URBAN/REGIONAL BUS AND FACILITY

URBAN/REGIONAL BUS AND

FACILITY PROGRAM

State Authorization: /

N. C. G. S. Article 2B of Chapter 136

N. C. Department of Transportation
Public Transportation Division (PTD)

Agency Contact Person- Program
Debra G. Collins, Director
Public Transportation Division
N.C. Department of Transportation
1550 Mail Service Center
Raleigh, NC 27699-1550
(919) 707-4687
(919) 733-1391
/ Address Confirmation Letters To
Wayne Davenport, Lead Auditor, CICA, CFS
Single Audit Compliance Unit
N. C. Department of Transportation
1507 MailServiceCenter
Raleigh, N.C.27699-1507
(919) 707-4581
Fax (919) 715-2710

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 NCDOT Office of Inspector General 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 (“Urban/Regional Bus and Facility Program”), DOT number (“DOT-19”) 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 program title 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, FederalPass through, State share and local share.

On NCDOT’s confirmation from the Grant Master List (GML), these moneys are shown by DOT number “DOT-19”.

I.PROGRAM OBJECTIVES

Grants are made under the Urban/Regional Bus and Facility Grant Program to provide matching funds to acquire federal grants at the local level for urban and regional transit systems. Matching funds are provided for the FTA Capital Program (Section 5309) and the FTA Urbanized Area Formula Program (Section 5307).

II.PROGRAM PROCEDURES

The program is administered by the State. Local recipients are local governments, and transportation authorities that must submit funding applications.

The local recipients apply to PTD by an application that includes a copy of the approved Federal Transit Administration (FTA) application the purpose, scope and proposed budget for the project. Following PTD review and approval, it will make a recommendation to the North Carolina Board of Transportation (BOT) regarding approval. Once BOT approves the funding, PTD prepares the grant agreement between NCDOT and the local recipient. Two copies of the grant agreement are sent to the local recipient for signature and return to NCDOT. Once NCDOT signs both copies, one will be sent to the local recipient and one will remain in NCDOT files. The grant agreement includes the purpose and scope of the project, identifies the total grant award, states the conditions for receipt of the financial assistance, specifies the state and local shares, and the period of availability.

PTD also prepares and sends the local recipient an award letter, project budget and instructions/forms for invoicing and reporting. The agreement specifies that invoices shall be submitted quarterly but no more frequently than monthly. Any supporting documentation required of the subrecipient will be specified in the executed contract transmittal package. All forms and instructions are available through PTD.

Refer to the FTA Capital Program (Section 5309) guidance and FTA Urbanized Area Formula Program (Section 5307) guidance for further information on the FTA website at

III.COMPLIANCE REQUIREMENTS

1. Activities Allowed or Unallowed

Compliance Requirement - Funds must be expended as specified in the funding application; the FTA Capital Program (Section 5309) and FTA Urbanized Area Formula Program (Section 5307) guidance, rules and regulations; the award letter; and the grant agreement, which incorporates the grantee’s application (scope of services) by reference. On occasion, grants are made that do not match FTA funding, with only a local matching requirement.

Audit Objective - Determine if funds were used for eligible approved budget expenditures.

Suggested Audit Procedure

1. Ascertain that services/expenditures conform to the application that serves as the scope of services.

  1. Test expenditures and related records for compliance with the program guidelines.
  1. Allowable Costs/Costs Principles

Compliance Requirement - Eligible uses of funds are limited to those addressed in the grant agreement on a project by project basis. The proposed budget gives specific categories of costs; any deviation from the budget must have an approved budget request change on file with NCDOT. The costs must be reasonable, necessary and conform to any limitation or exclusion set forth by laws, agreements or circulars. Requests for Reimbursement will be reviewed by the PTD staff before payment is approved. Additional information may be required before payment is approved.

Audit Objective – Determine that the allowable costs are accurately and adequately documented. Determine that the unallowable costs are covered by the local recipient.

Suggested Audit Procedure

  1. Test transactions for accuracy; allowability, and adequate documentation.
  2. Test any unallowable transactions to make sure the local recipient covers them.
  1. Cash Management

Compliance Requirement - Funds are normally reimbursed. If the subrecipient receives payment of 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. Depending on the project, a partial advance may be awarded initially and the difference reimbursed after the request for reimbursement is submitted. .

Invoices are submitted at time of purchase for reimbursement as set forth in the grant agreement.

Audit Objective – Determine that funds/reimbursements were handled properly and are reflected on the appropriate reports or requests for reimbursement.

Suggested Audit Procedures

  1. Test transactions for classification (capital and non-capital), proper submission, accuracy and adequacy of the documentation.
  2. Trace amounts for selected transactions to the reports.
  3. Ascertain that the grantee transmitted payment to the vendor within three (3) days of receipt for advance payments.

4. Conflict of Interest Policy

Compliance Requirement – N.C.G.S. 143C-6-23(b) requires each non-state entity eligible to receive state funds to have a conflict of interest policy which addresses conflicts that may arise when members of its governing body or its managing employees are involved in the disbursement of state funds. The entity is required to have a copy of their entity’s policy on file with the disbursing state agency before any funds are disbursed; this policy shall be approved by the entity’s governing board and a notarized statement of the board’s action shall be attached. All members of the board and management shall be familiar with and follow the policy and the legislation. The entity should have written procedures of how the conflict of interest policy is enforced. Also note: N.C.G.S. 14-234 - Public officers or employees benefiting from public contracts; exceptions.

Audit Objective - Determine if the policy statement has been provided to the

disbursing state agency, to current members of the board and management and

efforts are made to follow the policy.

Suggested Audit Procedure

  1. Obtain a copy of the policy and transmittal letter to the agencies disbursing state funds to the nonprofit entity.
  2. Verify the existence and enforcement of the entity’s procedures.

7.Matching, Level of Effort, Earmarking

Matching

Compliance Requirement – The grant agreement, the proposed budget and the award letter will state the State share and the local share. The State participation cannot exceed the amount stated in the grant agreement, grant award letter and approved project budget. The local share may increase for unallowable costs or costs exceeding project budget that must be absorbed at the local level.

Normally local match is on a cash basis, but in-kind matches are allowable for some projects with prior written permission of NCDOT.

Audit Objective - Determine that any excess funds came from the local share and not the Federal or State share.

Suggested Audit Procedures

1. Examine the approved project budget and any subsequent budget revisions and amendments.

  1. Ascertain the total project costs. Review financial records and determine the amount which can be claimed as the Federal and State share. Ascertain that if total project costs were exceeded, the local share increased and covered the costs.

Level of Effort – No testing is required at the local level.

Earmarking – No testing is required at the local level.

8.PERIOD OF AVAILABILITY OF STATE FUNDS

Compliance Requirement - The eligible project costs are to be completed within the specified timeframe unless written authorization was requested and received from NCDOT prior to the end of the period of performance specifying the new contract end date.

Audit Objective – Determine if costs were expended according to agreement and if a period of performance approval letter is on file if the project exceeded the initial contract period.

Suggested Audit Procedure - Determine whether project expenses occurred within the period of performance specified in the project agreement or an approved written extension of the period of performance from NCDOT is on file.

12.Reporting

1. Compliance Requirement - Invoices are submitted at time of purchase for reimbursement as set forth in the grant agreement.

Audit Objective – Determine if the project is matching Federal Transit Administration capital or planning activity line items. Determine that the progress report(s)/statement(s) submitted were accurate and supported by adequate documentation. On occasion, awards are made that do not match FTA grants.

Suggested Audit Procedure

  1. Test transactions to ascertain that information submitted on the reports are accurate and supported by adequate documentation (including invoices where necessary).

2. Trace amounts reflected in invoice and progress report to underlying accounting records.

2. Compliance Requirement - Grantees must submit quarterly DBE Report of Awards and Commitments documenting actual utilization (CFR Parts 23 and 26 and FTA Circular 5010.1D, 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 (DBE-IS form) documenting use and payment of DBE’s based on a record keeping system (49 CFR section 23.49, 23.11).

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. Participation by non-certified firms cannot be counted towards the DBE goal.

C-4DOT-19