1. U.S. Department of Transportation Office of Inspector General GRANT OVERSIGHT ISSUES AND FUTURE CHALLENGES Presented by Joe Comé Deputy Principal Assistant Inspector General for Auditing and Evaluation AASHTO Internal/External Audit Conference Savannah, Georgia July 12, 2012

2. U.S. Department of Transportation Office of Inspector General «» 2 WHO ARE THOSE AUDITORS? Grantees Single Audits (CPAs) Other Federal State Oversight Office of Inspector General Federal Granting Agency Local entities

3. U.S. Department of Transportation Office of Inspector General «» 3 U.S. DEPARTMENT OF TRANSPORTATION OFFICE OF INSPECTOR GENERAL “FORMAL ORGANIZATION CHART” Regional Offices Audit Atlanta, GA Baltimore, MD Cambridge, MA Fort Worth, TX New York, NY Oklahoma City, OK San Francisco, CA Seattle, WA Investigations Cambridge, MA Chicago, IL Fort Worth, TX New York, NY San Francisco, CA Sunrise, FL Washington DC

4. U.S. Department of Transportation Office of Inspector General «» 4 “LESS FORMAL DESCRIPTION”

5. U.S. Department of Transportation Office of Inspector General «» 5 AVIATION Wildlife Hazard Mitigation

6. U.S. Department of Transportation Office of Inspector General «» 6 BRIDGES Interstate 35W Bridge (2007) Construction material on deck Under-designed gusset plates

7. U.S. Department of Transportation Office of Inspector General «» 7 TUNNELS Central Artery Tunnel (2006)

8. U.S. Department of Transportation Office of Inspector General «» 8 TRANSIT Effects of Hurricane Sandy on New York’s Subway System

9. U.S. Department of Transportation Office of Inspector General «» 9 HIGHWAY PROJECTS Alaskan Way Viaduct Replacement Project

10. U.S. Department of Transportation Office of Inspector General «» 10 BIG MONEY

11. U.S. Department of Transportation Office of Inspector General «» 11 Audits 143 audit reports 385 recommendations Over $3 billion in financial recommendations Investigations 82 indictments 73 convictions $98 million in fines, restitutions, and recoveries. RETURN ON INVESTMENT $ 41 DOT OIG’s return for each budget dollar spent in fiscal year 2013 On track for similar results in fiscal year 2014: Over $532 million financial recommendations Over $1.3 billion in fines, restitutions, recoveries, and forfeitures—the bulk of which comes from Toyota’s settlement with the Federal Government.

12. U.S. Department of Transportation Office of Inspector General «» 12 DOT GRANTS In this tight budget environment, taxpayers expect the Government to be a good steward of tax dollars spent on DOT grants. DOT’s Estimated Grant Obligations FY 2013$100.1 billion Source: OMB Object Class Analysis, Budget of the U.S. Government, Fiscal Year 2013

13. GRANT OVERSIGHT ISSUES

14. U.S. Department of Transportation Office of Inspector General «» 14 Issues : Missing elements Unclear or unspecified milestones Undefined terms Inconsistency between agreements and other documents GRANT AGREEMENTS

15. U.S. Department of Transportation Office of Inspector General «» 15 Issues : Lack of outcome measures to determine project success relative to program goals Plenty of upfront goals but less after the fact measures Data for measuring program success not collected or not collected consistently MEASURING PERFORMANCE

16. U.S. Department of Transportation Office of Inspector General «» 16 Issues: Expenditures that are not allowable Expenditures not credited to proper account Problems with indirect costs Poor documentation for expenditures SUPPORTING EXPENDITURES

17. U.S. Department of Transportation Office of Inspector General «» 17 Issues: Lack of support for major management decisions and modifications to projects Poor documentation of change orders and rationale Contract files issues OTHER DOCUMENTATION

18. U.S. Department of Transportation Office of Inspector General «» 18 Issues: Lack of training plan Insufficient training on key tasks Knowledge of controls TRAINING

19. U.S. Department of Transportation Office of Inspector General «» 19 Issues: Remedies available and situations that warrant use When to use tracking Feedback considered when making and amending grants Reluctance to use enforcement authority for noncompliance REMEDIES AND SANCTIONS

20. U.S. Department of Transportation Office of Inspector General «» 20 Issues: Knowledge of fraud potential How to report fraud Current fraud issues related to Transportation projects FRAUD AWARENESS AND REPORTING

21. FUTURE PLANS AND CHALLENGES

22. U.S. Department of Transportation Office of Inspector General «» 22 We’re going to parachute in and do a surprise audit, but I want to keep the whole thing low key.

23. OIG, DOT AUDITS UNDERWAY OR COMING SOON

24. U.S. Department of Transportation Office of Inspector General «» 24 ARRA project closeout Oversight of major projects Oversight of States’ use of Federal-aid funds through the Financial Integrity Review and Evaluation Program (FIRE) Oversight of preliminary engineering on highway projects Oversight of the Bridge Inspection Program Implementation of OIG Bridge Program recommendations and MAP-21 Bridge provisions FHWA-RELATED AUDITS UNDERWAY

25. U.S. Department of Transportation Office of Inspector General «» 25 National Transit Database Oversight of at-risk transit agency grantees Efforts to deploy low or no emission buses and other transit-focused technologies Hurricane Sandy grant award and oversight processes FTA-RELATED AUDITS UNDERWAY

26. U.S. Department of Transportation Office of Inspector General «» 26 Evolving nature of Federal audit mandates Everything is an IT audit “Super Circular” impacts Innovative financing requires innovative auditing The dream of performance budgeting FUTURE CHALLENGES

27. U.S. Department of Transportation Office of Inspector General «» 27 QUESTIONS? We don’t want you to view this panel as being in any way confrontational, so please ask questions.