Central Indiana Regional Transportation Authority

Finding 2020-001 ? ALLOWABLE COST TESTING (Significant Deficiency) CFDA #20.507 Federal Transit Cluster Criteria: Management is responsible for maintaining appropriate documentation to substantiate the expenditure of funds in accordance with program requirement. Condition: We noted 3 expenditures for which management was unable to provide written documentation of proper approval. Additionally, we noted 2 expenditures for which management was unable to provide the supporting invoice. Context: We selected a sample of 60 expenditures totaling $311,966 of the total $1,208,156 expenditures. The three items lacking approval totaled $4,961. The two items lacking a supporting invoice was $295. Questioned Costs: $295. Effect: A lack of appropriate supporting documentation or formal review puts the Authority at an increased risk that ineligible expenditures could be incurred. Cause: The missing documentation identified appears to be the result of ineffective quality control and document retention processes. Recommendation: We recommend the Authority implement procedures to ensure that all required supporting documentation is maintained and that internal controls are in place to ensure expenditures are being properly reviewed. Views of Responsible Officials: Management concurs with this finding. See the separate corrective action plan.

FINDING 2019-002 Subject: Federal Transit Cluster - Suspension and Debarment Federal Agency: Department of Transportation Federal Program: Federal Transit Formula Grants CFDA Number: 20.507 Federal Award Numbers and Years (or Other Identifying Numbers): IN-2016-008, IN-2018-006, IN950038, IN-2019-027 Compliance Requirement: Procurement and Suspension and Debarment Audit Findings: Material Weakness, Modified Opinion Condition and Context The Authority had not established an effective internal control system related to the grant agreement and the Procurement and Suspension and Debarment compliance requirement. The Authority adopted a procurement policy on April 23, 2019, which included suspension and debarment requirements; however, there were no effective internal controls to ensure compliance with the policy. The Authority was required to verify that the vendor of any covered transactions that were expected to equal or exceed $25,000 was not suspended or debarred. The Authority added a clause to the vendor contracts to ensure compliance, but the threshold included in the clause was $100,000 instead of $25,000. Not all contracts included this clause, but those that did included the incorrect threshold for all vendors tested. In addition, there was no documentation that the Authority had searched all applicable vendors on the System for Award Management (SAM) to ensure that the vendors were not suspended or debarred. The lack of internal controls and noncompliance were systemic issues throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." 2 CFR 200.318(a) states: "The non-Federal entity must use its own documented procurement procedures which reflect applicable State, local, and tribal laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in this part." 2 CFR 180.300 states: "When you enter into a covered transaction with another person at the next lower tier, you must verify that that person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking SAM Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person." 2 CFR 180.220(b) states in part: "Specifically, a contract for goods or services is a covered transaction if any of the following applies: (1) The contract is awarded by a participant in a nonprocurement transaction that is covered under ? 180.210, and the amount of the contract is expected to equal or exceed $25,000. . . ." Central Indiana Regional Transportation Authority - Procurement Policy Manual, Appendix A: Required FTA Contract Clauses, Table 1, page 50: "Clause ? Debarment and Suspension for Professional Services/AE, Operations/Management/Subrecipients, Rolling Stock Purchase, Construction, Materials and Supplies >$25,000." Cause The Authority's management had not developed a system of internal controls that would have ensured compliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement. Effect The failure to establish an effective internal control system enabled material noncompliance to go undetected. Noncompliance with the grant agreement and the Procurement and Suspension and Debarment compliance requirement could have resulted in the loss of federal funds to the Authority. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Authority's management establish a system of internal controls to ensure compliance with the Procurement and Suspension and Debarment compliance requirement. A lack of segregation of duties within an internal control system allowed noncompliance with the Procurement and Suspension and Debarment compliance requirement, and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

FINDING 2019-003 Subject: Federal Transit Cluster - Period of Performance Federal Agency: Department of Transportation Federal Program: Federal Transit Formula Grants CFDA Number: 20.507 Federal Award Numbers and Years (or Other Identifying Numbers): IN-2016-008, IN-2018-006, IN950038, IN-2019-027 Compliance Requirement: Period of Performance Audit Finding: Material Weakness Condition and Context An effective internal control system was not in place at the Authority to ensure compliance with requirements related to the grant agreement and the Period of Performance compliance requirement. The Finance Manager reviewed the general ledger and made adjustments to the ledger monthly. However, an oversight or review process had not been established to ensure that the adjustments were made within the period of performance of the grant. The lack of internal controls was a systemic issue throughout the audit period. Criteria 2 CFR 200.303 states in part: "The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in 'Standards for Internal Control in the Federal Government' issued by the Comptroller General of the United States or the 'Internal Control Integrated Framework', issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). . . ." Cause The Authority's management had not developed a system of internal controls to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Effect The failure to establish an effective internal control system placed the Authority at risk of noncompliance with the grant agreement and the Period of Performance compliance requirement. A lack of segregation of duties within an internal control system could have also allowed noncompliance with the Period of Performance compliance requirement and allowed the misuse and mismanagement of federal funds and assets by not having proper oversight, reviews, and approvals over the activities of the program. Questioned Costs There were no questioned costs identified. Recommendation We recommended that the Authority's management establish internal controls to ensure compliance with the grant agreement and the Period of Performance compliance requirement. Views of Responsible Officials For the views of responsible officials, refer to the Corrective Action Plan that is part of this report.

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