Internal Audit Follow-Up Report

Transcription

1 Internal Audit Follow-Up Report Public Transportation Grants Indirect and Direct Cost Monitoring TxDOT Internal Audit Division

2 Objective To assess the status of corrective actions for high-risk Management Action Plans (MAPs) previously communicated in the Public Transportation Grants Indirect and Direct Cost Monitoring audit report issued July Summary Results Testing consisted of an evaluation of 3 MAPs to determine if corrective actions were implemented as agreed. MAP Status Comments 3 Closed Corrective actions have been completed. Scope The engagement was performed by Lilly Burson and Jennifer Stanush (Engagement Lead). The engagement was conducted during the period from February 19, 2018 to April 13, The engagement focused on updates to standard operating procedures (SOPs), quarterly financial monitoring forms, and Public Transportation Coordinator (PTC) Lead Review checklist, as well as PTC training workshops. Methodology The methodology used to complete the objectives of this engagement included: Discussion with (PTN) Program Services Section Director. Review of PTN quarterly financial monitoring, indirect cost, and personally identifiable information (PII) SOPs. Review of agendas, attendance records, and information presented at PTC training workshops held in April 2017 and July Reviewed Negotiated Indirect Cost Rate Agreement (NICRA) documentation for three Section 5311 subrecipients that were approved for use of indirect costs and that were also reviewed during the original audit to determine the approved indirect cost percentage rate and indirect cost allocation base. Using the indirect cost percentage rate and allocation base found in the NICRA document, verified indirect cost line item calculations within three FY18 Q1 Section 5311 RFRs. Background This report is prepared for the Texas Transportation Commission and for the Administration and Management of TxDOT. The report presents the results of the Public Transportation Grants Indirect and Direct Cost Monitoring Follow-Up engagement which was conducted as part of the Fiscal Year (FY) 2018 Audit Plan. PTN oversees state and federal grant programs including Federal Transit Administration (FTA) grants. As part of the grant application process, subrecipients that plan to submit for reimbursement of indirect costs throughout the grant must submit a NICRA which outlines the indirect cost allocation base (direct cost line items) and an indirect cost percentage rate used to calculate the indirect costs. August

3 Grant subrecipients submit monthly request for reimbursement (RFR) as grant related expenses are incurred. PTCs are responsible for reviewing RFRs for accuracy, completeness, and ensure appropriate supporting documentation is obtained prior to payment of the RFR. In addition to monthly RFR reviews, PTCs perform a financial monitoring review once a quarter for judgmentally selected line items to verify previously reimbursed costs. We conducted this follow-up engagement in accordance with Generally Accepted Government Auditing Standards and in conformance with the International Standards for the Professional Practice of Internal Auditing. Those standards require that we plan and perform the engagement to obtain sufficient, appropriate evidence to provide a reasonable basis for our conclusions based on our engagement objective. Recommendations to mitigate risks identified were previously provided to management during the original engagement to assist in the formulation of the management action plans referenced in this report. The Internal Audit Division uses the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework version August

4 Detailed MAP Follow-Up Status MAP Status: Closed Corrective actions have been completed. Original Audit Finding No. 1: Quarterly Financial Monitoring MAP 1.1: (PTN) headquarters staff discussed the results of the audit with the Public Transportation Coordinators (PTCs) during the April 2017 PTC Workshop. The discussion emphasized the three types of detail support documentation common to the exceptions, with instructions to the PTCs to exercise diligence in obtaining those documents as part of their quarterly monitoring process. PTN will update the Standard Operating Procedure (SOP) and the Lead Review Checklist to provide additional clarification when reviewing salaries, fringe, and rent payments. PTN will conduct additional training at the July 2017 PTC Workshop. Original Completion Date: August 15, 2017 Actual Completion Date: August 15, 2017 Original Audit Finding No. 2: Validation of Indirect Cost Calculation MAP 2.1: (PTN) will continue to strengthen its process for the management of indirect costs. PTN created draft Standard Operating Procedures (SOPs) in September 2016 to provide guidance on the administration of indirect costs to include: Program managers obtaining subrecipient Negotiated Indirect Cost Agreement (NICRA) information during the grant application process includes indirect cost rate type, percentage rate, and allocation base. Public Transportation Coordinators (PTCs) reviewing subrecipient NICRA to understand indirect cost rate and allocation base to be used in reimbursements. PTCs reviewing reimbursements to ensure indirect costs charged are supported by required documentation for the review method used (streamline or full documentation). PTCs verifying indirect costs have been properly charged. In addition, PTN staff received training in October 2016 on the monitoring of indirect costs, and refresher training in April The draft SOPs will be finalized, formally adopted, and distributed to the PTCs. Original Completion Date: May 15, 2017 Actual Completion Date: May 15, 2017 August

5 Original Audit Finding No. 3: Unsecured Personal Identifiable Information (PII) in Request for Reimbursement (RFR) Supporting Documentation MAP 3.1: The need to ensure all Personal Identifiable Information (PII) is kept under lock and key was discussed with the Public Transportation Coordinator (PTCs) at the April 2017 PTC Workshop. (PTN) has drafted a Standard Operating Procedure (SOP) to address this issue, and will distribute the finalized SOP to the PTCs. Direction given included that PTCs should remind subrecipients to redact PII prior to submitting documents to PTN, documents that include PII not be left in plain view, and all physical files containing PII should reside within a locked file cabinet or room when not being actively viewed. Original Completion Date: May 15, 2017 Actual Completion Date: May 12, 2017 Closing Comments The results of this MAP Follow-Up engagement were discussed with the Public Transportation Division (PTN) Director and PTN Program Services Section Director on May 1, The Internal Audit Division appreciates the cooperation and assistance received from the during this engagement. August