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FHWA Order 2910.2B

Order
Subject
Office of Inspector General and General Accounting Office Audit Findings, Recommendations, and Followup Action
Classification Code Date Office of Primary Interest
2910.2B April 30, 1990  

Par.

  1. Purpose

  2. Cancellation

  3. References

  4. Scope

  5. Policy

  6. Responsibilities

  7. Processing Draft Reports

  8. Processing Final Reports

  9. Resolving Audit Report Issues

  10. Closing Out Commitments

  11. Management Reporting

  1. PURPOSE. To establish policy, responsibilities, and procedures for processing Office of Inspector General (OIG) and General Accounting Office (GAO) audit reports, resolving OIG and GAO audit report findings and recommendations, and following up on the actions to be taken by the Federal Highway Administration (FHWA) in response to the OIG and GAO audit report recommendations.

  2. CANCELLATION. FHWA Order 2910.2a, Office of Inspector General and General Accounting Office Audit Resolution and Followup, dated October 28, 1986 is canceled.

  3. REFERENCES.

    1. DOT Order 8000.1C, July 20, 1989, Office of InspectorGeneral Audit and Investigation Report Findings, Recommendations and Followup Action.

    2. DOT Order 2960.1b, May 11, 1988, Relations With the General Accounting Office and Followup on General Accounting Office Reports.

    3. OMB Circular A-50, September 29, 1982, Audit Followup.

    4. FHWA Order H 2500.1A, September 1, 1987, FHWA Financial Management Handbook.

    5. Public Law 95-452, Inspector General Act of 1978, as amended by Public Law 100-504, October 18, 1988, Inspector General Act Amendments of 1988.

  4. SCOPE. The provisions of this Order are applicable to all elements of the FHWA responsible for resolution and followup of audit findings and recommendations of the OIG and the GAO, and to all OIG and GAO audits except those pertaining to contract price proposals.

  5. POLICY. It is the policy of the FHWA to cooperate with the OIG and GAO in expeditiously resolving audit recommendations and to carry out in a timely fashion any commitments made to the OIG and GAO and any other actions which the FHWA has determined to be necessary.

  6. RESPONSIBILITIES.

    1. Associate Administrators, Staff Office Directors, Regional Administrators, the Federal Lands Highway Program Administrator, and Regional Directors of Motor Carrier Safety, within their respective jurisdictions. are responsible for (1) reviewing draft and final audit reports referred to them for comment, (2) making every effort to reach a mutually acceptable resolution of GAO/OIG audit report findings and recommendations, and (3) following up to assure that corrective actions to implement resolved recommendations are taken.

    2. The Associate Administrator for Administration is responsible for overall coordination of the audit resolution and followup process and is the designated modal followup official (MFO). In this regard, theOffices of Management Systems, Fiscal Services, and Contracts and Procurement have the following responsibilities:

        (1) The Director, Office of Management Systems, is responsible for coordination all GAO audit activities and OIG audit activities which are national in scope or require FHWA Washington Headquarters concurrence. These activities include the review of audit reports, resolution of audit findings and recommendations, followup on the status of corrective actions, and submission of final action reports.

        (2) The Director, Office of Fiscal Services, is responsible for monitoring the control, followup and disposition of Federal-aid audits (external) and audits of regional internal operations, including Federal Lands Highway Office audits and Regional Motor Carrier Safety audits, submitted by the OIG; submitting final action reports; and providing guidance and technical assistance to other FHWA offices in the review, resolution, and followup of audit findings and recommendations.

        (3) The Director, Office of Contracts and Procurement, is responsible for coordinating audits of FHWA Washington Headquarters contracts prepared by, or obtained through, the OIG. This includes the review of audit reports, resolution of audit findings and recommendations, followup on the status of corrective actions, and submission of final action reports.

    3. The Directors of the Office of Management Systems, Office of Fiscal Services, and Office of Contracts and Procurement will establish and maintain centralized systems to control audit reports for which they are responsible to assure that corrective action is accomplished. As a minimum, these systems will contain information necessary for the preparation of management reports (see paragraph 11).

  7. PROCESSING DRAFT REPORTS. The following procedures for draft reports apply to the Washington Headquarters, Federal-aid Regional Offices, Federal Lands Highway Office, and Regional Offices of Motor Carrier Safety. Additional procedures for the Regional Offices are prescribed by FHWA Order H 2500.1A.

    1. General. When processing the draft report, emphasis is to be placed on determining the validity of the audit findings and reasonableness of the recommendations. Responses to the OIG will indicate agreement/disagreement with the findings, recommendations and monetary amounts, including costs questioned and estimates of the dollar value of recommendations that funds be put to better use, and estimated target dates for completion of final action on recommendations with which management agrees. Responses to the OIG should also indicate agreement/disagreement with findings of material weakness reportable to the Secretary under the Federal Managers' Financial Integrity Act. Every effort should be made to come to an agreement with the OIG during the draft report stage, to minimize disagreement on recommendations in the final report and reduce the possibility of referrals to the Departmental Followup Official (DFO) at the final report stage.

    2. FHWA Washington Headquarters.

        (1) At the Washington Headquarters level, OIG draft reports are usually transmitted for review directly to the FHWA Washington Headquarters (Attention: HMS) by the OIG Washington Headquarters or by the OIG regional office that sponsored the review. The GAO draft reports are transmitted to the FHWA by the Office of the Secretary. The HMS distributes both GAO and OIG draft reports to the appropriate office(s) for review and comment and to the Office of Chief Counsel for legal review.

        (2) A response time of 60 calendar days has been established for OIG draft reports and 30 calendar days for GAO draft reports. Offices in the Washington Headquarters may contact the HMS to extend the due date for OIG and GAO audit responses. The 30-day GAO deadline for audit response is mandated by law, but there is a provision that allows the agency to request additional time from the GAO to comment.

        (3) Washington Headquarters office comments are consolidated by the HMS into an FHWA response. In some cases, the OIG will informally request comments on the factual portions of preliminary draft reports directly from offices in which audit work was done. In regard to GAO reports on which the FHWA will not formally comment, the GAO may request a meeting with the FHWA will not formally comment, the GAO may request a meeting with the FHWA to informally discuss the factual portions of the report. The GAO or OIG representatives will be advised by the HMS that such comments are considered preliminary and are not to be construed as FHWA's formal response.

    3. Federal-aid Regional Offices, Federal Lands Highway Divisions and Regional Offices of Motor Carrier Safety

        (1) The OIG draft reports are transmitted for review directly to the FHWA Regional Office by the counterpart OIG regional office. Draft OIG reports of regional audits that contain recommendations addressed to the Washington Headquarters are transmitted by the Regional Office to theappropriateWashington Headquarters program office for comment on those recommendations and supporting findings and conclusions. In the latter case, the Washington Headquarters office should provide its response to the Regional Office for incorporation in the reply to the OIG. The GAO regional offices may transmit GAO draft reports to the FHWA Regional Offices for information prior to formal review at FHWA and DOT Headquarters, but all FHWA formal responses to GAO draft reports will be prepared in the Washington Headquarters.

        (2) Upon receipt of the OIG draft report, the FHWA Regional Office will coordinate the report within the region as appropriate. An information copy of the draft report along with the Regional Office response will be sent to HFS (Attention: HFS-211).

        (3) Clearances or consultations on OIG draft regional reports requiring Washington Headquarters assistance should be directed to the appropriate program offices. Any efforts by the OIG to solicit FHWA Washington Headquarters intervention in the resolution of a regional audit report will be discouraged unless such intervention is considered to be in the best overall interest of the FHWA.

        (4) Federal Lands Highway Divisions will follow the same procedures detailed above for FHWA Regional Offices. They will coordinate responses with the Federal Lands Highway Office as appropriate.

        (5) The response time for submitting comments to the OIG is 60 days. Extension of deadlines for responding to an OIG draft report are permitted when the report must be coordinated with the State highway agency (SHA) or subgrantees or where there is insufficient time to develop adequate responses.

  8. PROCESSING FINAL REPORTS. The following procedures for final reports apply to the Washington Headquarters, Federal-aid Regional Offices, Federal Lands Highway Office, and Regional Offices of Motor Carrier Safety. Additional procedures for the Regional Offices are prescribed by FHWA Order H 2500.1A.

    1. General. When processing the final report, emphasis is to be placed on determining the position of the FHWA on findings and recommendations not resolved at the draft stage and initiating corrective actions that may be necessary to correct system deficiencies and/or to resolve questioned costs. Response to the OIG will indicate agreement/disagreement with the findings, recommendations and monetary amounts, including costs questioned and estimates of the dollar value of recommendations that funds be put to better use, and also target dates for completion of final action on recommendations with which management agrees. Responses to the OIG should also indicate agreement/disagreement with the findings of material weakness reportable to the Secretary under the Federal Managers' Financial Integrity Act.

    2. FHWA Washington Headquarters. Upon receipt of the final report from the OIG or the GAO, the HMS will distribute the report to the appropriate FHWA Washington Headquarters offices for comment and recommended actions and to the Office of Chief Counsel for legal review. A 60-day response time has been established for OIG final reports. Responses to final GAO reports, which are submitted by OST to the Office of Management and Budget and certain congressional committees, are required only if the report contains recommendations. The response time is established by the OST Audit Liaison but is normally less than 60 days. When the FHWA Washington Headquarters responses have been received by the HMS, a consolidated FHWA response, including comments on the audit findings and recommendations and a statement of proposed corrective actions, if any, is signed by the Administrator and transmitted to the OIG, in the case of OIG final reports, or to the OST, in the case of GAO final reports.

    3. Federal-aid Regional Offices, Federal Lands Highway Divisions and Regional Offices of Motor Carrier Safety. Upon receipt of the OIG audit report, the appropriate office will coordinate the report within the region in accordance with regional procedures, determine FHWA's position on the findings and recommendations, and initiate corrective actions that may be necessary. The Regional Office will establish a date for responding tothe report that will be within 60 days for OIG reports.

      The Regional office will transmit a consolidated response including a statement of corrective action, if any, to the regional OIG. Federal Lands highway Divisions will process final reports in the same manner.

    4. Office of Contracts and Procurement. Upon receipt of FHWA Washington Headquarters contract audits prepared by or obtained through the OIG, the HCP will resolve findings and recommendations, including questioned costs, with contractors and transmit a response stating corrective actions to the OIG within 60 days.

  9. RESOLVING AUDIT REPORT ISSUES.

    1. GAO Audit Reports. Pursuant to paragraph 6b(3) of OMB Circular A-50, GAO reports are considered closed when the agency, i.e., the Department, responds to the Congress. However, FHWA still has the responsibility to assure completion of those corrective actions agreed to by management.

    2. OIG Audit Reports.

        (1) For most audits, findings and recommendations are closed at the time that FHWA management officials complete the actions agreed to in the final response, or, in the event of disagreement, the point at which the Assistant Secretary for Administration, who is the Department of Transportation (DOT) Followup Official, determines the matter to be resolved/closed. In some instances disagreements may require resolution at the Secretary's level.

        (2) Pursuant to Section 305 of the Supplemental Appropriations and Rescission Act of 1980, and Chapter 1, paragraph 4 of DOT Order 8000.1C, all unresolved findings and recommendations must have a final management decision rendered within 6 months after the final report issuance date.

        (3) Every effort shall be made to mutually agree on an acceptable resolution of all findings and recommendations within the 6-month time frame. Corrective actions should be clearly stated and achievable, and aimed at preventing future recurrences of any deficiencies on which the audit findings were based.

        (4) The procedures for resolution of OIG audits in the FHWA Washington Headquarters, Regional Offices, Federal Lands Highway Office, and Regional Offices of Motor Carrier Safety are as follows:

          (a) The OIG will review FHWA's response to the final report and advise the FHWA as to its position regarding the proposed actions, usually within 30 days.

          (b) If the OIG agrees with the corrective actions taken or proposed, the HMS, for the FHWA Washington Headquarters level audits, or the Regional Office, for the regional level audits, will so advise all interested parties.

          (c) If it is a regional report and there is no agreement at the regional level between the OIG and the FHWA, the regional OIG office will refer the matter to its Washington Headquarters office for resolution. The OIG Washington Headquarters may formally transmit the report to the DFO for resolution.

          (d) If it is a national report or a regional report with national policy implications and there is no agreement between the FHWA Washington Headquarters and the OIG Washington Headquarters, the matter may be referred by the InspectorGeneral to the DFO or to the Secretary for resolution.

          (e) If it is an OIG audit report of a Federal Lands Highway Division, it will be resolved in the same manner as a regional report with coordination through the Federal Lands Highway Office.

          (f) If it is an OIG audit report of a Regional Office of Motor Carrier Safety, it will be resolved in the same manner as a regional report.

        (5) The OIG Washington Headquarters provides to the FHWA Washington Headquarters (HMS) a listing, usually prepared on a monthly basis, of unresolved national and regional final audit reports (audits for which agreement on all recommendations has not been attained), as well as a listing of audits requiring final action reports. These listings are used by the HMS, HFS and HCP to track and followup or assist Washington Headquarters and/or regional offices in tracking or following up on the resolution of audit findings and recommendations.

  10. CLOSING OUT COMMITMENTS.

    1. Because of the diversity of recommendations contained in GAO and OIG audit reports, strict criteria cannot be established for closing actions. However, audits are generally closed when the recommended corrective action is taken, or when an alternative course of action is taken that satisfies the intent of the recommendation and is agreed to by the OIG.

    2. The FHWA offices which are responsible for implementing corrective actions that have been agreed to in response to GAO or OIG audit recommendations shall ensure that such actions are taken. Followup to ensure that corrective action has been effective will be handled through normal program monitoring. Each Associate Administrator, Staff Office Director, Regional Administrator, and the Federal Lands Highway Program Administrator, however, should assign responsibility and establish procedures to monitor corrective actions to ensure that they are taken within a reasonable timeframe. Failure to take final action within 1 year from the date of management decision will result in the audit report being listed in the Secretary's Semiannual Report on Final Action to Congress.

  11. MANAGEMENT REPORTING.

    1. The OIG will distribute to the DOT operating elements periodic final action status reports used in tracking audit recommendations until final action has been taken. The HMS will in turn distribute these reports to the appropriate Washington Headquarters offices. If final action has not been taken by the projected completion date, a new date will be entered on the report form and a brief explanation provided as to why the projected date could not be met.

    2. Upon completion of final action, a report will be provided to the OIG giving the audit report number, report title, description of recommendations, management decision (commitment), date final action was completed, and amount of disallowed costs recovered and/or funds put to better use. The OIG-generated status reports referred to in subparagraph a, above, may be used as the final action report by filling in the appropriate columns and returning the form to HMS.

    3. Public Law 100-504, Section 106(b), requires the Department to submit to the Congress a Semiannual Report on Final Action. The OST will develop the information to be provided in the report from periodic OIG-generated final action status reports and operating administration final action reports.

/s/
T. D. Larson
Federal Highway Administrator

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