Internal Audit Guide
http://www.phmsa.dot.gov/
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- Chapter 7 – Stewardship, Oversight, Laws, and Regulations 7.1
- FEDERAL LAW STATE LAW
- 7.3- FEDERAL REQUIREMENTS (2 CFR 200)
- 7.5—CATALOG OF FEDERAL DOMESTIC ASSISTANCE
- Chapter 8 – Innovative Financing And Construction Delivery Methods INNOVATIVE FINANCING
- 8.1—GRANT ANTICIPATION REVENUE VEHICLE (GARVEE)
- 8.2—TRANSPORTATION INFRASTRUCTURE FINANCE AND INNOVATION ACT (TIFIA)
- 8.3—SECTION 129 LOANS (23 U.S.C. 129 (A)(7))
- 8.4—TAX INCREMENT FINANCING (TIF
- 8.5—PRIVATE ACTIVITY BONDS (PABs)
- 8.6—PUBLIC-PRIVATE PARTNERSHIPS (P3s
- INNOVATIVE CONSTRUCTION DELIVERY METHODS
- 8.8—CONSTRUCTION MANAGER/GENERAL CONTRACTOR (CMGC)
- Chapter 9 - General Audit and Attestation Programs
- 9.2—PHASES A.
http://www.phmsa.dot.gov/ The Pipeline and Hazardous Materials Safety Administration (PHMSA) oversees the safety of more than 800,000 daily shipments of hazardous materials in the United States and 64 percent of the nation's energy that is transported by pipelines. PHMSA is dedicated solely to safety by working toward the elimination of transportation-related deaths and injuries in hazardous materials and pipeline transportation, and by promoting transportation solutions that enhance communities and protect the natural environment. PHMSA was created within the U.S. DOT under the Norman Y. Mineta Research and Special Programs Improvement Act of 2004. The purpose of the act was to provide the U.S. Department of Transportation with a more focused research organization and to establish a separate operating administration for pipeline safety and hazardous materials transportation safety operations. PHMSA is authorized to reimburse a state agency for up to 80 percent of the agency's actual cost of carrying out its pipeline safety program, including the cost of personnel and equipment. The actual amount of federal reimbursement depends upon the availability of appropriated funds and the state's pipeline safety program's performance. A state agency's program performance is based on PHMSA's annual Program Evaluation and Progress Report scoring of each state agency. The Program Evaluation includes an on-site review of the state’s inspection, compliance, accident investigation, training, and excavation damage prevention records and activities. The Progress Report scoring gives consideration to the state’s extent of safety authority over pipeline operators, inspector qualifications, inspection days accomplished, adoption of maximum civil penalty amounts, progress adopting amendments to federal regulations, adoption of one call requirements, and attendance at the National Association of Pipeline Safety Representative meetings. PHMSA also provides federal grant funding in support of preventing excavation damage to underground facilities which is a leading cause of pipeline incidents. Programs include:
6.12—RESEARCH AND INNOVATIVE TECHNOLOGY ADMINISTRATION http://www.rita.dot.gov/ The Research & Innovative Technology Administration (RITA) is an agency whose mission is to identify and facilitate solutions to the challenges and opportunities facing America's transportation system. RITA's focus is to promote transportation research that will foster the use of innovative technology. RITA includes the Volpe National Transportation Systems Center, an organization dedicated to enhancing the effectiveness, efficiency, and responsiveness of other federal organizations with critical transportation-related functions and missions. RITA was created in 2005 to advance transportation science, technology, and analysis, and to improve the coordination of transportation research within the Department and throughout the transportation community. With responsibility for research policy and technology sharing, the agency partners with national and international organizations and universities. RITA also includes the Bureau of Transportation Statistics, the Transportation Safety Institute, and the University Transportation Centers program. RITA performs four basic functions:
6.13—SAINT LAWRENCE SEAWAY DEVELOPMENT CORPORATION http://www.seaway.dot.gov/ The Saint Lawrence Seaway Development Corporation (SLSDC) operates and maintains a safe, reliable and efficient waterway for commercial and noncommercial vessels between the Great Lakes and the Atlantic Ocean. Saint Lawrence Seaway Development Corporation is a wholly owned government corporation created by statute May 13, 1954, to construct, operate, and maintain that part of the St. Lawrence Seaway between the Port of Montreal and Lake Erie, within the territorial limits of the United States. Trade development functions aim to enhance Great Lakes/St. Lawrence Seaway System utilization without respect to territorial or geographic limits. The SLSDC, in tandem with the Saint Lawrence Seaway Authority of Canada, oversees operations safety, vessel inspections, traffic control, and navigation aids on the Great Lakes and the Saint Lawrence Seaway. SLSDC works to develop trade opportunities to benefit port communities, shippers and receivers, and related industries in the area to provide economic development of the Great Lakes Region. The mission of the Corporation is to serve the U.S. intermodal and international transportation system by improving the operation and maintenance of a safe, reliable, efficient, and environmentally responsible deep-draft waterway, in cooperation with its Canadian counterpart. The SLSDC also encourages the development of trade through the Great Lakes Seaway System, which contributes to the comprehensive economic and environmental development of the entire Great Lakes region. 6.14—SURFACE TRANSPORTATION BOARD http://www.stb.dot.gov/stb/index.html The Surface Transportation Board (STB) is an independent, bipartisan adjudicatory body organizationally housed within the USDOT. STB was created pursuant to the ICC Termination Act of 1995 and is the successor agency to the Interstate Commerce Commission. The STB is an economic regulatory agency that Congress has charged with resolving railroad rate and service disputes and reviewing proposed railroad mergers. Although it is administratively affiliated with USDOT, it is required to maintain its independence in its decisions. The agency has jurisdiction over railroad rate and service issues; rail restructuring transactions, such as mergers, lines sales, line construction, and line abandonments; certain trucking companies; moving vans; non-contiguous ocean shipping rates; certain intercity passenger bus company structure, financial and operational matters; and rates and services of pipelines not regulated by the Federal Energy Regulatory Commission. It is responsible for the economic regulation of interstate surface transportation, primarily railroads, within the United States. The STB's mission is to ensure that competitive, efficient, and safe transportation services are provided to meet the needs of shippers, receivers, and consumers. The Board is charged with promoting, where appropriate, substantive and procedural regulatory reform in the economic regulation of surface transportation, and with providing an efficient and effective forum for the resolution of disputes. The Board continues to strive to develop, through rulemakings and case disposition, new and better ways to analyze unique and complex problems, to reach fully justified decisions more quickly, to reduce the costs associated with regulatory oversight, and to encourage private-sector negotiations and resolutions to problems where appropriate. Chapter 7 – Stewardship, Oversight, Laws, and Regulations 7.1—STEWARDSHIP AND OVERSIGHT AGREEMENT BETWEEN THE FEDERAL HIGHWAY ADMINISTRATION AND STATE TRANSPORTATION AGENCIES The Secretary of the United States Department of Transportation (USDOT) has delegated to the Administrator of the Federal Highway Administration (FHWA) the responsibility of administering the Federal-aid highway program (FAHP) under Title 23 and other associated laws. In addition, Title 23 allows states to assume the Secretary’s responsibilities in the design, construction, award, and inspection of certain federal-aid projects. Section 106 of Title 23, United States Code (USC), requires that the FHWA and STA enter into a stewardship and oversight agreement documenting the extent to which the STA assumes the responsibilities of the Secretary (and by delegation, FHWA) under Title 23, and where FHWA retains responsibilities. The purpose of the Stewardship/Oversight (S&O) Agreement is to formalize the roles and responsibilities of the FHWA division offices and each STA to address how the FAHP will be administered in the STA, and delineates a comprehensive FHWA and individual STA approach to FAHP stewardship and oversight. The most recent highway reauthorization act, the Moving Ahead for Progress in the 21st Century Act (MAP-21), was signed into law on July 6, 2012. While this legislation still allows states to assume the responsibilities previously delegated, MAP-21 further defines the requirements of stewardship and oversight responsibilities, including the need to have a stronger data-driven performance element, and a more formal application of risk management principles. FHWA revised the guidance regarding S&O on March 28, 2014. The intent of the revisions was to provide a consistent approach to developing future agreements with STAs, and to clarify distinctions with FHWA’s risk-based, data-driven stewardship and oversight framework. This revised guidance supersedes all previous guidance on this topic, and is available at: http://www.fhwa.dot.gov/federalaid/stewardship/ Section 106 of Title 23, United States Code, requires the FHWA and each STA to enter into an agreement documenting the extent to which the state will assume specific responsibilities under Title 23. The S&O Agreement formalizes these assumed responsibilities to address how the FAHP will be administered in each state. Rather than specifying mandatory procedures, the guidance outlines the basic S&O concepts and approaches that FHWA division offices should follow. Section 1503 of MAP-21 contains changes to the requirements for oversight and approval of Federal-aid projects. Specifically, Section 106 eliminated the provision prohibiting states from assuming responsibilities for new construction and reconstruction projects on the Interstate System exceeding $1 million in cost. In addition, MAP-21 prohibits STAs from assuming responsibility for projects determined by FHWA to be high risk. The S&O Agreement Guidance implements these changes. A significant change in FHWA’s project-level S&O of the FAHP is the transition from “full-oversight” of projects to oversight activities primarily focused on areas of higher risk and opportunity. The FHWA’s use of a risk-based approach for project S&O is intended to optimize the successful delivery of projects and to assure compliance with federal requirements. Risk-based project S&O has three main components:
This S&O Agreement Guidance also implements a process for conducting legal reviews of these agreements by the FHWA Office of Chief Counsel before they are signed by the STAs and FHWA division offices. Upon completion of the legal review, FHWA division administrators are authorized to execute and sign S&O Agreements with their respective STA. The Project Action Responsibility Matrix (an attachment to the guidance) is the cornerstone of the S&O Agreement for assumptions of project-level responsibilities. Deviations from this matrix must be consistent with specific responsibilities that 23 U.S.C. 106 allows the STAs to assume from the FHWA. The S&O Agreement may include S&O indicators as agreed to by the STAs and FHWA divisions to help in managing the FAHP. See Federal Rules for specific requirements regarding performance measures that are a requirement of MAP-21. These rules pertain to the Highway Safety Improvement Program (HSIP), statewide and metropolitan and non-metropolitan planning regulations, pavement, bridges, asset management, system performance, congestion, emissions, freight and public transportation. 7.2—HIERARCHY There is a hierarchy of law that all STAs must understand and follow. The United States Code (U.S.C.) is the codification by subject matter of general and permanent laws of the United States as passed by Congress and is specific to each federal agency. The U.S.C. is further detailed in specific statutes like Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) or Moving Ahead for Progress in the 21st Century Act (MAP-21). The Code of Federal Regulations (CFR) are programmatic and administrative requirements created by individual federal agencies as an interpretation and clarification of U.S.C. In addition to U.S.C. and CFRs, individual federal agencies will also have guidance to further explain how to carry out statutes and federal regulations. Federal Agency Guidance Code of Federal Regulations 49 and 23 CFR US Code, 49 and 23 USC FEDERAL LAW STATE LAW The specific regulatory information pertaining to transportations programs are listed below.
7.3- FEDERAL REQUIREMENTS (2 CFR 200) (a) Administrative requirements. Subparts B through D 2 CFR 200 set forth the uniform administrative requirements for grant and cooperative agreements, including the requirements for Federal awarding agency management of Federal grant programs before the Federal award has been made, and the requirements Federal awarding agencies may impose on non-Federal entities in the Federal award. (b) Cost Principles. Subpart E—Cost Principles of 2 CFR 200 establishes principles for determining the allowable costs incurred by non-Federal entities under Federal awards. The principles are for the purpose of cost determination and are not intended to identify the circumstances or dictate the extent of Federal government participation in the financing of a particular program or project. The principles are designed to provide that Federal awards bear their fair share of cost recognized under these principles except where restricted or prohibited by statute. (c) Single Audit Requirements and Audit Follow-up. Subpart F—Audit Requirements in 2 CFR 200 are issued pursuant to the Single Audit Act Amendments of 1996, (31 U.S.C. 7501-7507). It sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of non-Federal entities expending Federal awards. These provisions also provide the policies and procedures for Federal awarding agencies and pass-through entities when using the results of these audits. The Compliance Supplement is contained in 2 CFR 200 Subpart F Appendix XI: The link for the electronic version of the Code of Regulations is as follows: http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=1&SID=ab3a2671992eacd9725f23b8fce9ab6c&ty=HTML&h=L&r=SUBPART&n=2y1.1.2.2.1.6 7.4—AUDIT REQUIREMENTS The Code of Federal Regulations 2 CFR sets forth standards for obtaining consistency and uniformity among federal agencies for the audit of states, local governments, and non-profit organizations expending federal awards. Currently, if an entity receives $500,000 or more in total federal funding during a fiscal year, the entity is required to obtain an audit of Federal expenditures from a qualified Certified Public Accountant (CPA). STAs are responsible for engaging their own A-133 audit and monitoring those entities to which they’ve passed federal funds. The STA project managers are responsible for monitoring any audit findings for resolution. 7.5—CATALOG OF FEDERAL DOMESTIC ASSISTANCE The Catalog of Federal Domestic Assistance (CFDA) contains detailed program descriptions for federal assistance programs, including type of assistance offered, the agency offering the assistance, contact information, and eligibility criteria. 7.6—STATE LAW Each state has its own set of laws passed by the state legislature. These codes of law provide the legal authority to a state agency or department (for example an STA) to plan, design, operate, construct and maintain public roads and other transportation modes. States may also pass legislation on special transportation initiatives, public-private partnerships, tolls, oversize vehicle permits, outdoor advertising, highway enhancement, and other transportation programs. Some state laws implement federal law and can generally be more restrictive than federal law, such as contractor prompt payment laws. STAs may be authorized to waive certain provisions of state law when inconsistent with federal requirements, such as congressional district balancing requirements. Other state laws exist for activities not federally mandated, such as contractor prequalification or audit requirements. State laws typically establish governance of STAs, state employee codes of conduct, and rules for various administrative operations within STAs. In addition to codes of law, some states have rules and regulations promulgated directly from the STA which provide further governance of transportation matters, such as outdoor advertising, contractor prequalification, design-build contracting, and grant programs. Chapter 8 – Innovative Financing And Construction Delivery Methods INNOVATIVE FINANCING Innovative financing provides options during challenging economic times by offering alternatives to overcome the constraints of limited resources. Financial innovations can increase the ability of STAs to deliver transportation projects by accelerating construction, reducing costs, and providing the revenues required to deliver projects. We have briefly covered the more popular innovative financing methods below. For further information and a discussion of other innovative financing methods, visit the U.S. Department of Transportation Federal Highway Administration (FHWA), Innovative Program Delivery website at: www.fhwa.dot.gov/ipd. 8.1—GRANT ANTICIPATION REVENUE VEHICLE (GARVEE) GARVEE debt financing provides up-front capital for major highway projects. U.S. Code Title 23, Section 122 allows the use of future federal funds to repay the debt and related financing costs. This allows projects to be constructed sooner and at less cost due to inflation savings. The public realizes safety and economic benefits, and costs are spread over the useful life of the project. 8.2—TRANSPORTATION INFRASTRUCTURE FINANCE AND INNOVATION ACT (TIFIA) The TIFIA program provides federal credit assistance through direct loans, loan guarantees, and standby lines of credit for surface transportation projects of national and regional significance. TIFIA credit assistance provides access to capital markets, flexible repayment schedules, and more favorable interest rates than private capital markets can offer. 8.3—SECTION 129 LOANS (23 U.S.C. 129 (A)(7)) An STA may fund loans to a public or private entity to construct a toll or non-toll project that has a dedicated revenue source up to an amount equal to the federal share of the project. Dedicated revenue sources may include tolls, excise taxes, sales taxes, motor vehicle use fees, tax on real property, and tax increment financing. 8.4—TAX INCREMENT FINANCING (TIF) TIF is a mechanism allocating any increase in total property tax revenues toward public investment within a designated district. All or a portion of the increase can be dedicated to repay the debt incurred in building the transportation improvement. 8.5—PRIVATE ACTIVITY BONDS (PABs) PAB are debt instruments that may be issued by STAs and used to construct projects with significant private involvement. In an effort to increase private sector investment in transportation infrastructure, the federal government has provided access to these tax-exempt bonds. State projects receiving a PAB allocation must also receive assistance under U.S.C. Title 23 or Title 49. These bonds are limited to $15 billion and are allocated by the Secretary of Transportation to qualified projects. 8.6—PUBLIC-PRIVATE PARTNERSHIPS (P3s) P3s are contractual agreements between a public agency and a private entity in which the private entity takes on more risk than traditional project agreements. The private entity may participate in design, finance, operations, and maintenance, increasing the level of risk accepted. P3s are actually a procurement option and not a revenue source. P3s may increase financing capacity and reduce costs; however, a revenue source still needs to be identified for the project. By using P3s, a private entity may operate a facility over a specified term in exchange for annual payments. The entity may receive the right to collect toll revenues from the project, or other similar arrangements may be identified. INNOVATIVE CONSTRUCTION DELIVERY METHODS Innovative construction delivery methods help to provide efficiency and a smooth, effective transition from design to construction. Two such methods are described below. 8.7—DESIGN-BUILD (DB) DB is a project delivery method in which one entity assumes responsibility for the design and construction of a project under one contract. The DB team may be composed of a single firm, a consortium, or a joint venture. This method provides collaboration and coordination between the designer and the contractor, thus enabling early intervention to address project complexities, advance project delivery, reduce costs, and enhance quality. Coordination of design and construction processes result in time savings due to improved communication. Typically a two-step selection process is used. The first step is qualifications-based selection using a Request for Qualifications (RFQ). Best-value is then determined based upon the short-listed firms technical expertise and price components using a Request for Proposals (RFP). Please refer to 23 CFR 636 for regulations covering DB. 8.8—CONSTRUCTION MANAGER/GENERAL CONTRACTOR (CMGC) The CMGC project delivery method is divided into two contract phases:
Chapter 9 - General Audit and Attestation Programs The following audit programs are shells to help internal auditors develop their procedures when performing an engagement. Auditors can utilize available practice aids for particular areas in the fieldwork phase. 9.1—AUDIT PROGRAM PURPOSE AND SCOPE This program has the following major objectives:
9.2—PHASES
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