ACTA Audit Reports: (Click each link to go to the report)

Transcription

1 ACTA Audit Reports: (Click each link to go to the report) 1. ACTA - AECOM Technical Services, Inc. Audit Report ACTA - Jenkins/Gales & Martinez, Inc. (JGM) Audit Report ACTA - TELACU Construction Management, Inc. Audit Report ACTA - Moffatt & Nichol Audit Report ACTA - Balfour Beatty Infrastructure, Inc. (BBII) Audit Report 2015

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3 AECOM Technical Services, Inc. (formerly DMJM+Harris, Inc.) (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Agreed-upon Procedures (AUP) Report AECOM s Contract Costs Under the First Amended Agreement No. 27 For the Period July 1, 2013 to June 30, 2014

4 Table of Contents Agreed-upon Procedures (AUP) with Report of Independent Accountants For the period July 1, 2013 to June 30, 2014 Page Report of Independent Accountants on Applying Agreed-upon Procedures Schedule I - Summary of AUP-Determined and Reported AECOM Technical Services, Inc. Contract Costs Schedule II - Summary of AUP-Determined AECOM Technical Services, Inc. Contract Costs...4 Schedule III - Summary of Reported AECOM Technical Services, Inc. Contract Costs

5 Report of Independent Accountants on Applying Agreed-upon Procedures Mr. James Preusch Chief Financial Officer Alameda Corridor Transportation Authority Long Beach, CA We have performed the procedures enumerated below, which were agreed to by the Alameda Corridor Transportation Authority (ACTA), solely to assist ACTA in evaluating AECOM Technical Services, Inc. s (AECOM) (formerly DMJM+Harris, Inc.) (a joint venture partner of the Alameda Corridor Engineering Team ACET) compliance with the requirements of the First Amended Agreement No. 27 (the Contract) and the Federal Acquisition Regulation (FAR) Part 31 for the period July 1, 2013 to June 30, AECOM s management is responsible for AECOM s compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those specified parties in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Our procedures and findings are as follows: a) Procedures We tested 25% of the direct labor costs billed by AECOM to ACTA for the period July 1, 2013 to June 30, 2014 by performing the following procedures: Agreed labor hours billed to duly approved timesheets. Agreed labor rates billed to rates authorized per Contract. Agreed labor rates billed to actual labor rates per payroll registers. Recalculated mathematical accuracy of extensions and footings. Results No exceptions noted. b) Procedures We compared the provisional indirect expense billing rates used for the period July 1, 2013 to June 30, 2014 with the audited home office indirect expense rates for the twelve-month periods ended September 27, 2013 and October 3, We calculated the over- or underbilling of indirect expenses for the period July 1, 2013 to June 30, 2014.

6 Results As shown on Schedule I, the audited indirect expense rates were determined to be lower than the provisional indirect expense rate used for billing purposes. AECOM s home office indirect expense rates for the twelve-month periods ended September 27, 2013 and October 3, 2014 were audited by Cleary & Gill, LLC. AECOM s audited home office indirect expense rates vis-à-vis provisional rates for the twelve-month periods ended September 27, 2013 and October 3, 2014 were as follows: Fiscal Year Final Rate Provisional Rate September 27, % % October 3, % % Based on the above, AECOM overbilled ACTA $9,290, as summarized in Schedule I. We were not engaged to and did not perform an examination, the objective of which would be the expression of an opinion on compliance. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the audit committee and management of ACTA, AECOM and ACET and is not intended to be and should not be used by anyone other than these specified parties. Los Angeles, California May 4,

7 AECOM Technical Services, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Schedule I - Summary of AUP - Determined and Reported AECOM Contract Costs For the Period July 1, 2013 to June 30, 2014 Difference AUP-Determined Reported Over-billing (Schedule II) (Schedule III) (Under-billing) Direct Labor Regular rate $ 199,838 $ 199,838 $ - Indirect Expenses 297, ,551 9,290 Total $ 497,099 $ 506,389 $ 9,290 NOTES: a) AECOM performed program management services for ACTA as a joint venture partner to ACET. b) The over-billing in indirect expenses resulted from lower audited indirect expense rates as compared to the provisional indirect expense rate used for billing purposes. Below is a breakdown of the over-billing by work order: Base Contract $ 9,261 SR47 29 Total over-billing $ 9,290 See Report of Independent Accountants on Applying Agreed-upon Procedures. 3

8 AECOM Technical Services, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Schedule II - Summary of AUP Determined AECOM Contract Costs For the Period July 1, 2013 to June 30, 2014 Base Contract SR47 Work Order Work Order Total July 1, 2013 to September 30, 2013 Direct Labor Regular rate $ 45,321 $ - $ 45,321 Indirect Expenses (a) 66,876-66,876 Total $ 112,197 $ - $ 112,197 October 1, 2013 to June 30, 2014 Direct Labor Regular rate $ 153,835 $ 682 $ 154,517 Indirect Expenses (a) 229,368 1, ,385 Total $ 383,203 $ 1,699 $ 384,902 TOTAL AUP-DETERMINED - July 1, 2013 to June 30, 2014 Direct Labor Regular rate $ 199,156 $ 682 $ 199,838 Indirect Expenses (a) 296,244 1, ,261 Total $ 495,400 $ 1,699 $ 497,099 NOTE: a) The audited indirect expense rates of % and % were applied to direct labor at regular rates, for the three-month period ended September 30, 2013 and the nine-month period ended June 30, 2014, respectively, to calculate indirect expenses. See Report of Independent Accountants on Applying Agreed-upon Procedures. 4

9 AECOM Technical Services, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Schedule III - Summary of Reported AECOM Contract Costs For the Period July 1, 2013 to June 30, 2014 Base Contract SR47 Work Order Work Order Total July 1, 2013 to September 30, 2013 Direct Labor Regular rate $ 45,321 $ - $ 45,321 Indirect Expenses (a) 69,522-69,522 Total $ 114,843 $ - $ 114,843 October 1, 2013 to June 30, 2014 Direct Labor Regular rate $ 153,835 $ 682 $ 154,517 Indirect Expenses (a) 235,983 1, ,029 Total $ 389,818 $ 1,728 $ 391,546 TOTAL REPORTED - July 1, 2013 to June 30, 2014 Direct Labor Regular rate $ 199,156 $ 682 $ 199,838 Indirect Expenses (a) 305,505 1, ,551 Total $ 504,661 $ 1,728 $ 506,389 NOTE: a) The provisional rate of % was applied to direct labor at regular rates to calculate indirect expenses. See Report of Independent Accountants on Applying Agreed-upon Procedures. 5

10 Vasquez & Company LLP has over 45 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publically traded companies. Vasquez is a member of the McGladrey Alliance. McGladrey Alliance is a premier affiliation of independent accounting and consulting firms. McGladrey Alliance provides its members with access to resources of RSM US LLP (formerly known as McGladrey LLP). McGladrey Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Visit for more information regarding RSM US LLP and RSM International. McGladrey, the McGladrey Alliance logo and the McGladrey Alliance signatures are proprietary to RSM US LLP, while RSM is used under license by RSM US LLP. 801 South Grand Avenue, Suite 400 Los Angeles, California Ph. (213) Fax (213)

11 Jenkins/Gales & Martinez, Inc. (JGM) (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Agreed-upon Procedures Report JGM s Contract Costs Under the First Amended Agreement No. 27 For the Year Ended December 31, 2014

12 Jenkins/Gales & Martinez, Inc. (JGM) (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Agreed-upon Procedures Report JGM s Contract Costs Under the First Amended Agreement No. 27 For the Year Ended December 31, 2014

13 Table of Contents Agreed-upon Procedures (AUP) with Report of Independent Accountants For the Year Ended December 31, 2014 Page Report of Independent Accountants on Applying Agreed-upon Procedures... 1 Schedules: Schedule I - Summary of AUP-Determined and Reported JGM Contract Costs... 3 Schedule II - Summary of AUP-Determined JGM Contract Costs... 4 Schedule III - Summary of Reported JGM Contract Costs... 5

14 Report of Independent Accountants On Applying Agreed-upon Procedures Mr. James P. Preusch Chief Financial Officer Alameda Corridor Transportation Authority Long Beach, CA We have performed the procedures enumerated below, which were agreed to by the Alameda Corridor Transportation Authority (ACTA), solely to assist ACTA in evaluating Jenkins/Gales & Martinez, Inc. s (JGM), a joint venture partner of the Alameda Corridor Engineering Team (ACET), compliance with the requirements of the First Amended Agreement No. 27 ( Contract ) and the Federal Acquisition Regulation (FAR) Part 31 for the year ended December 31, JGM s management is responsible for JGM's compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those specified parties in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Our procedures and findings are as follows: 1. Procedures We tested 20% of the direct labor costs billed by JGM to ACTA for the year 2014 by performing the following procedures: Agreed labor hours billed to timesheets. Agreed labor rates billed to rates authorized under the Contract. Agreed labor rates billed to actual labor rates per payroll registers. Verified mathematical accuracy of extensions and footings. Results No exception noted. 2. Procedures We tested the indirect expenses billed by JGM to ACTA for the year 2014 by performing the following procedures: Obtained the Statement of Direct Labor, Fringe Benefits and General Overhead report for the year ended December 31, 2014 issued by the independent auditor, Rossi LLP, to determine whether the audit was performed to comply with the 1

15 provisions of the applicable sections of the Federal Acquisitions Regulation (FAR) part 31. Compared the expense accounts reported in the Statement of Direct Labor, Fringe Benefits and General Overhead for the year ended December 31, 2014 issued by the independent auditor, Rossi LLP, with JGM s general ledger. Recalculated the indirect expense rate reported in the overhead rate audit report above and compared it with the provisional rate of 175% used by JGM in billing ACTA and as agreed with ACTA and ACET. Results a. The schedules supporting the indirect expense rate calculation were based on the results of the audit of JGM s Statement of Direct Labor, Fringe Benefits and General Overhead for the year ended December 31, 2014 performed by another auditor, Rossi LLP, whose report dated September 8, 2016 expressed an unmodified opinion on the statement. The audit was performed based on JGM s compliance with Part 31 of the FAR cost principles. The expenses reported in the audit report agreed with JGM s general ledger balances for the year ended December 31, b. JGM s audited overhead rate for the year ended December 31, 2014 was 134% which is lower than the 175% overhead rate used to bill ACTA. This resulted to an over-billing of 41% or $50,238 (see Schedule I). Based on finding 2(b) above, JGM over-billed ACTA $50,238 during the year ended December 31, We were not engaged to, and did not conduct an examination, the objective of which would be the expression of an opinion on compliance with the requirements of the Contract and FAR Part 31. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the management of ACTA, JGM, and ACET and is not intended to be and should not be used by anyone other than these specified parties. Los Angeles, California October 12,

16 Jenkins/Gales & Martinez, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Schedule I - Summary of AUP-Determined and Reported JGM Contract Costs Year ended December 31, 2014 Difference AUP-Determined Reported Over-billing (Schedule II) (Schedule III) (Under-billing) Direct Labor $ 122,533 $ 122,533 $ - Indirect Expenses 164, ,433 50,238 Total $ 286,728 $ 336,966 $ 50,238 Indirect Expense Rates 134% 175% Notes: a) The over-billing in indirect expenses in 2014 resulted from a lower actual overhead rate of 134% as compared to the provisional overhead rate used for billing purposes of 175%. b) JGM performed program management services for ACTA as a joint venture partner with ACET. See report of independent accountants on applying agreed-upon procedures. 3

17 Jenkins/Gales & Martinez, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Schedule II - Summary of AUP-Determined JGM Contract Costs Year ended December 31, 2014 Pacific Coast Base Contract Highway Contract SR47 Work Order Work Order R-10 Project Work Order Total Direct Labor $ 62,749 $ 3,441 $ 25,493 $ 30,850 $ 122,533 Indirect Expenses 84,084 4,611 34,161 41, ,195 Total $ 146,833 $ 8,052 $ 59,654 $ 72,189 $ 286,728 See report of independent accountants on applying agreed-upon procedures. 4

18 Jenkins/Gales & Martinez, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Schedule III - Summary of Reported JGM Contract Costs Year ended December 31, 2014 Pacific Coast Base Contract Highway Contract SR47 Work Order Work Order R-10 Project Work Order Total Direct Labor $ 62,749 $ 3,441 25,493 $ 30,850 $ 122,533 Indirect Expenses 109,811 6,022 44,613 53, ,433 Total $ 172,560 $ 9,463 70,106 $ 84,837 $ 336,966 See report of independent accountants on applying agreed-upon procedures. 5

19 Vasquez & Company LLP has over 45 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publicly traded companies. Vasquez is a member of the RSM US Alliance. RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP. 801 South Grand Avenue, Suite 400 Los Angeles, California Ph. (213) Fax (213)

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21 TELACU Construction Management, Inc. (TCMI) (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Agreed-upon Procedures (AUP) Report TCMI s Contract Costs Under the First Amended Agreement No. 27 Year Ended December 31, 2014

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23 TELACU Construction Management, Inc. (TCMI) (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Agreed-upon Procedures (AUP) Report TCMI s Contract Costs Under the First Amended Agreement No. 27 Year ended December 31, 2014

24 TELACU Construction Management, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Table of Contents Agreed-upon Procedures (AUP) with Report of Independent Accountants Year ended December 31, 2014 Report of Independent Accountants... 1 Page Schedule I - Summary of AUP-Determined and Reported TCMI Contract Costs... 3 Schedule II - Summary of AUP-Determined TCMI Contract Costs... 4 Schedule III - Summary of Reported TCMI Contract Costs... 5

25 Report of Independent Accountants On Applying Agreed-upon Procedures Mr. James Preusch Chief Financial Officer Alameda Corridor Transportation Authority Long Beach, CA We have performed the procedures enumerated below, which were agreed to by the Alameda Corridor Transportation Authority (ACTA), solely to assist ACTA in evaluating TELACU Construction Management, Inc. s (TCMI) [a joint venture partner of the Alameda Corridor Engineering Team ACET] compliance with the requirements of the First Amended Agreement No. 27 (the Contract) and the Federal Acquisition Regulation (FAR) Part 31 for the year ended December 31, TCMI management is responsible for TCMI s compliance with those requirements. This agreed-upon procedures (AUP) engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those specified parties in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Our procedures and findings are as follows: 1. Procedures We tested 23% of the direct labor costs billed by TCMI to ACTA for the year 2014 by performing the following procedures: Agreed labor hours billed to duly approved timesheets. Agreed labor rates billed to rates authorized per the Contract. Agreed labor rates billed to actual labor rates per payroll registers. Recalculated mathematical accuracy of extensions and footings. Results No exceptions noted. 2. Procedures We compared the provisional indirect expense billing rates used for the year 2014 with the audited indirect expense rate for the same period. We calculated the over- or under-billing of indirect expenses for the year ended December 31, Results As shown on Schedule I, the audited indirect expense rate was determined to be higher than the provisional indirect expense rates used for billing purposes. TCMI s indirect expense rate for the year 2014 was audited by BDO USA, LLP. TCMI s audited indirect expense rate for the year 2014 was 152% while the provisional indirect expense rates used were 133% for the period January to June 2014 and 146% for the period July to December 2014.

26 Based on procedure number 2 above, TCMI under-billed ACTA by $15,950 as summarized in Schedule I. We were not engaged to and did not perform an examination, the objective of which would be the expression of an opinion on compliance. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the audit committee and management of ACTA, TCMI and ACET and is not intended to be and should not be used by anyone other than these specified parties. Los Angeles, California February 29,

27 TELACU Construction Management, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Schedule I - Summary of AUP-Determined and Reported TCMI Contract Costs Year ended December 31, 2014 Difference AUP-Determined Reported Over-billing (Schedule II) (Schedule III) (Under-billing) Direct Labor $ 127,487 $ 127,487 $ - Indirect Expenses 193, ,831 (15,950) Total $ 321,268 $ 305,318 $ (15,950) Indirect Expense Rate(s) 152% 133% and 146% NOTES: a) TCMI performed program management services for ACTA as a joint venture partner to ACET under the First Amended Agreement No. 27. b) The under-billing in indirect expenses resulted from higher audited indirect expense rate as compared to the provisional indirect expense rates used for billing purposes. Below is a breakdown of the under-billing by work order: Base Contract Work Order $ 12,450 SR47 Work Order 3,500 Total under-billing $ 15,950 See Report of Independent Accountants on Applying Agreed-upon Procedures. 3

28 TELACU Construction Management, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Schedule II - Summary of AUP-Determined TCMI Contract Costs Year ended December 31, 2014 Base Contract SR47 Work Order Work Order Total Direct Labor $ 95,461 $ 32,026 $ 127,487 Indirect Expenses (a) 145,101 48, ,781 Total $ 240,562 $ 80,706 $ 321,268 NOTE: a) The audited indirect expense rate of 152% was applied to direct labor to calculate indirect expenses. See Report of Independent Accountants on Applying Agreed-upon Procedures. 4

29 TELACU Construction Management, Inc. (A Joint Venture Partner of the Alameda Corridor Engineering Team for the Alameda Corridor Transportation Authority) Schedule III - Summary of Reported TCMI Contract Costs Year ended December 31, 2014 Base Contract SR47 Work Order Work Order Total Direct Labor $ 95,461 $ 32,026 $ 127,487 Indirect Expenses (a) 132,651 45, ,831 Total $ 228,112 $ 77,206 $ 305,318 NOTE: a) The provisional indirect expense rates of 133% and 146% were applied to direct labor for the period January to June 2014 and July to December 2014, respectively, to calculate indirect expenses. See Report of Independent Accountants on Applying Agreed-upon Procedures. 5

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32 Vasquez & Company LLP has over 45 years of experience in performing audit, accounting & consulting services for all types of nonprofit organizations, for-profit companies, governmental entities and publically traded companies. Vasquez is a member of the McGladrey Alliance. McGladrey Alliance is a premier affiliation of independent accounting and consulting firms. McGladrey Alliance provides its members with access to resources of RSM US LLP (formerly known as McGladrey LLP). McGladrey Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Visit for more information regarding RSM US LLP and RSM International. McGladrey, the McGladrey Alliance logo and the McGladrey Alliance signatures are proprietary to RSM US LLP, while RSM is used under license by RSM US LLP. 801 South Grand Avenue, Suite 400 Los Angeles, California Ph. (213) Fax (213)

33 INDEPENDENT ACCOUNTANT S REPORT ON APPLYING AGREED-UPON PROCEDURES FOR VERIFICATION OF BILLINGS BY MOFFATT & NICHOL ENGINEERS, ACET JOINT VENTURE CONTRACTOR UNDER FIRST AMENDED AGREEMENT NUMBER 27 FOR THE PERIOD DECEMBER 29, 2013 THROUGH DECEMBER 27, 2014 Prepared for: ALAMEDA CORRIDOR TRANSPORTATION AUTHORITY FINAL REPORT Prepared by: BCA Watson Rice LLP Hawthorne Blvd. Suite 150 Torrance, CA 90503

34 21250 Hawthorne Blvd. Suite 150 Telephone: Torrance, CA Facsimile: INDEPENDENT ACCOUNTANT S REPORT ON APPLYING AGREED-UPON PROCEDURES We have performed the procedures enumerated below, which were agreed to by the Alameda Corridor Transportation Authority (ACTA), solely to assist ACTA in determining whether the costs billed by Moffatt & Nichol Engineers (M&N), a member of the Alameda Corridor Engineering Team (ACET), for the period December 29, 2013 through December 27, 2014 were adequately supported and allowable per the terms of the First Amended Agreement Number 27. The management of M&N is responsible for the costs billed. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Our procedures and results are as follows: 1. We examined the billings and identified the amounts billed for direct labor costs. Results: We identified total direct labor costs of $251, for the following four projects: Base, SR-47, R-10, and PCH. 2. We selected at least 20% of the direct labor costs billed by M&N for testing. Results: We judgmentally selected invoices from each project for a total of nine invoices totaling $63, or 25% of the total invoiced direct labor costs of $251, For our sample of direct labor costs, we agreed direct labor hours billed to timesheets. Results: The direct labor hours billed was adequately supported by timesheets, except for the four (4) employees listed below. According to ACTA s representative, these employees worked out of the home office and therefore are not required to complete a timesheet. Instead, signed certified labor reports were provided as support for those labor hours and were accepted by ACTA.

35 Project Payment Request No. Employee Name Hours Base 244 Chan, Dick 1.00 Base 244 Economides, Demetre Base 247 Kenagy, Duane Base 247 Patel, Suhash For our sample of direct labor costs, we agreed direct labor rates billed to rates authorized per the Contract. Results: The direct labor rates billed agreed to the rates authorized in the Contract. No exceptions were noted as a result of our procedures. 5. For our sample of direct labor costs, we agreed direct labor rates billed to actual direct labor rates per M&N s payroll registers. Results: The direct labor rates billed were adequately supported by M&N payroll registers. No exceptions were noted as a result of our procedures. 6. We verified the mathematical accuracy of the sampled invoices. Results: No mathematical exceptions were noted as a result of our procedures. 7. We verified whether the overhead rate was audited and in accordance with FAR Part Results: Based on our examination of M&N s overhead rate report performed by an independent CPA for the year ended December 27, 2014, the audited overhead rate of % was performed in accordance with FAR Part No exceptions were noted as a result of our procedures. 8. We examined the billings and identified the amounts billed for Other Direct Costs. Results: Based on our examination of the invoices, M&N invoiced $21.44 to ACET for Other Direct Costs. However, ACET only billed $13.44 of mileage cost to ACTA. ACET did not bill the unsupported Weller Court fee of $8 to ACTA. 9. We selected at least 50% of the Other Direct Costs billed by M&N for testing. Results: We selected 100% of the $13.44 billed to ACTA for testing. 2

36 10. We agreed the amount billed to supporting documentation and verified allowability per Contract provisions and FAR Subpart Results: The mileage cost of $13.44 billed to ACTA agreed to supporting documentation and is allowable per Contract provision and FAR Subpart No exceptions were noted as a result of our procedures. 11. We calculated the total amount of over or under billing by M&N. Results: We found that M&N s actual audited overhead rate for the year ended December 27, 2014 was %, which is lower than M&N s billed overhead rate to ACTA of %. The lower actual overhead rate has resulted in an overbilling of costs by M&N totaling $31, for the period December 29, 2013 through December 27, (See attached Schedule A for a Summary Schedule of the Overbilling by Project). We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on the costs billed. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of management of the Alameda Corridor Transportation Authority and is not intended to be and should not be used by anyone other than this specified party. April 15, 2016 BCA Watson Rice LLP 3

37 SCHEDULE A MOFFATT & NICHOL ENGINEERS Agreement Number C0027 SUMMARY OF AMOUNT DUE TO/(FROM) ACTA For the Period December 29, 2013 through December 27, 2014 Payment BILLED ACTUAL Due Request No. Invoice Period Direct Labor Overhead Rate Overhead Cost Overhead Rate Overhead Cost to/(from) ACTA (a) (b) (c=a*b) (d) (e=a*d) (c-e) Project: BASE /29/13-1/25/14 $ 7, % $ 15, % $ 14, $ /26/14-2/28/14 11, % 22, % 20, , /1/14-3/29/14 11, % 23, % 21, , /30/14-4/26/14 14, % 27, % 26, , /30/14-4/26/ % % /27/14-5/31/14 23, % 45, % 42, , /27/14-5/31/14 9, % 18, % 17, , A 4/27/14-5/31/14 (156.00) % (303.87) % (284.14) (19.73) 250 6/1/14-6/28/14 13, % 25, % 23, , /1/14-6/28/14 9, % 18, % 17, , /28/14-7/26/14 11, % 23, % 21, , /28/14-7/26/14 5, % 10, % 9, /27/14-8/30/14 15, % 29, % 27, , /27/14-8/30/14 4, % 8, % 7, /31/14-9/27/14 10, % 21, % 19, , /31/14-9/27/14 1, % 2, % 2, /28/14-10/25/14 10, % 20, % 19, , /28/14-10/25/14 1, % 3, % 3, /26/14-11/29/14 8, % 15, % 14, , /26/14-11/29/14 1, % 3, % 3, /30/14-12/27/14 4, % 8, % 7, /30/14-12/27/ % 1, % 1, Total BASE $ 177, $ 345, $ 322, $ 22,420.63

38 MOFFATT & NICHOL ENGINEERS Agreement Number C0027 SUMMARY OF AMOUNT DUE TO/(FROM) ACTA For the Period December 29, 2013 through December 27, 2014 SCHEDULE A (Continued) Payment BILLED ACTUAL Due Request No. Invoice Period Direct Labor Overhead Rate Overhead Cost Overhead Rate Overhead Cost to/(from) ACTA (a) (b) (c=a*b) (d) (e=a*d) (c-e) Project: SR /29/13-1/25/14 $ 4, % $ 8, % $ 7, $ /26/14-2/28/14 7, % 15, % 14, /1/14-3/29/14 6, % 12, % 11, /30/14-4/26/14 5, % 10, % 9, /27/14-5/31/14 4, % 9, % 9, /1/14-6/28/14 3, % 7, % 7, /29/14-7/26/14 3, % 7, % 7, /27/14-8/30/14 3, % 6, % 5, /31/14-9/27/14 3, % 6, % 5, /28/14-10/25/14 2, % 5, % 4, /16/14-11/29/14 4, % 8, % 8, /30/14-12/27/14 3, % 6, % 6, Total SR47 $ 53, $ 103, $ 96, $ 6, Project: R /29/13-1/25/14 $ 2, % $ 4, % $ 4, $ /26/14-2/28/14 4, % 7, % 7, /1/14-3/29/14 1, % 2, % 1, /30/14-4/26/14 1, % 2, % 2, /27/14-5/31/14 1, % 2, % 2, /1/14-6/28/14 1, % 2, % 2, /27/14-8/30/ % %

39 MOFFATT & NICHOL ENGINEERS Agreement Number C0027 SUMMARY OF AMOUNT DUE TO/(FROM) ACTA For the Period December 29, 2013 through December 27, 2014 SCHEDULE A (Continued) Payment Request No. BILLED ACTUAL Due Overhead Rate Overhead Cost Overhead Rate Overhead Cost to/(from) ACTA Invoice Period Direct Labor (a) (b) (c=a*b) (d) (e=a*d) (c-e) 50 8/31/14-9/27/ % 1, % 1, /28/14-10/25/ % 1, % 1, /30/14-12/27/ % 1, % Total R10 $ 13, $ 25, $ 24, $ 1, Project: PCH /29/13-1/25/14 $ 2, % $ 3, % $ 3, $ /26/14-2/28/14 2, % 4, % 4, /1/14-3/29/14 1, % 2, % 2, /30/14-4/30/ % 1, % 1, /1/14-5/31/ % 1, % 1, /1/14-6/28/ % % Total PCH $ 7, $ 14, $ 13, $ Total All Projects $ 251, $ 489, $ 457, $ 31,789.63

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41 Balfour Beatty Infrastructure, Inc. (BBII) (A Contractor of the Alameda Corridor Transportation Authority) Agreed-Upon Procedures Report BBII s Contract Costs Under Agreement Number C0782 For the year ended December 31, 2015

42 Balfour Beatty Infrastructure, Inc. (BBII) (A Contractor of the Alameda Corridor Transportation Authority) Agreed-Upon Procedures Report BBII s Contract Costs Under Agreement Number C0782 For the year ended December 31, 2015

43 Report of Independent Accountants On Applying Agreed-Upon Procedures Mr. James Preusch Chief Financial Officer Alameda Corridor Transportation Authority Long Beach, CA We have performed the procedures enumerated below, which were agreed to by the Alameda Corridor Transportation Authority (ACTA), solely to assist ACTA in evaluating Balfour Beatty Infrastructure, Inc. s (BBII) compliance with the requirements of the Maintenance Agreement (Rail and Non-Rail Components) dated as of April 15, Contract C0782 (Contract) for the year ended December 31, BBII management is responsible for BBII s compliance with those requirements. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those specified parties in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. Our procedures and findings are as follows: 1. Procedure Compared total amount billed by BBII from January 1, 2015 to December 31, 2015 with the amount authorized by ACTA in the approved maintenance plan for that period. Findings BBII did not exceed the total approved maintenance budget for year 2015, however, billed costs under ACTA Operating (AEI) category exceeded the budget by $5,737, as shown in the table below. The budgeted contingency fund of $200,000 was not utilized in For the year ended December 31, 2015 Authorized Balance Category Budget Billed (Excess) Rail (M & O) $ 3,026,628 $ 2,799,719 $ 226,909 Non-Rail 812, , ,431 Capital 2,271,642 1,127,420 1,144,222 AEI 189, ,569 (5,737) Total $ 6,300,718 $ 4,812,893 $ 1,487,825 Contingency Fund $ 200,000 $ - $ 200,000 Approved Extra Work $ - $ 78,498 $ - 1

44 2. Procedures We tested approximately 35% of direct labor billed under the Contract for year 2015 by applying the following procedures. Agreed labor hours billed to BBII payroll documents, which consisted of official timesheets submitted by BBII to ACTA, and payroll reports. Agreed labor rates used for billing to rates authorized in the approved maintenance plan. Ascertained that labor hours billed for salaried employees did not exceed 40 hours per week. Mathematically recalculated the summarizations of the labor costs. Verified the supervisors approval on employee timesheets. Extrapolated errors noted to the entire population of invoices. Findings Out of 10,614 hours tested, we noted 2 labor hours of track laborers that were unsupported. As a result, invoice is overstated by $90 on non-rail cost. Extrapolating the error to the entire population of labor billings resulted in projected overbilling of $208 on non-rail cost. Total amount tested was $675, Procedures We tested approximately 20% of Other Direct Costs billed under the Contract for the year 2015 by applying the following procedures. Compared the billed expenses with the expenses authorized in the approved maintenance plan. Inspected prior ACTA approval of any subcontractor cost in excess of $25,000. For expenses billed based on actual costs, agreed amounts billed to invoices and other supporting documentation. In addition, mark-up rate used were agreed to that authorized in the approved budget. For those billed based on agreed-upon standard rates, agreed rates used to the approved budget and verified that no mark-up was added. For expenses supported by invoices dated prior to the month of the billing period, verified prior months billings to determine if it was previously billed. Compared other direct costs with budgeted categories to determine its proper allocation. Verified supervisor or program manager s approval on invoices. Mathematically recalculated the summarizations of other direct costs. Findings Procedures performed without exception. Total amount tested for other direct costs was $975, Procedures We tested approximately 20% of extra work billed under the Contract in the year 2015 by applying the following procedures: Agreed the extra work performed to an approved task order. Compared total amounts billed for each task order to the amount authorized in the respective task orders. Agreed the amounts billed to invoices and other supporting documentation. 2

45 For extra work supported by invoices dated prior to the month of the billing period, verified prior months billings to determine if it was previously billed. Mathematically recalculated the summarizations of the extra work billed. Findings Procedures performed without exception. Total amount tested for extra work was $30, Procedures We reviewed the contractor s billing process as it relates to ACTA projects by applying the following procedures: Made expanded inquiries with BBII personnel about the processes, documents and personnel involved in billing ACTA. Documented the result of inquiries. Tested the same test population mentioned at procedures 2, 3 and 4 above and determined whether the key controls are working and effective. Determined whether any improvements are necessary for the billing process. Identified areas posing significant risk in billing ACTA. Findings (a) We noted that BBII uses a manual approach in accumulating and transferring employee time charges to the timesheets, spreadsheets and to the invoices submitted to ACTA. The same manual procedure is also performed in preparing and reviewing invoices for other direct costs and extra work. This manual process required intensive data entry and is susceptible to error.. In our audit for the previous 3 years, test of invoices disclosed processing errors detailed below: Audit Area Error Rate Net Amount Error Rate Net Amount Error Rate Amount Labor costs 2.05% $ % $ 3, % $ 5,056 Other direct costs 0.23% 1, % 3, % 1,177 Extra work 0.00% % % 130 We suggest that BBII automate the invoice preparation from beginning to end. The automated process shall eliminate significant amount of data entry, make operations more efficient and provide more accurate billing reports as bases for business decisions. The automated process shall also allow the automated detection of duplicate vendor invoices. BBII may design the system internally or consider hiring a consultant for this service. (b) The result of the other procedures was communicated to ACTA in our Audit Risk Assessment Memorandum dated May 20, See attachment 1. 3

46 Summary Based on results of the procedures performed over the test populations noted above (findings 2), BBII has overbilled ACTA in 2015 by $208 in non-rail cost. * * * * * * * We were not engaged to, and did not conduct an examination, the objective of which would be the expression of an opinion on compliance. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the audit committee and management of ACTA and BBII and is not intended to be and should not be used by anyone other than these specified parties. The results of our agreed-upon procedures were discussed with BBII and Mr. James Preusch, Chief Financial Officer of the Alameda Corridor Transportation Authority. Los Angeles, California October 24,

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