Purpose. The purpose of the administrative review is to ensure internal controls are in place in the division office. This includes ensuring that sufficient documentation exists to support transactions, appropriate management approvals have been obtained, and the transactions are properly recorded in the agency's accounting system.
Method. The administrative reviews will be conducted by a team external to the division office under the direction of the Resource Center and the Chief Financial Officer (CFO). The reviews will be conducted once every 3 years using the criteria in this chapter.
In accordance with the FIRE Order, the results of the administrative review shall be recorded in the agency's Standard Working Papers attached to the Tool Kit.
The following presents the guidelines by which all administrative reviews will be conducted. It is included in the Tool Kit to provide division staff with a clear statement of what standards the division offices are being held to, and how the reviews will be conducted.
An administrative review is required as part of the Financial Integrity Review and Evaluation (FIRE) Order. The person conducting the review should not be involved in the administrative process being assessed. The following are some additional items that may be helpful in completing this review.
An important aspect of completing the administrative review is to look at the internal controls. The employee entering the accounting data should not also be the person buying the goods and services. Separation of duties and privileges should be reviewed for all systems, including the Fiscal Management Information System (FMIS). If separation of duties cannot be practiced (e.g., division offices that do not have the capacity and/or manpower to segregate critical privileges), ensure that the division has established adequate compensating controls to reduce the risk of a potential weakness that could result from not separating those privileges. There should also be a separation of responsibilities so that an individual does not have control over the entire process. For example, an office employee determines the item to purchase and completes a purchase request form. This form would then be handed to a certifying official to evaluate the availability of funds. Once the availability of funds is confirmed, the approving official would then authorize the expenditure. The credit card holder would then make the purchase. An individual could complete more than one of these tasks but it is important to verify that more than one person is involved in the process. The approving official should be responsible for reviewing the account statements from the credit card company. The credit card statements should be reconciled monthly against the transaction documents. The credit card holder completes this reconciliation. The approving official (NOTE - ONLY the cardholder and the approving official shall see the monthly bank statement!) is responsible for reviewing and verifying the monthly statements. Reviewing the Delphi reports is vital. The reports show you what the office has spent and to whom. Do not use "cuff" records or documents generated by office employees to reconcile expenditures. Only official Delphi reports should be utilized in verifying transactions and source documentation. A good way to evaluate the internal controls in the office is to sketch out a flowchart of who does what. An example of a flowchart that maps the procurement process is included at the end of this chapter.
The FIRE Order requires that you review five transactions from each of the following areas.
All transactions reviewed shall include a selection drawn from the 12-month period prior to the review. The attached outline gives you more detail on what to look for in each of these areas. In a small office, there may not be five transactions available in some of these areas. In those instances, review all of the transactions in that area for the year.
As part of the transaction review, you need to determine if the charge in Delphi matches the amount listed in the transaction documentation. You do not need a Delphi ID to do this. An Excel spreadsheet has been created to select the transactions from DELPHI. This program will run the 024. DELPHI GOE SUMMARY BY OBJECT CLASS report and the 030. RECON GL DETAIL BY FISCAL YEAR.
Execute Excel, making sure Macros are enabled, and complete the following procedures:
Click on File/Open
Browse the computer for C:\AdminReview\AdminTrack.xls (file and install procedures provided separately)
Click on the InfoView Menu Item
Select "Download Data via Business Objects" from the dropdown list
Select "Download Data via Business Objects" from the dropdown list
Click on "OK" Acknowledging the download will take some time to complete
The User Name and Password are simply the name of the state.
User Name: Utah
Complete the Selected Values dialog box for the 030 Report
1 - Select Fund: 1550955010 (good for FY05, for FY06 it will be 1560956010)
2 - Select Allotee: 249 (Divisions are always 2 plus the office number. In this case Utah is number 49. The accounting person will know the office's number. HQ codes have four numbers, starting with 0, and resource centers start with 5.)
3- Type 2003 or 2004 or 2005: Enter previous fiscal year.
1 - Select Agency: FHWA
2 - Select Fund: 1560956010 (Enter code for current Fiscal Year. This code is FY 2006)
3 - Select Allotee: 249 (Divisions are always 2 plus the office number. In this case Utah is number 49. The accounting person will know the office's number. HQ codes have four numbers, starting with 0, and resource centers start with 5.)
4 - Select Cost Center: 0049 (Divisions are always 00 followed by the office number).
5- Select Object Class: Leave it as it is.
Two worksheets will now exist. The "Admin" worksheet includes all of the payment transaction from the previous fiscal year. The "admin24" worksheet will include all of the information from the 024 Report for the current fiscal year. Format the worksheets for printing. Print the worksheets and prepare for selecting the transactions to be reviewed. Only include transactions from the "Admin" worksheet within the previous 12-month time period. Include all of the listed transactions in the "admin24" worksheet. After excluding transactions outside of the review period (previous 12 months), you will begin the random selection process. You may use any statistical random number generator (RNG) to select the transactions. The following is a web site that provides a RNG:
Select at random, 5 transactions from each of the areas to be reviewed (travel vouchers, credit card purchases and purchase orders). Looking at the Object Class, Purchase Order Number, and Vendor Name can do this.
The following are examples of the object class and document type:
|Object Class||PO Number||Vendor||Document Type|
|21000||T05FHCO0NVP07||Joe Traveler||Travel Voucher|
|26620||US Bank Card Services||Credit Card Purchase|
|31050||DTFH08-05-P-12345||Dell Computer||Purchase Order|
The first two numbers of an object class indicate the general category. The last three numbers of an object class indicate the specific expense within that category. The categories are as follows:
Each office determines the numbering scheme in the PO Number field. The Financial Manager can assist in determining the type of transaction based on the information in the Delphi report. It is important to remember that the selection of transactions for review should be an independent process and those involved in the procurement of goods and services should not be involved in selecting the sample. Compare the costs for the document numbers on your records to what is recorded in Delphi. In all cases, the amounts in the source documentation should be equal to or less than the Delphi amounts. Credit cards are entered by the system and should always match. The amount of the purchase order may be less if the obligation exceeds that which has been spent. Look over the vendors to whom payment was made. Do any seem inappropriate?
The reconciliation process is covered in the outline, and it is required by the FIRE Order. It must be completed on a monthly basis and reviewed by staff that is not responsible for entering accounting data (Financial Manager or Assistant Division Administrator). Your financial staff should be comparing their cuff records and source documentation to Delphi records.
Interviewing those involved in the process is an important step to evaluating the internal controls and designing a flowchart. Example questions are included in the outline, but feel free to ask additional questions to resolve issues and provide clarification.
Physical and Computer Security
Some of this is covered in the outline, but make sure security is a high priority for things such as credit cards, convenience checks, computers, user-ids and passwords. Verify that office policies exist to safeguard agency assets and prevent fraud. This includes verifying the sharing of passwords or allowing financial staff access to user accounts other than their own. Credit cards and convenience checks should be stored in a locked cabinet when not being used. It also includes preventing system access to all employees who are involved in the process and voluntarily leave the division or who are dismissed for cause.
Division Administrative Review Outline
Fund Authority / monthly reconciliations
Review 5 transactions.
Documentation required for each transaction:
3 or more vendor quotes if greater than $2500 and an open market purchase, if GSA order over $2,500 is there documentation that two or more GSA schedules were looked at and why they were not chosen for supplies and for services over $2,500 is there evidence that at least two other GSA vendors were solicited?
Form DOT 4230, Summary Sheet filled out and included with files of orders over $2,500
Evidence that the vendor is registered in the Central Contractor Registration (CCR) http://www.bpn.gov/ccrinq/
Have the proper clauses been included with the open market purchase orders (52.213-4 and 52.204-7) and has the CCR clause 52.204-7 been included with GSA orders that will be paid electronically.
Review 5 transactions
Documentation required for each transaction:
Credit cards and convenience checks
Review 5 transactions from each card assigned to your office
Documentation required for each transaction.
Documentation required for each transaction.
Review 5 transactions
Procurement and internal control process review.
Simplified Acquisitions Manual – The credit card holder should have a copy.
Appropriation Law – http://www.gao.gov/special.pubs/redbook1.html
Transportation Acquisition Manual Part 1213, Appendix B – http://www.dot.gov/ost/m60/ FHWA Purchase Card Manual
Federal Acquisition Regulation Part 13.301
FIRE Order – The financial manager should have a copy.
Staff Net Website
Frank Trent/Lakewood Administrative Services Team/720-963-3065
Dan Parker/Finance Service Team (Lakewood)/720-963-3063
William Thornton/Finance Service Team (Atlanta )/404-562-3661
Donna McAleer/HAAM-10 – Procurement/202-366-4270
Abebe Ayalew/HCF Accounting/202-366-2867
Lee Ann Upshur/HCF-20/202-366-3580
HAAM-10 Purchase Credit Cards/202-366-2872
Purpose. The Single Audit Act Amendments of 1996 requires non-Federal entities that expend $500,000 or more in a year in Federal awards to have a single audit conducted (see §.200 of Office of Management and Budget (OMB) Circular A-133). The purpose of this review is to verify that a single audit was performed by the State covering the State transportation departments and to issue a management decision(s) as needed. Located at the end of this chapter is a spreadsheet listing the States, their auditee names, fiscal year end date, single audit reporting due date, corresponding Entity Identification Number (EIN), and cognizant agency.
The initial steps in accomplishing this component are to identify when the audit is due and to determine if the audit has been completed and filed on time. States are required to submit their audit reports to the Federal Audit Clearinghouse (FAC) within the earlier of 30 days after receipt of the auditor’s report or nine months after the end of the State’s fiscal year (see §.320(a)) of OMB Circular A-133). The status can be checked at the Federal Audit Clearinghouse web site, http://harvester.census.gov/sac/. Included at the end of this chapter is a print screen of the FAC home page and instructions for verifying that required audit reports have been filed.
If the audit is not submitted timely, the division office should obtain confirmation that an extension has been granted by the cognizant agency. The Department of Health and Human Services (HHS) is the cognizant agency for all statewide single audits, and the Department of Transportation (DOT)/ Office of Inspector General (OIG) is the cognizant agency for State transportation departments single audits.
The next step is to obtain a copy of the single audit report or, at a minimum, a copy of the portion of the report that relates to FHWA programs. This information may be requested from the State transportation agency's Chief Financial Officer or the Auditor in charge of the single audit for your State. The OIG will issue correspondence outlining the single audit findings/recommendation for any material internal control weakness or questioned costs over $10,000. The division is responsible for complying with the instructions outlined in the OIG's correspondence. A copy of the division office’s response to the OIG should be provided to the FHWA Audit Liaison in HAIM-13.
In accordance with the FIRE Order and OMB A-133, the division office will complete the following for findings related to FHWA programs:
Obtain a copy of the State DOT corrective action plan including the due dates for the proposed corrective actions. If the State has not completed a corrective action plan, the division office is encouraged to assist the State in completing the plan.
Issue a management decision to the State DOT addressing each FHWA program related finding. The management decision shall be issued in a formal letter to the State DOT and either concur with the State DOT's proposed action plan and/or prescribe additional or alternative actions be taken to resolve the findings. A Sample Management Decision letter is included at the end of the chapter.
Monitor activities to ensure that corrective actions are taken and provide summaries/documentation supporting corrective actions taken to close out the single audit finding(s). The FHWA Audit Liaison will work with the divisions to close out findings reported through the OIG.
Document single audit review and oversight actions.
OMB Circular A-133 requires Federal agencies to issue a management decision on audit findings within six months after receipt of the audit report (see, §.405 of OMB A-133). Division offices should strive to resolve findings as quickly as possible. The division office should also work with the State DOT to ensure that sub-recipients are completing corrective actions.
To search the Federal Audit Clearinghouse (FAC) database, go to the FAC homepage and Click on "Search the Single Audit Database." The next screen you will see is the "Single Audit Disclaimer Information" page; after reading the disclaimer, click on the "Retrieve Records" button.
Search options are broken out by two main categories:
Search for Status of Submissions (Complete and Incomplete Records). Select Option 1, Entity Search, and enter the complete 9-digit EIN number (see attached list of EINs by State).
Search for Complete Records Only. Select Option 3, Entity Search, and enter the complete 9-digit EIN.
Once you select one of the above options, scroll down to the bottom of the screen and click on "View Results" of your search.
The results of your search by EIN will appear as the next screen, and should list the auditee's name, fiscal year, status, and date the form was filed in the FAC. To obtain additional information (auditor's name, company, address, etc.), click on the auditee's name and a screen will appear listing this information. You can scroll down to the bottom of the page and click on page numbers (2 or 3) to get a summary of all Federal Agencies by Catalog of Federal Domestic Assistance having findings in the report as well as a description of the findings.
You may print a copy of this page to provide additional documentation identifying the date of the review.
|Auditee Name||FY End
|State of Alabama||9/30||6/30>||636000619||HHS|
|State of Alaska||6/30||3/31||092600185||HHS|
|State of Arizona||6/30||3/31||866004791||HHS|
|State of Arkansas||6/30||3/31||710847443||HHS|
|State of California||6/30||3/31||680284175||HHS|
|State of Colorado||6/30||3/31||840644739||HHS|
|State of Connecticut||6/30||3/31||066000798||HHS|
|State of Delaware||6/30||3/31||516000279||HHS|
|Government of the District of Columbia||9/30||6/30||536001131||HHS|
|State of Florida||6/30||3/31||596001874||HHS|
|State of Georgia||6/30||3/31||580973190||HHS|
|State of Hawaii, Department of Transportation, Highway||6/30||3/31||990258224||DOT|
|State of Idaho C/O Office of State Controller||6/30||3/31||690820001||HHS|
|State of Illinois Office of Man. and Budg.||6/30||3/31||371320188||HHS|
|State of Indiana||6/30||3/31||356000158||HHS|
|State of Iowa||6/30||3/31||420933966||HHS|
|State of Kansas||6/30||3/31||486029925||HHS|
|Commonwealth of Kentucky||6/30||3/31||610600439||HHS|
|State of Louisiana||6/30||3/31||726000720||HHS|
|State of Maine||6/30||3/31||016000001||HHS|
|State of Maryland||6/30||3/31||526002033||HHS|
|Commonwealth of Massachusetts||6/30||3/31||046002284||HHS|
|Michigan Department of Transportation||9/30||EVEN||6/30||386000134||DOT|
|State of Minnesota||6/30||3/31||416007162||HHS|
|State of Mississippi||6/30||3/31||646000749||HHS|
|State of Missouri||6/30||3/31||446000987||HHS|
|State of Montana||6/30||ODD||3/31||810302402||HHS|
|State of Nebraska||6/30||3/31||470491233||HHS|
|State of Nevada||6/30||3/31||886000022||HHS|
|State of New Hampshire||6/30||3/31||026000618||HHS|
|State of New Jersey||6/30||3/31||216000928||HHS|
|New Mexico State Highway & Transportation Dept.||6/30||3/31||856000581||DOT|
|State of New York||3/31||12/30||146013200||HHS|
|State of North Carolina||6/30||3/31||561611588||HHS|
|State of North Dakota||6/30||EVEN||3/31||450309764||HHS|
|State of Ohio||6/30||3/31||311334820||HHS|
|State of Oklahoma||6/30||3/31||736017987||HHS|
|State of Oregon||6/30||3/31||931070707||HHS|
|Commonwealth of Pennsylvania||6/30||3/31||236003062||HHS|
|Puerto Rico Highway and Transportation Authority||6/30||3/31||660433808||DOT|
|State of Rhode Island and Providence Plantations||6/30||3/31||056000522||HHS|
|State of South Carolina||6/30||3/31||576000286||HHS|
|State of South Dakota||6/30||3/31||466000364||HHS|
|State of Tennessee||6/30||3/31||626001445||HHS|
|State of Texas||8/31||5/31||746000089||HHS|
|State of Utah||6/30||3/31||876000545||HHS|
|State of Vermont Dept. of Fin and Man||6/30||3/31||036000264||HHS|
|Commonwealth of Virginia||6/30||3/31||546001736||HHS|
|State of Washington C/O Office of Fin Man||6/30||3/31||916001089||HHS|
|State of West Virginia||6/30||3/31||550526580||HHS|
|State of Wisconsin||6/30||3/31||396028867||HHS|
|State of Wyoming||6/30||3/31||830208667||HHS|
|American Samoa Government||9/30||6/30||970000676||DOI|
|Government of Guam||9/30||6/30||980018947||HHS|
|Commonwealth of the Northern Mariana Islands||9/30||6/30||986019463||DOI|
|The Government of the United States Virgin Islands||9/30||6/30||660431676||DOA|
|In Reply Refer To: |
Ms. Susan Bristol
|May 3, 2005|
As required by Department of Transportation Order 4600.17A, and the Financial Integrity Review and Evaluation (FIRE) program, the FHWA is required to issue Management decisions on audit findings contained in the annual single audit of the Commonwealth. This correspondence is to address findings contained in the State’s Fiscal 2004 Single Audit report.
Enclosed, please find our observations on the three (3) findings relating to the Massachusetts Highway Department (MHD). The single audit finding is in bold, the MHD planned corrective action is in regular type, and the FHWA position is in italic. FHWA would appreciate receiving any letters or memorandums sent out by MHD as corrective actions to the findings. Our office will take the lead in sampling CA/T requests for payment to ensure certified payrolls have been received in a timely manner.
Please contact us if you have any questions. Thanks.
By Michael K. Lawton
Subrecipient Identification & Award Documents Need Improvement
All new and amended contracts with other governments and non-profit organizations should be reviewed by one bureau with MHD to ensure all federal-funded agreements or extensions the Department enters into are properly classified as either vendors or subrecipients.
Planning and Highway Engineering will continue to make the determination as to whether a contract or agreement should be classified as a vendor or sub-recipient. The Chief Counsel's office will verify that the contract language is appropriate for a sub-recipient before it goes to the Commissioner for signature.
The FHWA agrees there should be consistency in awards and payments made to other governmental units and non-profit organizations. MHD's position that the Planning and Highway Engineering section will make a determination that an award is a vendor or sub-recipient transaction is adequate. However, FHWA recommends that a memorandum be issued charging the Planning and Highway Engineering section this specific responsibility. FHWA considers the high level check by the Chief Counsel's office adequate for ensuring appropriate contract language is included on awards made to subrecipients.
Monitoring of Davis-Bacon Compliance Need Improvement
The Department should instruct those overseeing the CA/T at the MTA as well as the MHD's Resident Engineers to ensure all contractors and subcontractors submit certified payrolls within seven days after the regular payment date of the payroll period. CQE's should not be prepared for payment until the MHD receives certified payrolls for the payment period in question.
MHD will have the Chief Engineer send out a letter to Responsible Section heads outlining the importance of compliance with Davis-Bacon requirements, the letter will also have the appropriate SOP attached. (CSD-28-03-1-000, dated 4/10/98)
FHWA agrees with the Department's action as outlined above, however this action should be expanded to include the responsible CA/T official(s). Since approximately 90% of the late or missing Statements of Compliance came from CA/T prime contractors, FHWA will be making a random check of CA/T payments requests to ensure corrective action has been taken.
Inaccurate Recording of Payroll, Accrued Leave and Relocation Expenditures
The Department should stress to all individuals entering payroll and other information the need to recheck their entries before posting them and require management review of the information before it is recorded in the accounting system. In addition, the Department needs to ensure that employees' leave records are updated when any corrections are made.
In a memo, dated 4/5/01… Districts were instructed on procedural safeguards for recording of payroll. The procedures require time and attendance to be viewed by an employee other than the employee who did the data entry of payroll. These procedures were later incorporated into the Internal Control Plan, which is available on the Intraway. The Director of Payroll will send out a reminder to the Districts regarding proper payroll procedures to prevent future errors in posting.
The FHWA considers MHD's plan to send out a reminder to District Offices adequate to address this finding.
Fire Tool Kit Table of Contents | Order 45601a.htm