Finding Text
Finding Reference 2024-02
Assistance Listing Number 20.205 Highway Planning and Construction (Federal-Aid Highway Program)
Name of Federal Agency Department of Transportation
Compliance Requirement Matching, Level of Effort, Earmarking
Type of Finding: Significant Deficiency on Internal Control and Noncompliance
Condition:
From a sample of sixty federal construction projects examined, we noticed the following compliance deficiencies:
1. For two projects, the toll credit usage reported in the Authority’s Toll Credits Report differed from the
amounts reported in the Federal-Aid Project Agreements as approved by the Federal Highway Administration
(FHWA).
2. For one project, the Authority was unable to provide sufficient evidence for the auditors to validate the toll
credit usage amount during the fiscal year.
A similar finding was reported during the prior year’s single audit as finding number 2023-04.
Criteria:
In accordance with the signed Memorandum of Understanding (MOU) between the Authority and FHWA (signed on
February 25, 2016), the Authority shall implement modifications to its processes for approving, tracking, and
reconciling toll credits as identified by the FHWA and submit a report (i.e., Toll Credits Report) and a certification to
FHWA ascertaining that it has implemented these modifications. FHWA shall accurately identify the amount of toll
credits available for use by the Authority and identify the modifications that the Authority must make to its processes
for approving, tracking, and reconciling toll credit usage, as applicable.
Cause:
The causes of this finding include:
1) Recordkeeping and Personnel Issues: The Authority has implemented a recordkeeping system endorsed by
FHWA to monitor toll credit usage. However, it was observed that the Authority lacks sufficient personnel
designated to oversight and review of the toll credits reporting process. This has resulted in the reporting
procedure being conducted by a single employee without any formal oversight or review by additional staff
or management, leading to a lack of checks and balances in this compliance area.
2) Lack of Adequate Internal Controls: The Authority lacks adequate internal control mechanisms in place to
ensure the accuracy and completeness of the toll credit usage reporting. This includes the failure to reconcile
amounts reported in the Toll Credits Report with those approved of in the Federal-Aid Project Agreements.
Effect:
Non-compliance with the toll credits matching requirement per the MOU requirements. In addition, the Authority
could inadvertently use toll credits for a federal project that may lack toll credits balances.
Questioned Costs:
Could not be determined
Recommendation:
To address the identified compliance issues related to the discrepancies in toll credit usage reporting and the lack of
sufficient evidence for certain projects, the auditors recommend the following:
1) Strengthen Internal Controls: Enhance internal control procedures to ensure accurate and compliant reporting
of toll credit usage. This includes establishing clear guidelines for documentation, reporting, and verification
processes related to federal construction projects such as a review by an employee that is independent of the
initial reporting process to ensure objectivity. The review should verify the accuracy of the reported toll credit
usage against project agreements and supporting documentation.
2) Enhance Documentation Practices: Develop and enforce rigorous documentation practices. Ensure that all
relevant documents supporting the toll credit usage, such as agreements, approvals, and calculations, are
systematically collected, filed, and readily available for audit purposes.
3) Training and Awareness: Conduct training sessions for staff involved in the reporting and management of
federal construction projects. The training should cover the requirements for toll credit usage, the importance
of accurate reporting, and the procedures for ensuring compliance with federal guidelines.
4) Regular Reconciliation: Implement regular reconciliation procedures between the toll credits reported in the
Authority’s Toll Credits Report and the amounts in the Federal-Aid Project Agreements. Any discrepancies
identified should be investigated and resolved promptly.
5) Leverage Technology: Consider the use of accounting or project management software that can help track
and report toll credit usage accurately. Automation can reduce human errors and improve the efficiency of
the reporting process.
Views of Responsible Officials
Refer to Management’s unaudited corrective action plan.