PAUL BUNYAN TRANSITNon-Profit

2020 ? 005 Federal Agency: Department of Transportation Federal Program Title: Formula Grants for Rural Area and Tribal Transit Program AL Number: 20.509 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number(s): TFR-9101-20 Award Period: 1/1/2020-12/31/2020 Type of Finding: ? Material Weakness in Internal Control over Major Federal Programs, Material Noncompliance, and Other Matters Criteria or specific requirement: Non-federal entities other than states, including those operating federal programs as subrecipients of states, must follow the procurement standards set out at 2 CFR sections 200.318 through 200.326. They must use their own documented procurement procedures, which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable federal statutes and the procurement requirements identified in 2 CFR Part 200. Condition: During our testing we noted the Organization did not apply any procurement procedures for four small purchases and one noncompetitive proposal as they did not perform nor retain adequate documentation in accordance with Uniform Guidance. In addition, the Organization does not have a written procurement policy in accordance with Uniform Guidance. Questioned costs: $215,347 Context: 5 out of the 5 procurement selections did not have any procurement procedures followed for small purchases nor noncompetitive proposal. The entity should develop a procurement policy that conforms with Uniform Guidance. Cause: Management currently does not have a procurement policy that is in compliance with Uniform Guidance. Effect: Potential effect of noncompliance with Uniform Guidance when procuring goods and services for expenditures over federal awards. Repeat finding: No Recommendation: The Organization should review 2 CFR sections 200.318 through 200.326 requirements for procurement and update their policy accordingly. The Organization should also provide training to the various individuals involved in the procurement process to ensure they understand the applicable requirements. Views of responsible officials and planned corrective actions: The organization plans on creating and approving a formal procurement policy in compliance with Uniform Guidance.

2020 ? 006 Federal Agency: Department of Transportation Federal Program Title: Formula Grants for Rural Area and Tribal Transit Program AL Number: 20.509 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number(s): TFR-9101-20 Award Period: 1/1/2020-12/31/2020 Type of Finding: ? Material Weakness in Internal Control over Major Federal Programs Criteria or specific requirement: Timely review and approval should be maintained to ensure accurate amounts are charged to the grant for allowable costs, direct cost allocations, and for the cash being requested. Condition: During our testing, we noted the Organization did not have adequate internal controls designed to ensure there is someone reviewing and approving the employee benefits charges, monthly cost allocations and the cash requests prior to submission. Questioned costs: N/A Context: Two of the forty allowable cost transactions and three of the three monthly direct cost allocations selected for testing did not have a control procedure performed by someone other than the preparer of the allocations. All five of the cash requests selected for testing did not have support retained to show the requests were reviewed and approved prior to submission. Sampling was not a statistically valid sample. Cause: Management currently does not have an individual assigned to review the benefit allocations, monthly direct cost allocations or the cash requests. Effect: Inaccurate amounts of funds could be charged to the grant or requested. Repeat finding: No Recommendation: An individual should be assigned to review and approve the employee benefits, monthly direct cost allocations as well as the cash requests prior to submission. Views of responsible officials and planned corrective actions: The organization plans on creating a process for the employee benefits, monthly direct cost allocations as well as the cash requests to be reviewed and approved prior to submission.

2020 ? 007 Federal Agency: Department of Transportation Federal Program Title: Formula Grants for Rural Area and Tribal Transit Program AL Number: 20.509 Pass-Through Agency: Minnesota Department of Transportation Pass-Through Number(s): TFR-9101-20 Award Period: 1/1/2020-12/31/2020 Type of Finding: ? Significant Deficiency in Internal Control over Major Federal Programs and Other Matters Criteria or Specific Requirement: When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300).). Condition: During our testing we noted the Organization does not have an internal control policy over the suspension and debarment rules. Questioned Costs: N/A Context: 0 of the 2 selections had suspension and debarment procedures performed as there was no formal internal control policy in place dictating such a requirement. Cause: Management was unaware of the suspension and debarment requirements dictated by the Uniform Guidance. Effect: Potential for the Organization to do business with entities that are suspended or debarred which is not allowed per Uniform Guidance. Repeat Finding: No Recommendation: The Organization should implement a formal internal control policy over the suspension and debarment rules and follow them before entering into a covered transaction with another entity. Views of responsible officials and planned corrective actions: There is no disagreement with the audit finding.