Wednesday, July 17, 2013

Dept. of Transportation Audit of Stimulus Money Terminated Despite Estimated Improper Payments of $100M

    Despite an admission by the Department of Transportation (DOT) that the Federal-aid Highway Programs under the American Recovery and Reinvestment Act (ARRA) are "susceptible to significant improper payments," the DOT Inspector General has terminated an audit initiated in April "due to other higher priority work demands."  The original announcement of the audit of the ARRA programs (better known as the "stimulus") reported that DOT estimated improper payments of more than $100 million in 2012 alone [emphasis added]:

FHWA has funded approximately 13,000 State and local highway  infrastructure projects and has disbursed almost  $26 billion in ARRA funds.
The Improper Payments Information Act of 2002 makes Federal agencies accountable for preventing and detecting improper payments within their programs. The Improper Payment Elimination and Recovery Act of 2010 requires identification and estimation of improper payments. The Department of Transportation (DOT) has identified FHWA’s Federal-aid Highway Programs as susceptible to significant improper payments. In fiscal year 2012, DOT reported an estimate of $103.2 million  in improper payments in FHWA’s Federal-aid Highway Program.
    A report on another IG audit relating to the Federal Highway Administration and the ARRA was just issued on May 7, 2013 and found areas for improvement in DOT's oversight of the administration of program funds:
On May 7, 2013, we reported that FHWA inspections did not routinely verify whether States detected instances of noncompliance with some Federal requirements. For example, we projected that $125.6 million, or 12 percent, of ARRA progress payments made to contractors in three States were unsupported.
    The IG said that "all four recommendations" stemming from that audit were "resolved but open pending completion of planned actions" by DOT.

     The more recent audit, which began in April and was terminated this week, was intended to test DOT's internal controls to see if they were adequate to "prevent and detect improper payments" to ARRA grant recipients. The IG's termination letter stated that the audit may still take place at a later date.

Note: A version of this article first appeared at The Weekly Standard.

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