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had programs for the independent auditors to use for mation other state DOTs could use as a basis
state programs and referred auditors to the federal for providing uniform auditing requirements
guidelines for federal funding. at the state level.
Using the results of the survey, the research
The research team reviewed materials referenced
team identified candidate state DOTs with best
in the survey responses, examined documents avail-
practices for further examination. Candidates were
able on the state DOT websites, and conducted tele-
drawn from state DOTs representing a broad cross
phone interviews to better understand the different
section of agencies. When identifying candidates
policies and procedures these state DOTs use to mon-
for further study, the research team considered ge-
itor or conduct financial auditing of subrecipients.
ography and agency size, with the goal of selecting Apart from adherence to the federal single audit
state DOTs from all regions of the United States and requirement as described in OMB Circular A-133,
reflective of different resource levels, as measured most state DOTs do not have financial auditing re-
by the amount of state funding available for transit. quirements for their public transportation assistance
Given the focus of the project, the research team program subrecipients. With respect to assuring
also looked for state DOTs that supplied descrip- compliance with this requirement, most state DOTs
tions of their financial auditing requirements or included provisions in FTA-required state manage-
practices above and beyond OMB Circular A-133 ment plans and in written agreements with subrecip-
requirements. ients, passing through this requirement to the sub
On the basis of these criteria, members of the re- recipients. However, many of the state DOTs did not
search team identified candidate state DOTs which have written procedures for monitoring and enforc-
were then reviewed by the project panel. The four ing this requirement. This report describes written
candidates identified by the most panel members be- procedures that are easy to replicate and that would
came the state DOTs selected to be case studies, as enable other state DOTs to document compliance
follows: with the OMB Circular A-133 requirements.
· The Kentucky Transportation Cabinet A limited number of state DOTs (usually those
(KYTC), Office of Transportation Deliv- that have significant state funding for public trans-
ery. A model for smaller state DOTs, this portation) have financial auditing requirements spe-
agency has developed procedures and track- cific to state statute or regulation. In these cases,
ing spreadsheets that provide an easy-to-use the state auditors' offices have developed written
framework. procedures and guidelines for financial audits. This
· The Oregon DOT Public Transit Division. digest provides an executive overview of the Ohio
A model for medium-sized state DOTs, this DOT's oversight audit program and resource infor-
agency has implemented electronic reporting mation for two additional guides (from New York
procedures for all DOT subrecipients and cre- and Michigan). These examples can be beneficial to
ated a pre-award audit questionnaire for new other agencies interested in implementing a state-
subrecipients. specific financial auditing requirement.
· The Ohio DOT Office of Transit. A model
for medium-sized state DOTs, this agency Background
has created an oversight audit program for its
rural (Section 5311) subrecipients. The objectives of this research effort were to
· The New York State DOT Bureau of Pub- · identify various financial policies and proce-
lic Transportation. A model for large state dures used by each state to assure that the tran-
DOTs, New York--in addition to monitoring sit funding it provides is appropriately used by
subrecipient compliance with federal OMB the grantees for the purpose(s) intended;
Circular A-133 audit requirements--has a · document the varied frequency, timeliness, and
state single audit requirement for agencies degree of detail required for financial audits
that receive $100,000 or more in state trans- among states;
portation assistance. New York's Contract · develop a comparative document describing
Audit Bureau has developed a 34-page Guid- the different policies and procedures employed
ance for Auditors that contains specific infor- by state DOTs to perform this function; and
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