Southern New Hampshire Planning CommissionLocal Government

Transit Services Programs Cluster Enhanced Mobility of Seniors and Individuals with Disabilities (CFDA #20.513) Pass Through Payments from the New Hampshire Department of Transportation Criteria: The Commission is a pass-through entity of this federal award. One of the compliance requirements is to monitor the subrecipients during the agreement and post-award audits. Condition: Two of the nonprofit entities that received federal awards passed through from the Southern New Hampshire Planning Commission did not identify the federal awards on the Schedule of Expenditures of Federal Awards within their annual financial statements audited in accordance with the Uniform Guidance. Cause: The signed agreements between Southern New Hampshire Planning Commission and its subrecipients indicate that federal grant funds are being administered and that federal clauses relating to transportation apply under the agreement. However, the CFDA number is not specifically identified within the agreement nor is the requirement that an annual audit performed in accordance with the Uniform Guidance if the subrecipient expended total federal awards in excess of $750,000. Effect: Controls over the subrecipient monitoring requirements of the Commission are weakened. Monitoring the post-award audits of its subrecipients is not included within the Southern New Hampshire Planning Commission?s documented subrecipient monitoring procedures. As a result, federal pass-through funds of $221,215 during the year ended June 30, 2020 were omitted from the single audit reporting requirements of the subrecipients. Questioned Costs: None. Context: Federal transit funds were passed through to three separate subrecipients during the year ended June 30, 2020. One of the subrecipients expended less than $750,000 and did not require an audit to be performed in accordance with the Uniform Guidance. However, the other two subrecipients did meet the single audit threshold and failed to report the funding from the Southern New Hampshire Planning Commission. Recommendation: We recommend that all future agreements pertaining to the subaward of federal funds specifically identify the CFDA number and any requirement in which a compliance audit is necessary in accordance with the Uniform Guidance. We also recommend that the Southern New Hampshire Planning Commission amend its policy for subrecipient monitoring procedures to include the request of obtaining annual audited financial statements to determine whether the federal funding received has been properly identified. Views of Responsible Officials: Through an agreement with the New Hampshire Department of Transportation, the SNHPC serves as the Lead Agency for the administration of FTA Section 5310 (Enhanced Mobility of Senior and Individuals with Disabilities) funding to support regional transportation services for elderly and disabled residents. Transportation services funded through this effort are determined annually by the Regional Coordinating Council for Community Transportation, and both the services and providers are specified in an annual grant application to NHDOT. During FY 2020, subrecipient agencies included the Manchester Transit Authority, Easter Seals of NH, and The CareGivers. The SNHPC executes an annual Memorandum of Understanding (MOU) with each subrecipient agency detailing their responsibilities and requirements. Through these MOUs, each subrecipient acknowledges that they are utilizing FTA Section 5310 (Enhanced Mobility of Seniors and Individuals with Disabilities) and agree to ?at all times comply with all applicable FTA regulations, policies, procedures and directives.? The MOU also includes 13 required federal clauses including: Energy Conservation, Federal Changes, No Federal Government Obligation to Third Parties, Program Fraud and False or Fraudulent Statements and Related Acts, Termination, Civil Rights Requirements, Disadvantaged Business Enterprises, Prompt Payment and Return of Retainage, Charter Service Operations, School Bus Operations, Access to Records, Incorporation of Federal Transit Administration (FTA) Terms, and Debarment and Suspension. In the Incorporation of Federal Transit Administration (FTA) Terms section of the MOU, subrecipients agree that ?all agreement provisions required by DOT, as set forth in FTA Circular 4220.1F, are hereby incorporated by reference.? FTA Circular 4220.1F does detail the requirements of the Single Audit Act and that recipients exceeding the threshold for federal awards in a single year are subject to audit requirements. The audit finding suggests that the ?requirement that an annual audit [be] performed in accordance with the Uniform Guidance? is omitted from the MOU. However, this requirement is included by reference (because subrecipients acknowledge that all provisions of FTA Circular 4220.1F are included in the MOU by reference). The concern is that two subrecipients ? the Manchester Transit Authority (MTA) and Easter Seals of New Hampshire (ESNH) ? did not appropriately report FTA Section 5310 pass through funding via the SNHPC on their respective Single Audit Schedule of Expenditures of Federal Awards (SEFA). During FY 2020, MTA utilized $84,586 of FTA Section 5310 funding for shuttle services in Manchester, Goffstown, Hooksett, and New Boston. During FY 2020, ESNH utilized $89,463 of FTA Section 5310 funding for demand response services and mobility management activities. This concern is based on Vachon Clukay?s review of the most recent available audit reports available for MTA and ESNH. The most recent audit report available for MTA was for the year ending June 30, 2019 and the most recent audit report available for ESNH was for the year ending August 31, 2020. Management agrees that neither of these subrecipient audit reports correctly reported the FTA Section 5310 pass through funding received from SNHPC on their respective Single Audit SEFAs. Management inquired with both MTA and ESNH about this concern and received the following responses: ? MTA advised that in their FY 2019 SEFA, the Section 5310 pass through funding via SNHPC was inadvertently included in another FTA line item. MTA reports that this will be corrected in their pending FY 2020 Single Audit and the funding will be reported as pass through under CFDA code 20.513. ? Easter Seals advised that, ?After reviewing this it appears that this funding was missed on our Single Audit [?] We are revising our contract checklist to make sure that something like this does not happen in the future. We have notified our auditors and they had the following to say: ?The SEFA is audited and ultimately we opine that it is materially accurate and given this smaller amount, this opinion is still accurate knowing this information.? They also suggested that since this funding crosses our fiscal year we could go ahead and report this on next year?s audit which we plan to do [?]? Based on these responses, the MTA has indicated that they will be correctly reporting the pass-through funding on their FY 2020 SEFA. The audit finding suggests that ?pass through funds of $221,215 during the year ended June 30, 2020 were omitted from the single audit reporting requirements of the subrecipients.? However, we believe that this statement will only be true of the $89,463 utilized by Easter Seals. In summary, Management?s views on this audit finding are as follows: ? Management concurs that in the most recent audit reports from MTA (i.e. year ending 6/30/19) and ESNH (i.e. year ending 8/31/20) available to Vachon Clukay, the two subrecipients did not correctly report pass through Section 5310 funding on their respective SEFAs. ? Management does not agree with the inference that annual audit requirements were omitted from the subrecipient MOUs. This requirement is included by reference because subrecipients agree in the MOU that ?all agreement provisions required by DOT, as set forth in FTA Circular 4220.1F, are hereby incorporated by reference.? Management can take steps, however, to make the audit requirements more explicit in the MOU. ? While the subrecipient MOUs do explicitly state that the source of federal funding is the FTA Section 5310 (Enhanced Mobility of Senior and Individuals with Disabilities) program, Management concurs that the CFDA number should be explicitly listed on the MOU. ? Based on responses received by the subrecipients, we understand that MTA will be correctly reporting this funding on their pending FY 2020 audit report. Thus, Management does not agree with the statement that ?pass through funds of $221,215 during the year ended June 30, 2020 were omitted from the single audit reporting requirements of the subrecipients.? Management believes that this statement will only be true of the $89,463 utilized by ESNH. ? Management concurs with the recommendation that the SNHPC?s subrecipient monitoring procedures include reviewing audited financial statements to ensure that subrecipients are properly reporting federal funding on their respective Single Audit SEFAs.