Sneak Preview: FTA To Issue Guidance on At-Risk Grantee Oversight

July 1, 2016 | By Jerry Ashworth | Post a Comment

xsass_bookshot(The following was excerpted from a recent article in the Single Audit Information Service.) The Department of Transportation (DOT), Federal Transit Administration (FTA) plans to develop guidance for its regional officials by the end of the year to ensure that regional staff consistently oversee and document corrective actions taken by at-risk transit agencies, in response to recommendations in a recent DOT Office of Inspector General (OIG) audit.

The OIG defined “at-risk transit agencies” as those which FTA has restricted access to federal funds for noncompliance with FTA grant requirements, requiring that invoices be thoroughly reviewed and approved prior to FTA reimbursement. More than 2,000 urban and rural transit operators nationwide receive award funding from FTA. FTA can temporarily restrict an operator’s access to federal funds if the agency determines that the recipient has a significant internal control weakness or does not comply with federal requirements. From October 2010 through March 2014, FTA restricted access to funds for 35 transit operators for various reasons, including allegations of misuse or abuse of funds or being the subject of a whistleblower complaint, the OIG found.

Under the audit, the OIG reviewed FTA’s oversight and documentation related to findings and corrective actions taken by three of the largest at-risk recipients — Chicago Metra, Miami-Dade Transit (MDT) and the Washington Metropolitan Area Transit Authority (WMATA). The OIG found that FTA officials, upon determining that the three transit agencies reviewed had internal control weaknesses, appropriately issued letters informing the transit agencies that FTA would temporarily restrict their federal funds, conduct reviews of invoices and monitor their progress in completing corrective actions.

For example, after allegations arose in 2009 that a senior Chicago Metra official had committed fraud, FTA Region 5 restricted Metra’s access to grant funds and reviewed invoices to ensure Metra only used federal funds to pay for eligible activities. After inspecting invoices for several months, the regional office determined Metra used funds in accordance with federal requirements and lifted the restriction. However, in 2011, FTA regional officials found 12 internal control findings, specifically involving adequate payroll controls to ensure accurate timekeeping, and required Metra to take corrective actions. FTA has since determined that Metra has implemented policy changes to correct the payroll control weaknesses.

While the OIG noted that FTA regional officials took action to protect federal funds and track recipient progress in addressing corrective actions, it expressed concern that oversight methods varied among regional offices. For example, FTA regions hired project management oversight contractors to review and approve invoices before allowing at-risk agencies to access federal funds, but the procedures these contractors used differed. While FTA Regions 4 and 5 assigned the contractors to perform on-site invoice reviews at MDT and Metra, FTA Region 3 required WMATA to mail hard copies of its invoice packages to the oversight contractor for review.

(The full version of this story has now been made available to all for a limited time on Thompson’s Grants Compliance Expert site.)


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