If your agency expends more than $750,000 in Federal funds in any given fiscal year,
you will need to conduct an annual single audit.
If your agency has never taken part in a single audit,
you will want to become familiar with the process and its requirements.
A single audit, is an audit arranged by a recipient of federal funds that is undertaken by an independent auditor
and results in an audit report.
A single audit provides reasonable assurance that grant funds are being spent properly
and the recipient is in compliance with Federal requirements.
Let's look at the scope of a single audit
and your agency's responsibilities for assembling an audit package.
When your agency contracts for the services of an experienced and qualified auditor,
typically a certified public accountant, a single audit is initiated.
Your auditor will use risk-assessment principles to select the programs for audit
and then follow the guidelines established in the Single Audit Compliance Supplement.
This Federal Government publication tells your auditor what to look at
when auditing Federal Highway Administration programs.
Your auditor uses these guidelines to confirm that your agency’s financial reports are fairly presented
and that any prior audit findings have been resolved.
Your auditor will also review the adequacy of your agency’s internal controls that safeguard assets
and ensure compliance with Federal laws and regulations.
For example, your auditor could look for risks due to a lack of segregation of duties
and verify that an employee initiating a purchase requisition does not also have the authority to approve it.
When participating in a Federal-Aid highway project for the first time,
your agency may face new and unfamiliar requirements.
For example, Federal-Aid recipients may be required to use prevailing wage rates
when contracting for construction services, as required by the Davis-Bacon Act.
Or they may need to demonstrate they have treated owners fairly and consistently
when making real property acquisitions, as required by the Uniform Act.
A qualified auditor is able to verify your agency’s compliance
with these and other Federal laws and regulations.
The single audit concludes with the Auditor’s Report, which addresses the reliability of the financial data,
adequacy of internal controls, and compliance with Federal regulations.
Within 30 days after receiving the audit report or 9 months after the end of your fiscal year, whichever comes first,
your agency must provide a single audit package to the Federal Audit Clearinghouse.
Typically, a copy is also sent to the State Department of Transportation or State DOT.
In addition to the Auditor’s Report, the audit package includes:
Financial statements, a Schedule of Federal Expenditures, results of prior audits, and
corrective actions your agency plans to take as a result of the Auditor’s Report.
The State DOT will complete its review of your package within six months.
If it concurs with the auditor’s findings, the DOT will outline its expectations
including repayment of any disallowed costs,
adjustment of financial statements, or other necessary corrective actions.
The single audit benefits all stakeholders of your Federal-Aid transportation project.
For instance: If your State DOT gave Federal funds to your agency,
it will have confidence that the project will be audited at some point.
The Federal agency that awarded the project receives assurance that its funds were spent as intended
and in accordance with laws and regulations.
And your agency receives the benefit of knowing its internal controls are successful
in preventing waste, fraud and abuse.
For more information on the single audit and other audits that your agency may be subject to,
consult Title 2 of the Code of Federal Regulations, Part 200 and contact your State DOT.