Finding 624140 (2022-007)

Significant Deficiency
Requirement
N
Questioned Costs
-
Year
2022
Accepted
2023-07-16
Audit: 49041
Organization: City of Pendleton, Oregon (OR)

AI Summary

  • Core Issue: The Airport claimed $32,091 in costs under the CARES Act that were later deemed ineligible due to a requirement for a development addendum that was not approved by the FAA.
  • Impacted Requirements: Changes in CARES Act guidance led to disallowed costs and necessary adjustments to reported revenue, as $9.6 million in grants were pending approval.
  • Recommended Follow-Up: Implement procedures to monitor projects needing development addendums and ensure these are secured before project initiation.

Finding Text

Condition and criteria: The Airport claimed costs under the CARES Act that were originally determined to be deferred maintenance and not requiring an addendum for a development agreement. However, the taxi lanes and portions of the terminal rehabilitation projects are now required to go through a development addendum, which the FAA had not approved at the time of the audit. Cause: Guidance related to CARES Act dollars has changed several times since inception of the program. Context and Effect: Costs of $32,091 were disallowed by the FAA and adjustments were required to correct revenue reported on the SEFA since the addendum and $9.6 million grants were not yet approved. Auditor?s recommendation: We recommend that additional procedures and reviews be put in place to monitor projects that may require development addendums and that the addendums be obtained prior to performing the project. Management?s response: Economic Development & Airport Director believes very strongly that there is no way that Airport Staff could have foreseen the FAA procedural change as it relates to addendums being required for CARES Act projects. Staff understands the seriousness of the cash flow challenges this FAA procedural change created for the City, but still does not see any way it could have been avoided. If anything, someone on the FAA?s side made a serious mistake in telling Airport Staff that our projects did not require addendum agreements.

Categories

Reporting

Other Findings in this Audit

  • 47696 2022-005
    Material Weakness
  • 47697 2022-006
    Significant Deficiency
  • 47698 2022-007
    Significant Deficiency
  • 624138 2022-005
    Material Weakness
  • 624139 2022-006
    Significant Deficiency

Programs in Audit

ALN Program Name Expenditures
20.106 Airport Improvement Program $1.48M
21.027 Coronavirus State and Local Fiscal Recovery Funds $1.07M
97.036 Disaster Grants - Public Assistance (presidentially Declared Disasters) $655,563
20.509 Formula Grants for Rural Areas and Tribal Transit Program $154,149
20.513 Enhanced Mobility of Seniors and Individuals with Disabilities $134,180
95.001 High Intensity Drug Trafficking Areas Program $117,391
97.044 Assistance to Firefighters Grant $111,345