APRIL 2009 20.500 FEDERAL TRANSIT CAPITAL IMPROVEMENT GRANTS State Project/Program: FEDERAL TRANSIT ADMINISTRATION (FTA) CAPITAL PROGRAM U. S. Department of Transportation Federal Authorization: Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) (U.S.C. Section 5309) State Authorization: Public Transportation Division Agency Contact Person Program Miriam S. Perry, Director Public Transportation Division 1550 Mail Service Center Raleigh, NC 27699-1550 (919) 733-4713 Ext. 243 Fax (919) 733-1391 mperry@ncdot.gov Address Confirmation Letters To: Bertha Davis, CPA, Manager Single Audit Compliance Unit 1507 Mail Service Center Raleigh, N.C. 27699-1507 (919) 733-3624 ext. 468 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. Grants must be properly identified by program name (FTA-Capital Program), CFDA number ( 20.500 ), 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, program title and CFDA Number (20.500) 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 the NCDOT s confirmation from the Grant Master List (GML), these moneys are shown as part of CFDA Number 20.500. B-4 20.500 1
I. PROGRAM OBJECTIVES The objective of the Section 5309 Program of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), is to finance capital projects in one of three categories: (1) bus and bus-related facilities (2) modernization of fixed guideway systems and (3) construction of new fixed guideway systems and extensions (new starts) that will benefit the country s transit systems. II. PROGRAM PROCEDURES The Section 5309 program is a discretionary grant program. Funds are appropriated by Congress annually for specific transportation projects. By statute, FTA must announce the formula apportionments on October 1 or within 10 days of enactment of the DOT Appropriations Act, whichever is later. Grants are awarded to public agencies and agencies on approval of applications for specific programs of projects submitted to FTA. Progress is monitored through on-site inspections, quarterly progress and financial reports. SAFETEA-LU requires FTA to perform reviews and evaluations of the Section 5309 grants activities at least every 3 years. These reviews are conducted with specific reference to compliance with statutory and administrative requirements and consistency of actual program activities with (1) the approved program of projects and (2) the planning process required under 49 USC 5303. Section 5309 grantees can be subrecipients of the North Carolina Department of Transportation (NCDOT) or direct recipients of the Federal Transit Administration. Subrecipients of NCDOT will have an executed grant agreement with NCDOT. Direct recipients of FTA should use the Federal cluster for Capital Program and Urbanized Area Formula Program. Starting in FY2002, no new grants funded with pass-through Section 5309 funds were or will be initiated. However, the NCDOT continues to provide a match to direct recipients of new Section 5309 grants through the Public Transportation Grant Program, Urban Bus/Facilities Program (Public Transportation Section 5309-Capital Program Grant Agreement) or the Regional New Starts and Capital Program. III. COMPLIANCE REQUIREMENTS The federal granting agency has issued a compliance supplement that should be used in conjunction to this compliance supplement issued by the State Agency. Please refer to OMB Circular A-133 Compliance Supplement (Sect. A of the State Compliance supplement). In developing the audit procedures to test compliance with the requirements for a Federal program, the auditor should first look to OMB A-133 Compliance Supplement, 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/index.html. B-4 20.500 2
A. ACTIVITIES ALLOWED OR UNALLOWED AND ALLOWABLE COSTS/COST PRINCIPLES Compliance Requirement Funds must be expended as specified in the grant award letter and the grant agreement, which incorporates the grantee s application and the Federal Transit Administration s Master Agreement with NCDOT by reference. C. CASH MANAGEMENT Compliance Requirement - Project agreements specify that this is a cost reimbursement program. The request for reimbursement is due within 30 days following the end of the quarter. If the subrecipient receives payment of federal and state funds from NCDOT in advance of incurring the cost, the funds must be paid to the vendor within three (3) days of receipt from the department. If the funds are held longer than three (3) days, NCDOT relies on the Federal Compliance Supplement, Part 3, Section C. Cash Management, for guidance. F. EQUIPMENT AND REAL PROPERTY MANAGEMENT Compliance Requirement - Property (realty and related transit equipment) acquired with Section 5309 funds must be disposed of consistent with federal requirements outlined in FTA Circulars 5010.1C (dated October 1, 1998, Chapter II.C) and 9300.1B. Disposition of equipment before the end of its useful life is subject to prior FTA concurrence in the method of disposition. Unless otherwise determined in writing by FTA, the fair market value for rolling stock removed from service before the end of its useful life is the FTA share of the unamortized value of the remaining service life, based on straight line depreciation of the original purchase price, based upon the date the equipment was removed from revenue service rather than the date of disposal. Transfer of the Federal interest from a capital asset purchased under a grant to one not acquired with Federal assistance is not permitted, except when equipment that is damaged or destroyed is replaced (either with insurance proceeds or otherwise). Transfer of excess equipment by a recipient to another FTA recipient for use in mass transportation operations requires FTA approval (49 CFR section 18.32). G. MATCHING, LEVEL OF EFFORT, EARMARKING 1. Matching Compliance Requirement The grantee must pay at least the local share percentage specified in the grant contract. Local funds must be applied to the uses for which they were committed. 2. Level of Effort - NCDOT does not pass this requirement down to the local level. No testing is required. 3. Earmarking - NCDOT does not pass this requirement down to the local level. No testing is required. H. PERIOD OF AVAILABILITY OF FEDERAL FUNDS Compliance Requirement - Program funds appropriated by Congress have to be obligated by the year of the appropriation plus two additional years. NCDOT subrecipients should complete the project scope within the period of performance identified in the state-local agreement, B-4 20.500 3
unless written authorization from NCDOT has been received extending the period of performance for the project J. PROGRAM INCOME NCDOT is monitoring at the local level. No testing is required. L. REPORTING 1. Compliance Requirement - Financial, project status, and milestone activity reports must be submitted quarterly as specified in FTA Circular 5010.1C and the project agreement. The milestone and narrative reports are due by the 15 th day following the end of the quarter. Also, refer to any supplemental information distributed by NCDOT as it relates to this program. Audit Objective - Determine reports were correctly submitted. 1. Trace amounts reflected in Quarterly Financial Reports to underlying accounting records. 2. Verify certification by checking property management records including disposition actions. 2. Compliance Requirement - Grantees must submit quarterly DBE Report of Awards and Commitments documenting actual utilization (CFR Parts 23 and 26 and FTA Circular 4716.1A, 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 5010.1C). 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. 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. Participation by noncertified firms is not allowed. 3. 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, and the U.S. DOT DBE Final Rule, Federal Register dated February 2, 1999 - Participation by Disadvantaged Business Enterprises in Department of B-4 20.500 4
Transportation Programs). Additional required reports include Project Progress Reports and reports of significant events (FTA Circular 5010.1C). 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. 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. Participation by non-certified firms is not allowed. M. SUBRECIPIENT MONITORING NCDOT passes this grant to its subrecipients who can then 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 the subrecipient does not pass this money down to another subrecipient, no testing is required at the local level. B-4 20.500 5