U.S. Department of Transportation Office of Inspector General

GRANT OVERSIGHT ISSUES AND FUTURE CHALLENGES

Presented by Joe ComéDeputy Principal Assistant Inspector General for Auditing and Evaluation

AASHTO Internal/External Audit Conference

Savannah, Georgia July 12, 2012

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WHO ARE THOSE AUDITORS?

Grantees Single Audits (CPAs)

Other Federal

State Oversight

Office of Inspector General

Federal Granting Agency

Local e

ntities

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U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF INSPECTOR GENERAL “FORMAL ORGANIZATION CHART”

Regional Offices

Audit

• Atlanta, GA

• Baltimore, MD

• Cambridge, MA

• Fort Worth, TX

• New York, NY

• Oklahoma City, OK

• San Francisco, CA

• Seattle, WA

Investigations

• Cambridge, MA

• Chicago, IL

• Fort Worth, TX

• New York, NY

• San Francisco, CA

• Sunrise, FL

• Washington DC

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“LESS FORMAL DESCRIPTION”

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AVIATION

Wildlife Hazard Mitigation

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BRIDGES

Interstate 35W Bridge (2007)Construction material on deck

Under-designed gusset plates

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TUNNELS

Central Artery Tunnel (2006)

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TRANSIT

Effects of Hurricane Sandy on New York’s Subway System

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HIGHWAY PROJECTS

Alaskan Way Viaduct Replacement Project

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BIG MONEY

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Audits

• 143 audit reports

• 385 recommendations

• Over $3 billion in financial recommendations

Investigations

• 82 indictments

• 73 convictions

• $98 million in fines, restitutions, and recoveries.

RETURN ON INVESTMENT

$ 41DOT OIG’s return for

each budget dollar spent

in fiscal year 2013

On track for similar results in fiscal year 2014:

• Over $532 million financial recommendations

• Over $1.3 billion in fines, restitutions, recoveries, and forfeitures—the bulk of which comes from Toyota’s settlement with the Federal Government.

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DOT GRANTS

In this tight budget environment, taxpayers expect the Government to be a good steward of tax dollars spent on DOT grants.

DOT’s Estimated Grant Obligations

FY 2013 $100.1 billion

Source: OMB Object Class Analysis, Budget of the U.S. Government, Fiscal Year 2013

GRANT OVERSIGHT ISSUES

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Issues :

• Missing elements

• Unclear or unspecified milestones

• Undefined terms

• Inconsistency between agreements and other documents

GRANT AGREEMENTS

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Issues :

• Lack of outcome measures to determine project success relative to program goals

• Plenty of upfront goals but less after the fact measures

• Data for measuring program success not collected or not collected consistently

MEASURING PERFORMANCE

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Issues:

• Expenditures that are not allowable

• Expenditures not credited to proper account

• Problems with indirect costs

• Poor documentation for expenditures

SUPPORTING EXPENDITURES

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Issues:

• Lack of support for major management decisions and modifications to projects

• Poor documentation of change orders and rationale

• Contract files issues

OTHER DOCUMENTATION

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Issues:

• Lack of training plan

• Insufficient training on key tasks

• Knowledge of controls

TRAINING

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Issues:

• Remedies available and situations that warrant use

• When to use tracking

• Feedback considered when making and amending grants

• Reluctance to use enforcement authority for noncompliance

REMEDIES AND SANCTIONS

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Issues:

• Knowledge of fraud potential

• How to report fraud

• Current fraud issues related to Transportation projects

FRAUD AWARENESS AND REPORTING

FUTURE PLANS AND CHALLENGES

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We’re going to parachute in and do a surprise audit, but I want to keep the whole thing low key.

OIG, DOT AUDITS UNDERWAY OR COMING SOON

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• ARRA project closeout

• Oversight of major projects

• Oversight of States’ use of Federal-aid funds through the Financial Integrity Review and Evaluation Program (FIRE)

• Oversight of preliminary engineering on highway projects

• Oversight of the Bridge Inspection Program

• Implementation of OIG Bridge Program recommendations and MAP-21 Bridge provisions

FHWA-RELATED AUDITS UNDERWAY

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• National Transit Database

• Oversight of at-risk transit agency grantees

• Efforts to deploy low or no emission buses and other transit-focused technologies

• Hurricane Sandy grant award and oversight processes

FTA-RELATED AUDITS UNDERWAY

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• Evolving nature of Federal audit mandates

• Everything is an IT audit

• “Super Circular” impacts

• Innovative financing requires innovative auditing

• The dream of performance budgeting

FUTURE CHALLENGES

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QUESTIONS?

We don’t want you to view this panel as being in any way confrontational, so please ask questions.