SIOUX FALLS REGIONAL AIRPORT AUTHORITYLocal Government

Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3-46-0050-59, AIP3-46-0050-62, AIP3-46-0050-63, and AIP3-46-0050-64. COVID-19 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance; Material Noncompliance Criteria - 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition - The SF-425 annual report dated September 30, 2024, for award AIP3-46-0050-64 underreported the federal share of expenditures by $23,588, while the FAA Form 5100-127 annual report dated December 31, 2023, for all awards underreported the total capital expenditures and construction in progress by $2,729,962. Cause - The Authority does not have an internal control structure designed to ensure amounts reported on SF-425 and FAA Form 5100-127 reports are adequately reviewed and agree to underlying accounting records. Effect - Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs - None reported. Context/Sampling - A nonstatistical sample of 7 reports out of 27 reports. Repeat Finding from Prior Year – Yes, prior year finding 2023-002 Recommendation - Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF-425 and FAA Form 5100-127 reports agree with the underlying accounting records. Views of Responsible Officials - Management agrees with the finding.

Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3‐46‐0050‐54, AIP3‐46‐0050‐59, AIP3‐46‐0050‐60, and AIP3‐46‐0050‐62. COVID‐19 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria ‐ 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition ‐ The SF‐425 annual report dated September 30, 2023, for award AIP3‐46‐0050‐54 underreported the federal share of expenditures by $80,133, while the FAA Form 5100‐127 annual report dated December 31, 2022, for all awards underreported the externally restricted assets by $397,646. Cause ‐ The Authority does not have an internal control structure designed to ensure amounts reported on SF‐425 and FAA Form 5100‐127 reports are adequately reviewed and agree to underlying accounting records. Effect ‐ Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs ‐ None reported. Context/Sampling ‐ A nonstatistical sample of 10 reports out of 31 reports. Repeat Finding from Prior Year – Yes, prior year finding 2022‐002 Recommendation ‐ Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF‐425 and FAA Form 5100‐127 reports agree with the underlying accounting records. Views of Responsible Officials ‐ Management agrees with the finding.

Finding 2022-002 Department of Transportation Federal Financial Assistance Listing 20.106; Awards AIP3-46-0050-57 and AIP3-46-0050-61 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria - 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition - The SF-425 annual report dated September 30, 2022, for award AIP3-46-0050-57 overreported the federal share of expenditures by $1,347, while the SF-425 annual report dated September 30, 2022, for award AIP3-46-0050-61 underreported the federal share of expenditures by $1,494,690. Cause - The Authority does not have an internal control structure designed to ensure amounts reported on SF-425 reports are adequately reviewed and agree to underlying accounting records. Effect - Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. Questioned Costs - None reported. Context/Sampling - A nonstatistical sample of 4 reports out of 12 reports. Repeat Finding from Prior Year - No Recommendation - Management should determine and formalize reporting responsibilities between the Airport and the State and establish review processes to ensure that amounts included in SF-425 reports agree with the underlying accounting records. Views of Responsible Officials - Management agrees with the finding.

Finding 2021-002 Department of Transportation Assistance Listing #20.106; AIP3-46-0050-55, AIP3-46-0050-56, AIP3-46-0050-57 Airport Improvement Program Reporting Material Weakness in Internal Control over Compliance and Material Noncompliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements and performance expectations are being achieved and report these items in accordance with the program requirements. Condition: SF-425 annual reports were not completed and submitted for AIP3-46-0050-55, AIP3-46-0050-56 and AIP3-46-0050-57 awards by the due date. Additionally, amount reported under line item: Landed Weight in Pounds within FAA Form 5100-127 didn?t agree to underlying records. Lastly, SF-425 annual reports were not completed and submitted for AIP3-46-0050-55, AIP3-46-0050-56 and AIP3-46-0050-57 awards by the due date. Cause: The report used to prepare the landed weight for FAA Form 5100-127 excluded feeder carriers. The Authority has not filed the SF-425 annual reports in the past. There has been turnover at the State of South Dakota Department of Transportation (the State) and the Authority and the State did not determine assignment of the responsibilities relating to the completion and submission of SF-425 reports. Effect: Lack of compliance with designed internal controls over reporting could result in the Authority reporting incorrect or incomplete information. The required SF-425 reports were not filed by the due date. Questioned Costs: None reported. Context/Sampling: A nonstatistical sample of 3 reports out of 5 reports. Repeat Finding from Prior Year: No Recommendation: Management should determine and formalize reporting responsibilities between the Airport and the State. Views of Responsible Officials: Management agrees with the finding.

Finding 2020-002 Department of Transportation CFDA #20.106; AIP3-46-0050-54 Airport Improvement Program Activities Allowed/Allowable Costs Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. Procedures relating to determining the allowability of costs in accordance with 2 CFR Subpart E should identify costs that are not eligible for reimbursement. Condition: Internal controls failed to detect a request for reimbursement request for an unallowable cost relating to promotional expenses. Cause: Management failed to perform a detailed review of all expenditures for allowability within the cost principles 2 CFR 200 Subpart E. Effect: A unallowed cost for $12,500 was submitted for reimbursement in error. Questioned Costs: None reported. The unallowed cost was removed by the sponsor agency and there was no reimbursement for the cost Context/Sampling: Nonstatistical sampling was not used. Repeat Finding from Prior Year: No Recommendation: Management should perform a detailed review of all costs prior to submission to evaluate for allowability. Views of Responsible Officials: Management agrees with the finding.

Finding 2020-003 Department of Transportation CFDA #20.106, AIP3-46-0050-53, AIP3-46-0050-54 Airport Improvement Program Special Tests & Provisions: Davis Bacon Material Weakness in Internal Control over Compliance Criteria: The Wage Rate Requirements under the Davis Bacon Act relating to prevailing wage rates are applicable to construction work for airport development projects. (49 USC 47112) 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. Condition: The Authority uses a 3rd party contractor to monitor compliance with Davis Bacon prevailing wage requirements. The 3rd party firm did not formally document review of payroll certification provided by contractors. Cause: The 3rd party contractor did not formally document review of payroll certification provided by contractors. Effect: Controls over Davis Bacon compliance not operating effectively could result in the possibility that the Airport would not be able to prevent, detect, and correct potential instances of noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: We tested all contractor certifications for eight weeks out of 36 weeks in which contractors were performing work. Repeat Finding from Prior Year: Yes Recommendation: Management should ensure a secondary review of weeks monitored by 3rd party contractor for Davis Bacon requirements is documented. Views of Responsible Officials: Management agrees with the finding.

Finding 2020-004 Department of Transportation CFDA #20.106, AIP3-46-0050-54 Airport Improvement Program Suspension and Debarment Material Weakness in Internal Control over Compliance Criteria: Under 2 CFR 200.213, the Authority is required to have procedures in place to ensure they are not making subawards to parties that are suspended or debarred. In addition, 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal control over the federal award that provides assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition: The Authority contracts with a 3rd party to monitor for suspension and debarment requirements over capital expenditures, but that 3rd party agreement does not include responsibilities to monitor for suspension or debarment of other covered vendors reimbursed for operational expenditures under the CARES Act grant. Cause: The Authority was aware of the requirements but did not consider the covered vendors submitted for reimbursement under the CARES Act grant. Effect: Controls over suspension and debarment compliance not operating effectively could result in the possibility that the Airport would not be able to prevent, detect, and correct potential instances of noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: We tested three of thirteen vendors. Repeat Finding from Prior Year: No Recommendation: We recommend establishing procedures that include a review of covered vendors for suspension and debarment prior to requesting reimbursement, as well as adequate monitoring controls to ensure the procedures are implemented. Views of Responsible Officials: Management is in agreement.

Finding 2019-002 Department of Transportation CFDA #20.106 Airport Improvement Program Reporting Significant Deficiency in Internal Control over Compliance Criteria: 2 CFR 200.303(a) establishes that the auditee must establish and maintain effective internal controls over the federal awards that provide assurance that the entity is managing the federal awards in compliance with federal statutes, regulations, and the conditions of the federal award. 2 CFR 200.327 and 2 CFR 200.328 require the auditee to collect financial information and monitor its activities under federal awards to assure compliance with applicable federal requirements, to assure performance expectations are being achieved, and to report these items in accordance with program requirements. Condition: Internal controls failed to detect a clerical error on FAA 5100-127, Operating and Financial Summary report relating to net assets. Cause: Net assets were keyed incorrectly into report and error was not caught during review. Effect: Net assets were misreported on the FAA 5100-127 report by $30,000. There is a reasonable possibility that the Authority would not identify errors in reporting that could result in material reporting errors. Questioned Costs: None reported. Context/Sampling: Nonstatistical sampling was not used. Repeat Finding from Prior Year: No Recommendation: Management should perform a detailed review of all reports prepared by third party accountant prior to submission to evaluate for accuracy. Views of Responsible Officials: Management agrees with the finding.

Finding 2019-003 Department of Transportation CFDA #20.106, AIP3-46-0050-52 Airport Improvement Program Special Tests & Provisions: Davis Bacon Significant Deficiency in Internal Control over Compliance Criteria: The Wage Rate Requirements under the Davis Bacon Act relating to prevailing wage rates are applicable to construction work for airport development projects. (49 USC 47112) Condition: The Authority uses a 3rd party contractor to monitor compliance with Davis Bacon prevailing wage requirements. The 3rd party contractor omitted the established review process of AIP3-46-0050-52 and did not obtain all payroll periods for weeks where contractors were performing work at the Airport for that project. Cause: The engineering firm that is obtaining the required Davis Bacon certifications failed to supply supporting documentation to the 3rd party contractor as an oversight. Effect: Controls over Davis Bacon compliance not operating effectively could result in the possibility that the Airport would not be able to prevent, detect, and correct potential instances of noncompliance in a timely manner. Questioned Costs: None reported. Context/Sampling: We tested all contractor certifications for six weeks out of 31 weeks in which contractors were performing work. Repeat Finding from Prior Year: No Recommendation: Management should perform a secondary review of weeks monitored by Lamfers & Maas, LLP for Davis Bacon requirements. Views of Responsible Officials: Management agrees with the finding.