VISITOR CENTER. N. C. Department of Transportation Roadside Environmental Unit

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1 APRIL 2008 VISITOR CENTER State Authorization: North Carolina General Statute Roadside Environmental Unit Agency Contact Person Program Jennifer P. Pitts Roadside Environmental Unit 1557 Mail Service Center Raleigh, N.C (919) Fax: (919) Address Confirmation Letters To W. Wayne Rogers, CPA, Manager Single Audit Compliance Unit 1514 Mail Service Center Raleigh, N.C (919) ext. 363 Fax: (919) The auditor should not consider the supplement to be a safe harbor for identifying audit procedures to apply in a particular engagement, but the auditor should be prepared to justify departures from the suggested procedures. The auditor can consider the supplement a safe harbor for identification of compliance requirements to be tested if the auditor performs reasonable procedures to ensure that the requirements in the Supplement are current. The grantor agency may elect to review audit working papers to determine that audit tests are adequate. The Single Audit Compliance Unit of the External Audit Branch reviews all single audits, financial audits, and management letters of all grantees. We are looking at both the presentation (information as to program, pass-through and state funding, NCDOT identification numbers) and the dollar amounts presented versus our records. Any reports not received will be requested. Grants/appropriations must be properly identified by program name on the Schedule of Expenditures of Federal and State Awards. This information is available from the agreement with NCDOT; program name is in the second/third paragraph. I. PROGRAM OBJECTIVES The General Assembly of the State of North Carolina authorizes funding to certain Visitor Centers (NCGS (c)(2) revised) located within rest area sites, for the purpose of providing visitor information to the traveling public. Funding may only be used for operational costs for the center as allowed and defined in OMB Circular A-122 or A-87 (depending on organizational structure) and in accordance with the administrative requirements contained in OMB Circular A-110, 49 CFR 18, and/or state policies. C-4 DOT-13 1

2 II. PROGRAM PROCEDURES The program is administered by the North Carolina Department of Transportation, hereinafter referred to as the Department. Recipients are nonprofit organizations or local governments appointed by the State Legislature. The recipients receive an allocation of $100,000 annually from the Special Registration Plate fund with an additional $50,000 from the Highway Fund (with the exception of the McDowell Visitor Center and the visitor center in Transylvania County which receives an annual allocation of $25,000 from the Highway Fund, and Columbus County and Washington County which does not receive an allocation from the Highway Fund at this time). III. COMPLIANCE REQUIREMENTS 1. ACTIVITIES ALLOWED OR UNALLOWED a. Compliance Requirement - Funds should only be used for operating costs of the Visitor Center. Audit Objective Determine that expenditures were only for operating costs. Suggested Audit Procedures - Select a sample of expenditures that were charged to the program and ensure expenditures were for operating costs and reasonably prorated among programs that might share facilities and services. b. Compliance Requirement - If others provided the facilities or services at no cost to the Visitor Center, such cost should be reported as an operating cost and also shown as a funding source. Audit Objective Determine if facilities/services were properly accounted for. Suggested Audit Procedure - Select a sample of expenditures related to rent, maintenance, and utilities to ensure services were accounted for currently. c. Compliance Requirement - Other allowed or unallowed activities were covered in each Visitor Center s Construction, Operation and Maintenance Agreement entered into between the receiving organization and the Department. Audit Objective Determine that activities were allowable. Suggested Audit Procedure - Compare actual operating procedures with requirements in the agreement. 2. ALLOWABLE COSTS/COST PRINCIPLES a. Compliance Requirement - Funds should only be used for operating costs of the Visitor Center. It is the policy of the Department of Transportation that operating assistance will be available to reimburse visitor centers for expenditures for any goods or service that is reasonably necessary to carry out the normal day-to-day operations of the visitor center. It should include the types of outlays that are financed from the Operating Budget of the C-4 DOT-13 2

3 state government as distinguished from the Capital Improvements Budget. Included would be expenditures for costs expiring within a single fiscal year plus expenditures for items such as equipment that have a useful life that extends beyond a single fiscal year but are purchased in a single fiscal year. In other words current expenditures as defined under the modified accrual basis of accounting. It would exclude expenditures associated with the acquisition, construction, or substantial improvement of real property. Audit Objective Determine that expenditures were for operating costs. Suggested Audit Procedure - Select a sample of expenditures charged to the program and ensure expenditures were for operating costs and reasonably prorated among programs that might share facilities and services. b. Compliance Requirement - Standards for allowability of labor and fringe benefit cost set forth in OMB Circular A-122 (Non-Profit organization) or OMB Circular A-87 (State, Local or Indian Tribal Government) shall apply per the executed Reimbursement Agreement. Audit Objective Determine that labor and fringe benefits were allowable. Suggested Audit Procedure - Test a sample of labor and fringe benefit costs for conformity with OMB Circular A-122 or OMB Circular A-87 and administrative costs for conformity with 49 CFR 18. c. Compliance Requirement - If the Visitor Center provides facilities, utilities, or other expenses to other organizations not directly participating in the Visitor Center function, these costs should be shown as gifts and clearly outlined in their budget and financial statements. Audit Objective Determine if a shared facility has been properly accounted for. Selected Audit Procedure - Select a sample of expenditures charged to the program and ensure that they have been reasonably prorated among the organizations that might share facilities and services. 3. CASH MANAGEMENT Compliance Requirement - If the audited expenditures for any fiscal year (7/1/xx 6/30/xx) were less than the funding received for that fiscal year (7/1/xx 6/30/xx), the grantee must refund the difference to the Department or have the next year s allocation amount reduced by the difference. (See the executed Reimbursement Agreement between the Department and the receiving organization.) Audit Objective If applicable, determine if a refund has been sent to the Department or that the next year s allocation amount is reduced. Suggested Audit Procedure - Review the reimbursement agreement for the amount of funding. Compare the total funding received during FY 7/1/xx 6/30/xx to audited expenditures for the same FY. Ensure allowable audited expenditures equal or exceed funding received. If allowable audited expenditures were less than the funding received for that fiscal year, verify that a refund was issued to the Department or that a liability for the amount due is C-4 DOT-13 3

4 recorded in the program s balance sheet. If a liability was recorded in the program s balance sheet for the prior fiscal year, verify that the amount was refunded to the Department during the following year or that the next year s allocation amount was reduced by the liability. 4. CONFLICT OF INTEREST Compliance Requirement - Each center must have on file, prior to receiving State funds, a copy of their policy addressing conflicts of interest that might arise involving the organizations management, employees, and/or board members, per Chapter 321, Section 16, 1993 General Assembly Laws. Audit Objective Determine that the center has a conflict of interest policy. Suggested Audit Procedure Verify the existence of the conflict of interest policy. 5. ELIGIBILITY Visitor Centers receiving operating funds from the Special Registration Plate Account are designated by the General Assembly. (G.S (c)(2) revised) 6. EQUIPMENT AND REAL PROPERTY MANAGEMENT Compliance Requirement - The ownership and maintenance agreement of real property is found in the Visitor Center s Construction, Operation and Maintenance Agreement entered into between the receiving organization and the Department. Audit Objective From the agreement, determine the responsibilities of all parties. Suggested Audit Procedure - Verify the responsibilities of all parties to the Construction, Operation and Maintenance Agreement. 8. PERIOD OF AVAILABILITY OF STATE FUNDS Compliance Requirement - The Visitor Center s operating funds are allocated on a yearly basis. If the expenditures for the fiscal year were less than the allocation, the organization shall refund the difference to the Department for reallocation among the other Special Registration Plate Account recipients. No additional funds will be paid for expenditures exceeding the allocation. Audit Objective Determine if operating expenditures equaled or exceeded allocation. Suggested Audit Procedures - Review reimbursement agreement. Compare the total funding received during FY 7/1/xx 6/30/xx to audited expenditures for the FY. Ensure allowable audited expenditures equal or exceed funding received. If allowable audited expenditures are less than the funding received for that fiscal year, verify that a refund was issued to the Department or that a liability for the amount due was recorded in the program s balance sheet. If a liability was recorded in the program s balance sheet for the prior fiscal year, verify that the amount was either refunded to the Department during the following year or the next invoice was less the unused amount. 12. REPORTING C-4 DOT-13 4

5 1. Financial Reporting Compliance Requirement - Grants/appropriations must be identified in the Schedule of Federal and State Financial Assistance. Each project must be clearly identified by Grantor, and/or Pass-through Grantor and Program Title. Audit Objective Determine the correct presentation and amount of the grant/appropriation. Suggested Audit Procedure - Ascertain that grants/appropriations were identified clearly, appropriately and accurately. 2. Nongovernmentals Reports made by non-state entities Compliance Requirement North Carolina General Statute 143C-6-23 Use of State Funds by Non-State Entities, and North Carolina Administrative Code Chapter 9, Subchapter 03M Uniform Administration of State Grants addresses reporting requirements for nongovernmental entities. These regulations along with reporting forms may be accessed at: Audit Objective Determine applicable reporting requirements. Suggested Audit Procedure 1. Determine if the organization is subject to G.S. 143C Determine what type of filing/report should be made with the NCDOT. 3. DBE Reporting Compliance Requirement Per letter from the North Carolina Department of Transportation dated January 2, 2008, Form DBE-IS must be completed and submitted with each invoice to the Department. Information about DBE may be found at Audit Objective Determine that Form DBE-IS has been completed and is an accurate reporting of DBE usage. Suggested Audit Procedure - Ascertain that Disadvantanged Business Enterprise information and dollar amounts were identified accurately (if applicable). C-4 DOT-13 5