APRIL 2016 REGIONAL AND INTERCITY PROGRAM State Authorization: N. C. G. S. Article 2B of Chapter 136 N. C. Department of Transportation Public Transportation Division Agency Contact Person Program Debra G. Collins, Director Public Transportation Division N.C. Department of Transportation 1550 Mail Service Center Raleigh, NC 27699-1550 Phone: (919) 707-4684 Fax: (919) 733-1391 dgcollins1@ncdot.gov Address Confirmation Letters To: Phillip W. Ayscue, Manager NC DOT, Office of Inspector General Single Audit Compliance Unit N. C. Department of Transportation 1507 Mail Service Center Raleigh, N.C. 27699-1507 Phone: (919) 707-4571 Fax: (919) 715-2710 pwayscue@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. Grants must be properly identified by program name ( Regional and Intercity Program ), DOT number ( DOT-21 ), 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 WBS number is on the upper right hand corner of the first page. Grantor and/or pass-through grantor should also be included. On NCDOT s confirmation from the Grant Master List (GML), these moneys are shown as part of DOT-21. I. PROGRAM OBJECTIVES Intercity bus services are regular route, scheduled services, that provide intercity transportation within the state and connections to the national intercity bus system through interline agreements or through-service arrangements. The state will use a combination of state and federal Section 5311(f) funds available specifically for supporting intercity bus service to provide assistance in operating intercity routes. The goals of the intercity bus program include the development of a statewide, linked network of local, regional, and intercity transportation services. Because of limited resources, an initial priority is the development of intercity services or feeder service to intercity services from areas that do not currently have intercity connections. This can include reinstatement of intercity bus services on routes or in corridors that once had service, or feeder services from unserved areas to convenient C-4 DOT-21 1
connections with intercity services. Projects that offer services coordinated with other intercity services will receive priority, including those that utilize through-service buses, interline tickets, common inter-modal terminals, coordinated schedules, and joint information or marketing plans. Also, because of limited funding, a priority will be provided to projects that are potentially selfsustaining at some future time or which have the potential for reduced subsidy requirements in the future. Based on the input provided by community transportation systems, local officials/agencies, and intercity carriers, the program s focus is primarily providing operating funding to enable systems and operators to provide feeder connections to intercity services, to reinstate or initiate intercity bus services in areas lacking current services, and to allow coordination of long-distance medical trips as part of regional or intercity services. Accordingly, the program provides operating assistance, including funds to adequately market the service to the public. Given the amount of funding available, capital funding for vehicles or facilities would only have an indirect impact on the goal of serving areas or markets that are currently unserved. Based on the operational structure of the proposed service, a limited amount of administrative funding may also be available. II. PROGRAM PROCEDURES Annual Section 5311 formula apportionments are made to States who apply for funds on behalf of local recipients and administer the program. Section 5311(f) requires each state to spend fifteen percent of its annual Section 5311 apportionment "to carry out a program to develop and support intercity bus transportation," unless the Governor certifies that "the intercity bus service needs of the state are being met adequately." The North Carolina Department of Transportation is designated by the G.S. 136-44.20 to apply for and administer federal and state public transportation funds. Eligible applicants for intercity bus funds include: Community Transportation Systems that have fulfilled the programmatic requirements as outlined in the FY2007-2008 CTP Grant Application; other public, private non-profit, and private for-profit transportation providers; public transportation authorities; intercity bus providers; local public bodies including counties and municipalities; Indian Tribes and regional or local planning organizations. Depending upon applications received, PTD may elect to pass through funds to a local agency that will subcontract with a third party, including a private forprofit operator, to provide the service and/or PTD may contract directly with a private for-profit operator (i.e. intercity bus provider). The NCDOT uses a combination of state and federal funds to support one hundred percent (100%) of the net operating deficit of the selected intercity services to be provided in the service areas. Performance criteria are specified in the grant agreement between the NCDOT and the recipient. The request is reviewed by Public Transportation Division staff and, if approved, presented to the North Carolina Board of Transportation for funding approval. The funding award is approved by the North Carolina Board of Transportation for inclusion in a grant application to the US Department of Transportation Federal Transit Administration. Following Federal approval, the applicant agency receives the agreement between NCDOT and the applicant for local execution. Following full execution of the project agreement, the applicant agency receives a copy of the executed agreement, approved project budget, and instructions for reporting and receiving reimbursement by the department. III. COMPLIANCE REQUIREMENTS 1. ACTIVITIES ALLOWED OR UNALLOWED 1. Compliance Requirement - Funds must be expended as specified in the grant application, grant award letter, the project budget and the project agreement, which incorporates the grantee's application by reference. Audit Objective - Determine if funds were used for eligible approved budget expenditures. C-4 DOT-21 2
1. Ascertain that services/expenditures conform to the application that serves as the scope of services. 2. Test expenditures and related records for compliance with the program guidelines. 2. Compliance Requirement - Intercity Bus projects must adhere to all Federal Transit Administration regulations including, but not limited to, the Americans with Disabilities Act (ADA) by addressing the mobility needs of persons with disabilities. All services operated under this program must meet the applicable requirements for accessible service as defined by the ADA. Requirements differ based on the status of the entity (public or private), the type of vehicle, the size of the entity (if private) and the overall mix of service provided by the entity. Proposals must include information on the applicable regulations for the service proposed and how the applicant will meet those regulations. It should be noted that private operators of Over-the-Road Buses (OTRBs) are now required to provide accessible service as described in the ADA Final Rule issued September 24, 1998. Both private and public operators of other vehicle types (and public operators of OTRBs) were already covered by the ADA regulations in 49 CFR, Parts 27, 37 and 38. All applicants will need to address this issue in their application. Audit Objective - Determine if the grantee is in compliance with the Americans with Disabilities (ADA) regulations as specified in NCDOT policy guidance. - Examine documentation from NCDOT regarding adherence to program regulations. 3. Compliance Requirement - Service Interruptions Intercity Bus service may be interrupted due to vehicle breakdown or severe weather conditions (i.e. hurricanes, snow storms, floods). The carrier must provide a contingency plan for such service interruptions, which shall include, but is not limited to, provision of food and/or hotel accommodations for affected passengers. Audit Objective - Determine if the grantee is in compliance with the contingency plan for service interruptions. - Examine documentation from NCDOT regarding adherence to the written document. 3. CASH MANAGEMENT Compliance Requirement - Project agreements specify that this is a cost reimbursement program. NCDOT relies on the Federal Compliance Supplement, Part 3, Section C, Cash Management for guidance. Audit Objective Determine if funds were paid on a cost reimbursement basis. - Ascertain that funds were received following expenditure by the grantee. 7. MATCHING, LEVEL OF EFFORT, EARMARKING Matching 1. Compliance Requirement - The Federal and State participation cannot exceed the amount stated in the agreement or the renewal letter (approved project budget). C-4 DOT-21 3
Audit Objective Determine whether or not participation exceeds maximum. 1. Examine the agreement renewal letter and any subsequent budget revisions and amendments. 2. Ascertain the total project costs, including those eligible for NCDOT participation. 3. Review financial records and determine the amount which can be claimed as the Federal and State share. The Uniform Public Transportation Accounting System (UPTAS), revised May 2006, defines eligible reimbursable line item expenditures. (This is available from the subrecipient or NCDOT.) 2. Compliance Requirement - In order to assist in financing the operating costs of the project, the Department shall reimburse the Contractor for one hundred percent (100%) of the net operating deficit of the selected intercity services to be provided in the service area(s), defined as the balance of unrecovered operating expenditures after deducting all farebox, advertising and other operating revenues Audit Objective Determine if Federal and/or state share was at or below allowable amount. 1. Ascertain total operating expenditures. Verify the net operating cost (net operating cost defined as the balance of unrecovered operating expenditures after deducting all farebox, advertising, and other operating revenues). 2. Verify farebox revenues. 3. Ascertain the amount of the Federal and/or state share. *NOTE: NCDOT State Maintenance Assistance Program Funds (SMAP) can be used as the nonfederal match consistent with SMAP program guidelines. Level of Effort No testing is required at the local level. Earmarking No testing is required at the local level. 9. PROCUREMENT AND SUSPENSION AND DEBARMENT Compliance Requirement Subrecipients must comply with the federal and state procurement guidelines. Procurement guidelines are developed by the NCDOT based on the requirements. The procurement guidelines are mailed annually by NCDOT with the subrecipient s approved project budget. Nonprofit agencies must develop a written procurement policy and guidelines as required by FTA Circular 4220.1F. The guidelines must be approved by NCDOT. 12. REPORTING 1. Performance and Special Reports Compliance Requirement Grantees must report information on services and marketing to NCDOT with the invoice of expenditures on a monthly or quarter basis. The following data are to be recorded and reported each month for each route operated along with the invoice: C-4 DOT-21 4
(this is per page 15 of the Program Overview and Application Instructions dated July 1, 2012 for the current period) Total miles operated; Total passengers carried, including ridership generated from each ticketing station; If vehicle is accessible, a count of passengers using the wheelchair lift; Passenger miles; Passenger revenue; Freight/package delivery revenue; Total operating cost to provide the service; Cost per mile operated; Cost per passenger mile; and Marketing activities and expenses, with appropriate back-up documentation. Audit Objective Determine that reports were submitted accurately, timely and are adequately supported. - Trace operating statistics reflected in the monthly reports to underlying accounting records. 2. Compliance Requirement (FOR PROJECTS THAT MATCH FEDERAL AND LOCAL FUNDS) Grantees must submit quarterly DBE Report of Awards and Commitments documenting actual utilization (CFR Parts 23 and 26, 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, 23.11). Audit Objective - Determine DBE reports are supported by adequate documentation. 1. Review grantee s DBE contract expenditures (as opposed to contract awards) as outlined in 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. Participation by non-certified firms is not allowed. 13. 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. C-4 DOT-21 5