Northern Arizona Intergovernmental Public Transportation Authority

Finding Number: 2025‐001 Repeat Finding: No Program Name/Assistance Listing Title: Federal Transit Cluster Assistance Listing Number: 20.507, 20.526 Federal Agency: U.S. Department of Transportation Pass‐Through Agency: N/A Questioned Costs: $1,148,672 Type of Finding: Material Weakness Compliance Requirement: Cash Management Criteria In accordance with 2CFR Part 200.303, the Authority is responsible for the establishing and maintaining 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 term and conditions of the Federal award. In addition, the Authority must comply with 2 CFR Part 200.305 and ensure support is maintained for the reimbursement of expenditures. Condition The Authority did not have adequate internal controls in place to ensure eligible expenditures for the Federal Transit Cluster were reported on the Schedule of Expenditures of Federal Awards (SEFA). Cause The Authority was not requesting reimbursements in a timely manner resulting in expenditures from Federal sources not being recorded appropriately on the SEFA. Additionally, procedures were not followed to ensure reimbursement requests had appropriate documentation for associated expenditures. Effect The Authority did not ensure the grant expenditures were properly reported on the fiscal year 2024 SEFA, resulting in the need for the additional expenditures to be recognized on the SEFA. In addition, monies were drawn down for which there was not support for the reimbursement. Context For five of eleven reimbursement requests reviewed the Authority did not ensure that the grant expenditures were properly reported in the correct fiscal year on the Schedule of Expenditures of Federal Awards. Moreover, this resulted in fiscal year 2024 expenditures that were not appropriately recognized as federal expenses in the prior year totaling $1,487,236 that are now included in the current fiscal year SEFA. Additionally, For five of eleven reimbursement requests reviewed for the Federal Transit Cluster the requests were not reviewed and approved by a second, authorized person. Finally, the Authority did not retain documentation to support $1,148,672 of expenses requested for reimbursement in fiscal year 2025 from Federal Grants. The sample was not intended to be, and was not, a statistically valid sample.

Finding Number: 2024‐001 Repeat Finding: No Program Names/Assistance Listing Titles: Assistance Listing Numbers: Federal Award Numbers: Questioned Costs: Community Project Funding Congressionally Directed Spending 20.534 N/A $0 Federal Transit Cluster 20.507, 20.526 N/A $0 Federal Agency: U.S. Department of Transportation Pass‐Through Agency: Arizona Department of Transportation Type of Finding: Noncompliance, Material Weakness Compliance Requirements: Reporting Criteria In accordance with 2 CFR 200.512, the single audit must be completed, and the data collection form and reporting package must be submitted within the earlier of 30 calendar days after receipt of the auditor’s report(s), or nine months after the end of the audit period. Additionally, Authority management is responsible for establishing and maintaining internal controls over financial reporting to include controls over the Authority’s accounting records and general ledger transactions. Condition The audit was not completed by the deadline. In addition, adequate internal controls were not in place to ensure financial activity was properly reported in the Authority’s accounting records and that the reported amounts were accurate representations of financial activity. Cause Employee turnover and a change in financial reporting software delayed the single audit reporting package. The Authority changed financial reporting systems and there was a lack of training and understanding on how to review the new system’s data for accuracy. Effect The Authority was not in compliance with federal regulations and guidelines for single audit submissions. Additionally, amounts initially recorded within the financial system for financial presentation purposes were not accurate and required adjustment. Context The single audit report was not completed within 9 months of year end. In addition, the following balances were not accurately presented within the financial system until after the auditors’ review took place: capital assets, beginning net position, accounts payable, receivables, cash, and revenues. The sample was not intended to be, and was not, a statistically valid sample. Recommendation The Authority should allocate necessary resources to implement controls and procedures to ensure accounting records are being appropriately recorded in the Authority’s financial system and the single audit report is completed and submitted in a timely manner. Views of Responsible Officials See Corrective Action Plan.