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Suggested Citation:"Background." National Academies of Sciences, Engineering, and Medicine. 2012. State DOT Financial Auditing Requirements for Public Transportation Assistance Programs. Washington, DC: The National Academies Press. doi: 10.17226/14653.
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2mation other state DOTs could use as a basis for providing uniform auditing requirements at the state level. The research team reviewed materials referenced in the survey responses, examined documents avail- able on the state DOT websites, and conducted tele- phone interviews to better understand the different policies and procedures these state DOTs use to mon- itor or conduct financial auditing of subrecipients. Apart from adherence to the federal single audit requirement as described in OMB Circular A-133, most state DOTs do not have financial auditing re- quirements for their public transportation assistance program subrecipients. With respect to assuring compliance with this requirement, most state DOTs included provisions in FTA-required state manage- ment plans and in written agreements with subrecip- ients, passing through this requirement to the sub- recipients. However, many of the state DOTs did not have written procedures for monitoring and enforc- ing this requirement. This report describes written procedures that are easy to replicate and that would enable other state DOTs to document compliance with the OMB Circular A-133 requirements. A limited number of state DOTs (usually those that have significant state funding for public trans- portation) have financial auditing requirements spe- cific to state statute or regulation. In these cases, the state auditors’ offices have developed written procedures and guidelines for financial audits. This digest provides an executive overview of the Ohio DOT’s oversight audit program and resource infor- mation for two additional guides (from New York and Michigan). These examples can be beneficial to other agencies interested in implementing a state- specific financial auditing requirement. BACKgRounD The objectives of this research effort were to • identify various financial policies and proce- dures used by each state to assure that the tran- sit funding it provides is appropriately used by the grantees for the purpose(s) intended; • document the varied frequency, timeliness, and degree of detail required for financial audits among states; • develop a comparative document describing the different policies and procedures employed by state DOTs to perform this function; and had programs for the independent auditors to use for state programs and referred auditors to the federal guidelines for federal funding. Using the results of the survey, the research team identified candidate state DOTs with best practices for further examination. Candidates were drawn from state DOTs representing a broad cross section of agencies. When identifying candidates for further study, the research team considered ge- ography and agency size, with the goal of selecting state DOTs from all regions of the United States and reflective of different resource levels, as measured by the amount of state funding available for transit. Given the focus of the project, the research team also looked for state DOTs that supplied descrip- tions of their financial auditing requirements or practices above and beyond OMB Circular A-133 requirements. On the basis of these criteria, members of the re- search team identified candidate state DOTs which were then reviewed by the project panel. The four candidates identified by the most panel members be- came the state DOTs selected to be case studies, as follows: • The Kentucky Transportation Cabinet (KYTC), Office of Transportation Deliv- ery. A model for smaller state DOTs, this agency has developed procedures and track- ing spreadsheets that provide an easy-to-use framework. • The Oregon DOT Public Transit Division. A model for medium-sized state DOTs, this agency has implemented electronic reporting procedures for all DOT subrecipients and cre- ated a pre-award audit questionnaire for new subrecipients. • The Ohio DOT Office of Transit. A model for medium-sized state DOTs, this agency has created an oversight audit program for its rural (Section 5311) subrecipients. • The New York State DOT Bureau of Pub- lic Transportation. A model for large state DOTs, New York—in addition to monitoring subrecipient compliance with federal OMB Circular A-133 audit requirements—has a state single audit requirement for agencies that receive $100,000 or more in state trans- portation assistance. New York’s Contract Audit Bureau has developed a 34-page Guid- ance for Auditors that contains specific infor-

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TRB’s National Cooperative Highway Research Program (NCHRP) Research Results Digest 368: State DOT Financial Auditing Requirements for Public Transportation Assistance Programs identifies various financial policies and procedures used by states for conducting grantee financial audits.

The report documents policies, procedures, and practices used by some state departments of transportation designed to enhance and streamline their current financial auditing requirements.


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