FHWA Controls Over Financial Operations

FHWA developed and implemented new accounting policies and procedures, including policies/procedures on financial statement preparation; journal voucher management; preparation of grant accruals; suspense processing; preparation of Accounts Payable and HTF estimates; and reconciliation procedures for grant transactions, fund balance with Treasury, and payroll. These policies and procedures have been instrumental in enhancing the quality and timely preparation of the FY 2004 financial statements. FHWA has identified a number of other policies and procedures that will be developed in FY 2005, e.g., RAs, Transportation Infrastructure Finance and Innovation Act (TIFIA) loans, SF-133 (Standard Form) preparation and reconciliation, etc.

FHWA contracted out its reconciliation processes to a commercial accounting firm. This firm was required to catch up reconciliations from October 2003 to June 2004. This included monthly reconciliations of SF-224 transactions and Statement of Differences and cumulative grant transactions (obligations and expenditures) in the corporate accounting and grant systems on a daily and monthly basis. FHWA has continued these reconciliations through year's end. The June 30, 2004 financial statements were the first statements produced by FHWA that were reconciled. FHWA also completed the reconciliation of over 3,700 highway projects where balances between the accounting and grant systems did not agree.

In FY 2004, FHWA also implemented a number of system controls to improve financial accountability. FHWA began controlling annual funding allocations at the allotment level to eliminate overspending. FHWA also enhanced its grant system to not allow states to de-obligate more funds than were available for such purposes. FHWA implemented other policies and procedures to ensure that all payments made were done so with sufficient funds existing in the accounting system prior to payment.

Finally, FHWA researched and resolved approximately $2.2 billion in transactions that were deposited into suspense accounts dating back to 1992.