diff --git a/src/libs/WorkspacesSettingsUtils.ts b/src/libs/WorkspacesSettingsUtils.ts
index a27d518fe727..46927e430f67 100644
--- a/src/libs/WorkspacesSettingsUtils.ts
+++ b/src/libs/WorkspacesSettingsUtils.ts
@@ -63,7 +63,18 @@ const getBrickRoadForPolicy = (report: Report, altReportActions?: OnyxCollection
     const oneTransactionThreadReportID = ReportActionsUtils.getOneTransactionThreadReportID(report.reportID, reportActions);
     let doesReportContainErrors = Object.keys(reportErrors ?? {}).length !== 0 ? CONST.BRICK_ROAD_INDICATOR_STATUS.ERROR : undefined;
 
-    if (oneTransactionThreadReportID) {
+    if (!doesReportContainErrors) {
+        const parentReportActions = (altReportActions ?? allReportActions)?.[`${ONYXKEYS.COLLECTION.REPORT_ACTIONS}${report?.parentReportID}`];
+        const parentReportAction = parentReportActions?.[report?.parentReportActionID ?? '-1'];
+        const shouldDisplayViolations = ReportUtils.shouldDisplayTransactionThreadViolations(report, allTransactionViolations, parentReportAction);
+        const shouldDisplayReportViolations = ReportUtils.isReportOwner(report) && ReportUtils.hasReportViolations(report.reportID);
+        const hasViolations = shouldDisplayViolations || shouldDisplayReportViolations;
+        if (hasViolations) {
+            doesReportContainErrors = CONST.BRICK_ROAD_INDICATOR_STATUS.ERROR;
+        }
+    }
+
+    if (oneTransactionThreadReportID && !doesReportContainErrors) {
         const oneTransactionThreadReport = ReportUtils.getReport(oneTransactionThreadReportID);
 
         if (
diff --git a/tests/unit/WorkspaceSettingsUtilsTest.json b/tests/unit/WorkspaceSettingsUtilsTest.json
new file mode 100644
index 000000000000..ff83fe078adf
--- /dev/null
+++ b/tests/unit/WorkspaceSettingsUtilsTest.json
@@ -0,0 +1,86 @@
+{
+    "session": {
+        "accountID": 18634488
+    },
+    "reports": {
+        "report_4286515777714555": {
+            "type": "chat",
+            "isOwnPolicyExpenseChat": false,
+            "ownerAccountID": 0,
+            "parentReportActionID": "8722650843049927838",
+            "parentReportID": "6955627196303088",
+            "policyID": "57D0F454E0BCE54B",
+            "reportID": "4286515777714555",
+            "stateNum": 0,
+            "statusNum": 0
+        },
+        "report_6955627196303088": {
+            "reportID": "6955627196303088",
+            "chatReportID": "1699789757771388",
+            "policyID": "57D0F454E0BCE54B",
+            "type": "expense",
+            "ownerAccountID": 18634488,
+            "stateNum": 1,
+            "statusNum": 1,
+            "parentReportID": "1699789757771388",
+            "parentReportActionID": "7978085421707288417"
+        }
+    },
+    "transactionViolations": {
+        "transactionViolations_3106135972713435169": [
+            {
+                "name": "missingCategory",
+                "type": "violation"
+            }
+        ],
+        "transactionViolations_3690687111940510713": [
+            {
+                "name": "missingCategory",
+                "type": "violation"
+            }
+        ]
+    },
+    "reportActions": {
+        "reportActions_6955627196303088": {
+            "8722650843049927838": {
+                "actionName": "IOU",
+                "actorAccountID": 18634488,
+                "automatic": false,
+                "avatar": "https: //d2k5nsl2zxldvw.cloudfront.net/images/avatars/default-avatar_1.png",
+                "isAttachmentOnly": false,
+                "originalMessage": {
+                    "amount": 12300,
+                    "comment": "",
+                    "currency": "VND",
+                    "IOUTransactionID": "3106135972713435169",
+                    "IOUReportID": "6955627196303088"
+                },
+                "message": [
+                    {
+                        "deleted": "",
+                        "html": "₫123 expense",
+                        "isDeletedParentAction": false,
+                        "isEdited": false,
+                        "text": "₫123 expense",
+                        "type": "COMMENT",
+                        "whisperedTo": []
+                    }
+                ],
+                "person": [
+                    {
+                        "style": "strong",
+                        "text": "adasdasd",
+                        "type": "TEXT"
+                    }
+                ],
+                "reportActionID": "8722650843049927838",
+                "shouldShow": true,
+                "created": "2024-11-05 11: 19: 18.706",
+                "childReportID": "4286515777714555",
+                "lastModified": "2024-11-05 11: 19: 18.706",
+                "childReportNotificationPreference": "hidden",
+                "childType": "chat"
+            }
+        }
+    }
+}
diff --git a/tests/unit/WorkspaceSettingsUtilsTest.ts b/tests/unit/WorkspaceSettingsUtilsTest.ts
new file mode 100644
index 000000000000..9ee2b511379f
--- /dev/null
+++ b/tests/unit/WorkspaceSettingsUtilsTest.ts
@@ -0,0 +1,69 @@
+import type {OnyxCollection} from 'react-native-onyx';
+import Onyx from 'react-native-onyx';
+import {getBrickRoadForPolicy} from '@libs/WorkspacesSettingsUtils';
+import ONYXKEYS from '@src/ONYXKEYS';
+import type {Report, ReportActions, TransactionViolations} from '@src/types/onyx';
+import type {ReportCollectionDataSet} from '@src/types/onyx/Report';
+import * as TestHelper from '../utils/TestHelper';
+import waitForBatchedUpdates from '../utils/waitForBatchedUpdates';
+import mockData from './WorkspaceSettingsUtilsTest.json';
+
+describe('WorkspacesSettingsUtils', () => {
+    beforeAll(() => {
+        Onyx.init({
+            keys: ONYXKEYS,
+        });
+    });
+
+    beforeEach(() => {
+        global.fetch = TestHelper.getGlobalFetchMock();
+        return Onyx.clear().then(waitForBatchedUpdates);
+    });
+    describe('getBrickRoadForPolicy', () => {
+        it('Should return "error"', async () => {
+            // Given mock data for reports, transaction violations, sessions, and report actions.
+            const report = Object.values(mockData.reports)?.at(0);
+            const transactionViolations = mockData.transactionViolations;
+            const reports = mockData.reports;
+            const session = mockData.session;
+            const reportActions = mockData.reportActions;
+
+            await Onyx.multiSet({
+                ...(reports as ReportCollectionDataSet),
+                ...(reportActions as OnyxCollection<ReportActions>),
+                ...(transactionViolations as OnyxCollection<TransactionViolations>),
+                session,
+            });
+
+            await waitForBatchedUpdates();
+
+            // When calling getBrickRoadForPolicy with a report and report actions
+            const result = getBrickRoadForPolicy(report as Report, reportActions as OnyxCollection<ReportActions>);
+
+            // The result should be 'error' because there is at least one IOU action associated with a transaction that has a violation.
+            expect(result).toBe('error');
+        });
+
+        it('Should return "undefined"', async () => {
+            // Given mock data for reports, sessions, and report actions. Note: Transaction data is intentionally excluded.
+            const report = Object.values(mockData.reports)?.at(0);
+            const reports = mockData.reports;
+            const session = mockData.session;
+            const reportActions = mockData.reportActions;
+
+            await Onyx.multiSet({
+                ...(reports as ReportCollectionDataSet),
+                ...(reportActions as OnyxCollection<ReportActions>),
+                session,
+            });
+
+            await waitForBatchedUpdates();
+
+            // When calling getBrickRoadForPolicy with a report and report actions
+            const result = getBrickRoadForPolicy(report as Report, reportActions as OnyxCollection<ReportActions>);
+
+            // Then the result should be 'undefined' since no IOU action is linked to a transaction with a violation.
+            expect(result).toBe(undefined);
+        });
+    });
+});