JOB ACCESS - REVERSE COMMUTE NEW FREEDOM PROGRAM

APRIL 2011 TRANSIT SERVICES PROGRAMS CLUSTER 20.513 20.516 20.521 CAPITAL ASSISTANCE PROGRAM FOR ELDERLY PERSONS AND PERSONS WITH DISABILITIES JOB ACCESS - REVERSE COMMUTE NEW FREEDOM PROGRAM State Project/Program: ELDERLY AND PERSONS WITH DISABILITIES PROGRAM 49 U.S.C. 5310 (FORMERLY SECTION 16) JOB ACCESS REVERSE COMMUTE 49 U.S.C. 5316 NEW FREEDOM PROGRAM 49 U.S.C.5317 U. S. Department of Transportation Federal Authorization: State Authorization Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) 49 U.S.C. 5310, 5316, 5317 N. C. Department of Transportation Public Transportation Division Agency Contact Person Program Miriam S. Perry, Director Public Transportation Division N. C. Department of Transportation 1550 Mail Service Center Raleigh, NC 27699-1550 (919) 733-4713, ext. 243 mperry@ncdot.gov Address Confirmation Letters To: Bertha Davis, CPA, Manager Single Audit Compliance Unit N. C. Department of Transportation 1507 Mail Service Center Raleigh, N.C. 27699-1507 (919) 715-2327 Fax (919) 715-2710 bdavis@ncdot.gov The auditor should not consider the Supplement to be safe harbor for identifying audit procedures to apply in a particular engagement, but the auditor should be prepared to justify departures from the suggested procedures. The auditor can consider the supplement a safe harbor for identification of compliance requirements to be tested if the auditor performs reasonable procedures to ensure that the requirements in the Supplement are current. The grantor agency may elect to review audit working papers to determine that audit tests are adequate. The Single Audit Compliance Unit of the External Audit Branch reviews all single audits, financial audits, and management letters of all grantees. We are looking at both the presentation (information as to program, pass-through and state funding, NCDOT identification numbers) and the dollar amounts presented versus our records. Any reports not received will be requested. B-4 20.513-CL 1

Grants must be properly identified by program name ( Capital & Assistance Program for Elderly Persons and Persons with Disabilities - CFDA # 20.513, Job Access Reverse Commute CFDA # 20.516, New Freedom Program CFDA # 20.521) and WBS number on the Schedule of Expenditures of Federal and State Awards. This information is available from the agreement with NCDOT; program name is in the second/third paragraph while the work order number is on the upper right hand corner of the first page. Grantor and/or pass-through grantor should also be included. Please do not combine like projects into one dollar amount since we would need to call you for the breakdown; please report award amount, Federal Pass-through, State share and local share. On NCDOT s confirmation from the Grant Master List (GML), these moneys are shown as part of CFDA numbers 20.513, 20.516 and 20.521. Please note this is a different program from the one entitled Elderly and Disabled Transportation Assistance Program (E&DTAP). I. PROGRAM OBJECTIVES Capital Assistance Program for Elderly Persons and Persons with Disabilities (Section 5310) The objective of the Section 5310 program is to improve mobility for elderly individuals and individuals with disabilities throughout the country. Toward this, the Federal Transit Administration (FTA) provides financial assistance for transportation services planned, designed, and carried out to meet the special transportation needs of elderly individuals and individuals with disabilities in all areas urbanized, small urban, and rural. Job Access - Reverse Commute (JARC) (Section 5316) The objectives of the JARC program are to improve access to transportation services to employment and employment-related activities for welfare recipients and eligible low-income individuals and to transport residents of urbanized areas and nonurbanized areas to suburban employment opportunities. Under this program, FTA provides financial assistance for transportation services planned, designed, and carried out to meet the transportation needs of welfare recipients and eligible low-income individuals, and of reverse commuters regardless of income. New Freedom (Section 5317) The New Freedom program aims to provide additional tools to overcome barriers facing Americans with disabilities seeking integration into the work force and full participation in society. Lack of adequate transportation is a primary barrier to work for individuals with disabilities. The 2000 Census showed that only 60 percent of people between the ages of 16 and 64 with disabilities are employed. The New Freedom program seeks to reduce barriers to transportation services and expand the transportation mobility options available to people with disabilities beyond the requirements of the Americans with Disabilities Act (ADA) of 1990. II. PROGRAM PROCEDURES FTA annually publishes formula apportionments to the States and urbanized areas with populations of 200,000 persons or greater (i.e., large urbanized area) in a Federal Register notice published within 10 days after the Department of Transportation (DOT) Appropriations Act is signed into law. In the case of the Section 5310 program, the Governor of each State designates a State agency to administer the program. In the case of the JARC and New Freedom programs, the Governor: (1) designates a State agency to administer the program in nonurbanized areas and in urbanized areas with populations between 50,000 and 199,999 persons; and (2) in consultation with responsible B-4 20.513-CL 2

local officials and public transportation providers, designates a recipient to administer the program for the large urbanized area(s). The State agencies and designated recipients are responsible for fair distribution of the funds. State agencies and designated recipients must describe their procedures for administering the program in a State management plan (SMP), or program management plan (PMP) for those JARC and New Freedom-designated recipients serving large urbanized areas. State agencies and designated recipients apply to FTA for approval of a program of projects annually, and report annually to FTA on financial status and revisions to their program of projects. Federal transit law, as amended by Safe Accountable Flexible Efficient Transportation Equity Act, a Legacy for Users (SAFETEA-LU), requires that projects selected for funding under the Section 5310, JARC, and New Freedom programs be derived from a locally developed, coordinated public transit-human services transportation plan and that the plan be developed through a process that includes representatives of public, private, and non-profit transportation and human services providers and participation by members of the public. The Federal Transit Administration allows states to transfer their annual Section 5310 apportionment to the Section 5311(c) or 5307, or both. The NCDOT has transferred the funds to the Section 5311 program since 1997. The transferred funds must be used for eligible Section 5310 projects. A state may transfer to Section 5307 only after coordinating with private non-profit providers of services under Section 53 10. With the passage of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), such transfers are allowable only for administrative purposes. Grant funds must be awarded to eligible recipients for projects based on a competitive process defined by NCDOT, as the direct grant recipient. SAFETEA-LU allows select states to use up to one-third of the annual apportionment for operating costs. Federal Transit Administration Circular 9070.1F, dated May 1, 2007, provides program guidance. FTA monitors compliance with Federal requirements through administrative State Management Reviews, in which a State agency is generally reviewed every 3 years. Designated recipients who also receive FTA financial assistance under the Urbanized Area Formula Program (CFDA 20.509) are also subject to a Triennial Review from the FTA. Agreements are executed upon approval for program eligibility. The agreement identifies all of the federal and state requirements for receipt of the funds. The agreements are updated as changes in federal, state and local regulations occur. Annual agreements, approved project budgets are transmitted to the local organization following approval of the statewide application by the grant entity, typically the Federal Transit Administration. Subrecipients State agencies and designated recipients select subrecipients and monitor their compliance with Federal requirements. FTA does not directly monitor the subrecipients, but checks the State agency and designated recipient s procedures for monitoring during the State Management Review and Triennial Review. The State agency and designated recipient may impose program criteria in addition to those imposed by the FTA and may require additional reports from subrecipients. These State and designated recipient s requirements are included in the State Management Plan or Program Management Plan. B-4 20.513-CL 3

Source of Governing Requirements The programs in this cluster were authorized by SAFETEA-LU (Pub. L. No. 109-059, enacted on August 10, 2005). The Section 5310 program is authorized by 49 USC 5310, the JARC program is authorized by 49 USC 5316 and the New Freedom program is authorized by 49 USC 5317. Program regulations are in 49 CFR. Availability of Other Program Information Information about the programs may be found on the FTA web site at http://www.fta.dot.gov/. Program guidance and application instructions for the Section 5310, JARC, and New Freedom programs are contained in FTA Circulars 9070.1F, 9050.1, and 9045.1, respectively. These circulars can be found at the Legislation, Regulations, and Guidance section of the FTA web site. Eligible applicants for the Elderly Individual and Individuals with Disabilities funds are: Private nonprofit organizations Public Bodies that certify to the Governor that no nonprofit corporations or associations are readily available in an area to provide the service; and Local public bodies eligible to apply for Section 5310 funds, as coordinators of services for elderly persons and persons with disabilities are those designated by the state to coordinate human service activities in a particular are. Examples of such eligible public bodies are: A county agency on aging A public transit provider that NCDOT and the county board of commissioners or city council has identified as the lead agency to coordinate transportation services funded by multiple federal or state human service programs III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with the requirements for a Federal program, the auditor should first look to Part 2, Matrix of Compliance Requirements, to identify which of the 14 types of compliance requirements described in Part 3 are applicable and then look to Parts 3 and 4 for the details of the requirements. The OMB A-133 Compliance Supplement may be found at www.whitehouse.gov/omb/circulars. OMB has issued an addendum to Circular A-133 on June 30, 2009. This addendum supplements the 2010 OMB Circular A-133 Compliance Supplement (Supplement) to provide additional guidance for programs (including clusters of programs) with expenditures of American Recovery and Reinvestment Act of 2009 (Pub. L. No. 111-5) (ARRA) awards that the auditor determines are major programs in audits performed under OMB Circular A-133. This addendum is effective for audits of fiscal years beginning after June 30, 2008. It should be used in conjunction with other Parts and Appendices of the Compliance Supplement in determining the appropriate audit procedures to support the auditor s opinion on compliance for each major program with expenditures of ARRA awards. This addendum may be found at http://www.whitehouse.gov/omb/assets/a133_compliance/arra_addendum_1.pdf. B-4 20.513-CL 4

A. ACTIVITIES ALLOWED OR UNALLOWED Compliance Requirement Under the Section 5310 program, funds are available for capital expenses (and associated administrative, planning, and technical assistance) to support the provision of transportation services to meet the special needs of elderly persons and persons with disabilities (49 USC 5310(a)). Beginning with State FY08, the NCDOT resumed its annual application for Section 5310 program funds based on new rules and regulations identified under SAFETEA-LU. Under 5310 eligible activities include, but are not limited to: Capital Expenses Vehicles Mobility management centers and related activities Radio and communication equipment Vehicle Shelters Wheelchair lifts and restraints Computer hardware and software Operating Expenses Driver salaries and fringes Vehicle Insurance Volunteer reimbursements Vehicle supplies, fuel and maintenance expenses Compliance Requirement Under the JARC program, funds may be used for capital, planning, and operating expenses (and associated administrative, planning, and technical assistance) that support access to jobs and reverse commute projects (49 USC 5316(b)). Compliance Requirement Access to jobs projects are defined as projects relating to the development and maintenance of transportation services designed to transport welfare recipients and eligible low-income individuals to and from jobs and activities related to their employment, including: a. Transportation projects to finance planning, capital, and operating costs of providing access to jobs under this chapter; b. Promoting public transportation by low-income workers, including the use of public transportation by workers with nontraditional work schedules; B-4 20.513-CL 5

c. Promoting the use of transit vouchers for welfare recipients and eligible lowincome individuals; and d. Promoting the use of employer-provided transportation, including the transit pass benefit program under section 132 of the Internal Revenue Code of 1986 (49 USC 5316(a)(1)). Compliance Requirement Reverse commute projects are defined as public transportation projects designed to transport residents of urbanized areas and other-than-urbanized areas to suburban employment opportunities, including any projects to: a. Subsidize the costs associated with adding reverse commute bus, train, carpool, van routes, or service from urbanized areas and other-than-urbanized areas to suburban workplaces; b. Subsidize the purchase or lease by a nonprofit organization or public agency of a van or bus dedicated to shuttling employees from their residences to a suburban workplace; or c. Otherwise facilitate the provision of public transportation services to suburban employment opportunities (49 USC 5316(a)(4)). Compliance Requirement Under the New Freedom program, funds are available for capital and operating expenses (and associated administrative, planning, and technical assistance) that support new public transportation services beyond those required by the ADA and new public transportation alternatives beyond those required by the ADA designed to assist individuals with disabilities with accessing transportation services, including transportation to and from jobs and employment support services (49 USC 5317(b)(1)). The following are examples of new public transportation services beyond the ADA. 1. Enhancing paratransit beyond minimum requirements of the ADA. a. Expansion of paratransit service parameters beyond the three-fourths mile required by ADA. b. Expansion of current hours of operation for ADA paratransit services that are beyond those provided on the fixed-route services. c. The incremental cost of providing same day service. d. The incremental cost of making door-to-door service available to all eligible ADA paratransit riders, but not as a reasonable modification for individual riders in an otherwise curb-to-curb system. e. Enhancement of the level of service by providing escorts or assisting riders through the door of their destination. f. Acquisition of vehicles and equipment designed to accommodate mobility aids that exceed the dimensions and weight ratings established for common wheelchairs under the ADA and labor costs of aides to help drivers assist passengers with over-sized wheelchairs. B-4 20.513-CL 6

g. Installation of additional securement locations in public buses beyond what is required by the ADA. 2. New feeder service to commuter rail, commuter bus, intercity rail, and intercity bus stations, for which complementary paratransit service is not required under ADA. 3. Making accessibility improvements to transit and intermodal stations not designated as key stations. a. Building an accessible path to a bus stop that is currently inaccessible, including curbcuts, sidewalks, accessible pedestrian signals or other accessible features. b. Adding an elevator or ramps, detectable warnings, or other accessibility improvements to a non-key station that are not otherwise required under the ADA. c. Improving signage or wayfinding technology. d. Implementation of other technology improvements that enhance accessibility for people with disabilities including Intelligent Transportation Systems. 4. New training programs for individual users on awareness, knowledge, and skills of public and alternative transportation options available in their communities. The following are new public transportation alternatives beyond the ADA. 1. Purchasing vehicles to support new accessible taxi, ride sharing, and/or vanpooling programs. 2. Supporting the administration and expenses related to new voucher programs for transportation services offered by human service providers. 3. Supporting new volunteer driver and aide programs. 4. Supporting new mobility management and coordination programs among public transportation providers and other human service agencies providing transportation. C. CASH MANAGEMENT Compliance Requirement NCDOT and subrecipient project agreements specify that this is a cost reimbursement program. If the subrecipient receives payment of federal and state funds in advance of incurring the cost, the funds must be paid to the vendor within three (3) days of receipt from the department. NCDOT relies on the Federal Compliance Supplement, Part 3, Section C, Cash Management for guidance. Audit Objective Determine if advanced funds were disbursed within three days and that remaining costs were reimbursed following grantee expenditure. Suggested Audit Procedure - Ascertain that funds received in advance of incurring the cost were disbursed within three (3) days of receipt from NCDOT. D. DAVIS-BACON ACT B-4 20.513-CL 7

Compliance Requirement - The requirements of the Davis-Bacon Act apply to construction work financed by a grant under this program (49 USC 5333). F. EQUIPMENT AND REAL PROPERTY MANAGEMENT Compliance Requirement - Recipients, with FTA approval, are allowed to transfer, sell, or lease property, equipment, or supplies acquired with Federal transit funds that are no longer needed for transit purposes. FTA may authorize the recipient to transfer the asset to a local governmental authority to be used for a public purpose (49 USC 5334 (h) (1)). If a recipient sells the asset, the proceeds must be used to reduce the gross project costs of another federally funded capital transit project (49 USC 5334(h)(4)) or handled as stated in 49 CFR sections 18.31 or 18.32) (49 USC 5334(h)). G. MATCHING, LEVEL OF EFFORT, EARMARKING Matching Compliance Requirement - Section 5310 funds may be used to finance capital and operating expenses. The Federal share of eligible project costs may not exceed 80 percent of the net cost of the activity (49 USC 5310(c)(1)(a)). The Federal share of the eligible operating costs may not exceed 50 percent (50%) of the net operating costs of the activity. Subject to the availability of funds, NCDOT shall provide one-half (10%) of the required 20 percent (20%) nonfederal match for capital costs. Section 3012(b) of SAFETEA-LU authorized North Carolina as one of the seven states to participate in a pilot project allowing NCDOT to use up to one-third of the apportionment for fiscal years 2006-2009 for operating expenses. For these States, the Federal share for operating expenses is 50 percent, or 62.5 percent of the sliding scale rate for capital grants. Some examples of possible local match sources include: Local or state appropriations; Other non-dot federal funds; Private donations; Revenue from human services contracts and net income generated from advertising. Programs that are potential sources of local match include: employment training, aging, community services, vocational rehabilitation services, and Temporary Assistance for Needy Families (TANF). To be eligible for local match, these funds must be used for activities included in the total project costs. Income from contracts to provide human service transportation may be used either to reduce the net project cost (treated as revenue) or to provide local match from 5310 operating assistance. B-4 20.513-CL 8

Compliance requirement - JARC funds may be used to finance capital, planning and operating expenses. For the JARC and New Freedom programs, the Federal share of eligible capital and planning costs may not exceed 80 percent of the net cost of the activity. The Federal share of the eligible operating costs may not exceed 50 percent of the net operating costs of the activity (49 U.S.C. 5316(h) and 5317(g)). Subject to availability of funds, NCDOT shall provide onehalf (10%) of the required 20 percent (20%) nonfederal match for planning and capital costs. The local share of eligible capital and planning costs shall be no less than 20 percent of the net cost of the activity, and the local share for eligible operating costs shall be no less than 50 percent of the net operating costs. Eligible sources of matching funds are identified in the grant application. Local match may be derived from other Federal funds that are eligible to be expended for transportation. Examples of potential sources include: Temporary Assistance for Needy Children (TANF) Employment Training Aging Community Services Vocational Rehabilitation Services Other local match sources may include: Local or state appropriation-ncdot Work First Employment Transportation Assistance and Rural General Public Funds. Private donations Revenue from human services contracts Net income generated from advertising Employer contributions toward new or expanded services. Funds from for-profit organizations and non-profit organizations. Compliance Requirement - For all three programs, the 10 percent that is eligible to fund program administrative costs including administration, planning, and technical assistance may be funded at 100 percent Federal share (49 USC 5310(a)(4), 5316(b)(2), and 5317(b)(2)). Compliance Requirement - For all three programs, the Federal share is 90 percent for vehiclerelated equipment and facilities required by the Clean Air Act (CAA) or the ADA (49 U.S.C. 5323(i)). Compliance Requirement - As with all FTA formula program grants administered by NCDOT, all of the local match must be provided from sources other than federal DOT funds. B-4 20.513-CL 9

Audit Objective Determine whether the minimum amount or percentage of contributions or matching funds was provided. Suggested Audit Procedure 1. Examine the agreement and any subsequent budget revisions and amendments. 2. Ascertain the total project costs, including those eligible for NCDOT or FTA participation. 3. Review financial records and determine the amount which can be claimed as the Federal and State share. 4. Verify that the match is from the allowable source. 5. Verify that the values placed on in-kind contributions are in accordance with program regulations. Level of Effort No testing is required at the local level. Earmarking No testing is required at the local level. I. PROCUREMENT AND SUSPENSION AND DEBARMENT Compliance Requirement - Recipients of FTA funds shall certify to FTA, in accordance with 49 CFR 18.36 that its procurements and procurement system will comply with all applicable third-party procurement provisions of Federal laws, regulations and directives. Any applicant that fails to provide this certification may be determined ineligible for award. 1. Buy America - All steel, iron, and manufactured products used in the project must be manufactured in the U.S., as demonstrated by a Buy America certificate, or, in the case of rolling stock, the cost of components produced in the United States is more than 60 percent of the cost of all components and final assembly of the vehicle takes place in the United States (49 CFR part 661). a. The FTA Administrator may grant specific waivers following case-by-case determinations that: (1) applying the requirement would be inconsistent with the public interest; (2) the goods are not produced in the U.S. in a sufficient and reasonably available quantity and of satisfactory quality; or (3) the inclusion of the domestically produced material will increase the overall project cost by more than 25 percent (49 CFR sections 661.7(b) through (d)). b. Appendix A to 49 CFR section 661.7 provides general waivers for the following items: (1) Those articles, materials, and supplies exempted from the Buy America Act of 1933 as listed in 48 CFR section 25.104; (2) Microprocessors, computers, microcomputers, or software, or other such devices, which are used solely for the purpose of processing or storing data; and (3) All small purchases (under $100,000) made by FTA recipients. B-4 20.513-CL 10

c. Appendix A to 49 CFR section 661.11 provides a general Buy America waiver when foreign-sourced spare parts for buses and other rolling stock (including train control, communication, and traction power equipment) whose total cost is 10 percent or less of the overall project contract cost are being procured as part of the same contract for the major capital item. d. A recipient that purchases rolling stock for transportation of fare-paying passengers must conduct, or cause to be conducted, a pre-award audit before entering a formal contract for the purchase of rolling stock, and certify that a post-delivery audit is complete before title to the rolling stock is transferred. Preaward and post-delivery audits verify the accuracy of the Buy America certification, purchaser s requirements certification, and certification of compliance with or inapplicability of Federal motor vehicles safety standards (49 CFR part 663). 2. Disadvantaged Business Enterprises (DBE) - Recipients shall require that each transit vehicle manufacturer certify that it has complied with the requirements of 49 CFR section 26.49, as a condition to bid on a transit vehicle procurement in which FTA funds are involved. Recipients may, with FTA approval, establish project-specific goals for DBE participation in the procurement of transit vehicles that a transit vehicle manufacturer must meet (49 CFR section 26.49(d)). 3. Procurement of Vehicles and Facilities - In prohibiting discrimination in the provision of transportation services against persons with disabilities, the ADA requires that vehicles purchased or leased after August 25, 1990, and new and altered facilities designed and constructed (as marked by the notice to proceed) after January 25, 1992, must comply with the applicable standards of accessibility in 49 CFR parts 37 and 38 (42 USC 12101-12213). Audit Objective - Determine if any purchases were made or any contracts were entered into and that the policies and procedures were followed. Suggested Audit Procedure 1. Interview responsible officials and review purchasing records to determine whether there were any purchases or outside contracts. 2. Verify that appropriate policies/procedures were followed when making purchases or entering into contracts. Compliance Requirement - American Recovery and Reinvestment Act Reporting (ARRA). In addition to those statutes listed in the A-102 Common Rule and OMB Circular A-110, Section 1605 of ARRA prohibits the use of ARRA funds for a project for the construction, alteration, maintenance, or repair of a public building or work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States. ARRA provides for waiver of these requirements under specified circumstances. An award term is required in all awards for construction, alteration, maintenance, or repair of a public building or public work (2 CFR section 176.140). Further information about this requirement, including applicable definitions, is found in 2 CFR part 176, Subpart B located at http://edocket.access.gpo.gov/2009/pdf/e9-9073.pdf. Audit Objective Determine whether an award using ARRA funding includes a Buy-American award term and, if so, whether the recipient is complying with the Buy-American provisions of ARRA or if any waivers have been granted. B-4 20.513-CL 11

Suggested Audit Procedure Select a sample of ARRA-funded procurements, if any, for activities subject to Section 1605 of ARRA and test whether the non-federal entities requested and received any exceptions to Buy-American requirements; and test the sample of procurements to ascertain if entities are otherwise in compliance with the ARRA requirements. L. REPORTING Program Reports Compliance Requirement - Recipients are required to provide quarterly reports containing information about budget spending and program activities. Recipients are also required to report: a. Gaps in Service Filled. Provision of transportation options that would not otherwise be available for older adults and individuals with disabilities measured in numbers of older adults and individuals with disabilities afforded mobility they would not have without program support. b. Ridership. Actual or estimated number of rides (as measured by one-way trips) provided annually for individuals with disabilities and older adults on Section 5310 supported vehicle and services. Audit Objective Determine that reports were submitted accurately and are adequately supported. Suggested Audit Procedure - Trace operating statistics reflected in the reports to underlying accounting records. Nongovernmental Reports Compliance Requirement North Carolina General Statute 143C-6-23 Use of State Funds by Non-State Entities, and North Carolina Administrative Code Chapter 9, Subchapter 03M Uniform Administration of State Grants addresses reporting requirements for nongovernmental entities. These regulations along with reporting forms may be accessed at: https://www.ncgrants.gov/ncgrants/regulations.jsp https://www.ncgrants.gov/ncgrants/publicreportsregulations.jsp Audit Objective Determine applicable reporting requirements. Suggested Audit Procedure 1. Determine if the organization is subject to G.S. 143C-6-23. 2. Determine what type of filing/report should be made with the NCDOT. DBE Reports Compliance Requirement - Grantees must submit quarterly DBE Report of Awards and Report of Payments documenting actual utilization (CFR Parts 23 and 26 and FTA Circular 4716.1A, B-4 20.513-CL 12

and the U.S. DOT DBE Final Rule, Federal Register dated February 2, 1999 - Participation by Disadvantaged Business Enterprises in Department of Transportation Programs). Additional required reports include Project Progress Reports and reports of significant events (FTA Circular 5010.1D). Based on the level of FTA funding, exclusive of transit vehicle purchases, recipients are required to implement a DBE program. To monitor the progress of the DBE program, recipients are required to submit quarterly reports based on a record keeping system (49 CFR Section 23.49). Audit Objective - Determine DBE reports are supported by adequate documentation. Suggested Audit Procedure 1. Review grantee s DBE contract expenditures (as opposed to contract awards) as outlined in FTA Circular 4716.1A and 49 CFR Part 26. 2. Review the reports and trace the information to underlying data to determine completeness and accuracy. 3. Determine that for all participation amounts reported, the firms have been certified and that the certification is current. ARRA Reports Compliance Requirement - American Recovery and Reinvestment Act Reporting (ARRA). The NC Department of Transportation (NCDOT) is responsible for reporting project ARRA data to the Federal awarding agency. The subrecipient is responsible for reporting project ARRA data to NCDOT. Appropriate documents to meet the reporting requirements are provided to the subrecipient independent of the contract. In all cases (including months where no project work was performed), Project Status Reports are due to NCDOT by the 5 th of each month and Employment Data Reports are due to NCDOT by the 7 th of each month until the completion of the project. Audit Objective Determine that monthly Project Status Reports and Employment Data Reports were submitted timely and are accurately prepared. Suggested Audit Procedure - Ascertain that the grantee has accurately prepared the two ARRA data reports and documentation supports the reports. M. SUBRECIPIENT MONITORING NCDOT passes this grant to its subrecipients who can pass the funds down further to another subrecipient. If this situation occurs, NCDOT relies on the Federal Compliance Supplement, Part 3, Section M. Subrecipient Monitoring, for guidance. If this situation does not occur, no testing is required at the local level. Compliance Requirement - American Recovery and Reinvestment Act: A pass through entity is responsible for identifying to the first-tier subrecipients the requirement to register in the Central Contractor Registration (CRC), including obtaining a Dun and Bradstreet Data Universal Numbering System (DUNS) number, and maintain the currency of that information (Section 1512(h), ARRA, and 2 CFR 176.50(c)). B-4 20.513-CL 13

Audit Objective Determine whether the pass-through entity determined that subrecipients have current CCR registrations prior to making subawards and performed periodic checks to ensure that subrecipients are updating information as necessary. Suggested Audit Procedure Test the pass-through entity s subaward review and approval documents to determine whether, before award, the pass-through entity checked CCR to determine whether subrecipients were registered. N. SPECIAL TESTS AND PROVISIONS Charter Service Compliance Requirement - As part of the annual certifications and assurances required by the FTA, a recipient must execute an agreement with the FTA which provides that neither the recipient nor any of its subrecipients will provide charter service that uses equipment or facilities acquired with FTA funds, unless: (a) there are no willing and able private charter service operators, or (b) one or more of the exceptions listed in 49 CFR part 604 are met and the charter service is incidental to the provision of mass transportation. Charter service is defined as transportation, using buses or vans (funded in whole or in part by FTA), of a group of persons pursuant to a common purpose, under a single contract at a fixed charge for the vehicle or service, who have acquired the exclusive use of the vehicle or service to travel together under an itinerary either specified in advance or modified after leaving the place of origin. This definition includes the incidental use of FTA-funded equipment for the exclusive transportation of school students, personnel and equipment, and the housing of charter vehicles in FTA-funded facilities. Incidental charter service is defined as service that does not: (a) interfere with or detract from the provision of the mass transportation service for which the facilities or equipment were funded under the Act, or (b) shorten the mass transportation life of the equipment or facilities (49 CFR part 604). Audit Objective - Determine whether any use in charter service of equipment and facilities acquired with FTA funds conformed to 49 CFR part 604. Suggested Audit Procedure a. Ascertain if the subrecipient provides charter service with FTA-funded equipment by: (1) Obtaining written representation from the subrecipient, (2) Reviewing revenue accounts for indications of charter bus revenue statements, and (3) Reviewing the subrecipient s web site and local business Yellow Pages for indications of charter-service operations. b. Review the subrecipient s policies and procedures for charter, rental, or lease of its transit equipment. c. Test transactions that meet the definition of charter service and ascertain if: (1) FTA-assisted equipment or facilities (e.g., parking lots and maintenance garages) were used; (2) Documentation was available evidencing the absence of a willing and able private operator or an exception provided in 49 CFR part 604; (3) Documentation was available evidencing a charter fee that recovers the entire operating and capital costs of equipment used; and (4) Inventory records were adjusted to extend the useful life of the FTA subsidized transit equipment by the amount of charter service. School Bus Operation B-4 20.513-CL 14

Compliance Requirement - As part of the annual certifications and assurances required by FTA, a recipient must enter into an agreement with the FTA Administrator stating that the recipient will not engage in school bus operations exclusively for the transportation of students and school personnel in competition with private school bus operators, unless it demonstrates to the FTA Administrator any one of the exceptions listed in 49 CFR section 605.11 and the Administrator concurs. Indicators of exclusive school bus service are: a. Bus schedules that only operate one way to schools in the morning and the other way from schools in the afternoon. b. Destination signs that say school bus school special or a school name are indicative of prohibited exclusive school bus service. c. Buses that have flashing lights and swing arms like standard yellow school buses are indicative of prohibited exclusive school bus service. d. Bus stop signs that say school are indicative of prohibited exclusive school bus service. e. Bus stops that are located on school property away from general public thoroughfares are indicative of prohibited exclusive school bus service. However, all recipients can operate Tripper Service, which is defined as regularly scheduled mass transportation service that is open to the public, and designed or modified to accommodate the needs of school students and personnel, using various fare collections or subsidy systems. Buses used in Tripper Service are required to be clearly marked as open to the public and should not carry designations such as school bus or school special. All routes traveled by tripper buses must be within a grantee or operator s regular route service as indicated in their published schedules (49 CFR part 605). Audit Objective - Determine whether school bus service provided with FTA-funded equipment was approved by FTA or that FTA-assisted equipment and facilities used to accommodate students conformed to the definition of Tripper Service. Suggested Audit Procedure a. Ascertain if the subrecipient operates any transit service exclusively for school children through: (1) Reviews of bus schedules, published fares, and service contracts; (2) Discussions with subrecipient officials; and (3) Reviews of school district or individual school web sites for information on bus transportation of school students. b. Ascertain if FTA-funded equipment (e.g., buses or vans) or facilities (e.g., bus maintenance garages) were used to provide school service by reviewing inventory records, maintenance logs, parking sites, names on bus and van destination signs, school facilities, or by performing other appropriate procedures. c. If exclusive school bus service is identified, review documentation that the service was approved by the FTA. Special Tests and Provisions for Awards with ARRA Funding: 1. Compliance Requirement As provided in 2 CFR section 176.210, recipients of ARRA funds must maintain records that identify adequately the source and application of ARRA awards. B-4 20.513-CL 15

Audit Objective Determine whether accounting records for ARRA funds provide for the separate identification and accounting required for ARRA awards and activity. Suggested Audit Procedure Ascertain if expenditures of ARRA awards are accounted for separately from expenditures of non-arra awards. 2. Compliance Requirement Recipients of ARRA funds must identify the ARRA awards in their Schedule of Expenditures of Federal Awards (SEFA). Audit Objective Determine whether the entity met the requirements for reporting expenditures of ARRA awards on the SEFA and that reported amounts are supported by the accounting records and fairly presented in accordance with ARRA and program requirements. Suggested Audit Procedure Verify that the SEFA properly identifies and reports expenditures of ARRA awards and that reported expenditures are supported by accounting records. 3. Compliance Requirement If ARRA funds are passed from an entity to a subrecipient, the entity must: (1) separately identify to each subrecipient, and document at the time of the subaward and disbursement of funds, the Federal award number, CFDA number, and the amount of ARRA funds; and (2) require their subrecipients to provide similar identification (as noted in Compliance Requirement number 2 above) in their SEFA and reporting of data. Audit Objective If subawards of ARRA funds were made, determine whether the entity met the requirements for separately identifying to each subrecipient, and documenting at the time of the subaward and disbursement of funds, the Federal award number, CFDA number, and the amount of ARRA funds; and required their subrecipients to provide appropriate identification in their SEFA and reporting data. Suggested Audit Procedure Verify that the entity separately identified to each subrecipient, and documented at the time of the subaward and disbursement of funds, the Federal award number, CFDA number, and the amount of ARRA funds; and required their subrecipients to provide appropriate identification in their SEFA and reporting data. B-4 20.513-CL 16