DIAMOND STATE PORT CORPORATION

Reference Number: 2020-001 Federal Agency: U.S. Department of Transportation Federal Program: DoT Project No. DTMA91G140007 (TIGER) CFDA Number: 20.933 Compliance Requirement: Reporting Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement Control: Per 2 CFR section 200.303(a), a non-Federal entity must: 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). The Project Progress and Monitoring Reports: Consistent with the purposes of the FY 2013 TIGER Discretionary Grants, to ensure accountability and transparency in governmental spending, the Grantee shall submit quarterly progress reports (Quarterly Progress Reports) and Federal Financial Reports (SF-425) to the contacts designated by the Government in section 3.5. The Grantee shall submit the quarterly progress reports to the Government on a quarterly basis, beginning on the 20th of the first month of the calendar year quarter following the Effective Date, and on the 20th of the first month of each calendar year quarter thereafter until completion of the Project. The initial quarterly progress report shall include a detailed description, and, where appropriate, drawings, of the items funded. Condition, including perspective The Corporation did not have effective controls in place to ensure that its various reporting requirements reconciled to the Corporation?s expenditures for the TIGER Grant Agreement. In addition, we noted that the SF-425s we received did not have the date of the executive director?s signature and one SF-425 was dated after its due date. DIAMOND STATE PORT CORPORATION SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2020 Context During reporting testing, it was noted that there were discrepancies between total TIGER grant expenditures and the allocation between federal and non-federal expenditures between the Corporation?s schedule of expenditures and the quarterly SF-425s and cumulative progress reports for each quarters in fiscal year 2020. We noted the following differences: ? There was a difference from the general ledger on a cash basis and the SF-425s which totaled $(459,885) for the total fiscal year and consisted of a $13 of a federal expenditure difference and $(459,898) of non-federal expenditures. In addition, there were fluctuations within each quarter. ? There was a difference from the SF-425s and Quarterly Progress Reports which totaled $618,968 for the total fiscal year and consisted of a $(539,561) of a federal expenditure difference and $1,158,529 of non-federal expenditures. The difference represents the reversal of the difference from the prior fiscal year. In addition, there were fluctuations within each quarter. It was also noted that two of the four quarterly SF-425 we received were not dated when signed by the executive director and one SF-425 was submitted after its due date. Identification as a repeat finding This is a continuation of prior year finding 2019-001. Questioned Costs Undetermined. Cause The Corporation did not have the proper internal controls in place to ensure its reporting requirements for the TIGER Grant Agreement reconciled to the Corporation?s schedule of expenditures for the Agreement. Effect The Corporation is not properly reconciling its federal and non-federal expenditures for TIGER Grant Agreement to ensure all quarterly reports are complete, consistent and accurate. Recommendation We recommend that internal controls be updated to include quarterly reconciliation of all required reports (SF-425s and progress report) and ensure the reports have the executive director?s approval. Views of Responsible Officials and Planned Corrective Actions See attached for Corporation?s Corrective Action Plan.

Section III ? Findings and Questioned Costs ? Major Federal Awards Reference Number: 2019-001 Federal Agency: U.S. Department of Transportation Federal Program: DoT Project No. DTMA91G140007 (TIGER) CFDA Number: 20.933 Compliance Requirement: Reporting Type of Finding: Significant Deficiency, Noncompliance Criteria or specific requirement Control: Per 2 CFR section 200.303(a), a non-Federal entity must: 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). The Project Progress and Monitoring Reports: Consistent with the purposes of the FY 2013 TIGER Discretionary Grants, to ensure accountability and transparency in governmental spending, the Grantee shall submit quarterly progress reports (Quarterly Progress Reports) and Federal Financial Reports (SF-425) to the contacts designated by the Government in section 3.5. The Grantee shall submit the quarterly progress reports to the Government on a quarterly basis, beginning on the 20th of the first month of the calendar year quarter following the Effective Date, and on the 20th of the first month of each calendar year quarter thereafter until completion of the Project. The initial quarterly progress report shall include a detailed description, and, where appropriate, drawings, of the items funded. Condition, including perspective The Corporation did not have effective controls in place to ensure that its various reporting requirements reconciled to the Corporation?s expenditures for the TIGER Grant Agreement. In addition, we noted that the SF-425s we received did not have the signature and date of the executive director. Context During reporting testing, it was noted that there were discrepancies between total TIGER grant expenditure and the allocation between federal and non-federal expenditures between the Corporation?s schedule of expenditures and the quarterly SF-425s and cumulative progress reports for each quarters in fiscal year 2019. We noted the following differences: ? There was a difference from the general ledger on a cash basis and the SF-425s which totaled $105,543 for the total fiscal year and consisted of a $105,661 of a federal expenditure difference and $(18) of non-federal expenditures. In addition, there were fluctuations within each quarter. ? There was a difference from the SF-425s and Quarterly Progress Reports which totaled $(618,968) for the total fiscal year and consisted of a $1,095,123 of a federal expenditure difference and $(1,714,091) of non-federal expenditures. In addition, there were fluctuations within each quarter. It was also noted that three of the four quarterly SF-425 we received were not signed by the executive director. Questioned Costs Undetermined. Cause The Corporation did not have the proper internal controls in place to ensure it reporting requirements for the TIGER Grant Agreement reconciled to the Corporation?s schedule of expenditures for the Agreement. Effect The Corporation is not properly reconciling its federal and non-federal expenditures for TIGER Grant Agreement to ensure all quarterly reports are complete, consistent and accurate. Recommendation We recommend that internal controls be updated to include quarterly reconciliation of all required reports (SF-425s and progress report) and ensure the reports have the executive director?s approval. Views of Responsible Officials and Planned Corrective Actions See attached for Corporation?s Corrective Action Plan.

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