Finding Text
Activities Allowed/Unallowed and Cost Principles (Internal Control Over Compliance)
Significant Deficiency
ALN 20.509 Formula Grants for Rural Areas
Criteria: Uniform Guidance 2 CFR, §200.313(a) requires that non-federal entities must 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. These internal controls should be in
compliance with guidance in “Standards for Internal Control in the Federal Government” issued by
the Comptroller General of the United States or the “Internal Control Integrated Framework”,
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Condition: During our review of Yankton Transit Inc.’s internal controls related to formula grants
for rural areas major program, we tested disbursements for control deficiencies and transactions to
support the opinion on compliance. The Point of Sale transactions (debit card purchases) had no
evidence of approval of the transactions. Of the 40 transactions tested to support the opinion on
compliance, 4 transactions were out of compliance.
Questioned Costs: None
Cause: Yankton Transit Inc.’s current policies do not address the specific procedures related to
processing POS transactions prior to the transactions being processed.
Effect: Disbursements are being processed without proper approval, resulting in the possibility of
disallowed expenditures.
Recommendation: We recommend Yankton Transit Inc. become familiar with requirements of 2
CFR, §200.313(a) and establish appropriate internal control policies and procedures and that all staff
be trained on those policies and procedures, so they are familiar with the requirements. We further
recommend Yankton Transit Inc. does not process payments for disbursements that do not contain
necessary approval of purchases.
Views of Responsible Officials: See the corrective action plan that accompanies the schedule of
findings and questioned costs.