1. 1 Ohio Department of Transportation Michael Miller, Auditor Division of Finance & Forecasting Division of Finance & Forecasting Office of Audits Rural Transit Roundtable Rural Transit Roundtable July 31, 2008

2. 2 Office of Audits Transit System Financial Audits Oversight Role & Responsibility Financial Integrity Common Financial Audit Findings Office of Transit Data Reporting Compliance Review Rural Transit Roundtable July 31, 2008

3. 3 Oversight Role & Responsibility The Federal Transit Administration (FTA) is the grantor agency for the 49 U.S.C. Section 5311 Program a.k.a. Rural Transit Program ODOT is the Ohio grantee of the Rural Transit Program funds. Rural Transit Roundtable July 31, 2008

4. 4 Oversight Role & Responsibility Broadly defined, it is ODOT’s responsibility as the grantee to: – Provide financial stewardship to ensure federal and state funds awarded to sub-grantees are used appropriately. – Ensure costs submitted by sub-grantees comply with federal and state policies, procedures, rules, regulations, and principles. Rural Transit Roundtable July 31, 2008

5. 5 Oversight Role & Responsibility – It is ultimately ODOT’s responsibility to ensure that the Ohio Rural Transit Program is reliable and accountable to the citizens of Ohio. Ensure Prudent Use of Tax Dollars Rural Transit Roundtable July 31, 2008

6. 6 Financial Integrity Office of Transit partners with Office of Audits to conduct sub-grantee audits Office of Transit selects sub-grantees for audit based on combination of risk factors including: – Revenue received (federal/state sources) – Staff Turnover - key positions – Length of time since last audit – On-going issues/failure to address – Current issues Rural Transit Roundtable July 31, 2008

7. 7 Financial Integrity Office of Audits has performed financial audits of 8 rural transit systems City of Ashland Delaware County Transit Board City of Lancaster Tri-County CAC (Logan County) City of Marion City of Athens City of Chillicothe WSOS/TRIPS (Sandusky County) Rural Transit Roundtable July 31, 2008

8. 8 Financial Integrity Audit consisted of 3 – 4 days on-site to test and confirm: – Compliance with OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments. – Compliance with OMB Circular A-122, Cost Principles for Non-Profit Organizations – Compliance with 49 CFR 18 – Uniform Administrative Requirements for Grants and Cooperative Agreements to States and Local Governments Rural Transit Roundtable July 31, 2008

9. 9 Financial Integrity Audit consisted of 3 – 4 days on-site to test and confirm: – Compliance with ODOT’s Rural Transit Program Requirements – Compliance with the transit systems own policies and procedures. – Ability to trace costs claimed on invoices to the entity’s financial accounting system. Rural Transit Roundtable July 31, 2008

10. 10 Financial Integrity Audit focused on: – Allowable, allocable and reasonable costs. – Ability of transit system to properly segregate direct and indirect costs. – Appropriate and adequate Internal Controls. – Compliance with terms of ODOT contract. – Compliance with Generally Accepted Accounting Principles (GAAP). Rural Transit Roundtable July 31, 2008

11. 11 Common Audit Findings Non-Compliance Determined Unsupported or Inaccurate Costs. Ineligible Expenses. Failure of Internal Controls. Duplicate Costs. Non-compliance with Rural Transit Program Requirements. Inability to reconcile financial data reported on the 4 th quarter operating invoice to the general ledger. Failure to comply with Ohio Revised Code §9.38 Timely Deposit of Public Funds. Rural Transit Roundtable July 31, 2008

12. 12 Office of Transit Data Reporting Compliance Review Conducted by ODOT Transit Rep. in Conjunction with Financial Audit Compliance Review Purpose – Verify use of correct data definitions – Review data collection process Compliance Review Process – Desk review to prepare for on-site phase – Conduct on-site review process to include Testing of selected records and reports Interviews with front line transit system staff – Office of Transit issues report Rural Transit Roundtable July 31, 2008

13. 13 Office of Transit Data Reporting Compliance Review Compliance Review Report Follow-up – If non-compliance is determined the report will document required process improvements – ODOT Transit Rep. will work with transit system to develop implementation schedule for required process improvements – ODOT Transit Rep. will conduct follow-up with transit system to ensure continued compliance with Rural Transit Program requirements Questions regarding the Data Reporting Compliance Review process should be directed to ODOT Transit Rep. or Transit Manager Rural Transit Roundtable July 31, 2008

14. 14 ODOT Office of Audits Contact Information Michael Miller, Auditor (614) 466-0588 Michael.Miller@dot.state.oh.us Jana Cassidy, Administrator (614) 644-7892 Jana.Cassidy@dot.state.oh.us http://www.dot.state.oh.us/finance/TransitsMaterials.asp Rural Transit Roundtable July 31, 2008

15. 15 Questions? Rural Transit Roundtable July 31, 2008