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Report on the Quality Control Review of the Department of Transportation’s Audited Consolidated Financial Statements for Fiscal Years 2017 and 2016

Required by the CFO Act
Project ID: 
QC2018008
What We Looked At
This report presents the results of our quality control review (QCR) of the Department of Transportation’s (DOT) audited consolidated financial statements for fiscal years 2017 and 2016. KPMG LLP, under contract with us, issued a clean (unmodified) audit opinion on DOT’s financial statements. KPMG LLP reported two significant deficiency in internal control over financial reporting. KPMG also reported one instance of reportable noncompliance with laws and regulations tested.
 
What We Found
Our QCR disclosed no instances in which KPMG LLP did not comply, in all material respects, with auditing standards.

Recommendations

Open

Closed

Closed on 12.19.2018
No. 1 to FAA

KPMG recommends that management continue to refine the EC&D estimation methodology to ensure that the methodology is based on relevant, sufficient, and reliable data that is supported by sufficient appropriate audit evidence.

Closed on 12.19.2018
No. 2 to FAA

KPMG recommends that management review any refinements to the methodology to ensure that the estimate is presented and disclosed in the financial statements in conformity with applicable accounting principles.

Closed on 12.19.2018
No. 3 to FAA

KPMG recommends that management establish appropriate communication channels with personnel outside of the Financial Statements and Reporting Division to ensure proper communication and coordination related to the calculation of material financial statement information

Closed on 12.19.2018
No. 4 to FAA

KPMG recommends that management perform an adequate review and approval of the accounting estimates, including: 1) Review of sources of relevant factors; 2) Review of development of assumptions; 3) Review of reasonableness of assumptions and resulting estimates; and 4) Consideration of changes in previously established methods to arrive at accounting estimates.

Closed on 12.14.2018
No. 5 to FHWA

KPMG recommends that DOT establish a review control, with the appropriate level of precision, over the cash flow projections to ensure that the inputs are relevant and reliable.

No. 6 to FHWA

KPMG recommends that DOT review the overall cash flow model functionality and implementation to ensure that all assumptions are properly applied, documented, and supported in the execution of the cash flow projections.

No. 7 to FHWA

KPMG recommends that DOT consider automating the calculations that are performed manually to reduce the risk of misapplication of assumptions due to human error.

Closed on 12.14.2018
No. 8 to OST

KPMG recommends that the Department complete the internal reviews currently planned or being performed, and properly report the results in compliance with the ADA, if necessary.