Mn/DOT AUDITMn/DOT AUDIT

2010 COUNTY HIGHWAY 2010 COUNTY HIGHWAY ACCOUNTANTS CONFERENCEACCOUNTANTS CONFERENCE

SINGLE AUDIT DISCUSSIONSINGLE AUDIT DISCUSSION

SINGLE AUDIT OUTLINESINGLE AUDIT OUTLINE

How Your Project Gets Selected For AuditHow Your Project Gets Selected For Audit

ARRA RequirementsARRA Requirements

Material TestingMaterial Testing

Single Audit Report ProcessSingle Audit Report Process

HOW YOUR PROJECT GETS SELECTED FOR AUDIT

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, American Recovery and Reinvestment Act (ARRA), Project Type, Location

FHWA guidance to us for this year: audit 2/3 city/county projects and 1/3 trunk highway projects; also, 50% ARRA projects

AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA) REQUIREMENTS

See http://www.whitehouse.gov/omb/assets/a133_compliance/arra_addendum_1.pdf pages 29-53 and specific page references below

Need to have certification that ARRA Buy American provisions are met for Iron, Steel, and Manufactured Goods; also need Buy American provision in ARRA project proposals, page 33 of 301

Proposal language and practices addressing use of debarred contractors needs to be the same between Federal and non-federal (state aid) projects, page 33 of 301

Schedule of Federal Expenditures in annual financial reports needs to separately document ARRA expenditures, page 52 of 301

Data Collection Form (SF-SAC) in Single Audit Clearing House (http://harvester.census.gov/sac) needs to separately document ARRA expenditures, page 52 of 301

Cities and Counties must be registered in the Central Contractor Registration (CCR) database (https://www.bpn.gov/ccr/default.aspx), page 45 of 301

Contractors should be submitting reports indicating hiring for ARRA projects – reports should be checked for accuracy – see change in federal requirement addressing use of full-time equivalent for calculating hiring for ARRA projects

www.whitehouse.gov/omb/assets/recovery_act/OFPP_RecoveryReviewGuidance.pdf http://www.whitehouse.gov/omb/assets/memoranda_2010/m10-08.pdf

MATERIAL TESTING

Assess Measures Taken to Accomplish Compliance With Material Testing Requirements

Grading and Base Testing Requirements

Concrete Production/Testing Compliance

Bituminous Production/Testing Compliance

Recent Audit Results: Material Testing (Grading & Recent Audit Results: Material Testing (Grading & Base)Base)

Audit Finding for 3 Consecutive Years Audit Finding for 3 Consecutive Years

Opportunities for ImprovementOpportunities for Improvement Payment reductions need to be taken at the time of payment for work rather Payment reductions need to be taken at the time of payment for work rather

than at the end of the project (failing gradations; bitumen content)than at the end of the project (failing gradations; bitumen content) Preliminary and Final Grading and Base Reports Need to be Completed correctly Preliminary and Final Grading and Base Reports Need to be Completed correctly

and Sent in to the Grading and Base Unit (Grading and Base Manual, 5-692.301)and Sent in to the Grading and Base Unit (Grading and Base Manual, 5-692.301) Contractor Certificate of Compliance and QC Gradations Must be Submitted to Contractor Certificate of Compliance and QC Gradations Must be Submitted to

and Accepted by the Engineer Prior to placement and payment (2005 and Accepted by the Engineer Prior to placement and payment (2005 Specification 2211.3 F1, Special Provisions)Specification 2211.3 F1, Special Provisions)

QA gradations need to be done with Random Sampling Method per Schedule of QA gradations need to be done with Random Sampling Method per Schedule of Materials Control and Grading and Base Manual Chapter 7 (also Random Materials Control and Grading and Base Manual Chapter 7 (also Random Sampling Acceptance Report – Grading and Base Manual)Sampling Acceptance Report – Grading and Base Manual)

Perform DCP tests (Schedule of Materials Control)Perform DCP tests (Schedule of Materials Control) Perform Relative Density and Relative Moisture Tests (Schedule of Materials Perform Relative Density and Relative Moisture Tests (Schedule of Materials

Control)Control) Moisture Content Tests Must be Done to Verify 5% Moisture to Achieve Moisture Content Tests Must be Done to Verify 5% Moisture to Achieve

Compaction (Schedule of Materials Control, 2005 Specification 2211.3 C2, C3, Compaction (Schedule of Materials Control, 2005 Specification 2211.3 C2, C3, Special Provisions)Special Provisions)

QC and QA Percent Crushing (Schedule of Materials Control, Specification QC and QA Percent Crushing (Schedule of Materials Control, Specification 3138.2C)3138.2C)

Aggregate Quality (Schedule of Materials Control, Specification 3138.2D, 2E)Aggregate Quality (Schedule of Materials Control, Specification 3138.2D, 2E) Need to Verify Maximum of 3% Bitumen Content for Aggregate Base Class 7(B) Need to Verify Maximum of 3% Bitumen Content for Aggregate Base Class 7(B)

(Specification 3138.2 A2a(a))(Specification 3138.2 A2a(a)) Materials Certification Exceptions Summary needs to list missed tests and failing Materials Certification Exceptions Summary needs to list missed tests and failing

tests and resolution during the project as well as when the project is tests and resolution during the project as well as when the project is finaled(Contract Admin Manual 5-591.430 page MATLCERT-4)finaled(Contract Admin Manual 5-591.430 page MATLCERT-4)

Recent Audit Results: Material Testing (Concrete)Recent Audit Results: Material Testing (Concrete) Success in Meeting Requirements Success in Meeting Requirements

QC and QA Coarse and Fine Aggregate Gradation Tests Usually Done as RequiredQC and QA Coarse and Fine Aggregate Gradation Tests Usually Done as Required Cylinder Tests Done as RequiredCylinder Tests Done as Required

Opportunities for ImprovementOpportunities for Improvement Need to Complete and Submit Weekly Certified Ready Mix Plant Reports and Need to Complete and Submit Weekly Certified Ready Mix Plant Reports and

Test Beam Data to the Concrete Unit (Concrete Manual, 5-694.701; 5-Test Beam Data to the Concrete Unit (Concrete Manual, 5-694.701; 5-694.744(1))694.744(1))

Cores for Thickness need to be done (Schedule of Materials Control)Cores for Thickness need to be done (Schedule of Materials Control) Take payment reductions for air content falling outside specification Take payment reductions for air content falling outside specification

(Specification 2461.4A4b)(Specification 2461.4A4b) Conduct Coarse Aggregate Testing on No. 200 sieve (Specification 3137.2D1(i), Conduct Coarse Aggregate Testing on No. 200 sieve (Specification 3137.2D1(i),

Schedule of Materials Control)Schedule of Materials Control) Cementitious Materials and Admixtures for Concrete testing needs to be done Cementitious Materials and Admixtures for Concrete testing needs to be done Contractor needs to perform and document QC verification companion sample Contractor needs to perform and document QC verification companion sample

gradations (Schedule of Materials Control)gradations (Schedule of Materials Control) Contractor needs to perform and document QC moisture testing for aggregatesContractor needs to perform and document QC moisture testing for aggregates Air and Slump Tests should be taken as required and Documented on the Air and Slump Tests should be taken as required and Documented on the

Weekly Concrete Report (Schedule of Materials Control, Concrete Manual 5-Weekly Concrete Report (Schedule of Materials Control, Concrete Manual 5-694.727)694.727)

Certificate of Compliance Needed for Dowel Bars (Schedule of Materials Control)Certificate of Compliance Needed for Dowel Bars (Schedule of Materials Control) QA/verification testing needs to be performed by agency/agency controlled QA/verification testing needs to be performed by agency/agency controlled

personnel; QC testing needs to be performed by contractor/contractor controlled personnel; QC testing needs to be performed by contractor/contractor controlled personnel (23 CFR 637.205 and 637.207)personnel (23 CFR 637.205 and 637.207)

Recent Audit Results: Material Testing (Bituminous)Recent Audit Results: Material Testing (Bituminous)

Success in Meeting Requirements Success in Meeting Requirements Failing Materials Rarely Seen and are Properly AddressedFailing Materials Rarely Seen and are Properly Addressed Verification Testing is for the Most Part Done as RequiredVerification Testing is for the Most Part Done as Required Documentation, Including Test Summary Sheets, is ImprovingDocumentation, Including Test Summary Sheets, is Improving

Opportunities for ImprovementOpportunities for Improvement Retesting When QC-Verification Test Result Differences Exceed Tolerances Retesting When QC-Verification Test Result Differences Exceed Tolerances

(Table 2360.4-M Tolerances and 2360.4N)(Table 2360.4-M Tolerances and 2360.4N) Maintain a Bituminous Plant Diary (Contract Administration Manual 5-591.390)Maintain a Bituminous Plant Diary (Contract Administration Manual 5-591.390) Verification Samples From Behind the Paver Rather Than From the Truck Box Verification Samples From Behind the Paver Rather Than From the Truck Box

(2360.4D)(2360.4D) Special Provisions Should not Call for Contractor to Transport Verification Special Provisions Should not Call for Contractor to Transport Verification

Samples (23 CFR 637.205(d)) Samples (23 CFR 637.205(d)) Engineer needs to authorize paving of wear course in writing after October 15 or Engineer needs to authorize paving of wear course in writing after October 15 or

November 1 (depending on location) (2360.5B)November 1 (depending on location) (2360.5B) 1 Agency Core needs to be taken and tested per lot (Schedule of Materials 1 Agency Core needs to be taken and tested per lot (Schedule of Materials

Control)Control) 1 Verification test per day required (2360.4N)1 Verification test per day required (2360.4N) Asphalt Binder should be sampled and tested to verify Performance Grade Asphalt Binder should be sampled and tested to verify Performance Grade

characteristics (Schedule of Materials Control)characteristics (Schedule of Materials Control)

Single Audit Report ProcessSingle Audit Report Process

Meet With County Engineer at End of Week When Meet With County Engineer at End of Week When Audit is Finished to Discuss Results of Audit for Audit is Finished to Discuss Results of Audit for Specific Projects: Spring and Summer Specific Projects: Spring and Summer

Results From 15-18 Highway Construction Audits Results From 15-18 Highway Construction Audits Combined and Evaluated in OctoberCombined and Evaluated in October

Meetings to Discuss Audit Results in Meetings to Discuss Audit Results in October/November:October/November:

Office of MaterialsOffice of Materials Office of Construction and Innovative Contracting Office of Construction and Innovative Contracting State Aid for Local Transportation DivisionState Aid for Local Transportation Division Mn/Dot Commissioner’s StaffMn/Dot Commissioner’s Staff

ANOTHER EXCITING MEETING WITH THE AUDITORS

Single Audit Report ProcessSingle Audit Report Process

Draft Report for Response Issued in December; Finding Draft Report for Response Issued in December; Finding Recommendations Addressed to Mn/DOT Division DirectorsRecommendations Addressed to Mn/DOT Division Directors

Finding Recommendations Related to County Projects Addressed to Finding Recommendations Related to County Projects Addressed to Mn/DOT State Aid EngineerMn/DOT State Aid Engineer

Responses to Audit Findings Evaluated and Accepted by Mn/DOT Responses to Audit Findings Evaluated and Accepted by Mn/DOT Deputy CommissionerDeputy Commissioner

Final Report With Responses Issued in January is a Public DocumentFinal Report With Responses Issued in January is a Public Document

www.dot.state.mn.us/const/tools/references.html - Audit Report & Description of Audit www.dot.state.mn.us/const/tools/references.html - Audit Report & Description of Audit Process OnlineProcess Online

Single Audit Report ProcessSingle Audit Report Process

Audit Findings and Associated Questioned Costs are Normally Based on Audit Findings and Associated Questioned Costs are Normally Based on Patterns and Trends (multiple exceptions to requirements for multiple Patterns and Trends (multiple exceptions to requirements for multiple projects)projects)

Costs are Questioned by Individual Contract Item Value by ProjectCosts are Questioned by Individual Contract Item Value by Project

70% of Questioned Costs Relate to Material Testing (primarily missed tests 70% of Questioned Costs Relate to Material Testing (primarily missed tests and payment reductions not taken or not taken timely for materials not and payment reductions not taken or not taken timely for materials not meeting specifications)meeting specifications)

The Questioned Cost Committee Evaluates Questioned Costs, Creating a The Questioned Cost Committee Evaluates Questioned Costs, Creating a List of Likely Questioned Costs Which are Submitted to FHWAList of Likely Questioned Costs Which are Submitted to FHWA

The Questioned Costs Committee Sometimes asks Project The Questioned Costs Committee Sometimes asks Project Personnel to Attend Committee Meetings and Provide Information Personnel to Attend Committee Meetings and Provide Information Regarding Exceptions to Requirements Related to Questioned CostsRegarding Exceptions to Requirements Related to Questioned Costs

Your QuestionsYour Questions

Thank You For Inviting Us!Thank You For Inviting Us!

Dave ChristensenPrincipal Auditor

Special Audits and AnalysisMn/DOT Office of Audit 7th Floor

Transportation Bldg MS 190395 John Ireland BlvdSaint Paul MN 55155

Office (651) 366-4147; fax 366-4155dave.christensen@state.mn.us