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Section 5: Resolving Audit Findings Pertaining to Site Audits

Site Audits

In addition to audit coverage utilizing the single audit approach, The Texas Department of Transportation (TxDOT) Audit Office (AUD) conducts requested site audits each year on selected projects. Site audits are handled using AUD’s normal site audit procedures. AUD forwards any findings noted during the audit directly to the subgrantee for collection of the moneys due or other resolution as appropriate. Information copies are provided to the TRF-TS program managers and to the districts when appropriate.

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Division Responsibility

The Texas Department of Transportation (TxDOT) Audit Office (AUD) is responsible for:

  • determining that federally required audits for all grant agreements are performed
  • notifying the appropriate subgrantees in writing of findings and providing subgrantees with procedures for resolving findings
  • providing the TxDOT Traffic Operations Division (TRF) with copies of correspondence to subgrantees to be placed in the appropriate grant file of record.

The TxDOT Finance Division (FIN) is responsible for:

  • maintaining grant expenditure records in the Financial Information Management System (FIMS)
  • providing copies of refund deposit vouchers to TRF.

The TxDOT Traffic Operations Division - Traffic Safety Section (TRF-TS) is responsible for:

  • administering the traffic safety grant program
  • maintaining TxDOT’s official grant agreement files
  • placing copies of all audit-related correspondence in the original grant files.
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District Responsibility

The subgrantee should communicate directly with AUD to resolve any audit findings. If the subgrantee submits documentation to the district, however, the district is responsible for providing AUD with copies of all correspondence with the cited subgrantee as well as any related support materials. The district should note the miscellaneous contract and charge numbers of the cited grant or grants on all materials furnished to AUD.

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Types of Findings

There are three possible types of audit findings for which resolution may be required. They are:

  • administrative findings
  • internal control findings
  • compliance findings.
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Process Overview

The flow chart shown in Figure 7-1 provides an overview of the resolution process that follows an AUD audit finding. Detailed descriptions (as referenced in the flow chart) follow.

 Overview of resolution process following
an Audit Office finding.  (References are to subheadings found later
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Figure 7-1. Overview of resolution process following an Audit Office finding. (References are to subheadings found later in this section.)

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Notification of Findings

TxDOT AUD sends a letter with the audit findings to the subgrantee. The letter will:

  • request that the subgrantee respond within ten days and explain what actions have been taken to correct the findings
  • notify the subgrantee of exceptions to grant agreement expenditures and provide a copy of the “Schedule of Exceptions”
  • specify a suspense date by which the subgrantee must respond
  • inform the subgrantee that they may either:
    • mail a refund check made payable to the Texas Department of Transportation to the Austin headquarters, attention: Finance Division, Deposits Section, or
    • submit a letter of appeal.

    NOTE: AUD should send a copy of this audit letter to TRF-TS.

AUD also provides the following to TRF-TS and to FIN:

  • descriptions of weaknesses in procedures, internal controls, reports, and schedules of exceptions
  • a copy of administrative findings that deal with matters for which TxDOT was responsible.
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Handling of Refunds

When FIN receives a refund check from a subgrantee, FIN provides TRF-TS with a copy of the deposit voucher for the grant file of record. TRF-TS may then close the grant agreement file.

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Letters of Appeal

A subgrantee that disagrees with the findings must provide a letter of appeal to AUD that is supported by documentation verifying that the costs in question constitute an eligible reimbursement.

If the subgrantee submits a letter of appeal, AUD provides a copy of the letter, together with copies of all supporting documentation, to TRF-TS.

If AUD accepts the appeal, AUD then sends a letter of notification to the subgrantee, with copies to TRF-TS and FIN. TRF-TS may then close the grant agreement file.

If AUD rejects the appeal, AUD should notify the subgrantee by letter (with copies to TRF‑TS and FIN) and request that a refund check be sent as described in the original letter.

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When Refund Is Not Received

If FIN does not receive an expected refund check, then FIN notifies AUD. AUD should then send a second notification letter to the subgrantee.

NOTE: If the subgrantee has contacted AUD after receiving the first or second notification and has made a reasonable arrangement for issuance of a refund check, AUD may adjust the due date as appropriate. In such cases, AUD should notify the TRF‑TS in writing of the agreement (with a copy to FIN).

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File of Record

Audits deal with matters of legal consequence to both subgrantees and TxDOT. Therefore, it is necessary that all audit-related communications be documented in the official TxDOT grant agreement files. Project and program manager diligence in assuring that copies of all such records are provided to TRF-TS files is of major importance.

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Questions

Questions about procedures for notifying subgrantees of audit citations may be directed to the appropriate program manager of either TRF-TS or the TxDOT Audit Office (512-463-8635).

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