MORROW, COUNTY OFLocal Government

2022-002 Cash Management - Formula Grants for Rural Areas and Tribal Transit Program ALN 20.509 U.S. Department of Transportation Criteria: 2 CFR ?1200.1 gives regulatory effect to the Department of Transportation for 2 CFR ? 200.305(b)(3) which states reimbursement is the preferred method when the requirements in paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per ? 200.208 or when the non-federal entity requests payment by reimbursement. ODOT Federal Transit Administration Section 5311 Rural Transit Program Criteria and Application Instruction, Section VII, Part D provides that the grantee must submit via e-mail quarterly operating data reports on the 15th day of the month following the end of the calendar quarter. Condition: The County was required to submit quarterly invoices by the 15th day of the month following the end of the calendar quarter. Context: During our review of the quarterly reports, we noted the County had submitted all 2022 reports late. Effect: The County was not in compliance with cash management requirements in 2022. Cause: Lack of sufficient internal controls over the reporting requirements of the Rural Transit Program. Recommendation: We recommend the County enhance its internal controls over cash management requirements. View of Responsible Officials: See Corrective Action Plan

2 CFR ?1200.1 gives regulatory effect to the Department of Transportation for 2 CFR ? 200.305(b)(3) which states reimbursement is the preferred method when the requirements in paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per ? 200.208 or when the non-federal entity requests payment by reimbursement. This method may be used on any Federal award for construction, or if the major portion of the construction project is accomplished through private market financing or Federal loans, and the Federal award constitutes a minor portion of the project. When the reimbursement method is used, the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. ODOT Federal Transit Administration Section 5311 Rural Transit Program Criteria and Application Instruction manual, section VII Program Administration part D states; the grantee must submit via e-mail quarterly operating data reports (supplied by ODOT on Excel spreadsheet) on the 15th day of the month following the end of the calendar quarter. Reports which are not transmitted to the e-mail account and/or which are not identified appropriately will not be accepted. Failure to submit the report within the requested time schedule can result in the withholding of Federal and State funds. Sound accounting practices require public officials to design and operate a system of internal control that is adequate to provide reasonable assurance over the reliability of federal information provided for federal reimbursement. The Fiscal Supervisor creates the Ohio Department of Transportation (ODOT) invoices for reimbursement, and has the Director submit the invoices to ODOT for review indicating the Director?s approval of the invoice for reimbursement. The January to March quarterly invoice submitted to the Ohio Department of Transportation (ODOT) could not be agreed to the Morrow County Area Transit ledgers to ensure the expenses were paid prior to submission for reimbursement. In addition, the quarterly invoice for the first quarter was prepared and submitted by the Director of the department; which, is contrary to the policy and procedures in place. Finally, Morrow County Area Transit submitted three quarterly invoices late during 2020. Untimely submission of reports leads to untimely reimbursement being provided by ODOT. See chart in schedule of findings Failure to accurately and timely report expenditures to ODOT could result in the department receiving grant funding for unallowable expenses. Morrow County Area Transit should accurately and timely submit quarterly invoices to ODOT and maintain accurate ledgers to support the invoice amounts. The department should also ensure the invoices submitted to ODOT have been reviewed by the appropriate personnel at the department to help ensure accuracy.

Morrow County Area Transit Fiscal Policy and Procedure Disbursement Procedure: states in part; Unit Support Worker/Fiscal Supervisor receives invoices and stamps the invoice with date received. Unit Support Worker/Fiscal Supervisor verifies validity of each invoice, mathematical accuracy (if applicable), and highlights approval by Supervisor/Department head. Each invoice is matched with the current open purchase order or a new purchase order is created. For two out of sixty transactions tested, the supporting invoice was not marked indicating the materials and/or services were received and the expenses could be charged to the federal program. The actual expenses were found to be allowable under the grant agreement. Morrow County Area Transit had high turnover rate in both the Director and Fiscal Supervisor positions within the audit period and outlined controls in the Fiscal Policy and Procedure manual were not consistently followed. Lack of appropriate review could result in unallowable costs being charged to the federal program which could result in a federal questioned cost. We recommend management review control practices and ensure the practices are properly implemented for all nonpayroll transactions charged to the federal program.

Morrow County Area Transit Policies and Procedures: Daily and bi-weekly timesheets for payroll within the miscellaneous policies section states in part; the following procedure regarding time sheets by employees shall be followed: 1. Drivers shall complete a daily timesheet form so that each driver?s hours can be tracked and recorded into payroll. 2. At the end of each pay period (every two weeks) drivers shall review and sign their bi-weekly timesheets. Drivers are encouraged to keep copies of their daily time sheets in order to ensure that both match and correct hours are being accounted for. Incorrect hours may result in a delay in payment. 3. All employees must complete, sign, and turn in any overtime, sick, vacation, or other time off forms during each pay period. These forms should be attached to the employee?s timesheet. Failure to turn these forms in may result in time and/or pay not being properly awarded on that current payroll. 4. All Part-Time and Full-Time staff are required to have signed documentation for any time off and/or reimbursement claims. 5. Intermittent Drivers are to complete and turn in a monthly availability calendar. Intermittent employees may amend their monthly calendar as frequently as necessary, but any change of availability should be made at least forty-eight (48) hours in advance so that the schedule can be planned accordingly. Intermittent employees are not required to turn in time off forms, but must turn in any sick time or reimbursement claims. 6. Full-Time staff should complete their own timesheets, attach any time off or overtime forms, attach any reimbursement receipts, and turn everything into payroll on the Friday of that ending pay period. It is the individual employee?s responsibility to ensure that their information is in order and their hours are accurate. 7. Payroll will be completed and turned into the auditor?s office after all items have been accounted for and before the Morrow County Auditor?s designated payroll deadline. During review of the Formula Grants for Rural Areas grant program, we could not determine if the control process designed by Morrow County Area Transit was fully implemented and could not determine the efficacy of the control process. The following was found during our review: ? Daily timesheets completed by employees were not available for four out of sixty payroll transactions tested. ? Supervisor-completed biweekly timesheets were not available for three out of twenty two pay periods. ? Biweekly timesheets were not appropriately signed by both the employee and supervisor for two out of sixty employees. ? Long forms submitted to the County Auditor for payment were not properly signed for one out of twenty two pay periods. Lack of appropriate control over payroll disbursements could result in unallowable costs being charged to the Federal program which could result in questioned costs reported to the Federal agency. We recommend management review control practices and ensure the practices are properly implemented for all payroll transactions charged to the Federal program.

2 CFR ? 200.305(b)(3) states reimbursement is the preferred method when the requirements in paragraph (b) cannot be met, when the Federal awarding agency sets a specific condition per ?200.208 or when the non-federal entity requests payment by reimbursement. This method may be used on any Federal award for construction, or if the major portion of the construction project is accomplished through private market financing or Federal loans, and the Federal award constitutes a minor portion of the project. When the reimbursement method is used, the Entity has to submit requests by the 15th of the following month and the Federal awarding agency or pass-through entity must make payment within 30 calendar days after receipt of the billing, unless the Federal awarding agency or pass-through entity reasonably believes the request to be improper. Monthly invoices that were submitted to the Ohio Department of Transportation (ODOT) could not be tied to the Morrow County Area Transit ledgers to ensure the expenses were paid prior to submission for reimbursement. All of the monthly invoices were submitted late, with submissions ranging from one month to four months after the required due date. Finally, the monthly invoices were prepared and submitted by the Director of the department without any additional review performed by the Fiscal Supervisor. Failure to accurately and timely report expenditures to ODOT could result in the department receiving grant funding for unallowable expenses. Morrow County Area Transit should accurately and timely submit monthly invoices to ODOT and maintain accurate ledgers to support the invoice amounts. The department should also ensure the invoices submitted to ODOT have been reviewed by the appropriate personnel at the department to help ensure accuracy. Officials? Response: See Corrective Action Plan

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