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Suggested Citation:"The Michigan DOT." 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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Page 19

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19 the MiChigAn Dot Although it was not the subject of a full case study, the Michigan DOT’s use of a comprehen- sive, state-published audit guide can be considered a best practice. In Michigan, audits are reviewed for compliance with the state’s published Audit Guide for Transportation Authorities. If an annual audit cites an OMB Circular A-133 transit audit finding associated with funds in which the state is the pass-through entity, that audit finding is iden- tified, tracked, and resolved in accordance with an internal operating instruction (e.g., IDI 70206 “Identification, Review and Follow up of Audit Findings”) that meets the mandates of OMB Circular A-133. If ineligible expenditures are identified that are not properly subtracted out as ineligible, the proper subtraction is made and the transit agency is notified of it. Audits required under Michigan state law are used to reconcile eligible expenses, which are used to determine state operating assistance. The Michi- gan DOT’s transit subrecipients are notified of any areas of noncompliance with the state audit require- ments and asked to correct them. The topics covered in the Michigan DOT’s Audit Guide for Transportation Authorities are listed in Appendix C. An online copy of the complete audit guidance can be found at the following webpage: http://www.michigan.gov/documents/treasury/ Audit_Guide_202115_7.pdf. (CAB). CAB has instituted a process to identify subrecipients expending in excess of the expendi- ture threshold for federal awards identified in OMB Circular A-133. Subrecipients so identified are no- tified of their audit obligation under OMB Circular A-133, including the requirement to submit a copy of their federal OMB Circular A-133 Single Audit Report within 9 months after the end of their fiscal year. CAB obtains the subrecipient’s federal Single Audit Report and, where applicable findings are identified, CAB issues a management decision. The management decision states whether or not the audit finding is sustained, the reasons for the decision, and any corrective actions expected of the subrecipient (e.g., to repay disallowed costs, make financial ad- justments, or take other specific action). A timetable for follow-up is provided for situations in which the subrecipient has not completed corrective actions. The management decision is issued within 6 months after receipt of the subrecipient’s audit report. CAB may perform a limited-scope audit to verify that corrective action has taken place. A time- table for follow-up is provided in the management decision to cover situations in which the subrecipi- ent has not completed corrective actions. If adequate corrective action has not taken place or if the subrecipient fails to submit an audit report in accordance with OMB Circular A-133, CAB no- tifies the Accounting Bureau to suspend payment on future reimbursement claims submitted by the sub- recipient until notified otherwise.

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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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