Finding 501222 (2023-004)

Finding: The Uniform Guidance, 2 CFR Part 200, Appendix XI Compliance Supplement, dated May 2023, stipulates for a cost to be allowable under federal awards certain general criteria must be met, including costs that are adequately documented and necessary and reasonable for the performance of the federal award. The Alabama Department of Transportation (the “Department”) passed through a portion of the Formula Grants for Rural Areas and Tribal Transit Program federal award to subrecipients. One of the subrecipients requested and received reimbursement of program expenses. Subsequent to the payments of the invoices, the Department received information alleging that falsified or altered documents related to expenditures submitted by a subrecipient. Upon receipt of these allegations, the Department initiated a review of the supporting documents which had been submitted by the subrecipient. The review consisted of obtaining documents from vendors and comparing those documents to the ones submitted by the subrecipient. The results of this comparison indicated that the amounts owed and the description of goods and services provided columns had been changed. Nine of ten supporting documents for meeting expenses submitted for reimbursement by the subrecipient during the audit period were altered and were not true and accurate. These altered supporting documents totaled $94,123.56. The Alabama Department of Transportation reimbursed the subrecipient based on the altered documents and, therefore, improperly expended Formula Grants for Rural Areas and Tribal Transit Program federal award funds. Recommendation: The Alabama Department of Transportation should take actions to ensure that all reimbursements of expenses are adequately documented, based on true and accurate supporting documentation, and to ensure costs are allowable under the federal award. Response/Views: We agree that there appears to have been falsified supporting documentation submitted by a subrecipient. Corrective Action Planned: Once we were made aware of the allegation, we began a thorough review of the subrecipient’s invoices. Based on the information discovered during our review, we notified the Federal Transit Administration, Alabama Attorney General’s Office, Alabama Ethics Commission, and the Alabama Department of Examiners of Public Accounts. The Office of Inspector General for the U.S. Department of Transportation is currently investigating the case. The subrecipient involved in this matter is no longer associated with our Transit Program. The duties that they performed were either moved to another subrecipient or in-house. We have modified our invoice review process, and the changes have been applied to all subrecipients for the Transit Program. Anticipated Completion Date: We have taken the steps outlined above as of August 28, 2024. Contact Person(s): Jeff Hornsby, Chief Financial Officer