Fta Internal Control Self-Assessment Tool

INTERNAL CONTROL SELF-ASSESSMENT FORM (FOR FTA GRANTEES)
AGENCY NAME:
DATE OF ASSESSMENT:
Instructions:
This form has been designed to provide transit agency management staff with the information
necessary to evaluate the agencys internal control and financial management system.
This form is based on the criteria for effective internal control as set forth in Internal Control
Integrated Framework published by the Committee of Sponsoring Organizations of the
Treadway Committee (the COSO Report), as well as the criteria for effective financial
management systems established by FTA, based on 49 CFR Part 18, Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local Governments (the
"Common Rule").
This form is most useful when completed by individuals who have an understanding of internal
control concepts.
Each question should be answered by a check mark in the appropriate column (YES, NO, or
N/A). The questions have been prepared so that a positive (YES) answer will indicate a
satisfactory degree of internal control. A negative (NO) answer will indicate a potential control
weakness, which should be addressed if compensating controls do not already exist.
This form is divided into six major sections:
Section
Title
Page
I.
II.
III.
IV.
V.
VI.
Control Environment
Risk Assessment
Control Activities
Information and Communications
Monitoring
Key Accounts and Transaction Classes
2
6
8
10
12
14
This Internal Control Self-Assessment Form has been prepared and reviewed, as follows:
Prepared by
Date
Approved by
Date
Internal Control Self-Assessment Form
SECTION ICONTROL ENVIRONMENT

Section I of the form is designed to help the transit agency evaluate its overall control
environment, which sets the tone of the organization and influences the control consciousness of
its employees. The control environment encompasses the following factors:
Integrity and ethical values

Commitment to competence
Board of directors or audit committee participation
Managements philosophy and operating style
The agencys organizational structure
Assignment of authority and responsibility
Human resource policies and practices
YES
NO
N/A
____
____
____
2. Does a positive control environment exist, whereby there is an attitude

of control consciousness throughout the agency (e.g., checks and
balances, authorizations and approvals, segregation of duties, etc.), and
a positive "tone at the top?"
____
____
____
3. Is the competence of the agencys employees commensurate with their

responsibilities?
____
____
____
4. Is managements operating style (the way it assigns authority and

responsibility, and organizes and trains its employees) generally
embraced by the agency's employees?
____
____
____
5. Does management fully understand the requirements of laws and

regulations pertinent to its business, and in particular the financial
management system requirements established by FTA based on 49
CFR Part 18, Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Government (the
Common Rule)?
____
____
____
6. Does agency management carefully consider the potential effects of

taking unusual business risks or entering into non-routine financial
transactions (e.g., innovative financing techniques)?
____
____
____
7. Are financial statements prepared, approved, and submitted for review

to management, the board of directors, or the audit committee at
regular intervals?
____
____
____
1. Does agency management adequately convey the message that

integrity cannot be compromised?
YES
NO
N/A
8. Does agency management demonstrate concern about and willingness

to correct important weaknesses in the system of internal control?
____
____
____
9. Does the agency maintain an up-to-date accounting policies and

procedures manual that covers accounting for fixed assets, the budget
process, accounts payable process, procurement, payroll, etc.?
____
____
____
10. Is there an up-to-date chart of accounts maintained and does it

completely describe the nature of each account?
____
____
____
11. Does management periodically review insurance coverage?
____
____
____
12. Is insurance coverage adequate for FTA grant-funded rolling stock and
other FTA grant-funded assets/equipment?
____
____
____
13. Does management have a history of establishing reliable accounting

estimates?
____
____
____
14. Is there low turnover of accounting/finance, IT, and key management

positions?
____
____
____
15. Are key operating positions adequately staffed, thereby avoiding

constant crisis?
____
____
____
16. Is there sufficient coordination between the accounting/finance and IT

departments, resulting in timely reports and closings?
____
____
____
17. Is there an up-to-date organization chart that reflects the areas of

responsibility and the line of reporting?
____
____
____
18. Is the agency's organizational structure appropriate for its size and
complexity?
____
____
____
19. Are there formal (written) job descriptions that clearly set out duties
and responsibilities?
____
____
____
20. Are backgrounds and references of applicants for financial, IT, and key
management positions investigated?
____
____
____
21. Are reinvestigations performed periodically for individuals with

sensitive positions or access to sensitive financial information?
____
____
____
YES
NO
N/A
22. Are individuals with sensitive positions or access to sensitive financial

information required to sign security agreements and/or confidentiality
agreements?
____
____
____
23. Are personnel policies and employee benefit plans documented

(written) and communicated to employees?
____
____
____
24. Is there a formal (written) conflict of interest policy or code of conduct

in effect?
____
____
____
25. Are employees who handle cash, securities, and other valuable assets
bonded?
____
____
____
26. Do related employees, if any, have job assignments that minimize

opportunities for collusion?
____
____
____
27. Are employees adequately trained to meet their assigned

responsibilities?
____
____
____
28. Does the agency require a minimum level of annual training for all
employees throughout the agency?
____
____
____
29. Are there procedures in place to monitor and document training

received for all employees?
____
____
____
30. Are employees cross-trained to perform the duties of others during

periods of absence (vacation, sick leave, etc.)?
____
____
____
31. Is rotation of duties enforced by mandatory vacations?
____
____
____
32. Is job performance periodically evaluated and reviewed with

employees?
____
____
____
33. Has management established policies and procedures for development,

modification, and use of computer programs and data files?
____
____
____
34. Does the agency have a board of directors or audit committee? If yes:
____
____
____
a. Is the board or committee sufficiently independent of agency

management?
____
____
____
b. Does the board or committee take an active role in overseeing the

agencys policies and practices?
____
____
____
YES
NO
N/A
c. Does the board or committee approve the appointment of the

agencys independent auditors?
____
____
____
d. Does the board or committee have sufficient knowledge,

experience, and time to serve effectively?
____
____
____
e. Does the board or committee constructively challenge

managements planned decisions and take appropriate action if
necessary (for example, conducting special investigations)?
____
____
____
f. Does the board or committee meet in a timely manner with the

chief accounting officer and internal and external auditors to
discuss the reasonableness of the financial reporting process, the
system of internal control, and other significant matters?
____
____
____
g. Does the board or committee review the scope of activities of the

external and internal auditors at least annually?
____
____
____
h. Does the board or committee regularly receive and review key

information, such as financial statements, major marketing
initiatives, significant contracts, and negotiations?
____
____
____
i. Does a process exist for informing the board or committee in a

timely manner of sensitive information, investigation, and
improper acts (e.g., significant litigation, investigations by
regulatory agencies, embezzlement, misuses of corporate assets)?
____
____
____
j. Is there appropriate oversight in determining the compensation and

benefits of executive officers?
____
____
____
k. Is the board or committee sufficiently involved in establishing and

evaluating the effectiveness of the "tone at the top" (e.g., approving
the agencys code of conduct or its policies and procedures
manual)?
____
____
____
SECTION IIRISK ASSESSMENT

Section II of the form is designed to help the agency evaluate its risk assessment process, which
is the agency's process for "identification, analysis, and management of risks relevant to the
preparation of financial statements and financial reports that are fairly presented in conformity
with generally accepted accounting principles." Risks can arise or change due to circumstances
such as the following:
Changes in operating environment

New personnel
New or revamped information systems
Rapid growth
New technologies
New business models, products, or services
Organizational restructuring
New accounting pronouncements
YES
NO
N/A
1. Has management established clear agency-wide objectives and are

they consistent with its business plans and budgets?
____
____
____
2. Has management established objectives for key activities and are they
consistent with and linked to the agency-wide objectives and
strategies?
____
____
____
3. Has agency management identified the resources and critical factors

that are important to achieving its objectives (e.g., financing,
personnel, facilities, technology, etc.)?
____
____ ____
4. Does agency management consider risks arising from external sources

(e.g., supply sources, creditors demands, regulation, natural events)?
____
____ ____
5. Does management consider risks arising from internal sources (e.g.,

retention of key personnel or changes in their responsibilities,
compensation and benefit programs to keep the agency competitive,
the adequacy of back-up systems in the event of failure of systems that
could significantly affect operations)?
____ ____
____
6. Does management identify risks to key business functions and

prioritize them for purposes of mitigating them?
____ ____
____
7. Does management identify and monitor significant shifts in the transit

industry (e.g., changes in rider demographics, preferences, or spending
patterns)?
____ ____
____
YES
NO
N/A
8. Does agency management consult with its legal counsel regarding the
implications of any new legislation?
____
____
____
9. Are new employees in key positions adequately supervised to ensure

that they understand and perform in accordance with the agencys
policies and procedures?
____
____
____
10. Are procedures in place to assess the effects of new or redesigned

information systems and to monitor new technologies?
____ ____ ____
11. Are procedures in place to handle rapidly increasing volumes of

information and to filter the most relevant data for decision making?
____
____
____
12. When considering development of new or expanded transit services,

does agency management give appropriate consideration to major
factors such as customer demand, service delivery capabilities, and
cost/revenue implications?
____
____
____
13. Are staff reassignments and/or staff reductions appropriately analyzed

for their potential effect on operations or on the morale of the
remaining employees?
____
____
____
14. Is management aware of the existence of new accounting or reporting

pronouncements and how they may affect the agencys financial
reporting practices?
____
____
____
SECTION IIICONTROL ACTIVITIES

Section III of the form is designed to help the agency evaluate its control activities. Control
activities are the policies and procedures that help ensure managements directives are effective
in processing and preparing financial statements and other required financial reports. To
successfully address risks and achieve its objectives, agency management must institute various
control activities, such as segregation of duties, physical controls, and a system of approvals.
YES
NO
N/A
____
____
____
a. Clearly written?
____ ____
____
b. Actively communicated throughout the agency?
____
____
____
c. Actively monitored?
____ ____
____
a. Adequately identify variances from planned performance?
____
____
____
b. Adequately communicate variances to the appropriate level of

management?
____
____
____
a. Adequately investigate variances?
____
____ ____
b. Take appropriate and timely corrective action?
____ ____
____
4. Does the agency have a documented system for ensuring that financial
and accounting records are proper, complete, orderly, and wellmaintained?
____ ____
____
5. Has management established procedures to prevent unauthorized

access to, or destruction of, documents, records, and assets?
____ ____
____
6. Are there procedures in place to ensure that terminated employees'

access to documents, records, and assets is appropriately restricted?
____ ____
____
7. Has management established record retention policies that conform to

FTA's grant/Common Rule requirements?
____ ____
____
1. Does agency management have clear objectives in terms of budget,

revenue, cost, and other financial and operating goals? If yes, are such
objectives:
2. Do the planning and reporting systems in place:
3. Does the appropriate level of management:
YES
NO
N/A
8. Has management established policies for controlling access to

computer programs and data files?
____
____
____
9. Does management regularly monitor such policies?
____
____ ____
10. Is the general ledger/accounting system substantiated and updated on a

monthly basis, in a timely and accurate manner, with appropriate
reviews and approvals?
____
____
____
11. Are amounts recorded by the accounting system periodically compared

with physical assets?
____ ____ ____
12. Are control and subsidiary accounts reconciled regularly and
discrepancies reported to appropriate personnel?
____
____
13. Are signatures required to evidence the performance of critical control

functions, such as reconciling accounts?
____
____ ____
14. Are general journal entries and reclassification entries, other than
standard entries, required to be signed and approved by a responsible
official not involved with their origination?
____ ____
____
15. Are accounting estimates and judgments made only by knowledgeable

and responsible personnel?
____
____
____
16. Does the accounting system provide in a timely manner the necessary
information for the preparation of financial statements and related
disclosures, as well as other required financial reports (internal and
external), in accordance with generally accepted accounting principles
or another comprehensive basis of accounting?
____
____
____
17. Does the accounting system maintain sufficient detail regarding FTA
grant activities, and the source (i.e., grant number) and application of
FTA grant funds?
____
____
____
18. Are financial statements and related disclosures, as well as other

required financial reports (internal and external), prepared and
reviewed by competent personnel who are knowledgeable of the
factors affecting the organizations financial reporting requirements?
____ ____
____
____
SECTION IVINFORMATION AND COMMUNICATIONS

Section IV of the form is designed to help the agency evaluate its information and
communication systems. Information is identified, captured, processed, and reported by
information systems. Relevant information includes industry, economic, and regulatory
information obtained from external sources, as well as internally generated information.
Communications are inherent in information processing. Communications involve providing a
clear understanding of individual roles and responsibilities in an effective manner. This may be
accomplished through policy manuals, accounting manuals, or other means, and can be made
orally.
YES
NO
N/A
____
____
____
Information
1. Does the agency have mechanisms in place to obtain relevant external
information (e.g., on market conditions, legislative or regulatory
developments, and economic changes) and internally generated
information critical to the achievement of the agencys objectives?
2. Is the information provided to the right employees in sufficient detail

and on time to enable them to carry out their responsibilities efficiently
and effectively?
____
____ ____
3. Is the development or revision of information systems over financial

reporting based on a strategic plan and interrelated with the agencys
overall information systems, and is it responsive to achieving the
agency-wide and activity-level objectives?
____ ____
____
4. Does agency management commit the appropriate human and financial

resources to develop the necessary financial reporting information
systems?
____ ____ ____
Communications
1. Does agency management communicate employees duties and control
responsibilities in an effective manner?
____
____ ____
2. Are there communication channels and procedures in place for people

(employees and other parties) to report suspected improprieties?
____
____
____
3. Do communications flow across the agency timely (e.g., from

maintenance to accounting/finance) to enable employees to discharge
their responsibilities effectively?
____
____
____
10
4. Does agency management take timely and appropriate follow-up

action on communications received from customers, vendors, FTA,
other regulators, and/or other external parties?
5. Do other parties outside the agency review and follow up on the
agencys actions and/or requirements (e.g., an active review of bank
loan agreements)?
11
YES
NO
N/A
____
____
____
____
____
____
SECTION VMONITORING
Section V of the form is designed to help the agency evaluate its monitoring system. Monitoring
is a process that assesses the quality of internal control performance over time. It involves:
Timely evaluation by appropriate personnel of the design and operation of controls

Identifying areas of improvement and corrective actions
Follow-up procedures to determine that necessary actions are implemented
Monitoring can be accomplished in manners such as the following:

Ongoing internal activities
Internal audit function
External monitoring activities
YES
NO
N/A
____
____
____
a. Investigated timely?
____ ____
____
b. Used as a means to identify and correct control deficiencies?
____ ____
____
1. Is operating information used to manage operations integrated, tied to,

or reconciled with data generated by the financial reporting system
(e.g., ridership data vs. recorded fare revenues, or farebox collections
vs. cash balances/deposits, etc.)?
2. Are customer complaints:
3. Are communications from vendors and monthly statements of

accounts payable used as a method to detect potential problems?
____ ____ ____
4. Are internal control recommendations made by external auditors (and

internal auditors, if applicable) actually implemented?
____
____
5. Does management receive employee feedback from training seminars,

planning sessions, and other meetings on whether controls operate
effectively?
____
____ ____
6. Does the agency take a fresh look at the internal control system from
time to time and evaluate its effectiveness? If yes:
____
____
____
____
a. Does the evaluation process include checklists, questionnaires, or

other tools?
____ ____ ____
b. Are the evaluations documented?
____
12
____
____
YES
7. Does the agency have an internal audit function? If yes, do the internal
auditors:
NO
____ ____
N/A
____
a. Remain independent with regard to the agency's administrative,

control, processing, and special project activities?
____ ____ ____
b. Possess sufficient training, experience, and professional

certifications (e.g., CPA, CIA, etc.)?
____
c. Ensure that internal audit assignments are appropriate to the

experience and expertise of the auditors?
____ ____ ____
d. Adhere to applicable professional standards, practices, and

procedures?
____ ____
____
e. Properly plan and supervise their work to ensure that the quality of
the workpapers meets applicable standards?
____ ____
____
f. Have an adequate documentation of the agencys system of

internal controls?
____
____
g. Perform tests of controls and substantive tests?
____ ____ ____
h. Have sufficient documentation of their work?
____ ____ ____
i. Submit reports on their findings to the board of directors or audit

committee (rather than the general manager or executive director)
in a timely manner?
____
____
____
j. Follow up on corrective actions taken by management?
____
____
____
k. Have direct access to the board of directors or audit committee?
____
____
____
l. Have direct access to records, and the scope of their activities is

not limited?
____
____
____
13
____
____
____
SECTION VIKEY ACCOUNTS AND TRANSACTION CLASSES

Section VI of the form is designed to help the agency evaluate its control activities for key
accounts and transaction classes that impact upon FTA grants and grant activities.
CASH MANAGEMENT
YES
NO
N/A
1. Is the agency's mail opened by someone other than the cashier,

accounts receivable accountant, or other accounting employees who
may initiate or post journal entries?
____
____
____
2. Is the delivery of unopened business mail prohibited to employees

having access to the accounting records?
____
____
____
a. Place restrictive endorsements (e.g., For Deposit Only) on all

checks received?
____
____
____
b. Prepare a list of the money, checks, and other receipts?
____
____
____
c. Forward all remittances to the person responsible for preparing and

making the daily bank deposit?
____
____
____
d. Forward the total of all remittances to the person responsible for

comparing it to the authenticated deposit ticket and amount
recorded?
____
____
____
4. Is there an independent listing of cash receipts prepared before the

receipts are submitted to the cashier or accounts receivable
accountant?
____
____
____
5. Does an independent person verify the cash receipts listing against the
deposit slips?
____
____
____
6. Are authenticated deposit slips retained and reconciled to the

corresponding amounts in the cash receipts records?
____
____
____
7. Are cash receipts deposited intact daily?
____
____
____
8. Is the bank deposit made by someone other than the cashier or the
accounts receivable accountant?
____
____
____
Cash Receipts
3. Does the employee who opens the mail:
14
CASH MANAGEMENT
YES
NO
N/A
9. Do cash sales occur for other than fare revenues (e.g., monthly passes,
etc.)? If yes:
____
____
____
a. Are cash receipts pre-numbered?
____
____
____
b. Is an independent check of pre-numbered receipts done daily and

reconciled to cash collections?
____
____
____
c. Are cash register tape totals reconciled to amount of cash in

drawer?
____
____
____
d. Do cash refunds require approval?
____
____
____
a. Preparing the bank deposit?
____
____
____
b. Obtaining access to the cash receipts book?
____
____
____
c. Having access to collections from customers?
____
____
____
11. Are banks instructed not to cash checks that are drawn to the order of
the agency?
____
____
____
12. Is the cashier restricted from gaining access to the accounts receivable
records and bank and customer statements?
____
____
____
13. Does the agency have multiple funding sources that are used to fund
its operations and capital projects? If yes:
____
____
____
a. Are there formal (written) procedures in place to ensure that funds

due from all funding sources (federal, state, local) are requisitioned
and received timely?
____
____
____
b. Is the requisitioning function performed by employees who are

independent of the cash receipts function?
____
____
____
14. Are there formal (written) procedures in place to ensure that ECHO
(Electronic Clearinghouse Operations) requests for FTA grant funds
are made in a way that does not violate federal policy (i.e., the threeday rule)?
____
____
____
15. Is there a log of ECHO requests maintained?
____
____
____
10. Is the accounts receivable accountant restricted from:
15
CASH MANAGEMENT
YES
NO
N/A
16. Is the responsibility for making ECHO requests segregated from the
responsibility for approving requests and reconciliations (both bank
account and grant reconciliations)?
____
____
____
17. Is the ECHO log reconciled regularly to cash receipts reflected on the
monthly bank statements by a person independent of the cash receipts
and accounts receivable functions?
____
____
____
18. Are ECHO drawdowns reconciled periodically to the amounts

reflected as grant disbursements in FTA's TEAM (Transit Electronic
Award and Management) system?
____
____
____
19. Are there formal (written) procedures in place to ensure that no more
than the allowable federal portion is drawn down?
____
____
____
a. Authenticated bank deposit slips?
____
____
____
b. Deposit per the bank statements?
____
____
____
c. Listing of cash receipts prepared when mail is opened?
____
____
____
d. ECHO request log?
____
____
____
21. Is information adequately captured from remittances for accurate

posting of credits to customer accounts or for proper classification
regarding its sources (e.g., grant number)?
____
____
____
22. Do postings to the general ledger control accounts and subsidiary

accounts include the date on which the remittance was received?
____
____
____
23. Are postings to the general ledger made by a person independent of the
cash receipts and accounts receivable functions?
____
____
____
24. Does a responsible official, senior to the accounts receivable

accountant, approve journal entries affecting accounts receivable?
____
____
____
25. Are employees with accounts receivable responsibilities required to

take vacations, and are other employees cross-trained to perform those
functions when an accounts receivable employee is absent?
____
____
____
20. Does a person independent of the cash receipts and accounts

receivable functions compare entries to the cash receipts journal with:
16
CASH MANAGEMENT
YES
NO
N/A
1. Is cash collected from fareboxes regularly and often?
____
____
____
2. Does the agency restrict cash from being physically handled by

drivers/operators?
____
____
____
3. Are there procedures in place to control cash collected by

drivers/operators in the farebox?
____
____
____
4. Are there formal (written) procedures for processing and counting cash
once collected from the fareboxes?
____
____
____
Fare Revenues
5. If cash counting is performed:

a. Internally:
i. Are there controls in place to ensure that all cash is counted?
____
____
____
ii. Are the areas where physical handling of cash takes place (e.g.,
the "money room") reasonably safeguarded?
____
____
____
i. Has the agency satisfied itself that proper internal controls at

the external organization are in place and functioning as
intended?
____
____
____
ii. Has the agency reevaluated the controls at the external service
organization on a regular basis?
____
____
____
6. Are the results of the cash counts reconciled daily to the farebox
reports by a person independent of the cash receipts and cash counting
functions?
____
____
____
7. Is revenue cash transported to the bank by a person independent of the

cash receipts function?
____
____
____
____
____
____
b. Externally:
8. Are postings of fare revenues to the general ledger income accounts

made by a person independent of the cash receipts and cash counting
functions?
17
CASH MANAGEMENT
YES
NO
N/A
1. Are all cash disbursements made by check except those made from
petty cash?
____
____
____
2. Are pre-numbered checks used and all check numbers accounted for?
____
____
____
3. Are voided checks properly defaced and retained?
____
____
____
4. Are dual signatures required on checks over a predetermined amount?

If yes:
____
____
____
a. Are the check signers independent of each other?
____
____
____
b. Are invoices, vouchers, and other supporting documents presented

to each check signer along with the checks needing signature?
____
____
____
5. Is signing of checks in advance or in blank prohibited?
____
____
____
6. Are checks payable to "Cash" or "Bearer" prohibited?
____
____
____
7. Is access to unused checks limited to authorized persons?
____
____
____
8. Is a check-signing machine used? If yes:
____
____
____
a. At all times, are the keys, signature plate, and operation of the
signing machine under control of the official whose signature is on
the plate?
____
____
____
b. Are the employees who have custody of the keys and plate, and
who operate the check-signing machine, independent of checkpreparation functions and denied access to blank checks?
____
____
____
c. Are the checks issued to the machine operator counted in advance,

and reconciled with the totals indicated on the check-signing
machine by someone other than the machine operator?
____
____
____
9. Are supporting documents for checks properly canceled (e.g., stamped

"Paid") to avoid duplicate payments?
____
____
____
10. Do proper safeguards exist to prevent checks that have been mailed
from returning to the accounts payable accountant or to the employee
who drew the checks?
____
____
____
Cash Disbursements
18
CASH MANAGEMENT
YES
NO
N/A
11. Is the check-signing function independent of procurement, cash

accounting, and preparation of checks?
____
____
____
12. Are check signers authorized by the board of directors?
____
____
____
13. Are all checks promptly recorded upon issuance and listed in detail
(e.g., in a check register)?
____
____
____
14. Are payroll checks drawn against a separate payroll bank account?
____
____
____
1. Are bank statements, canceled checks, deposit tickets, and related

memos received directly from the bank by the employee performing
the reconciliations?
____
____
____
2. Are bank accounts reconciled monthly by a person independent of the

cash receipts, general ledger, accounts receivable, or accounts payable
functions?
____
____
____
a. Accounting for the sequence of all check numbers?
____
____
____
b. Examination of paid checks for date, name, endorsement, and

cancellation and comparison to the cash disbursements journal?
____
____
____
c. Comparison of bank deposit detail to cash receipts records?
____
____
____
d. Investigation of other reconciling items (e.g., checks returned for

insufficient funds)?
____
____
____
e. Follow-up on old outstanding checks?
____
____
____
____
____
____
1. Does the agency have formal (written) procedures related to cash

management and investment of funds?
____
____
____
2. Does the agency have procedures in place to ensure that funds held in
excess of FDIC limits are collateralized and protected?
____
____
____
Cash Account Reconciliations
3. Do bank account reconciliation procedures include:
4. Is an independent review performed of monthly bank reconciliations?

Investments
19
CASH MANAGEMENT
YES
NO
N/A
3. Are investment securities kept in a safe vault? If yes:
____
____
____
a. Is a record kept of all visits to the vault?
____
____
____
b. Is the presence or signature of two or more designated persons

required to open the vault?
____
____
____
c. Is a detail record (e.g., certificate number, description) kept of each

security?
____
____
____
d. Are the securities periodically inspected and compared with

detailed investment records by employees independent of the
custodian and with the general ledger?
____
____
____
4. Are all securities held in the name of the agency?
____
____
____
5. Is custody of investment securities held by the agency assigned to

bonded employees?
____
____
____
6. Is the custodian of securities independent of the accounting function?
____
____
____
7. Are purchases, exchanges, sales, and pledges of investments initiated

and approved by designated officers?
____
____
____
8. Are investments held in custodial accounts with a bank, trustee, or

broker? If yes:
____
____
____
a. Are account statements from these parties regularly reconciled

with the general ledger control account?
____
____
____
b. Is there a periodic review of the reputation and financial position

of the parties that are ensuring completion of investment
transactions?
____
____
____
9. Is documented management authorization of transactions compared

with evidence of execution of transactions (e.g., brokers advices)
promptly, and are differences investigated?
____
____
____
10. Are procedures in place to ensure that investment income is recorded

properly and collected in a timely manner?
____
____
____
11. Is a periodic review of the investment portfolio made by designated

officers?
____
____
____
20
FIXED ASSETS
YES
NO
N/A
1. Does the agency maintain formal (written) capitalization policies to

govern which types of charges are capitalized as fixed assets?
____
____
____
2. Are the methods for selecting useful lives and depreciation policy
clearly defined and approved by designated personnel?
____
____
____
3. Are there controls in place to ensure that only appropriate charges are
capitalized as fixed assets?
____
____
____
4. Does the agency have a well-defined policy for distinguishing between

capital expenditures and repairs and maintenance expenditures?
____
____
____
a. Asset description?
____
____
____
b. Identification number?
____
____
____
c. Cost?
____
____
____
d. Acquisition date?
____
____
____
e. Depreciation method?
____
____
____
f. Related depreciation?
____
____
____
g. Useful life?
____
____
____
h. Percentage of federal participation?
____
____
____
i. Grant number under which it was procured?
____
____
____
j. Location?
____
____
____
k. Who holds title?
____
____
____
l. Current condition of asset?
____
____
____
____
____
____
Recording
5. Are detailed fixed assets subsidiary records maintained, and do they

include:
6. Are the detailed records reconciled regularly to the general ledger

control accounts throughout the year?
21
FIXED ASSETS
YES
NO
N/A
a. All capital expenditures?
____
____
____
b. Major renovations?
____
____
____
c. Major repair jobs?
____
____
____
1. Are all fixed assets physically inspected periodically and compared to

detail records, at least every two years as required by FTA?
____
____
____
2. Are written instructions and procedures followed for fixed assets

inventory counts and is compliance with them checked?
____
____
____
3. Are fixed assets inventory counts supervised by qualified persons

following the written instructions and procedures?
____
____
____
4. Does the fixed assets inventory process ensure that the current
condition of assets is noted and updated in the fixed assets records?
____
____
____
5. Are fixed assets/property custodians independent of the fixed assets

accounting function?
____
____
____
6. Are all fixed assets adjustments documented, and do they require

management approval?
____
____
____
____
____
____
2. Does the retirement or sale of property require the review and approval
of designated personnel?
____
____
____
3. Are procedures in place to ensure that the rationale for disposal is

documented and approved for all fixed assets disposed?
____
____
____
4. Are procedures in place to ensure that property physically retired is

properly removed from the accounting records and that the proceeds
from sale, if any, are properly accounted for?
____
____
____
7. Are acquisitions of property authorized by designated personnel for:
Fixed Assets Inventory
Fixed Assets Disposals

1. Does the agency have formal (written) procedures to govern the
disposal of fixed assets and property?
22
FIXED ASSETS
YES
NO
N/A
5. Are there controls in place to ensure that FTA receives its share of any
proceeds upon disposal of grant-funded assets, if required?
____
____
____
1. Are physical safeguards (e.g., alarms, guards, restricted access) over

property in place?
____
____
____
2. Is all property adequately insured and is insurance coverage reviewed

periodically?
____
____
____
3. Are depreciable lives reviewed periodically by management and

compared to actual experience for adequacy?
____
____
____
4. Are procedures in place to identify possible impairments in the

carrying amounts of long-lived assets?
____
____
____
1. Does the agency have formal (written) maintenance procedures for

maintaining grant-funded rolling stock assets in serviceable condition?
____
____
____
2. Does the agency have controls in place to ensure that fixed assets
preventive maintenance schedules are adhered to?
____
____
____
3. Do the agency's controls ensure that standards for timely preventive

maintenance are achieved more than 80 percent of the time for all
scheduled maintenance?
____
____
____
4. Is senior management kept informed on the status of the performance

of preventive maintenance on rolling stock assets?
____
____
____
1. Are spare parts inventories adequately safeguarded and insured?
____
____
____
2. Are employees who are responsible for custody of spare parts

inventories independent of the inventory recording and accounting
functions?
____
____
____
3. Are receiving reports for all incoming parts and materials prepared for
the accounting/finance department matched with purchase orders and
invoices?
____
____
____
Fixed Assets Safeguards
Fixed Assets Maintenance
Spare Parts
23
FIXED ASSETS
YES
NO
N/A
4. Are perpetual inventory records maintained for supplies and spare

parts?
____
____
____
a. Quantities?
____
____
____
b. Unit costs?
____
____
____
c. Aggregate dollar values?
____
____
____
6. Are the perpetual records kept by employees who have no access to the
spare parts inventory?
____
____
____
7. Are perpetual inventory records checked regularly by cycle counts? If

yes:
____
____
____
a. Are all classes of inventory subjected to cycle counts?
____
____
____
b. Are significant differences between cycle counts and perpetual

records investigated and reconciled?
____
____
____
c. Are inventory adjustments documented and do they require

management approval?
____
____
____
8. Are full inventories of spare parts taken at the end of the fiscal year?
____
____
____
9. Are significant differences between physical counts and perpetual

records investigated promptly?
____
____
____
10. Are perpetual records reconciled periodically to the controlling

accounts in the general ledger?
____
____
____
11. Are perpetual records adjusted to physical inventory counts at least

once a year, and are adjustments to the inventory records approved by
a responsible employee?
____
____
____
12. Are written instructions and procedures followed for inventory counts,
and is compliance with them checked?
____
____
____
13. Are inventory counts supervised by qualified persons following the

written instructions and procedures?
____
____
____
5. Do the perpetual records show:
24
FIXED ASSETS
YES
NO
N/A
a. Quantities?
____
____
____
b. Unit cost?
____
____
____
c. Extensions and footings?
____
____
____
15. Are costs, extensions, and footings of the inventory listings verified by
a second person?
____
____
____
16. Are spare parts inventory adjustments documented, and do they

require management approval?
____
____
____
PROCUREMENT
YES
NO
N/A
____
____
____
____
____
____
____
____
____
a. Is it independent of the accounting/finance and receiving

departments?
____
____
____
3. Are departments other than the agency's procurement department

authorized to make purchases? If yes:
____
____
____
a. Are there procedures in place to control these purchases?
____
____
____
b. Are dollar limits established for these departments?
____
____
____
c. Are purchases made by other departments reviewed by the

procurement department for appropriateness, availability of funds,
and to avoid purchase of unnecessary or duplicative items?
____
____
____
4. Are proposed procurements made only after the respective department

heads sign off on purchase requisitions?
____
____
____
14. Are priced inventory sheets numerically controlled and verified as to:
Assessment of Need
1. Does the agency have a written Procurement Manual? If yes:
a. Does it conform to FTA's procurement regulations?
2. Does the agency have a procurement department? If yes:
25
PROCUREMENT
YES
NO
N/A
a. Is the decision on procurement type based on predetermined dollar

limits?
____
____
____
b. Is the procurement structure approved by senior management

levels or by the board of directors?
____
____
____
2. Are small purchases periodically monitored for appropriateness (i.e., to

ensure that multiple small purchases are not being made to circumvent
the requirements/procedures for large purchases)?
____
____
____
3. Are purchases by credit card authorized and allowed? If yes:
____
____
____
____
____
____
b. Are monthly statements reviewed for appropriateness of purchases,

by either the procurement department or by other agency officials? ____
____
____
Procurement Structure
1. Regarding the type of procurement arrangement to be structured (i.e.,
small purchase, sealed bid, competitive proposal--either fixed price or
cost-reimbursement, non-competitive/sole source):
a. Are there procedures/limitations in place to regulate their use?
4. Are items purchased only after competitive bids are obtained? If yes,
are competitive bids obtained for:
____
____
____
a. All purchases, specific types of purchases, or purchases over

predetermined dollar limits?
____
____
____
____
____
____
a. Description of items?
____
____
____
b. Quantity?
____
____
____
c. Price?
____
____
____
d. Terms?
____
____
____
e. Delivery requirements and dates?
____
____
____
5. Are purchase orders sent to vendors for all purchases, specific types of
purchases, or purchases over predetermined dollar limits?
6. Do purchase orders specify:
26
PROCUREMENT
YES
NO
N/A
7. Is a list of open purchase orders maintained and reviewed periodically? ____
____
____
8. Are purchase order forms pre-numbered?
____
____
____
9. Is the sequence of purchase order numbers accounted for periodically?
____
____
____
10. Does the agency's procurement or requisitioning department develop

independent cost estimates before receiving bids or proposals?
____
____
____
____
____
____
a. Is the approved vendors list kept current?
____
____
____
b. Does the approved vendors list include pre-qualified vendors for

certain types of procurements?
____
____
____
2. Are assessments made of a vendor's ability to successfully perform

before a contract is awarded? If yes, does this assessment consider:
____
____
____
a. The vendor's technical capability to perform?
____
____
____
b. The vendor's financial position and financial capacity?
____
____
____
c. The vendor's past performance?
____
____
____
1. Are there formal (written) selection procedures used for each type of
procurement, including procedures for evaluating the technical aspects
of a procurement?
____
____
____
2. Do the agency's procurement procedures specify the documentation

that is required to be maintained for each procurement?
____
____
____
3. Are the decision criteria and results documented and retained?
____
____
____
____
____
____
Vendor Qualification
1. Does the agency maintain an approved vendors list? If yes:
Vendor Selection
Civil Rights
1. Do the agency's procurement procedures ensure that minority firms
and women-owned business enterprises are used whenever possible?
27
PROCUREMENT
YES
NO
N/A
2. If Disadvantaged Business Enterprises (DBEs) must be utilized or

invited to bid, are there procedures in place to identify potential DBE
vendors and ensure appropriate communication of solicitations to
DBEs?
____
____
____
1. Are there procedures in place to ensure that modifications requested by

a vendor are not already in the original scope of work?
____
____
____
2. Are requirements analyses prepared by the user departments and

approved by the procurement department before the contract
modifications are issued?
____
____
____
3. Is there a process in place for developing independent cost estimates in

connection with cost modifications?
____
____
____
4. Are there procedures in place to ensure that the vendor is qualified to

perform the additional services?
____
____
____
1. Are there documented (written) policies for handling contract disputes

with vendors?
____
____
____
2. Do the dispute resolution policies specify under which circumstances

or at what point FTA should be informed of a contract dispute with a
vendor?
____
____
____
____
____
____
a. Are the agency's contracting representatives made aware of these

standards?
____
____
____
b. Are the standards enforced?
____
____
____
Contract Modifications
Dispute Resolution
Conflicts of Interest
1. Does the agency have written standards of conduct in place that define
real or perceived conflicts of interest relative to the performance of the
agency's representatives involved in the award or administration of
contracts? If yes:
28
ACCOUNTS PAYABLE
YES
NO
N/A
1. Does the agency have detailed written procedures for processing

accounts payable transactions? If yes:
____
____
____
____
____
____
2. Do the agency's accounts payable processing procedures describe the

criteria for deciding what to pay and when to pay certain invoices?
____
____
____
3. Is a log maintained of all goods and/or services received?
____
____
____
4. Does the receiving department prepare receiving reports to verify

receipt of goods and/or services received? If yes, are receiving reports:
____
____
____
a. Prepared for all items?
____
____
____
b. Pre-numbered?
____
____
____
a. Description?
____
____
____
b. Quantities?
____
____
____
c. Condition?
____
____
____
d. Price?
____
____
____
a. Furnished to the accounting/finance department?
____
____
____
b. Furnished to the procurement department?
____
____
____
c. Filed in the receiving department?
____
____
____
7. Are receipts under blanket purchase orders monitored, and are

quantities exceeding authorized totals returned to vendor?
____
____
____
8. Are procedures in place for the proper accounting for partial deliveries
of purchase orders?
____
____
____
a. Are the procedures current and accessible to all staff involved in

the processing of accounts payable transactions?
5. At the time that goods and/or services are received, and before
acceptance, does someone independent of the procurement department
check the terms of the purchase order as to:
6. Are copies of receiving reports:
29
ACCOUNTS PAYABLE
YES
NO
N/A
9. Are procurement and receiving functions separate from invoice

processing, accounts payable, and general ledger functions?
____
____
____
10. Are vendors invoices, receiving reports, and purchase orders matched
(i.e., three-way match) before invoices are processed?
____
____
____
11. Are open (i.e., unmatched) receiving reports recorded as a liability at

month-end?
____
____
____
12. Are all vendors instructed to mail their invoices to the same
name/department and address?
____
____
____
a. Prices?
____
____
____
b. Extensions and footings?
____
____
____
c. Freight charges or allowances?
____
____
____
d. Credit terms?
____
____
____
14. Are controls in place to ensure that all available vendor discounts are
taken?
____
____
____
15. Are purchases recorded in a purchase register or voucher register

before being processed through cash disbursements?
____
____
____
16. Does a responsible employee assign the appropriate general ledger

account distribution to which the invoices are to be posted? If yes:
____
____
____
____
____
____
____
____
____
____
____
____
____
____
____
13. Are vendor invoices checked as to:
a. Is the general ledger account coding reviewed and approved prior

to posting?
17. Are there procedures in place to ensure that costs coded to FTA
grants/projects are reasonable, allowable, and allocable? If yes:
a. Is the coding to FTA grants/projects reviewed and approved prior
to posting?
18. Are there procedures in place to ensure that invoices have been
processed before payment and to prevent duplicate payment (e.g., a
block stamp)?
30
ACCOUNTS PAYABLE
YES
NO
N/A
19. Does a responsible official approve invoices for payment?
____
____
____
20. Are there procedures in place to avoid the risk that a project manager
or department head could misplace an invoice before approving it and
submitting it to accounts payable?
____
____
____
21. Are open (i.e., unmatched) receiving reports, purchase orders, and
vendors invoices periodically reviewed and investigated for proper
recording?
____
____
____
22. Is the accounts payable ledger or voucher register reconciled monthly

to the general ledger control accounts?
____
____
____
23. Are statements from vendors regularly reviewed and reconciled against
recorded liabilities?
____
____
____
24. Do adjustments to accounts payable (e.g., write-off of Debit balances)

require the approval of a designated official?
____
____
____
PAYROLL
YES
NO
N/A
1. Are personnel/human resources records maintained independent of the

payroll processing and timekeeping functions?
____
____
____
2. Are there specific controls and procedures (written) established to

govern the payroll set-up and modification process to ensure that only
(and all) authorized employees are paid, at the correct wage rates?
____
____
____
3. Are procedures accessible to all staff involved in payroll processing?
____
____
____
4. Are the payroll accounting and general ledger functions independent?
____
____
____
5. Are changes to payroll information (e.g., pay grades/positions, pay

rates, withholdings, benefit elections, etc.) not made unless the
personnel/human resources department sends approved notification
directly to the payroll department?
____
____
____
6. Are payroll information changes reviewed and approved to ensure they

have been correctly entered?
____
____
____
31
PAYROLL
YES
NO
N/A
7. Are salary and wage rates authorized in writing by a designated official

and/or fixed by union contract?
____
____
____
8. Are signed authorizations maintained on file for employees whose

wages are subject to special deductions?
____
____
____
a. Approved in advance?
____
____
____
b. Reviewed for compliance with agency policy?
____
____
____
10. Are sick leave, vacations, and holidays reviewed for compliance with
agency policy?
____
____
____
11. Are appropriate forms (e.g., W-4) completed and signed by employees
to authorize payroll deductions and withholding exemptions?
____
____
____
12. Are the payroll accounting records periodically checked against the
personnel records for terminated employees, fictitious employees, etc.? ____
____
____
9. Are bonuses, commissions, and overtime:
13. Does the agency use a time clock and/or timesheets to capture payroll
hours for:
a. General office workers?
____
____
____
b. Operations/maintenance workers?
____
____
____
a. Punched by the employee in the presence of a designated

supervisor?
____
____
____
b. Signed by a supervisor at the end of the payroll period?
____
____
____
a. Signed by the employee at the end of the payroll period?
____
____
____
b. Signed by a supervisor at the end of the payroll period?
____
____
____
14. If the agency uses a time clock, are time cards:
15. If the agency uses time sheets for certain employees, are time sheets:
16. Are time cards and time sheets reviewed and compared with:
32
PAYROLL
YES
NO
N/A
a. The payroll distribution report?
____
____
____
b. Production schedules (route schedules, dispatch reports, etc.)?
____
____
____
a. Names of employees?
____
____
____
b. Hours worked?
____
____
____
c. Wage rates?
____
____
____
d. Deductions?
____
____
____
e. Agreement with payroll checks?
____
____
____
f. Unusual items?
____
____
____
18. Are employees paid out of a separate payroll bank account?
____
____
____
19. Are payroll checks pre-numbered and issued in numerical sequence?
____
____
____
a. Unissued payroll checks?
____
____
____
b. Signature plate?
____
____
____
a. Prepare the payroll?
____
____
____
b. Have access to the accounting records?
____
____
____
c. Have custody of cash funds?
____
____
____
a. Department heads or supervisors that approve time cards or time
sheets?
____
____
____
b. Persons who prepare the payroll?
____
____
____
17. Before payroll is disbursed, are payroll registers reviewed and
approved for:
20. Is access to the following restricted?
21. Are checks drawn and signed by designated officials who do not:
22. Are payroll checks distributed by someone other than the:
33
PAYROLL
YES
NO
N/A
23. Is the distribution of the payroll rotated periodically to different

employees without prior notice?
____
____
____
a. Is not involved in preparing the payroll?
____
____
____
b. Does not sign the checks?
____
____
____
c. Does not handle the check distributions?
____
____
____
a. Comparing the paid checks to the payroll?
____
____
____
b. Scrutinizing canceled check endorsements?
____
____
____
____
____
____
27. Is a liability account set up for all wages that have remained unclaimed
for a certain period of time? If yes:
____
____
____
24. Is the payroll bank account reconciled by a designated employee who:
25. Do payroll bank account reconciliation procedures include:
26. Are the payroll registers reconciled regularly to the general ledger
control accounts?
a. Have these wages been re-deposited in a special bank account?
____
____
____
b. Is identification required to be presented at the time of their

subsequent distribution?
____
____
____
28. Are distributions of hours (direct and indirect) to activity or

departments reviewed and approved by supervisory personnel?
____
____
____
29. Are actual payroll amounts reviewed and compared to budgeted

amounts, and are variances analyzed regularly?
____
____
____
30. Are detailed records maintained of the agencys liability for vacation
pay and sick pay? If yes:
____
____
____
____
____
____
____
____
____
a. Are they reconciled to the general ledger accounts periodically?

31. Are payroll accruals approved by a responsible official?
34
PAYROLL
YES
NO
N/A
____
____
____
____
____
____
b. Does the agency have formal procedures (written) for determining

which labor hours are to be capitalized and charged to FTA grants? ____
____
____
c. Are authorizations and approvals needed or obtained prior to when

the work is done?
____
____
____
d. Is the timing of force account labor controlled by a capital projects

schedule, rather than allowing project managers (foremen) or
agency management the latitude over when this is done?
____
____
____
e. Are there procedures in place to ensure that force account labor is

not both expensed and capitalized?
____
____
____
f. Are there controls in place to govern the utilization of overtime

labor on capital projects?
____
____
____
YES
NO
N/A
1. Does the agency have an indirect Cost Allocation Plan (CAP) that has
been approved by FTA, or other cognizant federal agency, if
applicable? If yes:
____
____
____
a. Does the agency have formal (written) procedures in place to

ensure that its CAP is prepared in accordance with OMB Circular
A-87, Cost Principles for State, Local and Indian Tribal
Governments?
____
____
____
b. Do the procedures for developing the CAP ensure that indirect

costs are allocated on an appropriate basis (i.e., direct labor, total
direct costs, etc.)?
____
____
____
Force Account Labor

1. Does the agency charge its own employee labor directly to capital
projects funded by grants? If yes:
a. Does the agency have a force account plan that has been approved
by FTA, if applicable?
OVERHEAD
Cost Allocation Plan
35
OVERHEAD
YES
NO
N/A
c. Does the agency require management approvals of the CAP prior

to application of the resultant rates, or prior to submission to FTA
for approval, if required?
____
____
____
d. Are there controls in place to ensure that the CAP rates are
correctly applied to the appropriate costs?
____
____
____
____
____
____
2. Is there a review and authorization process to ensure that capitalization

of indirect labor is properly charged within FTA parameters?
____
____
____
Overhead Labor Costs

1. Does the agency have a method for determining which overhead labor
hours are to capitalized?
Indirect Costs
1. Are there procedures in place for charging other indirect costs to
capital projects, such as percentages of certain overhead support
functions (e.g., legal, IT/EDP, etc.)?
____
____
____
2. Is there a review and authorization process whereby the types of

charges are identified and approved?
____
____
____
a. Are charged to capital projects on a regular basis (e.g., monthly)?
____
____
____
b. Are correctly calculated?
____
____
____
c. Are reviewed for reasonableness and consistency?
____
____
____
d. Are properly authorized?
____
____
____
____
____
____
2. Is there a review and authorization process whereby the direct costs are
identified, verified, approved, and charged to the project accounting
system?
____
____
____
3. Do procedures exist to ensure that indirect costs:
Direct Costs
1. Are there procedures in place for charging certain direct costs (e.g.,
supplies, construction equipment, etc.) to capital projects?
36
OVERHEAD
YES
NO
N/A
a. Coded or charged to the correct capital projects?
____
____
____
b. Correctly accumulated and correct in amount?
____
____
____
c. Reviewed for reasonableness?
____
____
____
d. Properly authorized?
____
____
____
YES
NO
N/A
____
____
____
____
____
____
2. Is the operating budget prepared in sufficient detail to provide a

meaningful tool by which to monitor performance?
____
____
____
3. Are senior management approvals and/or board of director approvals

needed to enact the operating budget?
____
____
____
4. Is performance against the operating budget reviewed by responsible

individuals throughout the course of the year? If yes:
____
____
____
a. Is budget performance measured regularly (e.g., monthly,

quarterly)?
____
____
____
b. Is budget performance measured and reported within a reasonable

amount of time after the end of the period?
____
____
____
c. Are actual expenditures compared with budgeted amounts and

variances investigated and explained?
____
____
____
d. Are actual expenditures compared with prior year amounts and

variances analyzed and explained?
____
____
____
3. Do procedures exist to ensure that direct costs are:
BUDGET CONTROLS
Operating Budget
1. Does the agency have detailed formal (written) procedures for
formulating the annual operating budget? If yes:
a. Are these procedures current and accessible to all staff involved in
the budget formulation process?
37
BUDGET CONTROLS
YES
NO
N/A
e. Is variance analysis performed at a sufficient level of detail by

which to adequately monitor operating performance (i.e., at the
budget line item level)?
____
____
____
f. Is appropriate documentation maintained as evidence of variance

investigation and in support of variance explanations?
____
____
____
g. Are the results of variance analyses provided to senior

management?
____
____
____
1. Are there procedures in place for planning capital projects and for
obtaining grant funding?
____
____
____
2. Are appropriate departments involved in the capital project/grant

planning process (i.e., planning, engineering, customer service, etc.)?
____
____
____
3. Do procedures exist to ensure that the agency's plans as described in

the Transportation Improvement Plan are being followed?
____
____
____
4. Are there procedures in place to provide assurance that required

approvals and funding commitments are obtained from FTA and from
appropriate state/local funding sources before spending commitments
are entered into?
____
____
____
____
____
____
a. Are these procedures current and accessible to all staff involved in

the budget formulation process?
____
____
____
b. Is the capital budget formulation process coordinated with the

operating budget process?
____
____
____
c. Are appropriate departments involved in the capital budget

development process (i.e., planning, engineering, construction,
project management, etc.)?
____
____
____
____
____
____
Capital Project/Grant Planning
Capital Budget
1. Does the agency have detailed written procedures for formulating the
annual capital budget? If yes:
2. Is the capital budget prepared in sufficient detail to provide a

meaningful tool by which to monitor capital project progress?
38
BUDGET CONTROLS
YES
NO
N/A
3. Are senior management approvals and/or board of director approvals

needed to enact the capital budget?
____
____
____
4. Is performance against the capital budget reviewed by responsible

individuals throughout the course of the year? If yes:
____
____
____
a. Is budget performance measured regularly (e.g., monthly)?
____
____
____
b. Is budget performance measured and reported within a reasonable

amount of time after the end of the period?
____
____
____
c. Are actual expenditures compared with budgeted amounts and

variances investigated and explained?
____
____
____
d. Is variance analysis performed at a sufficient level of detail by

which to adequately monitor progress or performance (i.e., at the
budget line item level)?
____
____
____
e. Is appropriate documentation maintained as evidence of variance

investigation and in support of variance explanations?
____
____
____
f. Are the results of variance analyses provided to senior

management?
____
____
____
YES
NO
N/A
____
____
____
a. Does this system accumulate both current year grant activity, as

well as cumulative (inception-to-date) financial information for
each grant held?
____
____
____
b. Does this system track special classifications, if any, of grant

expenditures?
____
____
____
c. Does this system track grant financial information by grant budget

line item?
____
____
____
GRANTS MANAGEMENT
Grant Records
1. Does the agency use a separate grants management system (i.e., apart
from the agency's main financial management/general ledger system)
to track grant activity? If yes:
39
GRANTS MANAGEMENT
YES
NO
N/A
d. Does this system track milestone information, as well as budget

and financial information?
____
____
____
e. Is there a process for reconciling grant financial information per

this system to the agency's general ledger system?
____
____
____
f. Is there a process for reconciling grant financial information per

this system to FTA's TEAM system?
____
____
____
g. Are reconciliations of the grants management system performed

regularly (i.e., monthly, quarterly)?
____
____
____
2. Does the agency have a documented process for determining whether

grant expenditures are allowable before they are incurred?
____
____
____
3. Once incurred, does the agency have procedures in place to ensure that
only approved and allowable costs have been charged to grants?
____
____
____
4. Is there a process preventing charges from being posted against grants

incorrectly, or for reversing incorrect charges?
____
____
____
5. Are there procedures in place to govern the recording of contract

change orders in the grants management system?
____
____
____
6. For change orders recorded, is historical grant data maintained (i.e., do

grant records reflect incremental changes rather than having
information be overwritten)?
____
____
____
7. Are change orders recorded in the grants management system on a

timely basis?
____
____
____
____
____
____
a. Does the agency have detailed written procedures to describe the

documentation required to establish encumbrances against grants
and to control the flow of documentation?
____
____
____
b. Is there a review and authorization process to ensure that

encumbrance amounts are established against the correct grants
and are recorded correctly?
____
____
____
Encumbrances
1. Does the agency track major encumbrances of grant balances for
project expenses? If yes:
40
GRANTS MANAGEMENT
YES
NO
N/A
c. Are encumbrance amounts recorded/released/adjusted at the

individual grant level by the agency's grants management system?
____
____
____
d. Does the grants management system (or other system that tracks
encumbrances) interface with the procurement system?
____
____
____
1. Are there formal (written) procedures in place to ensure that quarterly

financial status reports (FSRs) are prepared and submitted to FTA
timely (i.e., submitted within 30 days after quarter end)?
____
____
____
2. Is the agency's grants management system used as the source for

obtaining financial information for the FSRs?
____
____
____
3. Is there a documented review and authorization process prior to

submission to FTA to ensure that FSRs are complete and accurate?
____
____
____
4. Is there a process for reconciling FSR information for individual grants

to the general ledger system?
____
____
____
5. Is there a process for reconciling FSR information for individual grants

to the information tracked by FTA's TEAM system?
____
____
____
6. Are FSRs prepared on the accrual basis as required by FTA?
____
____
____
____
____
____
a. Do the procedures describe the documentation required to initiate a

grant budget revision?
____
____
____
b. Do the procedures describe the process for recording budget

revisions in the grants management system and main financial
management system?
____
____
____
c. Is there a review and authorization process in place?
____
____
____
d. Are the same departments involved as those included in the capital

budget development process?
____
____
____
Grant Reporting
Budget Revisions
1. Are there formal (written) procedures in place to ensure that grant
budget revisions are made only when properly authorized and
justified? Specifically:
41
GRANTS MANAGEMENT
YES
NO
N/A
2. Are there procedures in place to ensure that grant budget revisions are
communicated to FTA in a timely manner, and approved by FTA, if
required?
____
____
____
1. Does the agency have formal (written) policies and procedures in place
for closing out grants?
____
____
____
Grant Close-Out
2. Do the agency's grant close-out procedures:

a. Specify what documentation should be maintained related to the
close-out of a grant?
____
____
____
b. Ensure that grants are closed out and final FSRs are submitted on a
timely basis?
____
____
____
c. Ensure that inactive grants with unspent balances are not carried
forward beyond when close-out should occur (i.e., when all
approved grant project activities are complete)?
____
____
____
d. Ensure that inactive grants with excess balances are not being used
for other projects without the advance approval of FTA?
____
____
____
YES
NO
N/A
____
____
____
a. Is the agency's project management system used as the source for

obtaining narrative project milestone information for quarterly
FSR reporting to FTA?
____
____
____
b. Does this system track project milestone information, as well as

budget and financial information?
____
____
____
c. Is there a process for reconciling project costs per the project

management system to the agency's general ledger system?
____
____
____
PROJECT MANAGEMENT
Project Accounting
1. Does the agency use a separate project management/tracking system
(i.e., apart from the main financial management/general ledger system)
to track progress of construction capital projects? If yes:
42
PROJECT MANAGEMENT
YES
NO
N/A
d. Is there a process for reconciling project costs per the project

management system to the agency's grants management system?
____
____
____
e. Are reconciliations of the project management system performed

regularly (e.g., monthly, quarterly)?
____
____
____
f. Are receiving documents, purchase orders (or contracts), and

invoices matched before transactions are recorded in the project
management system?
____
____
____
1. Does in-house construction require authorized work orders?
____
____
____
2. Is construction-in-progress regularly reviewed for adherence to

budgeted amounts?
____
____
____
3. Do engineers and project managers use non-dollar metrics (i.e., other

than dollar percentage of completion) to measure the progress of
capital construction projects?
____
____
____
4. Are project status meetings held on a regular basis?
____
____
____
5. Are project status reports prepared and reviewed regularly with project
managers and senior management?
____
____
____
6. Do regular project status meetings and/or project status reports provide

an effective means for identifying and addressing problem areas or
project crises as they arise?
____
____
____
7. Are problem areas dealt with within a reasonable time frame?
____
____
____
8. Is there a process in place to keep FTA informed of problems that

could potentially impact FTA capital project grants?
____
____
____
9. If a problem requires a contract change, is there a documented process

for initiation, funding, and review/approval of the change order?
____
____
____
10. If a contract change order results in the need for a grant budget
revision, is there a documented process for preparation, review, and
approval of the budget revision request, prior to submission to FTA?
____
____
____
Project Management
43
IT CONTROLS
YES
1. Is the IT department independent of all user departments?
____ ____
____
2. Is there clear segregation of duties between computer programmers

and computer operators?
____
____
____
3. Are IT personnel prohibited from initiating transactions and making

changes to master files?
____
____
____
4. Are computer operators required to take annual vacations and are their
duties rotated periodically?
____
____
____
5. Is access to the data center/computer room restricted to authorized

personnel only?
____ ____
____
6. Are computer programmers prohibited from accessing production

programs, job control language, and live data files?
____ ____
____
7. Are computer operators prohibited from accessing source code and

programming documentation?
____
____
8. Is new or revised program testing on live data files strictly prohibited?
____ ____ ____
9. Are utility programs adequately controlled and their use logged for
subsequent management review?
____
____
____
10. Are unique and confidential passwords required to access IT systems?
____
____
____
11. Are passwords changed at regular intervals and canceled for

terminated employees?
____ ____
____
12. Are there restrictions on the length and type of password that can be
chosen?
____ ____
____
13. Do individuals have access only to those programs or files that are
necessary to perform their duties?
____ ____
____
14. Are there procedures in place for documenting new systems and
programs, as well as documenting modifications of existing ones?
____
____
15. Do system and program development procedures require active

involvement by the users, including:
____ ____ ____
a. User involvement in the design and approval of systems?
44
____
NO
____
____
____
N/A
____
IT CONTROLS
YES
NO
N/A
b. User review of the completion of various phases of the
application?
____ ____
____
c. User testing of new programs?
____
____
____
16. Are system and program modifications subject to appropriate testing,
and are test results reviewed and approved by user department and IT
management?
____
____
____
17. Are schedules prepared and adhered to for processing of computer
applications?
____
____ ____
a. Setting up of batch jobs?
____
____
____
b. Loading on-line application systems?
____ ____
____
c. Loading system software?
____
____
____
d. Input and output media to be used?
____
____
____
a. Initial loading of system and application software?
____
____
____
b. System failures?
____ ____
____
c. Restart and recovery?
____
____
d. Emergency situations?
____ ____ ____
e. Any other unusual situations?
____
____
____
____
____
____
18. Are adequate job set-up and execution procedures in place over:
19. Are there procedures in place for identifying, reporting, and approving
operator actions over:
20. Are logs used to record operator activities? If yes:

a. Are they reviewed by appropriate personnel?
____
____ ____ ____
21. Are the agencys application programs compatible with each other?
____
22. Are there procedures in place to control logical access to computer
applications and data files, to achieve the following:
____ ____
45
____ ____
____
IT CONTROLS
YES
NO
N/A
a. Restricting access to confidential and sensitive data?
____
____
____
b. Reducing the risk of entering unauthorized transactions into

processing?
____
____
____
c. Detecting unauthorized changes to programs supporting the

financial statements?
____
____
____
d. Controlling programmer access to production programs and live

data files?
____
____
____
e. Controlling operator access to source code and individual elements

of data files?
____
____
____
f. Limiting access by users to defined programs and data files?
____ ____
____
____
____
____
a. Obtaining only recognized software from reputable sources?
____ ____
____
b. Accepting only delivery of software in the manufacturers sealed

package?
____ ____
____
c. Using virus protection software to screen for virus infections?
____
____
d. Prohibiting the use of unauthorized programs introduced by

employees?
____ ____ ____
e. Prohibiting downloading of untested software from unknown

sources?
____ ____ ____
23. Are there procedures in place to prevent the introduction of viruses

and to recover from a virus infection? If yes, do they include:
____
24. Are there appropriate procedures for backup and storage of programs
and data files?
____
____
____
25. Are critical data files, systems, and program libraries backed up
regularly and stored off-site?
____ ____
____
26. Has the agency developed a formal (written) contingency or disaster

recovery plan to provide alternative processing and continued data
services in the event of an emergency or disaster that results in loss or
interruption of the IT function? If yes:
____
____
46
____
IT CONTROLS
YES
NO
N/A
i. Documented procedures for system recovery?
____
____
____
ii. Designation of conditions for implementing off-site disaster

recovery?
____
____
____
iii. Procedures for obtaining alternative hardware and software?
____
____
____
iv. Listing of all critical applications, programs, system software,

and data files?
____
____
____
v. Priorities and schedules for information retrieval?
____
____
____
vi. Assignment of roles and responsibilities for key employees?
____
____
____
vii. Listing of all key contacts and their telephone numbers?
____
____
____
b. Have the roles and responsibilities described in the contingency or

disaster recovery plan been communicated to the employees
identified as key contacts in the plan?
____
____
____
c. Is the contingency or disaster recovery plan tested periodically to

ensure its effectiveness?
____
____
____
a. Does the contingency or disaster recovery plan include:
27. Does the agency periodically perform an IT risk assessment to identify

all potential risks and vulnerabilities, as well as to make decisions
about which to mitigate through security controls?
____ ____ ____
28. Is there a written security plan that describes the agency's IT security
program, as well as the policies and procedures that support it?
____
____
29. Does the agency have an IT security awareness program, the purpose
of which is to inform all users of the established IT security policies?
____
____ ____
47
____

Fta Internal Control Self-Assessment Tool

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INTERNAL CONTROL SELF-ASSESSMENT FORM (FOR FTA GRANTEES)

Internal Control Self-Assessment Form

SECTION ICONTROL ENVIRONMENT

Integrity and ethical values

2. Does a positive control environment exist, whereby there is an attitude

3. Is the competence of the agencys employees commensurate with their

4. Is managements operating style (the way it assigns authority and

5. Does management fully understand the requirements of laws and

6. Does agency management carefully consider the potential effects of

7. Are financial statements prepared, approved, and submitted for review

1. Does agency management adequately convey the message that

Internal Control Self-Assessment Form

8. Does agency management demonstrate concern about and willingness

9. Does the agency maintain an up-to-date accounting policies and

10. Is there an up-to-date chart of accounts maintained and does it

11. Does management periodically review insurance coverage?

13. Does management have a history of establishing reliable accounting

14. Is there low turnover of accounting/finance, IT, and key management

15. Are key operating positions adequately staffed, thereby avoiding

16. Is there sufficient coordination between the accounting/finance and IT

17. Is there an up-to-date organization chart that reflects the areas of

21. Are reinvestigations performed periodically for individuals with

Internal Control Self-Assessment Form

22. Are individuals with sensitive positions or access to sensitive financial

23. Are personnel policies and employee benefit plans documented

24. Is there a formal (written) conflict of interest policy or code of conduct

26. Do related employees, if any, have job assignments that minimize

27. Are employees adequately trained to meet their assigned

29. Are there procedures in place to monitor and document training

30. Are employees cross-trained to perform the duties of others during

31. Is rotation of duties enforced by mandatory vacations?

32. Is job performance periodically evaluated and reviewed with

33. Has management established policies and procedures for development,

a. Is the board or committee sufficiently independent of agency

b. Does the board or committee take an active role in overseeing the

Internal Control Self-Assessment Form

c. Does the board or committee approve the appointment of the

d. Does the board or committee have sufficient knowledge,

e. Does the board or committee constructively challenge

f. Does the board or committee meet in a timely manner with the

g. Does the board or committee review the scope of activities of the

h. Does the board or committee regularly receive and review key

i. Does a process exist for informing the board or committee in a

j. Is there appropriate oversight in determining the compensation and

k. Is the board or committee sufficiently involved in establishing and

Internal Control Self-Assessment Form

SECTION IIRISK ASSESSMENT

Changes in operating environment

1. Has management established clear agency-wide objectives and are

3. Has agency management identified the resources and critical factors

4. Does agency management consider risks arising from external sources

5. Does management consider risks arising from internal sources (e.g.,

6. Does management identify risks to key business functions and

7. Does management identify and monitor significant shifts in the transit

Internal Control Self-Assessment Form

9. Are new employees in key positions adequately supervised to ensure

10. Are procedures in place to assess the effects of new or redesigned

____ ____ ____

11. Are procedures in place to handle rapidly increasing volumes of