1. Financial Oversight of the Federal-aid Program Financial Integrity Review and Evaluation (FIRE) Program Mark Newland, Financial Manager FHWA Indiana Division

2. Outline Cannot Cover all Aspects of FIRE
This will be a brief overview of FIRE
Will Focus on two activities

3. Goals of FIRE
Ensure and certify that Federal funds are properly managed and effectively used in accordance with Federal policies;
Safeguards are in place to minimize fraud, waste, abuse and mismanagement;
Include a wide range of employees in the review process to ensure objectivity and separation of duties;
Integrate internal controls and financial oversight as key components of the Agency’s day-to-day program and business activities.

4. What Governs FIRE? Chief Financial Officer Act of 1980
Federal Managers’ Financial Integrity Act (FMFIA) of 1982
Cash Management Improvement Act of 1990
Office of Mgmt & Budget (OMB) Circular A-123
OMB Circular A-127
OMB Circular A-133
Improper Payments Information Act of 2002
Title 23, Code of Federal Regulations (CFR), Part 630, Subpart A, Project Authorization and Agreement

5. FIRE Components * Focus of Today’s Presentation Administrative Review
Financial Management Review
Improper Payments Review*
Single Audit Review
Inactive Federal-aid Projects Review*
Federal Audit Findings Review
Program Funds Management Review
Annual Certification
Certification Validation
Needed Follow-up Activities
* Focus of Today’s Presentation

6. Improper Payments Review
Fed-aid Program is reimbursable.
INDOT pays contractor first, then bills/invoices FHWA.
Most billings based on construction progress estimates.
HQ and Division conduct separate Improper Payments Reviews.
HQ: Once per year – Samples selected by independent auditor
Division: Quarterly

8. Billing Review Will Check:
Project was authorized by FHWA prior to work being done.
Billing occurred after payment to contractor.
Charge per pay item matches what is in contract documents.
Correct funding split was utilized.
Quantities against field records for that time period.
Materials testing and labor if a part of the billing.

10. IPIA/Billing Reviews Not a “gotcha!” exercise.
Done to ensure compliance.
“Trust but Verify”
Most mistakes are honest.
Most errors are easily rectified.
Helps everyone assure proper financial oversight.
Creates fewer problems in the future – for everyone.
We like finding no problems!

11. Inactive Federal-aid Obligations Review
Projects with funds obligated but no expenditures against the obligation for a certain period of time.
Three Tiers of Inactives:
I: >$500K for 1 year or more;
II: >$50K <$500K for 2 or more years;
III: <$50K for 3 or more years.

12. Inactive Federal-aid Obligations Review
Metric is to keep inactives to 3% or less each month of a state’s apportionment.
Indiana’s apportionment = ~$933M
3% Goal = <$28M per month.
Congress is watching!
Not a good use of tax dollars to have them sitting dormant.
Projects not being constructed
Infrastructure not being improved
Jobs not being created

13. Inactive Federal-aid Obligations Review
Report to HQ OCFO quarterly but it is being tracked on a monthly basis.
FHWA watching project authorization requests much more closely now.
FHWA will not authorize PE, R/W or CN without a realistic expectation that phase will soon move forward and have expenditures.
FHWA can unilaterally deobligate inactive funds if necessary – but not the preferred action.

14. Inactive Federal-aid Obligations Review
Discretionary projects and earmarks have been problematic.
Good business to maximize use of funding.
Congress is looking for ways to reduce deficit.

15. Annual Certification and Certification Validation
Annual Certification – June 8th
A letter from the Division Administrator providing reasonable assurance that their office, programs, and operations are meeting the objectives of the FIRE Program and FMFIA.
Certification Validation – Sept. 23rd
Written correspondence from the Division Administrator providing an update and certification of fiscal year FIRE activities.

16. Questions? For more information on FIRE: