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Date Issued
Submitting OIG
Department of Transportation OIG
Agencies Reviewed/Investigated
Department of Transportation
Components
Office of the Secretary of Transportation
Report Number
QC2025015
Report Description

Our Objective(s)To perform a quality control review (QCR) of KPMG LLP's management letter related to the audit of DOT's consolidated financial statements as of and for the fiscal years ended September 30, 2024, and September 30, 2023. We reviewed KPMG's management letter, dated November 27, 2024, and related documentation.
About This ReportWe contracted with the independent public accounting firm KPMG, LLP, to audit DOT's consolidated financial statements. KPMG also issued a management letter discussing internal control matters that KPMG was not required to include in its audit report.
What We FoundThe independent auditor, KPMG, found six internal control matters in DOT's management of operations.

Federal Highway Administration's (FHWA) weaknesses within the user profile system change management process.
FHWA's weakness in accounting policies for Federal Lands Highway construction.
Enterprise Services Center's (ESC) weakness in control over Central Accounting Reporting System Classification, Transactions, and Accountability module reconciliation.
ESC's weakness in control over quarterly review of the journal voucher control log.
OST's weakness in control over management legal schedule and management legal letter.
FHWA's weaknesses in controls over the inputs to the Federal aid grant accrual.

Our QCR disclosed no instances in which KPMG did not comply, in all material respects, with U.S. generally accepted Government auditing standards.
RecommendationsWe agree with KPMG's 11 recommendations to strengthen DOT's information system and business process controls.

Report Type
Audit
Agency Wide
Yes
Number of Recommendations
11
Questioned Costs
$0
Funds for Better Use
$0
Report updated under NDAA 5274
No
External Link
https://www.oig.dot.gov/library-item/46621

Open Recommendations

This report has 11 open recommendations.
Recommendation Number Significant Recommendation Recommended Questioned Costs Recommended Funds for Better Use Additional Details
1 Yes $0 $0

KPMG recommends that FHWA management clearly and consistently communicate change management requirements per the FHWA Configuration and Change Management Process policy to the control operators.

2 Yes $0 $0

KPMG recommends that FHWA management review and update accounting policies and operating procedures to capitalize costs for the construction and procurement of non-heritage fixed assets on behalf of FLH's FLMA partners.

3 Yes $0 $0

KPMG recommends that FHWA management establish and maintain communications channels with FLMA partners of other ongoing projects and establish protocols for communicating asset-level detail for projects required by each agency's property accountants.

4 Yes $0 $0

KPMG recommends that FHWA management complete performance of an assessment of costs expensed for completed fixed asset construction projects to determine materiality and record remaining correcting accounting entries as needed.

5 Yes $0 $0

KPMG recommends that ESC enhance the design of the CTA control procedures to ensure that all information used in the reconciliations are complete and accurate, including adequate consideration of transactions that may impact period-end financial reporting.

6 Yes $0 $0

KPMG recommends that ESC document in its Standard Operating Procedure and communicate clearly defined objectives and requirements related to compliance with the Treasury requirement to reconcile all pertinent activity at the BETC level.

7 Yes $0 $0

KPMG recommends that ESC perform a review of the population of journal entries prior to the finalization of quarterly financials to ensure the complete population of journal entries was subject to the approval control during the period.

8 Yes $0 $0

KPMG recommends that ESC perform a review of the population of journal entries prior to the finalization of quarterly financials to ensure all journal entries were recorded.

9 Yes $0 $0

KPMG recommends that OST establish (or revise), communicate, and enforce an internal timeline, inclusive of a deadline(s) for when Operating Administrations need to provide their respective information to OST-B30 and the General Counsel office, that allows for sufficient time to gather, review, and draft the consolidated Legal Letter and Management Schedule.

10 Yes $0 $0

KPMG recommends that OST perform a more robust review in completing the consolidated Legal Letter and Management Schedule to ensure the process/control is performed accurately and completely.

11 Yes $0 $0

KPMG recommends that FHWA management develop an estimation methodology responsive to fluctuations in future expenses.

Department of Transportation OIG

United States