Finding Text
Reference Number 2022-001 Assistance Listing Number, Federal Agency, and Program Name - COVID 19 20.507, Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year - MI-2020-052 Pass through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.403 requires recipients of federal funds to expend them on allowable costs. Condition - The Authority disbursed a portion of its CARES Act funds to community partners; however, many of those partners offer only Section 5310 service for seniors and individuals with disabilities. Section 5310 program expenses are not allowable under the CARES Act. Questioned Costs - $1,146,291 Identification of How Questioned Costs Were Computed - Questioned costs represent the total amount of CARES Act funds passed through to community partners. Context - During the fiscal year, the Authority passed through $1,146,291 to 35 community partners. Cause and Effect - The CARES Act award was new to the Authority in fiscal year 2020. The Authority's other federal awards have existed for many years and the Authority is very familiar with their requirements and allowable uses. The Authority sought to share the new award with its community partners but was not aware that most of them did not have expenditures allowable under the CARES Act until the matter was identified during the Authority's most recent triennial review. Recommendation - When new awards are received, we recommend the Authority thoroughly analyze the compliance requirements, including the allowable uses. Views of Responsible Officials and Corrective Action Plan - Authority management is aware of the issue and has been diligently working with our FTA regional office to correct the issue. While certain community partner expenses were not eligible under the CARES Act, they are certainly eligible under CRRSA and ARPA funding grants. We are in the process of finalizing a plan with the FTA where all community partner relief funding will be reprogramed under the CRRSA and ARPA grants. This correction plan, once finalized, will result in no reduction of federal relief funding to SMART or any of our community partners. Given extraordinary circumstances and expedited nature of the CARES Act funding, we do not believe that this issue will be a significant risk for future grant funding; however, the Authority has modified our grant policy manual to ensure a more thorough review of eligible expenses for subrecipients.