Sneak Preview: FTA To Develop Integrity Plan Review Procedures

(The following was excerpted from a recent article in the Single Audit Information Service.) The Department of Transportation (DOT) Federal Transit Administration (FTA) plans to implement procedures by August 2020 to consistently review and approve integrity monitoring plans developed by recipients of Hurricane Sandy recovery grants, in response to a recent audit by the DOT Office of Inspector General (OIG).

The Disaster Relief Appropriations Act of 2013 (Pub. L. 113-2) appropriated $10.9 billion for FTA’s Public Transportation Emergency Relief Fund to assist in transportation-related recovery efforts in areas affected by Hurricane Sandy in 2012. As of April 2, 2019, about $8.3 billion of the funds had been obligated and $2.9 billion had been disbursed, leaving $5.4 billion of obligated funds yet to be disbursed.

To ensure the proper management of these funds, FTA requires state and local government recipients of more than $100 million in Hurricane Sandy grant funds to hire independent integrity monitors to prevent potential fraud and corruption. Integrity monitors are independent organizations that bring various disciplines of expertise, such as legal, auditing and accounting, investigative, engineering and environmental, to ensure that recipients comply with relevant laws and regulations, and prevent, uncover and report unethical or illegal conduct.

FTA requires Hurricane Sandy grant recipients to establish integrity monitoring plans that provide safeguards for the recovery funds. The agency is responsible for reviewing and approving these plans to ensure they meet program expectations and oversight goals. While FTA performs ongoing collaborative reviews of grantee’s integrity monitor plans after approval to ensure they are being followed, OIG found that the agency lacks a consistent and formal process for reviewing and approving the plans for known risks, such as organizational conflicts of interest and weaknesses in reporting requirements, during pre-award.

OIG evaluated five recipients that were required to hire integrity monitors and reviewed their monitoring plans. While FTA noted that three of the grantees had addressed the following three elements in their plans — (1) maintaining monitor independence, (2) providing monitors with supplemental resources as needed, and (3) identifying the appropriate scope of work for the monitors — the agency did not mention these elements when it approved the two other grantees’ plans. OIG explained that this “indicates that [FTA] performed its reviews and approvals in an ad hoc and inconsistent manner.” FTA officials told OIG that they view the integrity monitoring plan as a “living document” suitable for revision based on lessons learned during the program implementation, and that rather than establish formal procedures, FTA relied on regional staff with prior experience in this area to review the integrity monitoring plans.

(The full version of this story has now been made available to all for a limited time here.)

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