Quality Control Review of the Management Letter for the Surface Transportation Board's Audited Financial Statements for Fiscal Years 2024 and 2023

Date Issued

Wednesday, February 12, 2025

Submitting OIG

Department of Transportation OIG

Agencies Reviewed/Investigated

Surface Transportation Board

Report Number

QC2025021

Report Description

Our Objective(s)To perform a quality control review (QCR) of Allmond & Company, LLC's (Allmond), management letter related to the audit of STB's financial statements for fiscal years ended September 30, 2024, and September 30, 2023. We reviewed Allmond's management letter, dated November 6, 2024, and related documentation.
About This ReportWe contracted with the independent public accounting firm Allmond to audit STB's financial statements. Allmond also issued a management letter discussing internal control matters that Allmond was not required to include in its audit report.
What We FoundThe independent auditor, Allmond, found seven internal control matters in STB's operations.

STB does not have agency-specific written policies and procedures for processing personnel actions.
STB does not enforce existing policies that require employees to submit, and supervisors to approve, leave requests for annual leave used.
STB does not perform a full review of accountable property and does not update inventory listings when items are issued or reassigned to employees.
STB does not have a procedure to validate upward and downward adjustment activity in the general ledger and to make the necessary corrections to ensure that both the upward and downward adjustment balances are accurate.
STB does not have procedures to ensure that employees' annual leave balances are correct and that carryover balances comply with laws and regulations.
STB expensed a portion of capitalized equipment in error.
STB taxed Federal Employees Health Benefits premiums in error.

Our QCR disclosed no instances in which Allmond did not comply, in all material respects, with U.S. generally accepted Government auditing standards.
RecommendationsWe agree with Allmond's 13 recommendations to help strengthen STB's internal controls.

Report Type

Audit

Agency Wide

Yes

Number of Recommendations

Questioned Costs

Funds for Better Use

Report updated under NDAA 5274

External Link

https://www.oig.dot.gov/library-item/46642

Open Recommendations

This report has 13 open recommendations.

Recommendation Number	Significant Recommendation	Recommended Questioned Costs	Recommended Funds for Better Use
1	Yes	$0	$0
Allmond recommended that STB management should create and enforce agency-specific written policies and procedures that specify how personnel actions should be initiated, reviewed, and submitted. These policies and procedures should specify the roles and responsibilities of Human Resources personnel relating to this process and the required elements and documentation of management's review of personnel actions prior to submission.
2	Yes	$0	$0
Allmond recommended that STB management should perform and document routine reviews on a monthly or more frequent basis to ensure that all personnel actions processed during the period were appropriately reviewed and approved by a second, authorized HR official and the information reported on the Standard Form (SF)-50 Notification of Personnel Action is accurate in all respects.
3	Yes	$0	$0
Allmond recommended that STB management should enforce existing policies and procedures requiring all employees to submit a leave request for all annual leave used.
4	Yes	$0	$0
Allmond recommended that STB management should require timekeepers or other appropriate personnel to verify that all employee leave requests have been submitted and properly approved by the certifying officials and that all leave hours taken agree with the leave type that was requested and approved.
5	Yes	$0	$0
Allmond recommended that STB should perform a full inventory of all accountable and capitalized property during its annual physical inventory, including identifying and following up on items that have been reported as lost or stolen or for which the stated location is not accurate.
6	Yes	$0	$0
Allmond recommended that STB should correct and then regularly update all listings of STB's assets to enable the agency to quickly and accurately locate all items issued to STB personnel.
7	Yes	$0	$0
Allmond recommended that STB management should work with the service provider to identify, at least quarterly, upward adjustments that have been offset by downward adjustments in the general ledger or perform an independent review of the general ledger activity of both accounts so that manual adjustments can be recorded to properly state the ending balances of both accounts, if needed.
8	Yes	$0	$0
Allmond recommended that STB management should design and implement policies and procedures which enhance the internal review process for upward and downward adjustment transactions and includes a reconciliation of the undelivered orders balances with the supporting documentation to ensure that transactions have been recorded correctly.
9	Yes	$0	$0
Allmond recommended that STB should perform a review of all employees' leave balances to ensure they are accurate and comply with 5 U.S.C. 6304 requirements.
10	Yes	$0	$0
Allmond recommended that STB should record all equipment purchases that meet its capitalization thresholds as capitalized assets. If the acquired property is not ready to be placed into service, then that property should be classified as Construction in Progress or Other General Property, Plant and Equipment, depending on the circumstances that apply to the purchased items at that time.
11	Yes	$0	$0
Allmond recommended that STB should regularly assess all capitalized property and identify assets that require reclassification, such as when assets are being placed into, or taken out of, service.
12	Yes	$0	$0
Allmond recommended that STB should update its financial reporting and property management policies and procedures to include the recording of new capitalized purchases in accordance with generally accepted accounting principles.
13	Yes	$0	$0
Allmond recommended that STB should enforce standard operating procedures to require a second Human Resources Specialist or the Human Resources Director to review all employee transfer and onboarding documents to ensure that the documentation is complete and agrees with the information that was entered into the payroll and personnel system before the information is submitted to the payroll service provider.