The Transit System, Inc.

Criteria: Uniform Grant Guidance (2 CFR 200.303) requires a non-federal entity receiving federal awards establish and maintain internal controls designed to reasonably ensure complaince with federal laws, regulations, and program compliance requirements. Effective internal controls should include procedures to ensure that reimbursement is not requested for costs that were refunded or reimbursed by other means.; Condition: Internal controls over compliance failed to identify that amounts refunded or reimbursed by other means did not appropriately reduce the request for reimbursement.; Cause: In one instance, the amount refunded for a returned item was recorded into an account that was not included in the report run to prepare the request for reimbursement. In two other instances, insurance proceeds were received and recorded in a holding account since the repairs had not yet been performed. At the time the repairs were expensed, the insurance proceeds were not manually adjusted to offset the cost in order to reduce the amount requested for reimbursement.; Effect: Requests for reimbursement submitted were overstated by a total of $9,613.16.; Repeat Finding: No.; Recommendation: It is recommended that the System refund the grantee $9,613.16, and establish procedures and internal controls to prevent requesting reimbursement for items that have been refunded or already reimbursed by other means.; Management's Response: The System has contacted the Texas Department of Transportation requesting instructions on refunding the amounts. In addition, they will implement new procedures and controls surrounding the calculation of their request for reimbursement and the handling of insurance proceeds to prevent this from happening moving forward.