
is well documented. Alternatively, the Transit District could record expenditures directly to the grants
using a system of fund accounting. Adherence to Transit District policies should be monitored. Noncompliance
with policies and procedures should be addressed with employees through additional
training. Invoices should be paid in a timely manner to ensure late fees are avoided. If late fees are
incurred, they should not be charged to grant funds. Finally, the Transit District should ensure all
monthly reports are maintained to support reimbursement requests.
Views Of Responsible Officials
See Corrective Action Plan.