1. Mn/DOT AUDIT COUNTY HIGHWAY ACCOUNTANTS SINGLE AUDIT DISCUSSION

3. SINGLE AUDIT OUTLINE 3 Project Selection 3 DCP Requirements 3 Davis-Bacon Act Compliance 3 Contract Item Payments 3 Material on Hand Payments 3 Supplemental Agreement Payments 3 Environmental Requirements Compliance 3 Material Testing 3 Single Audit Report Process

4. PROJECT SELECTION  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, Project Type, Location

5. PROJECT SELECTION – NO PEEKING!

6. DCP REQUIREMENTS  Evaluate Measures Taken to Ensure That DCP Projects are Administered Properly  Right of Way (Right of Way Certificate, Right of Way Acquisition Files, 1099 Forms)  Advertising, Bid Letting, Bid Tabulation  Contract and Bond (Original Contract and Payment/Performance Bond)  Most Recent State Auditor Report  Controlling Time Charges (Project Proposal Special Provisions and Weekly Construction Diaries): Tracking of Working Days

7. Recent Audit Results: DCP Requirements Success in Meeting Requirements Success in Meeting Requirements Contract and Bond Contract and Bond Right of Way Documentation Right of Way Documentation Advertising Advertising Controlling Time Charges Controlling Time Charges Opportunities for Improvement – None Noted Opportunities for Improvement – None Noted

8. DAVIS-BACON ACT COMPLIANCE  Evaluate Measures Taken to Ensure That Required Wages are Paid to Contractor and Subcontractor Employees  Payroll/21658 Statement of Compliance Form Submittal and Review by City/County (Requests to Sublet; Weekly Construction Diary; Daily Diaries; Payrolls and/or 21658 Statement of Compliance Forms; Project Proposal Wage Decisions; Payroll Tracking Forms; all Correspondence Files )  Wage Compliance Checks (Completed Wage Compliance Check Forms)  Payroll Security

9. Recent Audit Results: Davis-Bacon Act Compliance Success in Meeting Requirements Success in Meeting Requirements Wage Rate Checking Wage Rate Checking Tracking of Payroll Receipt Tracking of Payroll Receipt Payrolls Labeled With Wage Classification Codes Payrolls Labeled With Wage Classification Codes Opportunities for Improvement Opportunities for Improvement Monthly Wage Compliance Checks - Administration Manual 5-591.320 (A)(3)(b) Monthly Wage Compliance Checks - Administration Manual 5-591.320 (A)(3)(b) Requests to Sublet Needed for Each Subcontractor - Specification 1801 Requests to Sublet Needed for Each Subcontractor - Specification 1801 The Inspector’s Diary Does Not Document all Companies Working On The Project – The Inspector’s Diary Does Not Document all Companies Working On The Project – Contract Administration Manual 5-591.320(A)(1)(b)(1) www.dot.state.mn.us/const/manuals/contractadmin/sec-320.pdf www.dot.state.mn.us/const/labor/documents/posterboards/fieldreviewform.pdf www.dot.state.mn.us/tecsup/spec/index.html www.dot.state.mn.us/const/labor/documents/contractdocs/requesttosublet.pdf

10. CONTRACT ITEM PAYMENTS  Evaluate Support for and Timing of Contract Item Payments (Partial Payments; Supporting Documentation)  Partial Payment Timeliness (Partial Payments; Change in Construction Contract Status Forms)

11. Recent Audit Results: Contract Item Payments Success in Meeting Requirements Success in Meeting Requirements Most Contract Item Payments are Timely and Well Documented Most Contract Item Payments are Timely and Well Documented Change in Contract Construction Status Forms are Completed Change in Contract Construction Status Forms are Completed Opportunities for Improvement Opportunities for Improvement Partial Payments are not Made Every 35 Days - M.S. 471.425 Partial Payments are not Made Every 35 Days - M.S. 471.425 Contract Bid Item Mobilization Not Paid Properly - Specification 2021 Contract Bid Item Mobilization Not Paid Properly - Specification 2021 Bituminous Tickets do not Include the Mix Design Report Number, Mixture Designation, or Street Inspector Initials – Specification 2360.4F(7) and Bituminous Manual 5-693.725 Fig. B (1), 14. A. Bituminous Tickets do not Include the Mix Design Report Number, Mixture Designation, or Street Inspector Initials – Specification 2360.4F(7) and Bituminous Manual 5-693.725 Fig. B (1), 14. A. Contract Bid Item Field Laboratory Not Paid Properly (Each Unit of Measure, should not be Paid in Fractions) - Specification 1501 Contract Bid Item Field Laboratory Not Paid Properly (Each Unit of Measure, should not be Paid in Fractions) - Specification 1501 Payment for Material on Hand and Supplemental Agreements, as Well as Withholding for Erodible Acres Documented in the Contract Bid Item Section of Partial Payments Rather Than Separately as an Adjustment - Specification 1501 Payment for Material on Hand and Supplemental Agreements, as Well as Withholding for Erodible Acres Documented in the Contract Bid Item Section of Partial Payments Rather Than Separately as an Adjustment - Specification 1501 www.revisor.leg.state.mn.us/stats/471/425.html www.dot.state.mn.us/tecsup/spec/index.html

12. MATERIAL ON HAND PAYMENTS  Determine if Material on Hand Payments are Made at the Correct Price and Supported by Invoice  Material on Hand Payments (Partial Payments; Materials on Hand Invoices)  Determine if Material on Hand Amounts are Reduced as Material on Hand Quantities are Placed

13. Recent Audit Results: Material on Hand Payments Success in Meeting Requirements Success in Meeting Requirements Payments are Supported by Contractor Invoice Payments are Supported by Contractor Invoice Payments are Made at Invoice Price, Rather Than Contract Bid Item Placed Price Payments are Made at Invoice Price, Rather Than Contract Bid Item Placed Price Material on Hand Balances are Credited as Material is Placed into the Work and Paid for Material on Hand Balances are Credited as Material is Placed into the Work and Paid for Opportunities for Improvement – None Noted Opportunities for Improvement – None Noted

14. DRAWING FOR 1st DOOR PRIZE: DOUBLE CHOCOLATE BROWNIES !!!!

15. SUPPLEMENTAL AGREEMENT PAYMENTS  Evaluate Controls Over Supplemental Agreement Payments  Proper Execution (Executed Supplemental Agreements)  Payment Made After Execution of Supplemental Agreement (Partial Payments, Executed Supplemental Agreements)

16. Recent Audit Results: Supplemental Agreement Payments Success in Meeting Requirements Success in Meeting Requirements Supplemental Agreement Form and Execution is Proper (District State Aid Engineers Signing “For Funding Only”) Supplemental Agreement Form and Execution is Proper (District State Aid Engineers Signing “For Funding Only”) Payment Occurs After Execution Payment Occurs After Execution Payments are Accurate (not Duplicated) Payments are Accurate (not Duplicated) Opportunities for Improvement Opportunities for Improvement Better Control Over Cost Overruns Due to Inadequate Geotechnical Surveys (Leading to Incorrect Contract Bid Item Amounts in Project Designs and Engineer’s Estimates) Needed – A-133 Compliance Supplement Part 3 B Allowable Costs/Cost Principles, page B-3-B: Costs Must be Reasonable and Necessary Better Control Over Cost Overruns Due to Inadequate Geotechnical Surveys (Leading to Incorrect Contract Bid Item Amounts in Project Designs and Engineer’s Estimates) Needed – A-133 Compliance Supplement Part 3 B Allowable Costs/Cost Principles, page B-3-B: Costs Must be Reasonable and Necessary Value Engineering Incentive Payments Should be Based on Current Project Costs and not on Future Project Costs - A-133 Compliance Supplement Part 3 B Allowable Costs/Cost Principles, page B-3-B: Costs Must be Reasonable and Necessary Value Engineering Incentive Payments Should be Based on Current Project Costs and not on Future Project Costs - A-133 Compliance Supplement Part 3 B Allowable Costs/Cost Principles, page B-3-B: Costs Must be Reasonable and Necessary www.whitehouse.gov/omb/circulars/a133_compliance/06/pt3.pdf

17. ENVIRONMENTAL REQUIREMENTS COMPLIANCE  Evaluate Measures Taken to Ensure Compliance With Environmental Requirements  NPDES Permit Compliance (Erosion Control Inspection Logs; Stormwater Pollution Prevention Plan; Application for NPDES Permit; Letter From MPCA Acknowledging Permit Coverage; Change in Construction Contract Status Forms)  Building Removal (Building Materials Inspection Report; Notice of Intent to Perform Asbestos Related Work if Applicable; Notice of Intent to Perform a Demolition; Hazardous Waste Manifests if Applicable)

18. Recent Audit Results: Environmental Requirements Compliance Success in Meeting Requirements Success in Meeting Requirements MPCA National Pollutant Discharge Elimination System (NPDES) Permit Coverage MPCA National Pollutant Discharge Elimination System (NPDES) Permit Coverage Improvement noted in Documenting of NPDES Permit Weekly Inspections Improvement noted in Documenting of NPDES Permit Weekly Inspections Notification of Intent to Perform Demolitions are being Done Notification of Intent to Perform Demolitions are being Done Stormwater Pollution Prevention Plans (SWPPP) are being Done Stormwater Pollution Prevention Plans (SWPPP) are being Done Opportunities for Improvement Opportunities for Improvement Need to Apply Withholding for Erodible Acres – Specification 2105.5 Need to Apply Withholding for Erodible Acres – Specification 2105.5 www.dot.state.mn.us/tecsup/spec/2005/2021-2360.pdf

19. MATERIAL TESTING  Assess Measures Taken to Accomplish Compliance With Material Testing Requirements  Bituminous Production/Testing Compliance  Concrete Production/Testing Compliance  Grading and Base Testing Compliance

20. Single Audit Report Process Meet With County Engineer at End of Week When Audit is Finished to Discuss Results of Audit for Specific Projects: Spring and Summer Meet With County Engineer at End of Week When Audit is Finished to Discuss Results of Audit for Specific Projects: Spring and Summer Results From 15-18 Highway Construction Audits Combined and Evaluated in October Results From 15-18 Highway Construction Audits Combined and Evaluated in October Meetings to Discuss Audit Results in November: Meetings to Discuss Audit Results in November: Office of Materials Office of Materials Office of Construction and Innovative Contracting Office of Construction and Innovative Contracting State Aid for Local Transportation Division State Aid for Local Transportation Division Mn/Dot Commissioner’s Staff Mn/Dot Commissioner’s Staff

22. Single Audit Report Process Draft Report for Response Issued in December; Finding Recommendations Addressed to Mn/DOT Division Directors Draft Report for Response Issued in December; Finding Recommendations Addressed to Mn/DOT Division Directors Finding Recommendations Related to County Projects Addressed to Mn/DOT State Aid Engineer Finding Recommendations Related to County Projects Addressed to Mn/DOT State Aid Engineer Responses to Audit Findings Evaluated and Accepted by Mn/DOT Deputy Commissioner Responses to Audit Findings Evaluated and Accepted by Mn/DOT Deputy Commissioner Final Report With Responses Issued in January is a Public Document Final Report With Responses Issued in January is a Public Document www.dot.state.mn.us/const/tools/references.htmlwww.dot.state.mn.us/const/tools/references.html - Audit Report & Description of Audit Process Online www.dot.state.mn.us/const/tools/references.html

23. DRAWING FOR 2 nd DOOR PRIZE !!!!

24. Your Questions

25. Thank You For Inviting Us! Dave Christensen Principal Auditor Special Audits and Analysis Mn/DOT Office of Audit 7th Floor Transportation Bldg MS 190 395 John Ireland Blvd Saint Paul MN 55155 Office (651) 366-4147; fax 366-4155 dave.christensen@dot.state.mn.us