Titusville-Cocoa Airport AuthorityLocal Government

MW 2022-004 DISPOSITION OF GRANT-PURCHASED PROPERTY US Department of Transportation ? Federal Aviation Administration ALN: 20.106 Airport Improvement Program Contract No. Undetermined Florida Department of Transportation CSFA: 55.004 Aviation Grant Programs Contract No. Undetermined Criteria: 2 CFR section 200.303 and Section 215.97(10), Florida Statutes, require award recipients to establish and maintain effective internal controls over compliance with federal awards and state financial assistance programs. Award recipients under the Airport Improvement Program and the Aviation Grant Program are subject to assurance that proper records are maintained for equipment and real property acquired with federal awards or state financial assistance such that the disposition of any equipment and real property is in accordance with federal and state requirements, and the federal or state awarding agency has appropriately authorized the use of any proceeds from property sold or authorized its conversion to nonfederal or nonstate use. Condition: In December 2021, the Authority disposed of real property whose acquisition was funded in part with federal awards and state financial assistance. The Authority did not properly maintain records that identified the source of funds used to acquire property and other capital assets. As a result, the properties were sold without prior authorization of the Federal Aviation Authority and the Florida Department of Transportation. Cause of condition: The properties at issue were originally acquired in and around 2005 and 2006. In the past few years, the Authority has seen turnover in positions key to the grant compliance process. Additionally, as noted in the fiscal year 2021 audit as finding MW 2021-002, the Authority?s capital asset records have not been maintained in sufficient detail to identify specific assets or that identified the source of funding used to acquire property and capital assets. As a result, current management initiated the sale of these properties without consulting the FAA or the Florida Department of Transportation. Questioned costs: None Potential effect of condition While the Florida Department of Transportation has since retroactively acknowledged the sale of the properties and has released their portion of the proceeds from the sales to the Authority, ultimate resolution of the portion of the proceeds from the sales attributed to funding from the FAA is with the FAA. Perspective: When the new Director of Airports arrived at the Authority in fiscal year 2021, he was presented with concerns from the Board about the condition of these properties and the decision was made by the Authority to sell them. The proceeds from the sale of the properties was reported as restricted net position as of September 30, 2021, pending investigation into the original source of funding for the purchases. In addition to the lack of detail in the capital asset records, the prior management did not provide an Exhibit A with the Master Plan, which would have documented properties purchased with federal funds. Recommendation: The Authority should maintain its asset listing in sufficient detail to readily describe the asset using unique identifiers such as the legal description for real property and the source of funding used for the acquisition. For property or equipment acquired using federal or state grant funds, the Authority should ensure compliance with any requirements of the grant(s) related to disposition of property. Management?s Response: The Authority acknowledges the audit finding and corrective action is being taken. All capital assets purchased and donated will be recorded in the listing of capital assets and recorded in the accounting software. The Authority will be redesigning the control to be more efficient and deciding whether to keep a single listing with all various attributes required by the standard setting or oversight bodies for which the Authority must comply or keeping multiple listings and reconciling them no less than annually. The Authority will report restricted net position for the proceeds from the sale of the property referred to in the finding. Research is being conducted into the origin of the funds used for the original property purchases through the Master Plan.

SD 2022-005 PERFORMANCE REPORTS US Department of Transportation ? Federal Aviation Administration ALN: 20.106 Airport Improvement Program Contract No. 3-12-0013-023-2021 (for 2021) 3-12-0080-032-2021 (for 2021) Criteria: 2 CFR section 200.303 requires non-federal entities to establish and maintain effective internal controls. The award agreements require performance reporting and quarterly performance reporting (for construction expenditures), to ensure grant funded projects are progressing timely. Condition: Annual reports for award 3-12-0013-023-2021 and quarterly reports for award 3-12-0080-032-2021 were not submitted to the Federal Aviation Authority as required. Cause of condition: After the resignation of both the CEO and the Manager of Finance and Grant Administration in March 2021, the management of Federal awards was assumed by the Deputy Director of Operations on an interim basis. In fiscal year 2022, there was turnover of the project management consultants hired to assist in the grant management process, which was to include the preparation of all required reporting. The Authority did not have adequate controls in place to ensure that required performance reports were being prepared and remitted for review and approval prior to being submitted to the FAA. Questioned costs: None Potential effect of condition: The Authority was not in-compliance with program requirements and award terms for annual quarterly performance reporting. Perspective: New personnel was placed in charge of the grant management process, which included the requirements for performance reporting. There was a lapse in knowledge of the performance reports required to be submitted to the FAA. Recommendation: In the event of changes in key personnel, the person assuming responsibility for a role essential to reporting compliance should consider reaching out to the grantor to ensure that information about the nature and timing of any annual and/or quarterly performance reporting requirements is clarified. The Authority should implement controls to ensure that all required reports are prepared by the project management consultants and reviewed by the Authority prior to being submitted to the FAA on a timely basis. Management?s Response: The Authority acknowledges the audit finding and corrective action is in process. Management is currently working with our project management consultants requesting quarterly reports on active projects for timely filings with the FAA. Once performance reports are received, the reports will be reviewed by management and submitted on a quarterly and/or annual basis.

REVIEW OF REIMBURSEMENT REQUESTS US Department of Transportation ? Federal Aviation Administration ALN: 20.106 Airport Improvement Program Contract No. 3-12-0013-021-2019 (for 2019) 3-12-0080-030-2020 (for 2020) 3-12-0101-014-2019 (for 2019) Criteria: 2 CFR section 200.303 requires non-federal entities to establish and maintain effective internal controls. To provide for effective internal controls over the completeness, accuracy, validity and timeliness of reporting, requests for reimbursement should be subject to independent review by someone other than the preparer. Independent review of the requests for reimbursement also provides for internal control over grant matching requirements. Condition: I. The reimbursement request for award 3-12-0080-030-2020 was submitted with ineligible (disallowed) items. This reimbursement request was reviewed by the Chief Executive Officer (CEO) prior to submission. II. None of the reimbursement requests submitted while the CEO and the Manager of Finance and Grant Administration positions were vacant (March 2021 ? July 2021) were subjected to independent review. Cause of condition: I. The CEO did not identify ineligible (disallowed) items in his review of the reimbursement request. II. During the period from (March 2021 ? July 2021), both the preparer and reviewer roles identified in the control process were concurrently vacant. While the reimbursement requests during that period were prepared by the Interim Executive Director, the Authority did not identify someone to fill the review function. Questioned costs: None Potential effect of condition: I. The grantor disallowed $30,931 in expenses. II. Reimbursement requests not subject to review may contain errors or include ineligible expenses. Further, the calculation (reporting) of local match funds may be inaccurate. Recommendation: I. The person responsible for reviewing reimbursement requests should be familiar enough with the requirements of the award program to be able to identify ineligible costs during the review process. II. In the event that one or both of the key personnel positions becomes vacant again, the Authority should provide for a temporary change in their procedures such that an independent review is performed by someone with sufficient knowledge of the award program, such as an Authority Board member or a consultant.

ANNUAL REPORTS US Department of Transportation ? Federal Aviation Administration ALN: 20.106 Airport Improvement Program Contract No. 3-12-0013-021-2019 (for 2019) 3-12-0080-030-2020 (for 2020) 3-12-0101-014-2019 (for 2019) Criteria: 2 CFR section 200.303 requires non-federal entities to establish and maintain effective internal controls. The award agreements require annual financial and performance reporting pursuant to 2 CFR section 200.328 and 2 CFR section 200.329. Condition: Annual reports were not submitted to the Federal Aviation Authority (FAA) as required. Cause of condition: Both the CEO and the Manager of Finance and Grant Administration resigned effective March 2021. The Director of Operations and Facilities assumed management of Federal awards on an interim basis, but was not aware of the annual reporting requirements and did not submit the reports for fiscal year 2021. Questioned costs: None Potential effect of condition: The Authority was not in-compliance with program requirements and award terms for annual financial and performance reporting. Recommendation: In the event of changes in key personnel, the person assuming responsibility for a role essential to reporting compliance should consider reaching out to the grantor to ensure that information about the nature and timing of any annual financial and/or performance reporting requirements is clarified.

WAGE RATE COMPLIANCE US Department of Transportation ? Federal Aviation Administration ALN: 20.106 Airport Improvement Program Contract No. 3-12-0080-030-2020 (for 2020) Criteria: 2 CFR section 200.303 requires non-federal entities to establish and maintain effective internal controls. All laborers and mechanics employed by contractors or subcontractors to work on construction contracts in excess of $2,000 financed by federal assistance funds must be paid wages not less than those established for the locality of the project (prevailing wage rates) by the Department of Labor (DOL) (40 USC 3141?3144, 3146, and 3147. Nonfederal entities shall include in their construction contracts subject to the Wage Rate Requirements a provision that the contractor or subcontractor comply with those requirements and the DOL regulations (29 CFR Part 5, Labor Standards Provisions Applicable to Contacts Governing Federally Financed and Assisted Construction). This includes a requirement for the contractor or subcontractor to submit to the nonfederal entity weekly, for each week in which any contract work is performed, a copy of the payroll and a statement of compliance (certified payrolls) (29 CFR sections 5.5 and 5.6; the A-102 Common Rule (section 36(i)(5)); OMB Circular A-110 (2 CFR Part 215, Appendix A, Contract Provisions); 2 CFR Part 176, Subpart C; and 2 CFR section 200.326). Condition: Required wage rate requirement language was not included the agreement with one of two contractors tested during the current fiscal year. Further, certified payrolls were not obtained from this contractor. Cause of condition: Wage rate requirements were not attached to the purchase order issued to the contractor or otherwise incorporated into the terms of the agreement with the contractor. Historically, the Authority has used a grant consultant to review agreements with contractors and to collect and review weekly certified payrolls remitted by the contractors. For award number 3-12-0080-030-2020, the Authority did not follow their control procedures and the grant consultant was not utilized to monitor compliance with wage rate requirements. Questioned costs: $18,121. Potential effect of condition: The Authority was not in compliance with wage rate requirements and award terms. Recommendation: Exceptions or modifications of the Authority?s internal control process should be considered with caution. In all cases, the Authority should ensure contract and vendor management procedures include appropriate grant compliance procedures to include: I. Construction contracts and agreements for federal programs include wage rate requirement language. II. Weekly certified payrolls are collected and reviewed for all projects subject to wage rate requirements.