Update on Financial Management Oversight (FMO) Report

Finance & Administration Committee
Information Item IV-A
September 11, 2014
Update on Financial Management
Oversight (FMO) Report
Washington Metropolitan Area Transit Authority
Board Action/Information Summary
Action
Information
MEAD Number:
200989
Resolution:
Yes
No
TITLE:
Update on FMO Report
PRESENTATION SUMMARY:
Update the Committee on the status of WMATA’s Corrective Action Plan (CAP) responses to the Federal
Transit Administration’s (FTA’s) Financial Management Oversight (FMO) report.
PURPOSE:
Provide a progress report on the status of all FMO Corrective Action Plan (CAP) items and identify next
steps following the submission of the 90-day CAP items.
DESCRIPTION:
Key Highlights:
z
z
WMATA committed to 65 CAP items in response to FTA’s FMO findings and advisory
comments
Documentation has been submitted for 60 of 65 CAPs, and submission commitments are
fulfilled for:
{ Two of three Material Weakness Findings
{ Six of six Significant Deficiency Findings
{ Three of five Advisory Comments
Background and History:
The Financial Management Oversight (FMO) report of June 10, 2014, identified nine separate
findings, including three material weaknesses and six significant deficiencies. An additional five
advisory comments were also identified. A total of 45 recommendations from FTA for addressing
the findings and comments were included in the report.
Metro officially responded to the draft report within the requested 30-day response timeframe. Metro
agreed with the findings and comments and proposed 65 Corrective Action Plan (CAP) items to
address the various recommendations. Metro committed to implementing 100 percent of the CAP
items for the findings (material weaknesses and significant deficiencies) within 90 days of the final
FMO report. Metro also committed to completing all CAP items for the advisory comments within
one year, even though responding to advisory comments is optional.
FTA did not take exception to any of Metro’s responses or CAP items, and the release of the final
report “started the clock” on Metro’s commitment to complete the 30-, 60-, and 90-day items.
Discussion:
Four CAP items that were committed to a less than 30-day deadline were submitted on June 30,
2014. An additional 16 CAP items were submitted by the 30-day submission deadline of July 10,
2014, and the 27 CAP items with a 60-day submission deadline were submitted on-time as of
August 8, 2014. Most recently, 12 CAP items with a 90-day submission deadline were submitted to
FTA on September 8, 2014. Metro also completed and submitted one 180-day CAP item early,
bringing the total number of CAP items submitted to 60 out of 65. Metro has requested an extension
on two 90-day CAP items related to reviewing and reconciling open Federal grants. Metro remains
committed to meeting the remaining deadlines (for both the two extended items and the remaining
three items with deadlines greater than 90 days) and closing out all of the findings from the FMO
report.
The two tables below summarize the status as of September 8 of the 65 CAP items by finding level
and by submission deadline.
Following the submission and review of the 30-day CAP items, WMATA received four follow-up
requests from FTA that were responded to on August 26. Actions taken in response to the follow-up
requests were:
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Submission of a plan to identify and correct any incorrect grant drawdowns
Revision of the Grants Management Manual to clarify:
{ Timing of grant close-outs
{ Process for indirect cost reporting on FFRs
{ Expenditure-based indirect cost reporting on FFRs
FTA responses to the 60-day submissions are still pending; responses to the 90-day submissions
are expected in approximately one month. WMATA has also retained a forensic accounting firm to
review selected major FY2014 capital project expenditures to ensure compliance with FTA
requirements.
FUNDING IMPACT:
No funding impact, information item only.
Project Manager: Thomas J. Webster
Project
OMBS/CFO
Department/Office:
TIMELINE:
Previous Actions
July 2014 -- Presentation to FA committee on FMO status following 30day submissions.
Anticipated actions after
presentation
October 2015 and forward -- complete remaining five CAP items and
implement long-term compliance monitoring
RECOMMENDATION:
No recommendation -- information item only.
Washington Metropolitan Area Transit Authority
Update on Financial Management
Oversight (FMO) Report
Finance and Administration Committee
September 11, 2014
Purpose
• Provide latest progress report on FMO
Corrective Action Plan (CAP)
Summary Timeline
Draft FMO
Report
received
M arch 13
Final FMO
Report
received
30-day CAP
items
submitted
to FTA
June 10
July 10
90-day CAP
items
submitted
to FTA*
Sept. 8
April 10
June 30
August 9
Metro
responses
submitted
to FTA
Four
immediate
CAP items
submitted
to FTA
60-day CAP
items
submitted to
FTA
* Ex cluding tw o ex tended item s
Update
• FMO Report reset:
– 9 Findings (3 Material Weaknesses and 6 Significant
Deficiencies) and 5 Advisory Comments
– 45 total recommendations from FTA
– 65 CAP items committed to by WMATA
• Documentation submitted for 60 out of 65 CAPs,
submission commitments fulfilled for:
– 2 of 3 Material Weakness Findings
– 6 of 6 Significant Deficiency Findings
– 3 of 5 Advisory Comments
Update (cont.)
• Four follow-up requests from FTA on 30-day CAP
submissions were fulfilled by WMATA on August 26:
• Plan to identify/correct any incorrect grant drawdowns
• Revision of the Grants Management Manual to clarify:
 Timing of grant close-outs
 Process for indirect cost reporting on FFRs
 Expenditure-based indirect cost reporting on FFRs
Update (cont.)
• WMATA has retained a forensic accounting firm to
review selected major FY2014 capital project
expenditures
• FTA responses to the 60-day submissions are still
pending; responses to the 90-day submissions are
expected in approximately one month
• WMATA has requested an extension on two 90-day
CAP items related to reconciliation and revision of
federal grants
FMO Corrective Action Plan Status as
of 9/8/14: By Finding
Financial Controls Risk
Completion Risk
Complete
Significantly
Complete
In
Progress
Extended
Material
Weaknesses
(MW)
23
0
0
2
Significant
Deficiencies
(SD)
31
0
0
0
Advisory
Comments
(AC)
6
1
2
0
TOTAL
60
1
2
2
(92% )
(2% )
(3% )
(3% )
TOTAL
25
(38% )
31
(48% )
9
(14% )
65
FMO Corrective Action Plan Status as
of 9/8/14: By Completion Date
Time to Completion
Completion Risk
Complete
Significantly
Complete
In
Progress
Extended
30 days
or less
20
0
0
0
60 days
27
0
0
0
90 days
12
0
0
2
180+ days
1
1
2
0
TOTAL
60
1
2
2
(92% )
(2% )
(3% )
(3% )
TOTAL
20
(31% )
27
(42% )
14
(21% )
4
(6% )
65
Next Steps
• Complete five remaining CAP items
• Implement long-term compliance monitoring
plans
• Strengthen internal compliance capacity
– Increase staffing
– Implement compliance monitoring software
and other related tools

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