Internal Audit Follow-Up Report

Transcription

1 Internal Audit Follow-Up Report Civil Rights Division Program Management TxDOT Internal Audit Division

2 Objective To assess the status of corrective actions for high-risk Management Action Plans (MAPs) previously communicated in the Office of Civil Rights Program Management audit report issued May 2013 and the MAP Follow-Up report issued August Summary Results Testing consisted of an evaluation of 7 MAPs (including 3 FMAPs) to determine if corrective actions were implemented as agreed. MAP Status Comments 2 Open Corrective actions that require completion to address identified risks from the original audit report. 5 Closed Corrective actions have been completed. Scope The scope included a review of submitted documentation regarding Civil Rights Division s (CIV) Disadvantage Business Enterprise (DBE) program management. The engagement was performed by Rita Ruiz and Lindsay Bibeau (Engagement lead). The engagement was conducted during the period from December 5, 2016 to February 16, Methodology The methodology used to complete the objectives of this engagement included: Reviewed prior TxDOT Internal Audit Division audit report findings and MAPs, as well as, the State Auditor s Office audit report Selected Business Opportunity Programs at the Department of Transportation, September 2015 and Sunset Advisory Commission Staff Report the Texas Department of Transportation th Legislature Conducted interviews with key personnel in CIV, such as federal programs section director, operations and policy director, Historically Underutilized Business (HUB) program director and contract compliance section director Obtained and reviewed listing of District DBE Submissions, SOPs, and Local Government Project Best Practices Workbook, Policy Manual, and Project Management Guide Reviewed newly created checklist for auditing Local Governments (LG) Reviewed the CIV DBE goal setting spreadsheet Observed the LG SharePoint site with DBE reporting Reviewed selected monthly/quarterly LGP DBE goal tracking reports Background This report is prepared for the Texas Transportation Commission and for the Administration and Management of TxDOT. The report presents the results of the Civil Rights Division Program Management Follow-Up engagement which was conducted as part of the Fiscal Year (FY) 2017 Audit Plan. Civil Rights Division (CIV), formally known as the Office of Civil Rights (OCR), was established to ensure equal employment opportunity in employment, participation, benefits, services May

3 and contracts; preventing and eliminating unlawful discrimination; and encourage diversity in all TxDOT s programs and activities. To achieve their objective, CIV administers supportive services programs to local governments, such as the DBE program. The DBE program is federally mandated, which requires CIV to develop, implement, monitor and enforce the performance of the program and ensure achievement of program goals. In order to achieve these requirements the program should include standardizing and streamlining the flow of information for the LG submission process including goal setting, ensuring that all LG let projects are assigned DBE goals which are monitored and tracked, establishing an effective support services program, and updating the DBE certification process for initial certification and renewal process. CIV is required to either achieve, or show good faith efforts to achieve, the DBE goals for federally funded projects and report TxDOT s progress toward this goal to Federal Highway Administration (FHWA). We conducted this follow-up engagement in accordance with Generally Accepted Government Auditing Standards and in conformance with the International Standards for the Professional Practice of Internal Auditing. Those standards require that we plan and perform the engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for our conclusions based on our engagement objective. Recommendations to mitigate risks identified were previously provided to management during the original engagement to assist in the formulation of the management action plans referenced in this report. The Internal Audit Division uses the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework version May

4 Detailed MAP Follow-Up Status MAP Status: Open Corrective actions that require completion to address identified risks from the original audit report. Original Audit Finding No. 2: Disadvantaged Business Enterprise (DBE) Goal Tracking/ Monitoring MAP Owners: Carlos Balderas, HUB Program Director & Dave Tovar, Contract Compliance Section Director, Civil Rights Division (CIV) FMAP 2.1The following will be completed for the Disadvantage Business Enterprise (DBE) goal tracking and monitoring process: Monitoring the cumulative year to date setting of the DBE goals for all projects* On-going (monthly) monitoring of attainment of the overall (including local project) DBE goal Confirm that DBE goal attainment information including project payouts is populated into Local Government Project Section s SharePoint site* *Items were considered complete. Original Completion Date: January 15, 2015 Revised Completion Date: July 15, 2017 Original Audit Finding No. 3: Support Services Program Client Selection and Invoice Payment Support MAP Owner: Carlos Balderas, HUB Program Director, Civil Rights Division (CIV) MAP 3.1: The following will be completed: In order to ensure effectiveness of the Support Services programs, a review and update of existing procedures will be performed. This will include: process requirements, roles/responsibilities, documentation requirements, and file management. CIV will review the existing Texas Business Opportunity & Development (TBOD) Program contract. Electronic File Management System (EDMS) will be incorporated as part of document retention.* To ensure process sustainability: o Updated procedures will be documented and training on these procedures will be performed. o Functional cross training will be instituted in the Supportive Services Program Area. To ensure appropriate division responsibilities: The payments for TBOD will not be processed or reviewed by the individuals responsible for managing the program. Currently, invoices for payments are entered into the Accounts Payable system by an individual who is not involved with TBOD.* Verification of staff s adherence to the updated procedures will be performed by Lead Workers for first review, and the Section Director for final concurrence.* To ensure program performance, CIV will implement control measures for follow-up May

5 evaluations with the firms receiving services through the Technical Assistance Program (TAP). Research will be done to consider the following for efficiency and effectiveness: o A commitment process in which both parties agree and submit to CIV a detailed outline of the services to be provided along with estimated begin dates and estimated completion dates; and/or* o The possibility of having a boiler plate purchase order form created by CIV specifically for the TAP program in which both the DBE and the TAP Provider signs off on; and/or * o A concealed evaluation (submitted in a sealed envelope) form to be provided by the client receiving the services from the vendor. The form is to be submitted under sealed envelope by the provider to CIV. The electronic surveys will reside in a shared folder on the T: drive rather than on an individual s Desktop or U: drive. In addition, an CIV representative will conduct a minimum of one (1) onsite evaluation of the services provided by the TAP Provider to the client.* To streamline the application process: There will be a two-step verification process for the whole submittal package so that more than one individual in CIV will review the information. The entire filing packet will also be scanned utilizing the EDMS filing system in order to ensure proper maintenance of the files. ** * Items were considered complete. ** Items were determined to be complete during a prior engagement and were not reviewed during this follow-up. Original Completion Date: August 15, 2013 Revised Completion Date: January 15, 2015 Revised Completion Date: September 15, 2017 May

6 MAP Status: Closed Corrective actions have been completed. Original Audit Finding No. 1: Federal Disadvantaged Business Enterprise (DBE) Program MAP Owner: Carlos Balderas, HUB Program Director, Civil Rights Division (CIV) MAP 1.1: CIV will coordinate with Contract Services and the Local Government Project Section to ascertain the local government (LG) let projects that CIV has not captured and any future LG let projects. CIV will also receive a list of LG let projects from each district prior to the project letting. Currently LGs submit DBE goal attainment and accomplishments to the District DBE Coordinators (DDC). We do not want to eliminate the DDCs oversight role in LG projects. The following will be completed: To ensure that CIV receives all applicable Local Government (LG) let and other federally funded design-build project information, we will streamline the submission process for both initial project information with DBE goal and DBE goal monitoring/attainment information. Streamlining will include: o Standardizing the flow of information to CIV, intake of the information in CIV, recording and tracking this data in CIV. o Standardized DBE goal methodology for contract specific goals to ensure continued attainment of the overall DBE goal and the related calculations used for the type of project and work involved. CIV will work closely with the Construction Division, the Local Government Project Section on this action. We will strive to have quarterly meetings with each of these divisions.* o Updating the Memorandum of Understanding in accordance with updated DBE goal methodology. * o Input from district, division, and CIV staff will be included in process development. o Coordination with Local Government Project Oversight Division for updates to the Local Government Project Procedures Manual. * o Streamlining will be documented in a flow chart, shared with district and CIV staff and made part of the process SOP. * Items were determined to be complete during a prior engagement and were not reviewed during this follow-up. Original Completion Date: September 15, 2013 Revised Completion Date: January 15, 2015 Actual Completion Date: January 24, 2017 MAP Owner: David Millikan, Director, Local Government Project Section FMAP 1.1: The following efforts will be undertaken by the Local Government Project Section (LGP) to ensure that the audit finding is addressed in a timely and accurate manner. Updating the LG project procedures document to emphasize goal setting and goal attainment: Supplement the current Local Government responsibilities to include: o Providing timely bid item information to TxDOT project personnel o Providing timely Disadvantage Business Enterprise (DBE) goal commitment May

7 information to TxDOT project personnel o Providing timely final DBE payment information upon final project acceptance Supplement the current TxDOT District responsibilities to include: o Communicate LG-furnished bid item information to CIV a reasonable period of time prior to desired date to commence advertising o Provide monthly sub-contractor progress payment information in accordance with LGP or CIV defined procedures o Provide final sub-contractor payment information in accordance with LGP or CIV defined procedures. Original Completion Date: October 15, 2014 Actual Completion Date: June 10, 2015 Original Audit Finding No. 2: Disadvantaged Business Enterprise (DBE) Goal Tracking Monitoring MAP Owners: Carlos Balderas, HUB Program Director & Dave Tovar, Contract Compliance Section Director, Civil Rights Division (CIV) MAP 2.1: Currently local governments (LG) submit commitments and monthly progress reports to the District DBE Coordinators (DDCs). We do not want to eliminate the DDCs oversight role in LG projects; therefore, we will require that the DDCs submit a report of the committed DBEs and their amounts. The following will be completed: To ensure that opportunities for DBE goals on LG let projects are assessed by CIV, ideally prior to proposal submission: o Partner with the Design Division to receive appropriate project information.* o Collaborate with the LG Project Section to update the DBE Goal portion of the LG Project Procedures Guidance Document to emphasize DBE goal attainment.* o Review all LG let projects to assign DBE goals. To ensure that all active projects DBE goal attainment information (monthly and final) is received by CIV and verified and approved prior to project close out: o Develop a standard form letter to become part of the final payment submission to assure compliance with FHWA letter dated September 21, 2010, which requires reporting of actual payments to DBE firms.* o Require that the LG maintain a DBE verification of payment log for subs or that in the future, subs may use an electronic payment reporting system.* o Create a standardized checklist to be used by the DDC when they audit the LG. CIV may use the DBE Task Force to create this checklist. Currently, CIV uses the Subcontractor Monitoring System (SMS) to gather data for DBE goal reporting. SMS does not contain LG let project data. To ensure complete and accurate DBE goal attainment reporting to FHWA, CIV will develop and implement a database for DBE goal data not available in the Subcontractor Monitoring System (SMS) such as LG project information. This database will streamline the overall reporting process, which is currently very labor intensive and requires the use of multiple spreadsheets and databases. In addition, this new database will also allow for continuous monitoring of DBE goal attainment during May

8 the reporting period and facilitate continual adjustment (higher or lower) for contract specific DBE goal setting.* CIV will enforce the requirement of the DDC SOP that the final report be sent to CIV, and will seek to hire additional help to aid in this effort. Compliance will be monitored by CIV staff conducting district audits and collaborating with the Finance Division to receive copies of the inactive projects report.* Updated SOPs and guidance will be disseminated through appropriate channels to the District Engineers, District Directors of Construction, and DDCs. * Items were determined to be complete during a prior engagement and were not reviewed during this follow-up. Original Completion Date: August 15, 2013 Revised Completion Date: January 15, 2015 Actual Completion Date: March 24, 2017 MAP Owner: Dave Tovar, Contract Compliance Section Director, Civil Rights Division (CIV) FMAP 2.2: The following will be completed for the Disadvantage Business Enterprise (DBE) goal tracking and monitoring process: Develop written guidelines for the DBE goal monitoring process for Local Government Projects to include roles and responsibilities, time requirements for posting Local Government (LG) DBE goal information by district staff, and an internal organizational chart mapping the lines of approval Updated SOPs and guidance will be disseminated through appropriate channels to the District Engineers, District Directors of Construction, and District DBE Coordinators. o On Local Govt. projects, CIV will develop a quarterly report tracking DBE goal amounts cumulatively for the year Original Completion Date: January 15, 2015 Actual Completion Date: January 9, 2017 Original Audit Finding No. 4: Disadvantaged Business Enterprise (DBE) Certification Process MAP Owner: Tonia Yarbrough, Federal Programs Section Director, Civil Rights Division (CIV) MAP 4.1: The following will be completed for the Initial Certification and Renewal Certification process: CIV will review and update its procedures regarding the Certification process in the DBE Program to include processing new applications, renewals, and Annual Update Affidavits. Methods of verification will include an updated Desk Audit Checklist used by the Certification Specialist for review of documents and the field visit to reflect the eligibility standards of 49 CFR Part 26.* The eligibility report and the supporting documents collected at the onsite review will either substantiate the information in the desk audit form or contradict the information. * Certification Section will also become more familiar with the compliance component of the program in effort to better identify front companies.* May

9 * Items were determined to be complete during a prior engagement and were not reviewed during this follow-up. Original Completion Date: July 15, 2013 Revised Completion Date: January 15, 2016 Actual Completion Date: December 1, 2016 Closing Comments The results of this MAP Follow-Up engagement were discussed with/provided to the Civil Rights Division Director on April 17, The Internal Audit Division appreciates the cooperation and assistance received from the Civil Rights Division during this engagement. May