Finding Text
Findings and Questioned Costs Related to Federal and State Awards
Finding Number: 2023‐001
Repeat Finding: Yes; 2022‐001, 2021‐001
Federal Program Name/Assistance Listing Title: Federal Transit Cluster
Federal Assistance Listing Number: 20.507, 20.526
Federal Agency: U.S. Department of Transportation
Federal Award Number: 5339‐R‐2022‐GCTD‐00039, 5339‐R‐2022‐GCTD‐00039
Federal Pass‐Through Agency: Texas Department of Transportation
State Program Name: State Urbanized Area Formula Program, State Formula Grants For Rural Areas
State Agency: Texas Department of Transportation
Type of Finding: Significant Deficiency in Internal Control Over Compliance
Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles
Questioned Costs: N/A
Criteria: 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 District lacked proper internal controls over disbursements.
Cause: The District’s internal controls over federal awards, and specifically, disbursements were not adequate.
Effect: The District was not in compliance with Federal regulations and guidelines and 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 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 District does not account for grant expenditures separately in the general ledger. Additionally, the District should lock down months after cash is reconciled and all adjusting entries have been posted.
• The District did not maintain all monthly supporting documentation for the reimbursements requested from FTA/TxDOT.
• Based on an initial sample of 40 disbursements reviewed:
o For 4 disbursements, the payment requisition form was not signed by the Executive Director.
o For 1 disbursement, the coding was incorrect.
o For 1 disbursement, the check was not signed in accordance with the District's policies.
• Based on an additional sample of 3 disbursements reviewed:
o For 1 disbursement, the disbursement was not supported by invoices or other documentation.
o For 1 disbursement, the coding was incorrect.
Recommendation: The District should put a purchase approval process in place before the District’s funds are obligated. The District should ensure the rationale for allocation of expenditures to grants is well documented. Alternatively, the District could record expenditures directly to the grants using a system of fund accounting. Adherence to 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 District should ensure all monthly reports are maintained to support reimbursement requests.
Views Of Responsible Officials: The District agrees with the finding and has taken steps to address this issue as detailed in the Corrective Action Plan.