Internal Audit Follow-Up Report Public Transportation Grant Management TxDOT Internal Audit Division
Objective Assess the status of corrective actions for high risk Management Action Plans (MAPs) previously communicated in Public Transportation Grant Management audit report dated August 2014. Summary Results Testing consisted of an evaluation of 2 MAPs to determine if corrective actions were implemented as agreed. MAP Status Comments 2 Closed Corrective actions have been completed. Scope This engagement was conducted within the Public Transportation Division (PTN). Training and policies and procedures that were updated or conducted during Fiscal Year (FY) 2015 and 2016 were reviewed. In addition, sub-recipients that had submitted request for reimbursements (RFRs) during FY 2016 were selected for review. Sub-recipient documentation was reviewed to ensure supporting documentation was included with the RFR and that PTN conducted quarterly reviews on those sub-recipients. The engagement was performed by Tim Owen and Jill Emery (Engagement Lead). The engagement was conducted during the period from February 22, 2016 to May 10, 2016. Methodology The methodology used to complete the objective of this engagement included: Reviewed supporting documentation of Public Transportation Division s (PTN) quarterly reviews of grant reimbursements Obtained procedures for RFRs to determine signature authority levels are set Sampled 2 RFRs from 5 sub-recipients to determine supporting documentation was provided and the supporting documentation substantiated the budget item paid Sampled 3 RFRs over $250,000 to determine if second level approval was obtained Compared orientation training materials to revised PTN Standard Operating Procedures (SOP) for match Reviewed SOPs to determine if they contained guidance for sub-recipient monitoring and document deficiencies in the tracking log Reviewed PTN staff meeting, workshop agendas, and presentations to determine training and guidance was provided for new and revised procedures Obtained SOPs and training materials specific to the monitoring and mitigating of deficiencies to verify that SOPs require 1) all compliance deficiencies and 2) the need for corrective action be documented in Improvement Action Plans (IAPs) and the IAP tracking log August 2016 2
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 Public Transportation Grant Management MAP Follow-Up engagement which was conducted as part of the Fiscal Year 2016 Audit Plan. The Public Transportation Division (PTN) is in charge of overseeing state and federal grants for public transportation programs. These grant programs help facilitate the development of public transportation services to meet the growing needs of Texans across the state. To help assist in overseeing the program, PTN has staff (e.g., Public Transportation Coordinators (PTCs)) throughout the state to assist in administering public transportation programs. PTCs are charged with reviewing the grantees Request for Reimbursements to determine compliance with the grant requirements before releasing funds. PTN Headquarters provides oversight to the PTCs and an additional level of compliance review of the programs. 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 2013. August 2016 3
Detailed MAP Follow-Up Status MAP Status: Closed Corrective actions have been completed. Original Audit Finding Number 1: Request for Reimbursement Approval Process MAP Owner: Donna Roberts, Section Director, Public Transportation Division (PTN) MAP 1.1: PTN agrees to strengthen the process for conducting quarterly reviews of financial records to ensure increased coverage of operating and administrative categories expenses reviewed. At a minimum, we will review the source documentation for 30% of the line items within each budget category associated with a reimbursement request. We have already updated our quarterly monitoring form to allow for the increase in coverage. PTN also agrees to implement a 2nd level approval for any request for reimbursement (RFR) of $250,000 or more and has already included this requirement in the reimbursement form drafted for use under the new Enterprise Resource Planning (ERP) system. For those agencies who have a history of financial compliance and offer little risk, our procedures will continue to allow for the processing of RFRs with supporting documentation that consists of a general ledger report, produced from the sub-recipient s accounting system, as long as the report indicates the specific grant program, total budget, expenditures to date, amount of expenditures requested for reimbursement by category (administrative, operating, capital), and description of line items for each category. We will provide guidance on documentation requirements including type of documentation by budget category and when source documents are reviewed at the time of reimbursement. We will update our recently developed Standard Operating Procedures (SOPs) with these new requirements for conducting and documenting financial reviews. The new requirements, along with the updated quarterly monitoring form, and updated ERP form, will be introduced at the July 2014, PTC Workshop, with full implementation targeted for fiscal year 2015. Original Completion Date: January 1, 2015 Actual Completion Date: May 5, 2015 Original Audit Finding Number 2: Sub-recipient Monitoring and Public Transportation Coordinator Oversight MAP Owner: Donna Roberts, Section Director, Public Transportation Division (PTN) MAP 2.1: All written division guidance used to communicate program management and oversight procedures will be updated by January 15, 2015. A set of Standard Operating Procedures (SOPs) is scheduled for distribution by August 31, 2014. These SOPs will provide detailed August 2016 4
guidance for sub-recipient monitoring and enhance current training and technical assistance methods which include: New Public Transportation Coordinator (PTC) orientation, on-the-job training and mentoring, formal classroom training, written formspecific procedures, regularly scheduled PTC meetings and workshops held four times a year, and visits from headquarters staff to the field (on a rotational basis) to review PTC operations in depth. The SOPs will require that all compliance deficiencies and need for corrective action are documented on the Improvement Action Plan (IAP) form and included in the tracking log. This was discussed in detail at our July 2014 PTC Workshop. New PTC orientation, on-the-job training, PTC meetings and regularly scheduled workshops will be used as opportunities to clarify the importance of documenting compliance program deficiencies and the value of anticipating and addressing potential compliance program issues through technical assistance and training. Original Completion Date: January 15, 2015 Actual Completion Date: May 15, 2015 Closing Comments The results of this MAP Follow-Up engagement were provided to the Public Transportation Division on August 3, 2016. The Internal Audit team appreciates the cooperation and assistance received from the Transportation Division during this engagement. August 2016 5