What We Looked At Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Federal Transit Administration (FTA) received $25 billion to help the Nation’s public transit agencies mitigate the impacts of COVID-19. FTA obligated over $4.4 billion of this funding to recipients within FTA’s Region 9, which contains the 4th, 10th, and 11th highest FTA CARES Act fund recipients nationwide. Although the Agency expanded its oversight of COVID-19 relief funding recipients, we previously found risks associated with these activities and FTA’s oversight of contract and grant expenditures. Given our previous findings and the magnitude of taxpayer funds involved, we initiated this audit to assess FTA’s oversight of its Region 9 recipients’ compliance with CARES Act funding requirements. Specifically, we evaluated (1) FTA’s oversight processes relevant to Region 9 CARES Act payments, and (2) the eligibility of CARES Act payments for a statistical sample of eight Region 9 recipients.What We Found FTA conducts limited oversight of its Region 9 recipients' CARES Act payments. Specifically, the Agency did not amend its standard automated grant payment process to account for elevated CARES Act fund risks and relies on contractor-conducted oversight reviews that are insufficiently scoped to identify CARES Act funding noncompliance. Further, despite FTA encouraging recipients to use these funds expeditiously, FTA Region 9 funds remain unexpended. These limited oversight activities put the Agency at greater risk its CARES Act funds will be subject to fraud and misuse. For instance, we identified a total of $192.8 million in unsupported costs and $4.2 million in ineligible expenses associated with CARES Act payments for six of the eight sample Region 9 recipients tested. These issues were due in part to FTA’s limited oversight and broad eligibility guidance. Overall, we estimate FTA paid up to $340 million in unsupported costs and $106.9 million in ineligible expenses across Region 9 CARES Act recipients—totaling $446.9 million in Federal funds at risk.Our Recommendations We made four recommendations to strengthen FTA’s oversight of its recipients’ compliance with CARES Act funding requirements. The Agency concurred with recommendations 1 through 3, which we consider resolved but open pending completion of planned actions. FTA did not concur with recommendation 4, which we consider open and unresolved.
Open Recommendations
| Recommendation Number | Significant Recommendation | Recommended Questioned Costs | Recommended Funds for Better Use | Additional Details | |
|---|---|---|---|---|---|
| 1 | Yes | $0 | $0 | ||
| Implement written procedures to test recipients' CARES Act payments using methodologies to sufficiently validate that costs are supported and eligible. These procedures should include guidance for determining the extent of transaction level testing needed to sufficiently validate recipient's payment. | |||||
| 2 | Yes | $0 | $0 | ||
| Implement written procedures to test recipients' financial system controls to prevent duplicate payments from Federal, State, and local sources. | |||||
| 3 | Yes | $0 | $0 | ||
| Implement a written policy requiring that FTA officials develop and implement enhanced oversight processes to specifically mitigate identified risks associated with any funding appropriation, when applicable. | |||||
| 4 | Yes | $0 | $446,900,000 | ||
| For FTA funds identified at elevated risk for misuse, implement written procedures to strengthen the Agency's ability to assess expense eligibility prior to recipients receiving payments. Implementing this recommendation could put up to $446.9 million in Region 9 funds to better use by improving FTA's ability to identify unsupported costs and ineligible expenses before issuing CARES Act payments. This could also result in hundreds of millions in Agency funds put to better use among the other nine FTA regions. | |||||
