DEPARTMENT OF TRANSPORTATION
CFDA 20.106 AIRPORT IMPROVEMENT PROGRAM
I. PROGRAM OBJECTIVES
The objective of the Airport Improvement Program is to assist sponsors, owners, or operators of
public-use airports in the development of a nationwide system of airports adequate to meet the
needs of civil aeronautics.
II. PROGRAM PROCEDURES
States, counties, municipalities, U.S. Territories and possessions, and other public agencies,
including Indian tribes or Pueblos are eligible for airport development grants if the airport on
which the development is required is listed in the National Plan of Integrated Airport Systems
(NPIAS). Applications for grants must be submitted to the nearest Federal Aviation
Administration (FAA) Airports Field Office. Primary airport sponsors must notify FAA by
January 31 or another date specified in the Federal Register of their intent to apply for funds
which they are entitled to under Public Law 97-248 (49 USC Chapter 31). A reminder is
published annually in the Federal Register. Other sponsors are encouraged to submit early in the
fiscal year and to contact the appropriate FAA Airports Field Officer for any local deadlines.
Sponsors must formally accept grant offers no later than September 30 for grant funds
appropriated for that fiscal year.
III. COMPLIANCE REQUIREMENTS
In developing the audit procedures to test compliance with the requirements for a Federal
program, the auditor should first look to Part 2, Matrix of Compliance Requirements, to
identify which of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the requirements.
A. Activities Allowed or Unallowed
Grants can be made for planning, constructing, improving, or repairing a public-use airport or portion thereof and for safety or security equipment. Eligible terminal building development is limited to nonrevenue-producing public-use areas that are directly related to the movement of passengers and baggage in air carrier and commuter service terminal facilities within the boundaries of the airport. Eligible construction is limited to items of work and for the quantities listed in the grant description and/or special conditions.
In general, Federal funds cannot be expended for:
- Passenger automobile parking facilities, buildings to be used as hangars, and portions of
terminals that are revenue-producing or not directly related to the safe movement of passengers
and baggage at the airports, and
- Costs incurred before execution of the grant, unless such costs are for land, necessary costs in
formulating a project, or costs covered by a letter of intent.
The following are examples of items for which FAA funds cannot be expended:
- Fuel farms.
- Emergency planning.
- Decorative landscaping, sculpture, or art works.
- Communication systems, except those used for safety/security.
- Training facilities, except those included in an otherwise eligible project as an integral part of
that project and that are of a relatively minor or incidental cost, i.e., less than 10 percent of the
project cost. An example of an exception would be a training room included as part of a new
Aircraft Rescue and Firefighting (ARFF) facility.
- Roads of whatever length, exclusively for the purpose of connecting public parking facilities to
an access road.
- Roads serving solely industrial or non-aviation-related areas or facilities.
- General aviation terminals.
- Airport surface detection systems (ASDE).
- Maintenance/service facilities except for those allowed to service required ARFF equipment.
- Office/administrative equipment, including data processing equipment, computers, recorders,
etc.
- Projects for the determination of latitude, longitude, and elevation except as an incidental part of
master planning.
Program guidance is provided in FAA Order 5100.38A, Airport Improvement Program
Handbook, and FAA Advisory Circulars in the 150/5100 series.
F. Equipment and Real Property Management
Under this program, FAA is authorized by sections 511(a)(13) and (14) of the Airport and Airway
Improvement Act (AAIA) of 1982 (49 USC 2210(a)(13)-(14)), as amended, to allow recipients to
reinvest the proceeds from the sale of real property acquired with Federal awards for noise
compatibility or airport development purposes.
G. Matching, Level of Effort, Earmarking
1. Matching
The share of allowable costs for a particular grant to be borne by FAA and other parties is
established in the grant agreement.
2. Level of Effort - Not Applicable
3. Earmarking - Not Applicable
L. Reporting
1. Financial Reporting
a. SF-269, Financial Status Report - Applicable
b. SF-270, Request for Advance or Reimbursement - Applicable
c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Applicable
d. SF-272, Federal Cash Transactions Report - Applicable
2. Performance Reporting - Not Applicable
3. Special Reporting - Not Applicable
N. Special Tests and Provisions
1. Revenue Diversion
Compliance Requirement - Section 511(a)(12) of the AAIA (42 USC 2210(a)(12)), requires
that all revenues generated by a public airport be expended for the capital or operating costs of
the airport, the local airport system, or other local facilities which are owned or operated by the
owner or operator of the airport and are directly and substantially related to the actual air
transportation of passengers or property. This section also provides that the limitation on the use
of revenue generated by the airport shall not apply if the governing statutes controlling the
owner's or operator's financing that was in effect before September 3, 1982, provided for the use
of any revenue from the airport to support not only the airport but also the airport owner's or
operator's general debt obligations or other facilities. Program guidance is provided in FAA
Order 5190.6A, Airport Compliance Requirements, chapter 4, section 5.
Audit Objective - Determine whether the airport owner or operator accounted for all revenue
and expenditures in compliance with the provisions of Section 511(a)(12) of the AAIA (49 USC
2210(a)(12)).
Suggested Audit Procedures
a. Review the policy for using airport revenue.
b. Test revenue use transactions (e.g., analysis of airport fund transfers, loans from the fund,
interest payments to and from the fund, and expenditures) to verify that airport revenue is used
for the capital or operating cost of the airport, or for the excepted costs specified in section
511(a)(12) of the AAIA (49 USC 2210(a)(12)).
c. Perform tests of airport revenue generating activities (e.g., leases, telephone contracts, etc.) to
ascertain that all airport generated revenue is accounted for.
d. Perform tests of transactions to ascertain that payments from airport revenues to the sponsors, related parties, or other governmental entities are airport-related, properly documented, and are commensurate to the services or products received by the airport. It is normal and permissible for municipal airport sponsors to use the services of its other municipal departments to obtain support services for the airport. However, the auditor should inquire as to whether the sponsor, other governmental entities, or related parties may receive airport-generated revenue without providing commensurate services or products to the airport.
DEPARTMENT OF TRANSPORTATION
CFDA 20.205 HIGHWAY PLANNING AND CONSTRUCTION (Federal-Aid Highway
Program)
I. PROGRAM OBJECTIVES
The objectives of the Highway Planning and Construction Program are to: (1) assist States in
constructing and rehabilitating the National Highway System (NHS) including Interstate highways
and building or improving other Federal-aid roads and streets; (2) provide aid for repairing the
system, roads, and streets following disasters; (3) foster safe highway design; and, (4) replace or
rehabilitate unsafe bridges.
II. PROGRAM PROCEDURES
Funds are provided to State highway agencies (SHAs) to pay for a defined portion of the
planning, research, and construction costs of approved projects. Funds can also be made available
through SHAs to local public agencies (LPAs), such as cities, counties, tribal governments,
metropolitan planning organizations (MPOs), and other political subdivisions. In some cases,
projects may be administered by the SHA under certification acceptance (CA) procedures or
special rules procedures of 23 USC 117 or 106(c), respectively, approved by the Federal Highway
Administration (FHWA).
III. COMPLIANCE REQUIREMENTS
In developing the audit procedures to test compliance with the requirements for a Federal
program, the auditor should first look to Part 2, Matrix of Compliance Requirements, to
identify which of the 14 types of compliance requirements described in Part 3 are
applicable and then look to Parts 3 and 4 for the details of the requirements.
A. Activities Allowed or Unallowed
1. Although State-owned lands may be exchanged for lands required for highway purposes,
Federal funds may not reimburse for more than the fair market value of the land required for
highway purposes plus damages. This is computed as the lesser of either the sum of: the fair
market value of the land required for highway purposes plus damages, or the sum of: (1) the fair
market value of the State-owned land; (2) any additional cash payments made; and, (3) the cost of
construction features to mitigate damages (23 CFR section 710.304).
2. Federal funds can be used only to reimburse costs that are: (1) incurred subsequent to the date
of authorization to proceed; (2) in accordance with the conditions contained in the project
agreement and the plans, specifications, and estimates (PS&E); (3) allocable to a specific project;
and, (4) claimed for reimbursement subsequent to the date of the project agreement (23 CFR
sections 1.9, 630.114, 630.205, 630.303, and 630.304).
3. Administrative and overhead costs that are considered necessary for the management,
supervision, and administrative control of a suitably equipped, staffed and operational State
Highway Agency are unallowable, except that those costs incurred for salaries and wages of the
administrative organization of the highway planning, research, and development units may be
eligible in the ratio of the time spent on federally-funded work to the unit's working hours as a
whole (23 CFR sections 1.11, 140.705, and 140.713).
4. Federal funds can be used to reimburse for administrative settlement costs incurred in defending
contract claim proceedings before arbitration boards or State courts only if approved by FHWA
for Federal-aid projects. If special counsel is used, it must be recommended by the State Attorney
or SHA legal counsel and approved in advance by FHWA (23 CFR section 140.505).
5. Costs incurred by the SHA or MPO for highway planning and research work are subject to a
work program approved by FHWA (23 CFR section 420.111).
6. Payments for damages from right-of-way acquisitions for personal property, loss of business or
goodwill, circuity of travel, diversion of traffic, and other items of damage not generally
compensable in eminent domain are not eligible for Federal participation (23 CFR section
710.304(h)).
7. Bond projects authorized prior to November 28, 1995, under 23 USC 115, Advance
Construction, and under Section 122, Payment to States for Bond Retirement, are subject to the
requirements in effect on the date of project authorization. Bond related costs are an eligible cost
of construction on projects, including Intermodal Surface Transportation Efficiency Act (ISTEA)
demonstration projects, which were authorized by FHWA on or after November 28, 1995 (23
USC 122).
8. Expenditures for highway maintenance are not eligible ( 23 USC 116), except for Interstate
Maintenance Program and Preventive Maintenance (23 USC 119) (23 CFR section 1.27).
9. Federal funds may be used to reimburse for tuition and direct educational costs of continuing
highway-related education of SHA and LPA employees, but not for travel, subsistence, or salaries
of students (23 CFR section 260.407).
10. Payroll and related expenses are reimbursable for project employees while attending training courses which directly benefit Federal-aid highway projects. These training costs may be charged to Federal-aid projects as a miscellaneous function (23 CFR section 140.703(g)).
G. Matching, Level of Effort, Earmarking Requirements
1. Matching
a. The State is generally required to pay a portion of the project costs. Portions vary according to
the type of funds authorized and are stated in project agreements.
b. A State's matching share for a project may be credited by the fair market value of donated
private land incorporated in the project, and certain toll revenues used to build or improve
highways, bridges and tunnels (23 USC 120 and 23 USC 323).
c. Third party donations of funds, materials, and services may be used as a State's matching share
on or after November 28, 1995. Donations must be made by the third party after the date the
project is approved by FHWA and prior to approval of the final voucher (i.e., before the final
request for payment). Donated materials and services must meet the eligibility requirements of
the project (23 USC 323).
2. Level of Effort - Not Applicable
3. Earmarking
Items included in estimates (obligations) for construction engineering for a State, for a Federal
fiscal year, shall not exceed, in the aggregate, 15 percent of the total estimated costs (obligations)
of all projects financed with Federal-aid highway funds in that fiscal year, after excluding from
such total estimated costs, the estimated costs of right-of-way, preliminary engineering, and
construction engineering costs (23 USC 106(c)).
J. Program Income
The Federal share of net income from airspace rights-of-way obtained by the States for sales,
uses, or leases shall be used by the State for projects eligible under 23 USC (23 USC 156).
L. Reporting
1. Financial Reporting
a. SF-269, Financial Status Report - Not Applicable
b. SF-270, Request for Advance or Reimbursement - Not Applicable
c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable
d. SF-272, Federal Cash Transactions Report - Not Applicable
e. PR-20, Voucher for Work Under Provisions of the Federal-Aid and Federal Highway Acts, as
Amended (OMB No. 2125-0507)
f. FHWA-1447, Voucher for Payment Under Certification Acceptance (OMB No. 2125-0507)
2. Performance Reporting - Not Applicable
3. Special Reporting - Not Applicable
N. Special Tests and Provisions
1. Use of Other State or Local Government Agencies
Compliance Requirement - Other State or local government agencies may be used for acquiring
rights-of-way and are reimbursed based on a written agreement (23 CFR section 710.203).
Audit Objective - Determine whether other State or local government agencies acquire
rights-of-way in accordance with their agreement with the State.
Suggested Audit Procedures
a. Examine records and ascertain if other agencies were used for acquiring rights-of-way on
Federal-aid projects.
b. Review a sample of right-of-way acquisition agreements with other agencies.
c. Perform tests of selected payments to other agencies to verify that they comply with the written
agreement.
2. Cooperative acquisition of rights-of-way
Compliance Requirement - When funds are reimbursed for the acquisition of rights-of-way in
coordination or cooperation with other Federal programs, the acquisition and cost-sharing
responsibilities of SHA and the other agencies shall be set forth in an agreement (23 CFR section
710.304).
Audit Objective - Determine whether rights-of-way acquired in coordination or cooperation with
other Federal programs are accomplished in accordance with an agreement.
Suggested Audit Procedures
a. Ascertain through a review of the agreement if rights-of-way were acquired in coordination or
cooperation with other Federal programs.
b. Test the transaction records and verify that they comply with the agreement.
3. Replacement of publicly owned real property
Compliance Requirement - Federal funds may be used to reimburse the reasonable costs for the
functional replacement of publicly-owned real property, provided that FHWA concurs that it is in
the public interest. The cost of increases in capacity and other betterments are not eligible except
if: (1) necessary to replace a utility; (2) required by existing codes, laws, and zoning regulations;
or (3) related to reasonable prevailing standards for the type of facility being replaced (23 CFR
sections 712.604 and 712.605).
Audit Objective - Determine whether the functional replacement of real property was
accomplished within FHWA requirements.
Suggested Audit Procedures
a. Ascertain if there were any functional replacements of publicly-owned real property.
b. Verify that FHWA concurred in paying the reasonable costs of the functional replacements.
c. Review a sample of transactions involving replacement costs and verify that the costs charged
to the Federal-aid project were consistent with the FHWA-approved agreement between all
parties which sets forth how the costs of the facility are to be shared.
4. Project extensions
Compliance Requirement - FHWA must approve extensions affecting project costs or the
amount of liquidated damages, except those for projects administered under certification
acceptance (CA) or special rule procedures (23 CFR section 635.121).
Audit Objective - Determine whether proper FHWA approvals were obtained for contract
extensions affecting project costs and the amount of liquidated damages assessed.
Suggested Audit Procedures
a. Review the systems for monitoring and controlling contract time and review project files to
determine if there were project extensions.
b. Verify that FHWA approval was obtained for time extensions affecting project cost and, where
applicable, the amount of liquidated damages assessed.
5. Sampling program
Compliance Requirement - An SHA or LPA must have a sampling and testing program for
projects on the NHS to ensure that materials and workmanship generally conform to approved
plans and specifications (23 CFR section 637.205).
Audit Objective - Determine whether the State is following a quality assurance program that
meets FHWA's requirements.
Suggested Audit Procedures
a. Obtain an understanding of the recipient's sampling and testing program.
b. Review documentation of test results on a sample basis to verify that the proper number of
tests are being taken in accordance with the program.
c. For failed materials, verify that there was a price adjustment based on an engineering analysis
by the SHA.
6. Contractor recoveries
Compliance Requirement - When a State recovers funds from highway contractors for project
overcharges due to bid-rigging, fraud, or anti-trust violations or otherwise recovers compensatory
damages, the Federal-aid project involved shall be credited with the Federal share of such
recoveries (Tennessee v. Dole 749 F.2d 331 (6th Cir. 1984); 57 Comp. Gen. 577 (1978); 47
Comp. Gen. 309 (1967)).
Audit Objective - Determine whether the proper credit was made to the Federal share of a
project when recoveries of funds are made.
Suggested Audit Procedures
a. Determine the extent to which the State has recovered overcharges and other compensatory
damages on Federal-aid projects through appropriate interviews and a review of legal, claim, and
cash receipt records.
b. Review a sample of cash receipts and verify that appropriate credit is reflected in billings to the
Federal Government.
7. Project Approvals
Compliance Requirement - Construction projects administered under standard procedures
cannot be advertised nor force account work commenced until FHWA: (1) approves the plans,
specifications, and estimates; and, (2) authorizes the SHA to advertise for bids or approves the
force account work. Construction cannot begin until after FHWA concurs in the contract award
(23 CFR sections 630.205, 635.112, 635.204, and 635.309). Construction projects administered
under certification acceptance (CA) or special rule procedures require only FHWA authorization
to proceed (23 USC 106; 23 CFR section 640.113).
Audit Objective - Determine whether project activities are started with required Federal
approvals.
Suggested Audit Procedures
a. Review a sample of projects and identify dates of the necessary approvals, authorizations, and
concurrences.
b. Identify dates that projects were advertised and contract or force account work was initiated and compare to FHWA's approval dates.
DEPARTMENT OF TRANSPORTATION
CFDA 20.500 FEDERAL TRANSIT CAPITAL IMPROVEMENT GRANTS
CFDA 20.507 FEDERAL TRANSIT CAPITAL AND OPERATING ASSISTANCE
FORMULA GRANTS
I. PROGRAM OBJECTIVES
The objective of the Capital Improvements Grants Program and the Capital and Operating
Assistance Formula Grants Program is to assist in financing the planning, acquisition,
construction, and improvement of facilities and equipment in mass transportation services and the
payment of operating expenses to improve or continue such service by operation, lease, contract,
or otherwise.
II. PROGRAM PROCEDURES
Grants are awarded to public agencies on approval of applications for specific programs or
projects submitted to the Federal Transit Administration (FTA). Progress is monitored by FTA
through on-site inspections, telephone contacts, correspondence, and quarterly progress and
financial status reports. FTA provides funds based on a project's progress.
FTA is required to perform reviews and evaluations of 49 USC 5307 grant activities at least every
3 years. FTA Order 9010.1B, "Triennial Reviews," dated April 5, 1993, provides guidance to
FTA staff and recipients on the conduct of triennial reviews. These reviews are conducted with
specific reference to compliance with statutory and administrative requirements and consistency of
actual program activities with (1) the approved program of projects, and (2) the planning process
required under 49 USC 5303.
III. COMPLIANCE REQUIREMENTS
A. Activities Allowed or Unallowed
The activities allowed are specified in the grant agreement.
F. Equipment and Real Property Management
Any disposition of equipment before the end of its useful life is subject to prior FTA concurrence
in the method of disposition. Unless otherwise determined in writing by FTA, the fair market
value for rolling stock removed from service before the end of its useful life is the FTA share of
the unamortized value of the remaining service life, based on straight line depreciation of the
original purchase price, based upon the date the equipment was removed from revenue service
rather than the date of disposal. Transfer of the Federal interest from a capital asset purchased
under a grant to one not acquired with Federal assistance is not permitted, except when
equipment that is damaged or destroyed is replaced (either with insurance proceeds or otherwise).
Transfer of excess equipment by a recipient to another FTA recipient for use in mass
transportation operations requires FTA approval (49 CFR section 18.32).
I. Procurement and Suspension and Debarment
1. Buy America
All procurements for all steel, iron, and manufactured products in excess of $100,000 require, as a
condition of responsiveness, a Buy America certificate, documentation of general waiver, per
Appendix A to 49 CFR section 661.7, or documentation of specific waiver. A manufactured
product is domestic if all of the manufacturing processes for the product took place in the United
States and if all items or material used in the product are of United States origin. Four types of
waivers that must be obtained through a request to the FTA are if: (a) the materials and products
are not produced in the United States in sufficient and reasonably available quantities and of a
satisfactory quality; (b) inclusion of domestic material will increase the overall project contract by
more than 25 percent; (c) FTA finds that the application of the Buy America requirements is not
in the public interest (except for those items already listed in 49 CFR section 661.7, Appendix A)
(Buses and other rolling stock (including train control, communication, and traction power
equipment) are exempted from the Buy America requirements if the cost of their components
produced in the United States is more than 60 percent of all their components and final assembly
takes place in the United States); or (d) the procurement of buses or other rolling stock fails to
meet the component and final assembly test as required in 49 CFR section 661.11 (49 CFR part
661).
A recipient which makes purchases of rolling stock for transportation of fare-paying passengers,
must conduct or will cause to be conducted a pre-award audit before entering a formal contract
for the purchase of rolling stock, and that a post-delivery audit is complete before title to the
rolling stock is transferred. Pre-award and post-delivery audits verify the accuracy of the Buy
America certification, purchaser's requirements certification, and certification of compliance with
or inapplicability of Federal motor vehicles safety standards (49 CFR part 663).
2. Disadvantaged Business Enterprises (DBE)
Recipients shall require that each transit vehicle manufacturer, as a condition to bid on transit
vehicle procurement in which FTA funds are involved, certify that it has an overall DBE goal
approved by the FTA Administrator or that it has submitted an overall DBE goal and it has not
been disapproved by the FTA Administrator (49 CFR section 23.67).
3. Procurement of Vehicles and Facilities
In prohibiting discrimination in the provision of transportation services against persons with
disabilities, the Americans with Disabilities Act of 1990 (ADA) requires that vehicles purchased
or leased after August 25, 1990, and new and altered facilities designed and constructed (as
marked by the notice to proceed) after January 25, 1992, must comply with the appropriate
standards in 49 CFR parts 37 and 38 (42 USC 12101 -12213).
L. Reporting
1. Financial Reporting
a. SF-269, Financial Status Report - Applicable
b. SF-270, Request for Advance or Reimbursement - Applicable
c. SF-271, Outlay Report and Request for Reimbursement for Construction
Program - Not Applicable
d. SF-272, Federal Cash Transactions Report - Not Applicable
2. Performance Reporting - Not Applicable
3. Special Reporting
Report of DBE Awards and Commitments (OMB No. 2105-0510) - Based on the level of FTA
funding, exclusive of transit vehicle purchases, recipients are required to implement a DBE
program. To monitor the progress of the DBE program, the recipient is required to submit
quarterly reports based on a recordkeeping system (49 CFR section 23.49).
N. Special Tests and Provisions
1. Environmental Review
Compliance Requirement - The National Environmental Policy Act (NEPA) (42 USC 4321 et
seq.) and the FTA implementing rule (23 CFR part 771) require that the environmental effects of
proposed mass transportation projects be documented and that environmental protection be
considered before a decision is made to proceed with a project. Additionally, if there is no
feasible or prudent alternative to avoid the effects, all reasonable steps must be taken to minimize
adverse environmental effects, in accordance with Section 4(f) of the Department of
Transportation Act of 1966, as amended. It is the policy of FTA that, among other matters,
measures necessary to mitigate adverse impacts be incorporated into any proposed transportation
improvement (49 USC 303).
Environmental mitigation measures are described in NEPA environmental documents, when
required. For projects requiring an Environmental Impact Statement (EIS), mitigation measures
are summarized in a Record of Decision. For projects requiring an Environmental Assessment,
mitigation measures are summarized in a Finding of No Significant Impact (FONSI). For
categorically excluded projects, any mitigation measures will be documented in the FTA approval
memorandum for the project. In all cases, environmental mitigation measures should be
referenced in the construction grant agreement with the recipient (23 CFR part 771).
Audit Objective - Determine whether environmental mitigation measures associated with FTA
assisted construction were implemented as referenced in the construction grant agreement.
Suggested Audit Procedures
a. Identify any FTA assistance provided for construction and review copies of the grant agreement
and EIS or FONSI to identify mitigation measures specified.
b. For sample of mitigation measures, compare the status of implementation with the
commitments made in the environmental documents or grant agreement.
2. Charter Service
Compliance Requirement - Recipients must execute a one-time agreement with FTA which
provides that neither the recipient nor any of its subrecipients will provide charter service that
uses equipment or facilities acquired with FTA funds, unless there are no willing and able private
charter service operators or one or more of the exceptions listed in 49 CFR part 604 are met and
the charter service is incidental to the provision of mass transportation. Charter service is defined
as transportation, using buses or vans (funded in whole or in part by FTA), of a group of persons
pursuant to a common purpose, under a single contract at a fixed charge for the vehicle or
service, which has acquired the exclusive use of the vehicle or service to travel together under an
itinerary either specified in advance or modified after leaving the place of origin. This definition
includes the incidental use of FTA-funded equipment for the exclusive transportation of school
students, personnel and equipment, and the housing of charter vehicles in FTA-funded facilities.
Incidental charter service is defined as service which does not: (a) interfere with or detract from
the provision of the mass transportation service for which the facilities or equipment were funded
under the Act, or (b) does not shorten the mass transportation life of the equipment or facilities
(49 CFR part 604).
Audit Objective - Determine whether the use in charter service of equipment and facilities
acquired with FTA funds conformed to 49 CFR part 604.
Suggested Audit Procedures
a. Ascertain if the recipient provides charter service with FTA-funded equipment by obtaining
written representation from recipient, and reviewing revenue accounts for indications of charter
bus revenue statements.
b. Review the recipient's policies and procedures for charter, rental, or lease of its transit
equipment.
c. Test transactions which meet the definition of charter service and ascertain if:
(1) FTA-assisted equipment or facilities (e.g., parking lots and maintenance garages) were used;
(2) Documentation was available evidencing the absence of a willing and able private operator or
an exception provided in 49 CFR part 604;
(3) Documentation was available evidencing a charter fee that recovers the entire operating and
capital costs of equipment used; and
(4) Inventory records were adjusted to extend the useful life of the FTA subsidized transit
equipment by the amount of charter service.
3. School Bus Operation
Compliance Requirement - The recipient, as a condition of eligibility, must enter into an
agreement with the FTA Administrator stating that the recipient will not engage in school bus
operations exclusively for the transportation of students and school personnel in competition with
private school bus operators unless it demonstrates to the FTA Administrator any one of the
exceptions listed in 49 CFR section 605.11 and the Administrator concurs. However, all
recipients can operate "Tripper Service" defined as mass transportation service, open to the
public, and designed or modified to accommodate the needs of school students and personnel,
using various fare collections or subsidy systems. Buses used in "Tripper Service" are required to
be clearly marked as open to the public and should not carry designations such as "school bus" or
"school special" (49 CFR part 605).
Audit Objective - Determine whether school bus service provided with FTA funded equipment
was approved by FTA or that FTA-assisted equipment and facilities used to accommodate
students conformed to the definition of "Tripper Service."
Suggested Audit Procedures
a. Ascertain if the recipient operates any transit service exclusively for school children through a
review of bus schedules, published fares, and service contracts, and discussion with recipient
officials.
b. Ascertain if FTA-funded equipment (e.g., buses or vans) or facilities (e.g., bus maintenance
garages) was used to provide school service by review of inventory records, maintenance logs,
parking sites, or other appropriate procedures.
c. If exclusive school bus service is identified:
(1) Review documentation that the service was approved by the FTA, or
(2) Through a review of bus schedules and published fares during school season and discussions with recipient officials, met the definition of "Tripper Service."
DEPARTMENT OF TRANSPORTATION
20.600 STATE AND COMMUNITY HIGHWAY SAFETY
20.601 ALCOHOL TRAFFIC SAFETY AND DRUNK DRIVING PREVENTION
INCENTIVE GRANTS
I. PROGRAM OBJECTIVES
The objective of the State and Community Highway Safety Program is to provide a coordinated
national highway safety program to reduce traffic accidents, deaths, injuries, and property
damage.
II. PROGRAM PROCEDURES
Funds are provided to the States, following submission of their highway safety plans, in
accordance with a predefined formula. Each State distributes at least 40 percent of the funds to
political subdivisions of the State, to be expended on local projects.
III. COMPLIANCE REQUIREMENTS
A. Activities Allowed or Unallowed
Funds must be expended as specified in the grantee's highway safety plan. Certain specific costs
which will not be approved or that require prior approval have been identified in Highway Safety
Grant Funding Policy for NHTSA/FHWA Field-Administered Grants and are listed below (23
CFR section 1200.20).
1. The following costs are allowable or allowable with specific conditions:
a. Equipment - Major equipment (tangible, nonexpendable, personal property having a useful life
of more than one year and an acquisition cost of $5000 or more per unit) purchases for new and
replacement equipment must be pre-approved.
b. Installation - The purchase and installation of regulatory and warning signs and supports and
field reference markers are allowable for roads off the Federal aid system.
c. Travel - Travel for out-of-state individuals benefiting the host State's highway safety program is
allowable.
d. Training - The cost of training personnel and the development of new training curricula and
materials is allowable. However, training costs for Federal employees, with the exception of
Department of the Interior personnel assigned Section 402 responsibility, are unallowable.
e. Program Administration - The costs for consultant services, promotional activities, alcoholic
beverages to support police "sting" operations, and meetings and conferences are allowable.
2. The following costs are unallowable:
a. Facilities and Construction: highway construction, maintenance or design, construction or
reconstruction of permanent facilities, highway safety appurtenances, office furnishings and
fixtures, and land.
b. Equipment: truck scales, traffic signal preemption systems.
c. Training: individual's salary, and training employees of Federal agencies, excepted as noted
above.
d. Public Communications: advertising space.
e. Program Administration: research costs, expenses to defray activities of Federal agencies, and
commercial drivers' compliance requirements.
G. Matching, Level of Effort, Earmarking
1. Matching
a. The State shall pay at least 20 percent, or the applicable sliding scale rate, as stated in the grant
award, of the total cost of the program. The State shall pay at least 50 percent of the costs for
planning and administration (23 CFR section 1252.4; 23 USC 120(b), 402(d), and 406(c)).
b. The Highway Safety Act requires that those States that qualify for special incentive programs
under Section 410 (CFDA 20.601) must match Federal funds at 25 percent the first year, 50
percent the second year, and 75 percent the third year (23 USC 408 and 410).
c. Additional matching requirements may be specified in the grantee's highway safety plan to limit
the maximum Federal share of an ambulance, helicopter, or aircraft to 25 percent.
2. Level of Effort - Not Applicable
3. Earmarking
a. At least 40 percent of Federal funds apportioned to a State for any fiscal year shall be expended
by or for the political subdivisions of the State in carrying out local highway safety programs (23
CFR section 1250, 23 USC 402(b)(1)(C)).
b. The costs for planning and administration shall not exceed 10 percent of the funds received by
the State (23 CFR section 1252.4).
L. Reporting
1. Financial Reporting
a. SF-269, Financial Status Report - Not Applicable
b. SF-270, Request for Advance or Reimbursement - Not Applicable
c. SF-271, Outlay Report and Request for Reimbursement for Construction Program - Not Applicable
d. SF-272, Federal Cash Transactions Report - Not Applicable
e. HS-217, Highway Safety Plan Cost Summary (OMB No. 2127-0003)
f. Federal-Aid Reimbursement Voucher (OMB No. 2127-0003)
2. Performance Reporting - Not Applicable
3. Special Reporting - Not Applicable