Audit Reports

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May 9, 2016

Weaknesses Identified in Volpe’s Cost Accounting Practices for the V-TRIPS Contract

Self-Initiated
Project ID: 
ZA2016064
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The U.S. Department of Transportation’s (DOT) Volpe National Transportation Systems Center (Volpe) performs transportation-related systems research and applications development for DOT and other Federal and non-Federal sponsors. To provide the needed information technology support services, Volpe relied on its Transportation Information Project Support (V-TRIPS) contract—a 5-year, $234 million, multi-award service contract. Because Volpe puts all sponsor funds into a working capital fund, it is critical that its cost accounting and financial reporting systems track costs by project and charge sponsors accurately—especially for contracts like V-TRIPS with multiple projects and sponsors. Our prior reviews of Volpe have identified problems with its accounting practices, including weaknesses in how it allocates indirect costs among sponsors. Accordingly, we conducted this follow-on audit to assess the reliability of Volpe’s accounting practices for administering the V-TRIPS contract.

Overall, Volpe’s cost and general accounting practices were not always reliable or sufficiently transparent to verify that V-TRIPS funds were appropriately administered.  Specifically, 36 of the 129 transactions we tested—totaling nearly $8.7 million—were not properly recorded. Additionally, Volpe did not follow current DOT policy or maintain transparency when collecting indirect costs from sponsors for its risk mitigation account, resulting in the approved cap being exceeded by as much as $7.4 million in 2014. These errors occurred because Volpe does not have formal cost accounting policies and procedures or strong internal management controls. DOT has been challenged to ensure Volpe takes needed corrective actions, due largely to Volpe’s complex funding arrangement and shifting departmental oversight resulting from several reorganizations over the last 12 years. We made four recommendations to improve Volpe’s cost and general accounting practices. The Department concurred with all four recommendations. 

Recommendations

Open

Closed

Closed on 07.11.2017
No. 1 to OST

Require Volpe to implement written cost accounting policies and procedures that comply with Federal accounting standards and DOT policies.

Closed on 03.09.2017
No. 2 to OST

Work with Volpe to identify those recommendations deemed appropriate from the 2015 draft Deloitte report and take action to implement them.

Closed on 03.31.2017
$4,960,165
No. 3 to OST

Require Volpe to comply with the RMA limits specified in DOT Order 2300.6E, provide an annual accounting of the RMA, and work with the Office of General Counsel to establish a legally appropriate plan to resolve the excess $5 million in the RMA as of 2015.

Closed on 05.01.2019
No. 4 to OST

Improve Volpe's internal management controls—including timely reconciliations (e.g., invoices to appropriate funding sources)—to prevent, detect, and correct billing errors, such as those identified in this report.