Audit Reveals Major Financial Problems For Memphis Transit Authority Due To Co-Mingling Grant Funds & Ignoring Previous Budgets

Image Credit: Thomas R Machnitzki / CC

The Tennessee Conservative [By Adelia Kirchner] –

A recent audit revealed that the Memphis Area Transit Authority (MATA) is facing big financial issues after not properly documenting expenses, co-mingling grant funds, and not adhering to their own budget plans.

“Since the departure of the last permanent CFO in October 2023, the transit authority has operated without defined budgets for individual departments, leading to potential inefficiencies and lack of accountability in financial management,” the audit stated.

It was also noted that in the past, the finance team was excluded from the budgeting process except for the CFO, effectively “undermining their ability to provide oversight and contribute to strategic financial planning and monitoring.”

“Finance has not been proactively provided with copies of budgets, suggesting budgets to actual tracking may not be effective,” the audit document continues. 

The “scathing” audit, conducted by PwC, stated that the public transit service’s expenses “lacked clear documentation linking it to MATA’s operational objectives.”

MATA was found to not be following their own policies and the audit states that the transit service is dysfunctional in seven different areas. 

Highlighted findings from the audit include:

• Poor management of the MATA company card – 44% of all charges to the card since 2019 were not accompanied by detailed receipts and 68% of these charges were not specifically businesses expenditures (ex. $11,269.22 spent on concessions at Memphis Grizzlies games and a $394 smart watch).
• MATA has co-mingled and not properly disperse federal, state and local grant funds and operating budget funding, making it difficult to report compliance with funding requirements.
• Auditors could not properly determine the cause of financial discrepancies due to MATA’s internal tracking spreadsheets co-mingling this funding.
• The audit considered the cost of MATA’s office space to be questionable as the transit service rents two floors of an office building but while one floor sits at approximately 80% occupancy, the other is “largely unoccupied, raising questions on why this much square footage was secured.”
• MATA has paid $4.6 million in rent, insurance and utilities since January 2022. 
• In that same time frame, MATA also spent $1.2 million on furniture, “office space design” and a moving crew.
• Meanwhile, an operational MATA facility on Levee Road was deemed “sinking” and “may be inoperable soon” according to the audit. 
• MATA was found to not be properly documenting payments.
• Mata was found to not be properly reviewing working estimates to evaluate if a lower price was possible.
• MATA’s grant tracking has been conducted using manual spreadsheets due to “constraints in its software” which the audit stated increases the risk of clerical errors regarding grant monies.

MATA told The Commercial Appeal that the transit service was taking the findings and recommendations presented in the audit “very seriously.”

“As a public agency, MATA remains committed to operating with transparency, accountability, and in alignment with all established policies and procedures,” the statement read. “We will thoroughly evaluate the report and work closely with our stakeholders to assess any areas for improvement and to strengthen internal processes where needed. Our focus is — and continues to be — on serving the public responsibly while ensuring the integrity of our financial and operational practices.”

About the Author: Adelia Kirchner is a Tennessee resident and reporter for the Tennessee Conservative. Currently the host of Subtle Rampage Podcast, she has also worked for the South Dakota State Legislature and interned for Senator Bill Hagerty’s Office in Nashville, Tennessee.  You can reach Adelia at adelia@tennesseeconservativenews.com.