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Who Conducts and Pays how the state funds the audits, 22 of 29 state DOTs for Financial Audits (76 percent) indicated that a subrecipient's financial A majority of respondents indicated that they audit was an eligible operating expense. Associated did not use contractors to conduct financial audits comments from respondents included the following (Figure 6). However, some state DOTs reported di- statements: rect hiring of contractors to conduct OMB Circular An operating assistance subsidy may be used A-133 audits (17.8 percent) or other financial audits to offset costs. (13.3 percent). Through a cost allocation plan, they would be By far, most state DOTs allowed the subrecipi- reimbursed for a portion of the cost. ents to hire independent auditors to conduct their FTA funds pay for this and subrecipients can financial audits. Only two state DOTs reported in- volvement in selection or approval of the certified be eligible for reimbursement if a line item public accounting (CPA) firms used by subrecipi- expense is submitted in their 5311 budget ents, other than providing the general procurement plan. oversight of subrecipient third-party contracts, such Subrecipients may request at least partial re- as when the amount of the contract exceeded a imbursement for cost but most do not. $25,000 threshold. A proportionate amount of the audit can be Most of the state DOTs indicated that they paid charged to FTA grants. for all or a portion of the cost of subrecipients' fi- The state provides financial assistance as a nancial audits (Figure 7). When asked to describe percentage of annual operating expenses. Figure 6 Respondents' use of contractors to conduct subrecipients' financial audits. 7