Mn/DOT AUDITMn/DOT AUDIT

2011 COUNTY HIGHWAY 2011 COUNTY HIGHWAY ACCOUNTANTS CONFERENCEACCOUNTANTS CONFERENCE

SINGLE AUDIT DISCUSSIONSINGLE AUDIT DISCUSSION

SINGLE AUDIT OUTLINESINGLE AUDIT OUTLINE

How Your Project Gets Selected For AuditHow Your Project Gets Selected For Audit

ARRA RequirementsARRA Requirements

Contract Item PaymentsContract Item Payments

Material TestingMaterial Testing

Single Audit Report ProcessSingle Audit Report Process

HOW YOUR PROJECT GETS SELECTED FOR AUDIT

Single Audit Act of 1984: Highway Planning and Construction Program

Agreement With Office of Legislative Audit

Letter of Agreement and Stewardship Plan Between Mn/DOT and the Federal Highway Administration

Population of Highway Construction Payments for the State Fiscal Year Ended June 30

15-18 Highway Construction Projects Selected for Audit (some trunk highway and some city/county)

Factors Influencing Selection: Project Size, American Recovery and Reinvestment Act (ARRA), Project Type, Location

FHWA guidance to us for this year: audit 2/3 city/county projects and 1/3 trunk highway projects; also, 50% ARRA projects

AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA) REQUIREMENTS

See www.whitehouse.gov/omb/assets/a133_compliance/arra_addendum_1.pdf pages 29-53 and specific page references below, also incorporated into the March 2010 A-133 Compliance Supplement www.whitehouse.gov/omb/circulars/a133_compliance_supplement_2010

Going Well

Certification that ARRA Buy America provisions are met for Iron, Steel, and Manufactured Goods; Buy America provision in ARRA project proposals, page 33 of 301

Proposal language and practices addressing use of debarred contractors the same between Federal and non-federal (state aid) projects, page 33 of 301

Schedule of Federal Expenditures in annual financial reports separately documents ARRA expenditures, page 52 of 301

Data Collection Form (SF-SAC) in Single Audit Clearing House (http://harvester.census.gov/sac) needs to separately document ARRA expenditures, page 52 of 301

Contractors submitting reports indicating hiring for ARRA projects

Needs Additional Attention

Cities and Counties must be registered in the Central Contractor Registration (CCR) database (https://www.bpn.gov/ccr/default.aspx), page 45 of 301

CONTRACT ITEM PAYMENTSGoing Well

Documentation for most contract item payments

Material on hand payments (high risk area, continue to monitor invoices closely)

Needs Additional Attention

Partial Payment Timeliness (every 35 days per M.S. 471.425 unless modified in special provisions)

Mobilization

MATERIAL TESTING

Assess Measures Taken to Accomplish Compliance With Material Testing Requirements

Grading and Base Testing Requirements

Concrete Production/Testing Compliance

Bituminous Production/Testing Compliance

Recent Audit Results: Material Testing (Grading & Recent Audit Results: Material Testing (Grading & Base)Base)

Single Audit Report Finding for 4 Consecutive Years (2007-2010) Single Audit Report Finding for 4 Consecutive Years (2007-2010)

Going Well Significant decrease in total questioned costs and the number of projects with Significant decrease in total questioned costs and the number of projects with exceptions to requirementsexceptions to requirements

Needs Additional Attention Payment reductions need to be taken at the time of payment for work rather Payment reductions need to be taken at the time of payment for work rather

than at the end of the project (bitumen content)than at the end of the project (bitumen content) Preliminary and Final Grading and Base Reports Need to be Completed correctly Preliminary and Final Grading and Base Reports Need to be Completed correctly

and Sent in to the Grading and Base Unit (Grading and Base Manual, 5-692.301)and Sent in to the Grading and Base Unit (Grading and Base Manual, 5-692.301) QA gradations need to be done with Random Sampling Method per Schedule of QA gradations need to be done with Random Sampling Method per Schedule of

Materials Control and Grading and Base Manual Chapter 7 (also Random Materials Control and Grading and Base Manual Chapter 7 (also Random Sampling Acceptance Report – Grading and Base Manual)Sampling Acceptance Report – Grading and Base Manual)

Moisture Content Tests Must be Done to Verify 5% Moisture to Achieve Moisture Content Tests Must be Done to Verify 5% Moisture to Achieve Compaction (Schedule of Materials Control, 2005 Specification 2211.3 C2, C3, Compaction (Schedule of Materials Control, 2005 Specification 2211.3 C2, C3, Special Provisions)Special Provisions)

QC and QA Percent Crushing (Schedule of Materials Control, Specification QC and QA Percent Crushing (Schedule of Materials Control, Specification 3138.2C)3138.2C)

Aggregate Quality (Schedule of Materials Control, Specification 3138.2D, 2E)Aggregate Quality (Schedule of Materials Control, Specification 3138.2D, 2E) Need to Verify Maximum of 3% Bitumen Content for Aggregate Base Class 7(B) Need to Verify Maximum of 3% Bitumen Content for Aggregate Base Class 7(B)

(Specification 3138.2 A2a(a))(Specification 3138.2 A2a(a)) Materials Certification Exceptions Summary needs to list missed tests and failing Materials Certification Exceptions Summary needs to list missed tests and failing

tests and resolution during the project as well as when the project is tests and resolution during the project as well as when the project is finaled(Contract Admin Manual 5-591.430 page MATLCERT-4)finaled(Contract Admin Manual 5-591.430 page MATLCERT-4)

Recent Audit Results: Material Testing (Concrete)Recent Audit Results: Material Testing (Concrete)Going WellGoing Well

QC and QA Coarse and Fine Aggregate Gradation Tests Usually Done as RequiredQC and QA Coarse and Fine Aggregate Gradation Tests Usually Done as Required Cylinder Tests Done as RequiredCylinder Tests Done as Required

Needs Additional Attention Need to Complete and Submit Weekly Certified Ready Mix Plant Reports and Need to Complete and Submit Weekly Certified Ready Mix Plant Reports and

Test Beam Data to the Concrete Unit (Concrete Manual, 5-694.701; 5-Test Beam Data to the Concrete Unit (Concrete Manual, 5-694.701; 5-694.744(1))694.744(1))

Cores for Thickness need to be done or alternate method of control over Cores for Thickness need to be done or alternate method of control over thickness needs to be approved by the State Concrete Engineer and thickness needs to be approved by the State Concrete Engineer and documented in the special provisions or on a Supplemental Agreement documented in the special provisions or on a Supplemental Agreement (Schedule of Materials Control)(Schedule of Materials Control)

Take payment reductions for concrete mixture not meeting specification when Take payment reductions for concrete mixture not meeting specification when paying for placement of mixturepaying for placement of mixture

Conduct Quality Testing, including Coarse Aggregate Testing on No. 200 sieve Conduct Quality Testing, including Coarse Aggregate Testing on No. 200 sieve (Specification 3137.2D1(i), Schedule of Materials Control)(Specification 3137.2D1(i), Schedule of Materials Control)

Air and Slump Tests should be taken as required and Documented on the Weekly Air and Slump Tests should be taken as required and Documented on the Weekly Concrete Report (Schedule of Materials Control, Concrete Manual 5-694.727)Concrete Report (Schedule of Materials Control, Concrete Manual 5-694.727)

Certified Mill Test Reports needed for Structural Steel (ASTM Standards/Schedule Certified Mill Test Reports needed for Structural Steel (ASTM Standards/Schedule of Materials Control)of Materials Control)

Recent Audit Results: Material Testing (Bituminous)Recent Audit Results: Material Testing (Bituminous)

Going WellGoing Well Failing Materials Rarely Seen and are Properly AddressedFailing Materials Rarely Seen and are Properly Addressed Verification Testing is for the Most Part Done as RequiredVerification Testing is for the Most Part Done as Required Documentation, Including Test Summary Sheets, is ImprovingDocumentation, Including Test Summary Sheets, is Improving

Needs Additional AttentionNeeds Additional Attention Ensure that all testing is done as required by the Special Provisions for Stabilized Ensure that all testing is done as required by the Special Provisions for Stabilized

Full Depth Bituminous Pavement ReclamationFull Depth Bituminous Pavement Reclamation Special Provisions Should not Call for Contractor to Transport Verification Special Provisions Should not Call for Contractor to Transport Verification

Samples (23 CFR 637.205(d)) Samples (23 CFR 637.205(d)) 1 Verification test per day required (2360.4N)1 Verification test per day required (2360.4N) Asphalt Binder should be sampled and tested to verify Performance Grade Asphalt Binder should be sampled and tested to verify Performance Grade

characteristics (Schedule of Materials Control)characteristics (Schedule of Materials Control)

Single Audit Report ProcessSingle Audit Report Process

Meet With County Engineer at End of Week When Meet With County Engineer at End of Week When Audit is Finished to Discuss Results of Audit for Audit is Finished to Discuss Results of Audit for Specific Projects: Spring and Summer Specific Projects: Spring and Summer

Results From 15-18 Highway Construction Audits Results From 15-18 Highway Construction Audits Combined and Evaluated in OctoberCombined and Evaluated in October

Meetings to Discuss Audit Results in Meetings to Discuss Audit Results in October/November:October/November:

Office of MaterialsOffice of Materials Office of Construction and Innovative Contracting Office of Construction and Innovative Contracting State Aid for Local Transportation DivisionState Aid for Local Transportation Division Mn/Dot Commissioner’s Staff Mn/Dot Commissioner’s Staff

ANOTHER EXCITING MEETING WITH THE AUDITORS

Single Audit Report ProcessSingle Audit Report Process

Draft Report for Response Issued in December; Finding Draft Report for Response Issued in December; Finding Recommendations Addressed to Mn/DOT Division DirectorsRecommendations Addressed to Mn/DOT Division Directors

Finding Recommendations Related to County Projects Addressed to Finding Recommendations Related to County Projects Addressed to Mn/DOT State Aid EngineerMn/DOT State Aid Engineer

Responses to Audit Findings Evaluated and Accepted by Mn/DOT Responses to Audit Findings Evaluated and Accepted by Mn/DOT Deputy CommissionerDeputy Commissioner

Final Report With Responses Issued in January/February is a Public Final Report With Responses Issued in January/February is a Public DocumentDocument

www.dot.state.mn.us/const/tools/references.html - Audit Report & Description of Audit www.dot.state.mn.us/const/tools/references.html - Audit Report & Description of Audit Process OnlineProcess Online

Single Audit Report ProcessSingle Audit Report Process

Audit Findings and Associated Questioned Costs are Normally Based on Audit Findings and Associated Questioned Costs are Normally Based on Patterns and Trends (multiple exceptions to requirements for multiple Patterns and Trends (multiple exceptions to requirements for multiple projects)projects)

Costs are Questioned by Individual Contract Item Value by ProjectCosts are Questioned by Individual Contract Item Value by Project

70% of Questioned Costs Relate to Material Testing (primarily missed tests 70% of Questioned Costs Relate to Material Testing (primarily missed tests and payment reductions not taken or not taken timely for materials not and payment reductions not taken or not taken timely for materials not meeting specifications)meeting specifications)

The Questioned Cost Committee Evaluates Questioned Costs, Creating a The Questioned Cost Committee Evaluates Questioned Costs, Creating a List of Likely Questioned Costs Which are Submitted to FHWAList of Likely Questioned Costs Which are Submitted to FHWA

The Questioned Costs Committee Sometimes asks Project The Questioned Costs Committee Sometimes asks Project Personnel to Attend Committee Meetings and Provide Information Personnel to Attend Committee Meetings and Provide Information Regarding Exceptions to Requirements Related to Questioned CostsRegarding Exceptions to Requirements Related to Questioned Costs

Your QuestionsYour Questions

Thank You For Inviting Us!Thank You For Inviting Us!

Dave ChristensenAgency Policy Specialist

Special Audits and AnalysisMn/DOT Office of Audit 7th Floor

Transportation Bldg MS 190395 John Ireland BlvdSaint Paul MN 55155

Office (651) 366-4147; fax 366-4155dave.christensen@state.mn.us