Audit Reports

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September 9, 2019

FTA Has an Opportunity To Improve the Integrity Monitor Program for Hurricane Sandy Grantees

Mandated by the Disaster Relief Appropriations Act of 2013
Project ID: 
ZA2019064
View PDF Document
What We Looked At
To support transportation-related recovery and relief efforts in areas damaged by Hurricane Sandy in October 2012, the Disaster Relief Appropriations Act of 2013 (DRAA) appropriated $10.9 billion to the Federal Transit Administration (FTA). Recognizing it needed to be especially diligent with DRAA funds, FTA required grantees that received over $100 million to hire independent integrity monitors as a safeguard against fraud, corruption, and cost abuse. DRAA also directed our office to support oversight of the funds. Accordingly, our audit objective was to assess FTA’s policies for the use of integrity monitors and evaluate FTA’s oversight of integrity monitors.
 
What We Found
While FTA performs ongoing collaborative reviews of grantee integrity monitor plans, it lacks formal processes for identifying known risks and determining integrity monitor independence. As a result, internal staff who serve as integrity monitors may have self-interest concerns. For example, integrity monitors participated in settlements that could have included Federal funds and did not always notify FTA of these settlements until late in the process or after the settlements were completed. FTA also has an opportunity to improve the way grantees manage integrity monitor performance. For example, Agency officials did not make sure that grantees resolved integrity monitor recommendations or developed controls to prevent problems from reoccurring—in part because FTA viewed the integrity monitor program as a grantee internal control. Still, FTA recently improved its guidance on the amount of detail grantees should include in their quarterly reports. Until this guidance is implemented by all DRAA grantees, however, FTA may not realize the full benefits of the integrity monitor program, and Hurricane Sandy funds may be at risk.
 
Our Recommendations
We made eight recommendations to improve FTA’s oversight of Hurricane Sandy relief funds, including a recommendation to recover an estimated $1.1 million in settlement funds. FTA concurred with seven and partially concurred with one.

Recommendations

Open

Closed

No. 1 to FTA

Develop and implement procedures for consistently reviewing,approving and periodically updating grantee integrity monitor plans.

No. 2 to FTA

Develop and implement guidance for determining threats and impediments to independence. The guidance should address criteria for independence, including the use of internal grantee staff and actions required if independence issues cannot be resolved.

No. 3 to FTA

Develop and implement procedures requiring all participants in grantee integrity monitoring activities to promptly notify the grantee and FTA when they have knowledge of current or prospective legal matters relating to FTA-funded Hurricane Sandy projects that may affect the Federal Government, including defaults, breaches, major disputes, or litigation; and promptly notify the grantee, FTA, and DOT-OIG if they have knowledge about potential fraud, waste, or abuse occurring on FTA-funded projects, including knowledge of a criminal or civil investigation; by a Federal, State, or local law enforcement or other investigative agency, a criminal indictment or civil complaint; probable cause that could support a criminal indictment; or any other credible information.

Closed on 10.22.2019
$1,100,000
No. 4 to FTA

Recover the estimated $1.1 million that represents FTA's share of the settlement funds paid to PANYNJ-OIG.

No. 5 to FTA

Provide guidance or training on Master Agreement notification requirements for grantees and integrity monitors, such as defining what is meant by providing prompt notification.

No. 6 to FTA

Develop and implement procedures for periodically assessingwhether integrity monitors are meeting plan expectations, and for takingappropriate corrective actions when integrity monitors are not meetingexpectations.

No. 7 to FTA

Inform integrity monitors about best practices for targetingnew risk areas, such as procedures for contractor responsibilitydeterminations, and updating plans accordingly.

No. 8 to FTA

Develop and implement procedures for grantee oversight of integrity monitors that include a review of quarterly reports that, at a minimum contain information about integrity monitor activities, findings, and recommendations, as well as descriptions of the grantee's response to the recommendations and estimated completion dates for corrective actions, where appropriate.