Assurance and Compliance Office
A more detailed description of the services performed by the Assurance and Compliance Office include, but are not limited to the following:
ACO conducts independent and objective audits to determine whether VDOT’s network of risk management and internal control governance processes, as designed and represented by management, is adequate and functioning to ensure effectiveness and efficiency of operations; reliability of reporting; and compliance with policies, procedures, laws, and regulations. The audit reports provide recommendations for improvements in procedures and systems.
Special projects are audits, reviews or investigations that are not scheduled on the Audit Plan based on the normal risk assessment process. ACO may, upon request, also be assigned to perform audits, reviews or investigations for other state agencies. The scope of the special project is determined at the time of the engagement.
State Fraud, Waste and Abuse Hotlines - ACO conducts investigations for the State Fraud, Waste, and Abuse Hotline (formally known as the State Employee Fraud, Waste, and Abuse Hotline), which is administered by the Office of State Inspector General (“OSIG”).
Investigations (non-Hotline related) - ACO conducts investigations based on detection, referral, or request by management of misconduct, policy misapplication, or fraud, waste, abuse or any other inappropriate activity.
External Reviews and Evaluations
Indirect Cost Rate Audits and Reviews –
Pursuant to 23 CFR 172.11(a)(1), costs or prices based on estimated costs for contracts shall be eligible for Federal-aid reimbursement only to the extent that costs incurred or cost estimates included in negotiated prices are allowable in accordance with the Federal cost principles. In addition, contracts awarded for engineering and design services by state transportation agencies must follow the cost principles contained in the Federal Acquisition Regulations ("FAR") of Part 31 of Title 48, Code of Federal Regulations ("CFR"). As such, consulting firms should submit overhead rate documentation for the most recent fiscal year, as detailed in the applicable documentation checklist for review and acceptance. Additional information is provided at the ACO Indirect Cost Rate Audit Home Page.
Upon review, ACO will accept or adjust the consulting firm's indirect cost rate(s) subject to audit.
CPA Workpaper Reviews –
ACO performs CPA Workpaper Reviews of the examination and supporting workpapers of the Indirect Cost Rate Audits in accordance with VDOT’s role as Cognizant Agency as defined in 23 U.S.C. 112(b)(2)(c) and 23 CFR 172.3. ACO requires access to the work papers of the consulting firm's CPA as part of the acceptance of the consulting firm's indirect cost rate(s). Using a risk based approach, or upon request, ACO or its designee will conduct CPA workpaper reviews on selected consultants using the American Association of State Highway and Transportation Officials (“AASHTO”) Uniform Audit & Accounting Guide Chapter 12 and Appendix A-1 to determine whether:
- the audit was conducted in accordance with GAGAS;
- the auditor adequately considered the auditee's compliance with FAR Part 31 and other related laws, regulations and guidance; and
- the audit report format is acceptable.
ACO may also perform CPA workpaper reviews when cognizance is transferred from another state.
To the extent practicable, the review will be performed remotely through access to electronic records of the consulting firm and/or the CPA firm. If electronic records are not provided, it may be necessary for ACO or its designee to perform the review at the physical location of the consulting firm and/or the CPA firm.
Based on the results of the CPA work paper review, ACO will issue a letter of concurrence with the related indirect cost rates, or the indirect cost rate(s) may be adjusted.
Indirect Cost Allocation Plan Reviews
ACO performs reviews of indirect cost rates and Indirect Cost Allocation Plans (“ICAP”) prepared and submitted by Metropolitan Planning Organizations (“MPO”) and Planning District Commissions (“PDC”) that wish to be reimbursed for indirect costs on projects funded by the Federal Highway Administration (“FHWA”). These reviews are performed in accordance with 2 CFR Part 200 Section E. ACO may also perform this type of review for Virginia State Departments as delegated by the FHWA, in accordance with Appendix V of 2 CFR 200.
Pre-Award evaluations are performed at the request of the VDOT Consultant Procurement Office or the VDOT Project Coordinators responsible for locality projects and are designed to assist VDOT in the overall evaluation of architectural and engineering consultant cost proposals. The pre-award evaluation should, to the extent possible, determine if the provisions of the proposed agreement are in compliance with VDOT policy and federal regulations (23 CFR Part 172, 48 CFR 31, etc.), the financial capability of the firm, the adequacy of the organization’s accounting system and the propriety of overhead, other direct costs, and labor additives. Pre-award evaluations may include “agreed-upon procedures”, depending upon the objectives and scope of the request.
Chapter 4, Section 4.9 of the Manual for the Procurement and Management of Professional Services includes the Pre-Award process and includes a list of the minimal required documentation necessary to perform an evaluation. The manual is found at the following link:
Final Invoice Reviews
At the completion of an architectural and engineering consultant contract, and upon final invoicing, ACO may perform a final review to ascertain whether the correct FAR indirect cost rates were used, the costs billed are in accordance with the terms and conditions of the contract and VDOT policy, supported by proper source documentation, and comply with FARs 48 CFR 31, 42.7, 52 and 23 CFR Part 172. This review can also be performed as an interim review prior to contract completion.
Single Audit/Sub recipient monitoring
Based on an approved risk plan, VDOT is required to perform sub-recipient monitoring on entities that receive federal funds of $750,000 or more through VDOT during the fiscal year. ACO reviews Comprehensive Annual Financial Reports (“CAFRs”) of localities and municipalities and PDC’s to ensure compliance with 2 CFR 200 Section D requirements. ACO ensures that localities and municipalities have met the audit requirements contained in the 2 CFR 200. For entities that received less than $750,000 of federal funds from VDOT in a fiscal year, the ACO performs a limited review in accordance with the approved risk plan.