State DOT Financial Auditing Requirements for Public Transportation Assistance Programs (2012)

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21 APPenDiX B. suRveY 1. INTRODUCTION This research is being conducted by Maxine Marshall and John Potts of The DMP Group, under contract with the National Cooperative Research Program (NCHRP) of the Transportation Research Board (TRB). We thank you for your time and ask you to complete this survey promptly or forward it to the appropriate person on your staff responsible for conducting or monitoring subrecipient financial audits. BACKGROUND State Departments of Transportation (DOTs) invest a significant amount of money to support local public transportation in both urban and rural communities. At a time when most states are financially constrained, it is becoming more important for the public transportation units of the state DOTs to demonstrate that every effort is being made to monitor the expenditure of state and federal funds and to assure that the funds are being used for their intended purpose and in compliance with state and federal regulations. State DOTs differ significantly in the distribution and sources of state funding for public transportation and in the approaches used to monitor the use of the funds. While all states must pass through the federal requirement that a Single Audit, as described in the Office of Management and Budget (OMB) Circular A-133, be conducted of any agency that expends $500,000 or more in federal funds in a given year, FTA does not have a specific requirement for subrecipients that receive less than $500,000 per year. In these cases, the state DOTs follow their own procedures for assuring that FTA and state funds are accounted for properly. Many states do require subrecipients to conduct financial audits to assure that the transit funding provided by the state is appropriately used for the intended purpose(s). The objective of this study is to identify current practices used by states regarding the submission and review of financial audits, whether it is the A-133 audit or a separate financial audit required by the state. The results of the research will include a detailed description of practices and procedures that may be applicable to other states. 2. TRANSIT SUBRECIPIENT AUDIT REQUIREMENTS 1. Please provide the following contact information for the person completing the survey. Your Name: Agency: Address: Address 2: City/Town: State: ZIP: Your Position: Your Email Address: Phone Number:

22 2. Which FTA program funds does your state administer? [ ] Planning (5303, 5304 and/or 5305) [ ] Urbanized Area Formula Program (5307) [ ] Transit Capital Investment (5309) [ ] Transportation for Elderly and Persons with Disabilities (5310) [ ] Formula Grants for Other than Urbanized Areas (5311) [ ] Job Access and Reverse Commute (5316) [ ] New Freedom (5317) 3. Please identify ALL types of public transit assistance programs for which your state provides funding (applies to state funds only). [ ] Capital [ ] Operating [ ] Persons with Disabilities [ ] Elderly [ ] Planning [ ] Large Urban (>200,000 population) [ ] Small Urban (50,000–200,000 population) [ ] Rural (<50,000 population) 4. How much state funding was used for public transportation programs in FY 2009? 5. How many persons are currently employed in the public transportation section of your state DOT? Full-time Part-time Consultants (full or part-time) 6. Does your state have an internal audit function for DOT, including public transportation programs? ( ) Yes ( ) No If your answer was YES, to whom (what position) does this person report? 7. Does your state require ALL subrecipients to have an independent financial audit conducted annually? ( ) Yes ( ) No If your answer was NO, please identify which type of subrecipient is exempt from auditing requirements. 8. Does your state require ALL subrecipients (including those that expend less than $500,000 per year in federal funds) to have annual Single Audits conducted in accordance with OMB Circular A-133? ( ) Yes ( ) No If your answer was NO, please specify

23 9. Does your state have financial audit requirements for subrecipients other than A-133? ( ) Yes ( ) No If your answer was YES, what is the source of the requirement (e.g., state statute or procedure)? 10. Does your state use contractors to conduct the subrecipients financial audit? (applies to A-133 and other financial audits) [ ] Yes, for A-133 Audit [ ] Yes, for other financial audits [ ] No, we don’t use contractors to conduct financial audits If your answer was YES, please explain 11. Is your state involved in the selection or approval of the CPA firms used by subrecipients? ( ) Yes ( ) No 12. Does your state pay for all or a portion of the subrecipients’ financial audit? (applies to A-133 and other financial audits) ( ) Yes ( ) No If your answer was YES, please describe (e.g., do you allow it as an eligible expense?) 3. STATE AUDITING PROCEDURES & REVIEW 1. What other role(s) does your state play in subrecipient financial audits (e.g., attend/observe audit meetings)? 2. Does your state require ALL subrecipients to submit the complete audit report to your state? (applies to A-133 and other financial audits) ( ) Yes ( ) No If your answer was NO, please specify 3. What is the deadline for submission of the annual audit to your state? (applies to A-133 and other financial audits) ( ) Within 30 days of the receipt of the audit report by the subrecipient ( ) Within nine months of the end of the subrecipients fiscal year ( ) Within 120 days following the close of the subrecipients fiscal year ( ) Other If your answer was OTHER, please specify

24 4. Are there consequences for late submission of the subrecipients’ financial audits? (applies to A-133 and other financial audits) ( ) Yes ( ) No If your answer was YES, please describe 5. Is the financial audit used to verify that specific program requirements are being met, e.g. subrecipient eligibility, cost allocation among programs, drug & alcohol testing, ADA? (applies to A-133 and other financial audits) ( ) Yes ( ) No If your answer was YES, please describe 6. What is your state’s process for reviewing the audits? What happens if areas of concern, e.g. ineligible expenditures were found, are identified? (applies to A-133 and other financial audits) 7. What follow-up action does your state perform for ALL subrecipient financial audits? (applies to A-133 and other financial audits) 8. Does your state have any audit manuals/guidelines that CPA firms must follow? (applies to A-133 and other financial audits) 4. ADDITIONAL COMMENTS 1. Please add any experience you have had with state financial audit requirements that you were not asked about and feel other states might benefit. 2. If you have any current state audit procedures that you feel could be considered a “best practice”, please send your electronic file to NCHRP-DOTAuditStudy@thedmpgroup.com ( ) I will send an electronic file of our “best practice” ( ) I will not send a file at this time but feel we could benefit from other states’ procedures Thank you so much for participating in this NCHRP project on State Financial Auditing Requirements for their Public Transportation Assistance Programs. We recognize that you are very busy and we appreciate the time you devoted to this effort. We hope that the results will benefit you in the future. Maxine Marshall and John Potts The DMP Group