TOLEDO AREA REGIONAL TRANSIT AUTHORITY

Assistance Listing, Federal Agency, and Program Name 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year All Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding Yes 2023-005 Criteria 2 CFR 200.320 provides standards for acceptable methods of procurement, which includes the following required support for the contract price: Informal procurement methods (micro purchases) may be awarded without submitting competitive price or rate quotations if the non federal entity considers the price to be reasonable based on research, experience, purchase history, or other information and documents in files accordingly. Small purchases require that price or rate quotations be obtained and documented to support the procurement decisions. Formal procurement methods require documentation of sealed bids, proposals, or rationale for the use of non competitive procurements, such as single source and emergency procurements Condition During our testing, we identified two contracts that did not have adequate documentation to support the basis for the contract price. Questioned Costs $222,703 Identification of How Questioned Costs Were Computed The sum of the expenditures incurred under the contracts for the two exceptions identified in our testing was used to calculate questioned costs. Context Of the 33 procurements selected for testing, there were two contracts subject to formal procurement methods that had no evidence to support whether sealed bids, proposals, or noncompetitive procurements were used to support the contract price, one of which was a sole source contract. Cause and Effect The Authority experienced turnover in personnel that resulted in it being unable to locate documentation to support compliance for the two exceptions identified in our testing. Recommendation We recommend that internal controls be put in place to ensure that all procurements adhere to 2 CFR 200.320 and maintain documentation to support compliance and supervisory review. Views of Responsible Officials and Corrective Action Plan Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control and verify all purchases in accordance with 2 CFR 200.32 standards for acceptable methods of procurement going forward.

Condition: During our testing, we identified two contracts that did not have adequate documentation to support the basis for the contract price. Planned Corrective Action: Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control and verify all purchases in accordance with 2 CFR 200.32 standards for acceptable methods of procurement going forward. Contact person responsible for corrective action: James Karasek Anticipated Completion Date: 6/1/2025

2023-005

Assistance Listing, Federal Agency, and Program Name 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year All Pass through Entity Not applicable Finding Type Material weakness Repeat Finding No Criteria 2 CFR 200.305 requires that for reimbursement based grants, the entity should incur the costs for which reimbursement was requested prior to the date of the reimbursement request. Condition During our testing, we identified one reimbursement request that included a check that was not paid as it was voided and paid with a subsequent check, which was also requested for reimbursement. Questioned Costs $3,819 If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported Not applicable Identification of How Questioned Costs Were Computed The sum of the expenditures incurred under the contracts for the exception identified in our testing was used to calculate questioned costs. Context Of the 9 draws selected for testing, there was one draw that included one invoice submitted for reimbursement twice on the same draw as it was incorrectly entered into the system. Cause and Effect A check was voided and expense was never paid as the invoice was incorrectly coded to the incorrect vendor, but was still included as a check on the reimbursement request. Recommendation We recommend that the internal controls be put in place to ensure that there are no duplicate expenses being submitted for reimbursement. Views of Responsible Officials and Planned Corrective Actions Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control, accumulated, and monitor all transaction related to our grant draws in accordance with 2 CFR 200.305 going forward.

Condition: During our testing, we identified one reimbursement request that included a check that was not paid as it was voided and paid with a subsequent check, which was also requested for reimbursement. Planned Corrective Action: Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to electronically control, accumulated, and monitor all transaction related to our grant draws in accordance with 2 CFR 200.305 going forward. Contact person responsible for corrective action: James Karasek Anticipated Completion Date: 6/1/2025

Assistance Listing, Federal Agency, and Program Name 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year All Pass through Entity Not applicable Finding Type Material weakness and material noncompliance with laws and regulations Repeat Finding Yes 2023-006 Criteria The Authority should ensure there is a process in place prior to entering into contracts with vendors in excess of $25,000 to verify such contractors are not suspended, debarred, or otherwise excluded pursuant to 2 CFR Section 180.300. Condition There was no evidence to support that the Authority performed procedures to verify that the vendors were not suspended, debarred, or otherwise excluded prior to entering into contracts for 18 contracts within our testing population. Questioned Costs Not applicable Identification of How Questioned Costs Were Computed Not applicable Context Of the 33 procurements selected for testing, 18 procurements did not contain evidence of either (1) a search performed on Sam.gov to determine if the vendor was suspended, debarred, or otherwise excluded; (2) a certification from the contractor attesting that they are not suspended, debarred, or otherwise excluded; or (3) adding a clause or condition to the covered transaction with that vendor. Cause and Effect The Authority has experienced turnover that resulted in it being unable to locate documentation to support compliance. Recommendation We recommend that internal controls be put in place to ensure that the required verification is performed, documented, and reviewed by a supervisor prior to entering into contracts with vendors. Views of Responsible Officials and Planned Corrective Actions Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to indicate and upload verification that a vendor was checked for suspension, debarment, or exclusions prior to entering into a contract in accordance with 2 CFR 180.300, going forward.

Condition: There was no evidence to support that the Authority performed procedures to verify that the vendors were not suspended, debarred, or otherwise excluded prior to entering into contracts for 18 contracts within our testing population. Planned Corrective Action: Effective 6/1/2025, TARTA implemented a new ERP system that will allow us to indicate and upload verification that a vendor was checked for suspension, debarment, or exclusions prior to entering into a contract in accordance with 2 CFR 180.300, going forward. Contact person responsible for corrective action: James Karasek Anticipated Completion Date: 6/1/2025

2023-006

Assistance Listing, Federal Agency, and Program Name - 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year - All, including COVID 19 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - 2 CFR 200.320 provides standards for acceptable methods of procurement which includes the following required support for the contract price: Informal procurement methods (micro purchases) may be awarded without submitting competitive price or rate quotations if the non Federal entity considers the price to be reasonable based on research, experience, purchase history or other information and documents in files accordingly. Small purchases require that price or rate quotations be obtained and documented to support the procurement decisions. Formal procurement methods require documentation of sealed bids, proposals or rationale for the use of non competitive procurements such as single source and emergency procurements. Condition - During our testing we identified five contracts that did not have adequate documentation to support the basis for the contract price. Questioned Costs - $419,296 Identification of How Questioned Costs Were Computed - The sum of the expenditures incurred under the contracts for the five exceptions identified in our testing was used to calculated questioned costs. Context - There was one contract subject to the micro purchase method of procurement that had no evidence to support whether the price was reasonable based on research, experience, purchase history or other factors. There were two contracts subject to small purchasing procedures that had no evidence to support whether price or rate quotes were obtained. There were two contracts subject to formal procurement methods that had no evidence to support whether sealed bids, proposals or noncompetitive procurements were used to support the contract price. Cause and Effect - The Organization experienced turnover in personnel that resulted in the Authority being unable to locate documentation to support compliance for the five exceptions identified in our testing. Recommendation - We recommend that internal controls be put in place to ensure that all procurements adhere to 2 CFR 200.320 and maintain documentation to support compliance and supervisory review. Views of Responsible Officials and Corrective Action Plan - Implement a new internal controls checklist, and review process, along with procurement training for all management staff involved in the procurement process. In addition, TARTA will be moving to a new accounting ERP system in early 2025 that will automate the procurement workflow process to ensure proper approval and documentation has been obtained prior to procuring products and services, eliminating errors.

Condition: During our testing we identified 5 contracts that did not have adequate documentation to support the basis for the contract price. Planned Corrective Action: Implement a new internal controls checklist, and review process, along with procurement training for all management staff involved in the procurement process. In addition, TARTA will be moving to a new accounting ERP system in early 2025 that will automate the procurement workflow process to ensure proper approval and documentation has been obtained prior to procuring products and services, eliminating errors. Contact person responsible for corrective action: James Karasek Anticipated Completion Date: 9/30/2024, and new ERP early 2025

Assistance Listing, Federal Agency, and Program Name - 20.500, 20.507, 20.525, 20.526, U.S. Department of Transportation, Federal Transit Cluster Federal Award Identification Number and Year - All, including COVID 19 Pass through Entity - Not applicable Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - The Organization should ensure there is a process in place, prior to entering into contracts with vendors in excess of $25,000, to verify such contractors are not suspended debarred, or otherwise excluded pursuant to 2 CFR Section 180.300. Condition - There was no evidence to support that the Organization performed procedures to verify that the vendors were not suspended, debarred or otherwise excluded prior to entering into contracts in all instances. Questioned Costs - None Identification of How Questioned Costs Were Computed - Not applicable Context - Of the 60 procurements selected for testing, not all of the procurements contained evidence of either (1) a search performed on Sam.gov to determine if the vendor was suspended, debarred, or otherwise excluded; (2) a certification from the contractor attesting that they are not suspended, debarred, or otherwise excluded; or (3) adding a clause or condition to the covered transaction with that vendor. Cause and Effect - The Organization has experienced turnover that resulted in the Authority being unable to locate documentation to support compliance. Recommendation - We recommend that internal controls be put in place to ensure that the required verification is performed, documented and reviewed by a supervisor prior to entering into contracts with vendors. Views of Responsible Officials and Planned Corrective Actions - Procurement manager is assigned responsibility for verifying and documenting that vendors were not suspended, debarred or otherwise excluded through Sam.gov. This has also been added to our current document checklist and will be part of the new accounting ERP automated procurement workflow and review process.

Condition: There was no evidence to support that the Organization performed procedures to verify that the vendors were not suspended, debarred or otherwise excluded prior to entering into contracts in all instances. Planned Corrective Action: Procurement manager is assigned responsibility for verifying and documenting that vendors were not suspended, debarred or otherwise excluded through Sam.gov. This has also been added to our current document checklist and will be part of the new accounting ERP automated procurement workflow and review process. Contact person responsible for corrective action: James Karasek Anticipated Completion Date: 09/30/2024, and new ERP early 2025