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Mn/DOT AUDIT

This conference will discuss the process of project selection for audit, ARRA requirements, and material testing in highway construction. It will also provide an overview of recent audit results and opportunities for improvement.

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Mn/DOT AUDIT

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  1. Mn/DOT AUDIT 2010 COUNTY HIGHWAY ACCOUNTANTS CONFERENCE SINGLE AUDIT DISCUSSION

  2. SINGLE AUDIT OUTLINE • How Your Project Gets Selected For Audit • ARRA Requirements • Material Testing • Single Audit Report Process

  3. HOW YOUR PROJECT GETS SELECTED FOR AUDIT • Single Audit Act of 1984: Highway Planning and Construction Program • Agreement With Office of Legislative Audit • Letter of Agreement and Stewardship Plan Between Mn/DOT and the Federal Highway Administration • Population of Highway Construction Payments for the State Fiscal Year Ended June 30 • 15-18 Highway Construction Projects Selected for Audit (some trunk highway and some city/county) • Factors Influencing Selection: Project Size, American Recovery and Reinvestment Act (ARRA), Project Type, Location • FHWA guidance to us for this year: audit 2/3 city/county projects and 1/3 trunk highway projects; also, 50% ARRA projects

  4. AMERICAN RECOVERY AND REINVESTMENT ACT (ARRA) REQUIREMENTS • See http://www.whitehouse.gov/omb/assets/a133_compliance/arra_addendum_1.pdf pages 29-53 and specific page references below • Need to have certification that ARRA Buy American provisions are met for Iron, Steel, and Manufactured Goods; also need Buy American provision in ARRA project proposals, page 33 of 301 • Proposal language and practices addressing use of debarred contractors needs to be the same between Federal and non-federal (state aid) projects, page 33 of 301 • Schedule of Federal Expenditures in annual financial reports needs to separately document ARRA expenditures, page 52 of 301 • Data Collection Form (SF-SAC) in Single Audit Clearing House (http://harvester.census.gov/sac) needs to separately document ARRA expenditures, page 52 of 301 • Cities and Counties must be registered in the Central Contractor Registration (CCR) database (https://www.bpn.gov/ccr/default.aspx), page 45 of 301 • Contractors should be submitting reports indicating hiring for ARRA projects – reports should be checked for accuracy – see change in federal requirement addressing use of full-time equivalent for calculating hiring for ARRA projects • www.whitehouse.gov/omb/assets/recovery_act/OFPP_RecoveryReviewGuidance.pdfhttp://www.whitehouse.gov/omb/assets/memoranda_2010/m10-08.pdf

  5. MATERIAL TESTING • Assess Measures Taken to Accomplish Compliance With Material Testing Requirements • Grading and Base Testing Requirements • Concrete Production/Testing Compliance • Bituminous Production/Testing Compliance

  6. Recent Audit Results: Material Testing (Grading & Base) • Opportunities for Improvement • Payment reductions need to be taken at the time of payment for work rather than at the end of the project (failing gradations; bitumen content) • Preliminary and Final Grading and Base Reports Need to be Completed correctly and Sent in to the Grading and Base Unit (Grading and Base Manual, 5-692.301) • Contractor Certificate of Compliance and QC Gradations Must be Submitted to and Accepted by the Engineer Prior to placement and payment (2005 Specification 2211.3 F1, Special Provisions) • QA gradations need to be done with Random Sampling Method per Schedule of Materials Control and Grading and Base Manual Chapter 7 (also Random Sampling Acceptance Report – Grading and Base Manual) • Perform DCP tests (Schedule of Materials Control) • Perform Relative Density and Relative Moisture Tests (Schedule of Materials Control) • Moisture Content Tests Must be Done to Verify 5% Moisture to Achieve Compaction (Schedule of Materials Control, 2005 Specification 2211.3 C2, C3, Special Provisions) • QC and QA Percent Crushing (Schedule of Materials Control, Specification 3138.2C) • Aggregate Quality (Schedule of Materials Control, Specification 3138.2D, 2E) • Need to Verify Maximum of 3% Bitumen Content for Aggregate Base Class 7(B) (Specification 3138.2 A2a(a)) • Materials Certification Exceptions Summary needs to list missed tests and failing tests and resolution during the project as well as when the project is finaled(Contract Admin Manual 5-591.430 page MATLCERT-4) Audit Finding for 3 Consecutive Years

  7. Recent Audit Results: Material Testing (Concrete) • Success in Meeting Requirements • QC and QA Coarse and Fine Aggregate Gradation Tests Usually Done as Required • Cylinder Tests Done as Required • Opportunities for Improvement • Need to Complete and Submit Weekly Certified Ready Mix Plant Reports and Test Beam Data to the Concrete Unit (Concrete Manual, 5-694.701; 5-694.744(1)) • Cores for Thickness need to be done (Schedule of Materials Control) • Take payment reductions for air content falling outside specification (Specification 2461.4A4b) • Conduct Coarse Aggregate Testing on No. 200 sieve (Specification 3137.2D1(i), Schedule of Materials Control) • Cementitious Materials and Admixtures for Concrete testing needs to be done • Contractor needs to perform and document QC verification companion sample gradations (Schedule of Materials Control) • Contractor needs to perform and document QC moisture testing for aggregates • Air and Slump Tests should be taken as required and Documented on the Weekly Concrete Report (Schedule of Materials Control, Concrete Manual 5-694.727) • Certificate of Compliance Needed for Dowel Bars (Schedule of Materials Control) • QA/verification testing needs to be performed by agency/agency controlled personnel; QC testing needs to be performed by contractor/contractor controlled personnel (23 CFR 637.205 and 637.207)

  8. Recent Audit Results: Material Testing (Bituminous) • Success in Meeting Requirements • Failing Materials Rarely Seen and are Properly Addressed • Verification Testing is for the Most Part Done as Required • Documentation, Including Test Summary Sheets, is Improving • Opportunities for Improvement • Retesting When QC-Verification Test Result Differences Exceed Tolerances (Table 2360.4-M Tolerances and 2360.4N) • Maintain a Bituminous Plant Diary (Contract Administration Manual 5-591.390) • Verification Samples From Behind the Paver Rather Than From the Truck Box (2360.4D) • Special Provisions Should not Call for Contractor to Transport Verification Samples (23 CFR 637.205(d)) • Engineer needs to authorize paving of wear course in writing after October 15 or November 1 (depending on location) (2360.5B) • 1 Agency Core needs to be taken and tested per lot (Schedule of Materials Control) • 1 Verification test per day required (2360.4N) • Asphalt Binder should be sampled and tested to verify Performance Grade characteristics (Schedule of Materials Control)

  9. Single Audit Report Process • Meet With County Engineer at End of Week When Audit is Finished to Discuss Results of Audit for Specific Projects: Spring and Summer • Results From 15-18 Highway Construction Audits Combined and Evaluated in October • Meetings to Discuss Audit Results in October/November: • Office of Materials • Office of Construction and Innovative Contracting • State Aid for Local Transportation Division • Mn/Dot Commissioner’s Staff

  10. ANOTHER EXCITING MEETING WITH THE AUDITORS

  11. Single Audit Report Process • Draft Report for Response Issued in December; Finding Recommendations Addressed to Mn/DOT Division Directors • Finding Recommendations Related to County Projects Addressed to Mn/DOT State Aid Engineer • Responses to Audit Findings Evaluated and Accepted by Mn/DOT Deputy Commissioner • Final Report With Responses Issued in January is a Public Document www.dot.state.mn.us/const/tools/references.html - Audit Report & Description of Audit Process Online

  12. Single Audit Report Process • Audit Findings and Associated Questioned Costs are Normally Based on Patterns and Trends (multiple exceptions to requirements for multiple projects) • Costs are Questioned by Individual Contract Item Value by Project • 70% of Questioned Costs Relate to Material Testing (primarily missed tests and payment reductions not taken or not taken timely for materials not meeting specifications) • The Questioned Cost Committee Evaluates Questioned Costs, Creating a List of Likely Questioned Costs Which are Submitted to FHWA • The Questioned Costs Committee Sometimes asks Project Personnel to Attend Committee Meetings and Provide Information Regarding Exceptions to Requirements Related to Questioned Costs

  13. Your Questions

  14. Thank You For Inviting Us! Dave Christensen Principal Auditor Special Audits and Analysis Mn/DOT Office of Audit 7th Floor Transportation Bldg MS 190 395 John Ireland Blvd Saint Paul MN 55155 Office (651) 366-4147; fax 366-4155 dave.christensen@state.mn.us

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