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 agency’s 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. Control Environment 2
II. Risk Assessment 6
III. Control Activities 8
IV. Information and Communications 10
V. Monitoring 12
VI. Key Accounts and Transaction Classes 14

This Internal Control Self-Assessment Form has been prepared and reviewed, as follows:

Prepared by Date

Approved by Date

1 Internal Control Self-Assessment Form

SECTION I—CONTROL 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
• Management’s philosophy and operating style
• The agency’s organizational structure
• Assignment of authority and responsibility
• Human resource policies and practices

YES NO N/A

1. Does agency management adequately convey the message that

integrity cannot be compromised? ____ ____ ____

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 agency’s employees commensurate with their

responsibilities? ____ ____ ____

4. Is management’s 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? ____ ____ ____

2 Internal Control Self-Assessment Form

 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? ____ ____ ____

3 Internal Control Self-Assessment Form

 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

agency’s policies and practices? ____ ____ ____

4 Internal Control Self-Assessment Form

 YES NO N/A

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

agency’s 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

management’s 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 agency’s code of conduct or its policies and procedures
manual)? ____ ____ ____

5 Internal Control Self-Assessment Form

SECTION II—RISK 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)? ____ ____ ____

6 Internal Control Self-Assessment Form

 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 agency’s
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 agency’s financial
reporting practices? ____ ____ ____

7 Internal Control Self-Assessment Form

SECTION III—CONTROL 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 management’s 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

1. Does agency management have clear objectives in terms of budget,

revenue, cost, and other financial and operating goals? If yes, are such
objectives: ____ ____ ____

a. Clearly written? ____ ____ ____

b. Actively communicated throughout the agency? ____ ____ ____

c. Actively monitored? ____ ____ ____

2. Do the planning and reporting systems in place:

a. Adequately identify variances from planned performance? ____ ____ ____

b. Adequately communicate variances to the appropriate level of

management? ____ ____ ____

3. Does 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 well-
maintained? ____ ____ ____

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? ____ ____ ____

8 Internal Control Self-Assessment Form

 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 organization’s financial reporting requirements? ____ ____ ____

9 Internal Control Self-Assessment Form

SECTION IV—INFORMATION 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 agency’s 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 agency’s
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 Internal Control Self-Assessment Form

 YES NO N/A

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

agency’s actions and/or requirements (e.g., an active review of bank ____ ____ ____
loan agreements)?

11 Internal Control Self-Assessment Form

SECTION V—MONITORING

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

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:

a. Investigated timely? ____ ____ ____

b. Used as a means to identify and correct control deficiencies? ____ ____ ____

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 Internal Control Self-Assessment Form

 YES NO N/A

7. Does the agency have an internal audit function? If yes, do the internal
auditors: ____ ____ ____

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 agency’s 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 Internal Control Self-Assessment Form

SECTION VI—KEY 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

Cash Receipts

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? ____ ____ ____

3. Does the employee who opens the mail:

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? ____ ____ ____

14 Internal Control Self-Assessment Form

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? ____ ____ ____

10. Is the accounts receivable accountant restricted from:

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 three-
day rule)? ____ ____ ____

15. Is there a log of ECHO requests maintained? ____ ____ ____

15 Internal Control Self-Assessment Form

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? ____ ____ ____

20. Does a person independent of the cash receipts and accounts

receivable functions compare entries to the cash receipts journal with:

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? ____ ____ ____

16 Internal Control Self-Assessment Form

CASH MANAGEMENT YES NO N/A

Fare Revenues

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? ____ ____ ____

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? ____ ____ ____

b. Externally:

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? ____ ____ ____

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 Internal Control Self-Assessment Form

CASH MANAGEMENT YES NO N/A

Cash Disbursements

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 check-
preparation 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? ____ ____ ____

18 Internal Control Self-Assessment Form

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? ____ ____ ____

Cash Account Reconciliations

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? ____ ____ ____

3. Do bank account reconciliation procedures include:

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? ____ ____ ____

4. Is an independent review performed of monthly bank reconciliations? ____ ____ ____

Investments

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? ____ ____ ____

19 Internal Control Self-Assessment Form

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 Internal Control Self-Assessment Form

FIXED ASSETS YES NO N/A

Recording

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? ____ ____ ____

5. Are detailed fixed assets subsidiary records maintained, and do they

include:

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? ____ ____ ____

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

control accounts throughout the year? ____ ____ ____

21 Internal Control Self-Assessment Form

FIXED ASSETS YES NO N/A

7. Are acquisitions of property authorized by designated personnel for:

a. All capital expenditures? ____ ____ ____

b. Major renovations? ____ ____ ____

c. Major repair jobs? ____ ____ ____

Fixed Assets Inventory

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? ____ ____ ____

Fixed Assets Disposals

1. Does the agency have formal (written) procedures to govern the

disposal of fixed assets and property? ____ ____ ____

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? ____ ____ ____

22 Internal Control Self-Assessment Form

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? ____ ____ ____

Fixed Assets Safeguards

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? ____ ____ ____

Fixed Assets Maintenance

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? ____ ____ ____

Spare Parts

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? ____ ____ ____

23 Internal Control Self-Assessment Form

FIXED ASSETS YES NO N/A

4. Are perpetual inventory records maintained for supplies and spare

parts? ____ ____ ____

5. Do the perpetual records show:

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? ____ ____ ____

24 Internal Control Self-Assessment Form

FIXED ASSETS YES NO N/A

14. Are priced inventory sheets numerically controlled and verified as to:

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

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: ____ ____ ____

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? ____ ____ ____

25 Internal Control Self-Assessment Form

PROCUREMENT YES NO N/A

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. 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: ____ ____ ____

a. Are there procedures/limitations in place to regulate their use? ____ ____ ____

b. Are monthly statements reviewed for appropriateness of purchases,

by either the procurement department or by other agency officials? ____ ____ ____

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? ____ ____ ____

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:

a. Description of items? ____ ____ ____

b. Quantity? ____ ____ ____

c. Price? ____ ____ ____

d. Terms? ____ ____ ____

e. Delivery requirements and dates? ____ ____ ____

26 Internal Control Self-Assessment Form

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? ____ ____ ____

Vendor Qualification

1. Does the agency maintain an approved vendors list? If yes: ____ ____ ____

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? ____ ____ ____

Vendor Selection

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? ____ ____ ____

Civil Rights

1. Do the agency's procurement procedures ensure that minority firms

and women-owned business enterprises are used whenever possible? ____ ____ ____

27 Internal Control Self-Assessment Form

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? ____ ____ ____

Contract Modifications

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? ____ ____ ____

Dispute Resolution

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? ____ ____ ____

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: ____ ____ ____

a. Are the agency's contracting representatives made aware of these

standards? ____ ____ ____

b. Are the standards enforced? ____ ____ ____

28 Internal Control Self-Assessment Form

ACCOUNTS PAYABLE YES NO N/A

1. Does the agency have detailed written procedures for processing

accounts payable transactions? If yes: ____ ____ ____

a. Are the procedures current and accessible to all staff involved in

the processing of accounts payable transactions? ____ ____ ____

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? ____ ____ ____

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:

a. Description? ____ ____ ____

b. Quantities? ____ ____ ____

c. Condition? ____ ____ ____

d. Price? ____ ____ ____

6. Are copies of receiving reports:

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? ____ ____ ____

29 Internal Control Self-Assessment Form

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? ____ ____ ____

13. Are vendor invoices checked as to:

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: ____ ____ ____

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 Internal Control Self-Assessment Form

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 Internal Control Self-Assessment Form

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? ____ ____ ____

9. Are bonuses, commissions, and overtime:

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.? ____ ____ ____

13. Does the agency use a time clock and/or timesheets to capture payroll
hours for:

a. General office workers? ____ ____ ____

b. Operations/maintenance workers? ____ ____ ____

14. If the agency uses a time clock, are time cards:

a. Punched by the employee in the presence of a designated

supervisor? ____ ____ ____

b. Signed by a supervisor at the end of the payroll period? ____ ____ ____

15. If the agency uses time sheets for certain employees, are time sheets:

a. Signed by the employee at the end of the payroll period? ____ ____ ____

b. Signed by a supervisor at the end of the payroll period? ____ ____ ____

16. Are time cards and time sheets reviewed and compared with:

32 Internal Control Self-Assessment Form

PAYROLL YES NO N/A

a. The payroll distribution report? ____ ____ ____

b. Production schedules (route schedules, dispatch reports, etc.)? ____ ____ ____

17. Before payroll is disbursed, are payroll registers reviewed and

approved for:

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? ____ ____ ____

20. Is access to the following restricted?

a. Unissued payroll checks? ____ ____ ____

b. Signature plate? ____ ____ ____

21. Are checks drawn and signed by designated officials who do not:

a. Prepare the payroll? ____ ____ ____

b. Have access to the accounting records? ____ ____ ____

c. Have custody of cash funds? ____ ____ ____

22. Are payroll checks distributed by someone other than the:

a. Department heads or supervisors that approve time cards or time

sheets? ____ ____ ____

b. Persons who prepare the payroll? ____ ____ ____

33 Internal Control Self-Assessment Form

PAYROLL YES NO N/A

23. Is the distribution of the payroll rotated periodically to different

employees without prior notice? ____ ____ ____

24. Is the payroll bank account reconciled by a designated employee who:

a. Is not involved in preparing the payroll? ____ ____ ____

b. Does not sign the checks? ____ ____ ____

c. Does not handle the check distributions? ____ ____ ____

25. Do payroll bank account reconciliation procedures include:

a. Comparing the paid checks to the payroll? ____ ____ ____

b. Scrutinizing canceled check endorsements? ____ ____ ____

26. Are the payroll registers reconciled regularly to the general ledger
control accounts? ____ ____ ____

27. Is a liability account set up for all wages that have remained unclaimed
for a certain period of time? If yes: ____ ____ ____

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 agency’s 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 Internal Control Self-Assessment Form

PAYROLL YES NO N/A

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? ____ ____ ____

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? ____ ____ ____

OVERHEAD YES NO N/A

Cost Allocation Plan

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.)? ____ ____ ____

35 Internal Control Self-Assessment Form

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? ____ ____ ____

Overhead Labor Costs

1. Does the agency have a method for determining which overhead labor
hours are to capitalized? ____ ____ ____

2. Is there a review and authorization process to ensure that capitalization

of indirect labor is properly charged within FTA parameters? ____ ____ ____

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? ____ ____ ____

3. Do procedures exist to ensure that indirect costs:

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? ____ ____ ____

Direct Costs

1. Are there procedures in place for charging certain direct costs (e.g.,
supplies, construction equipment, etc.) to capital projects? ____ ____ ____

2. Is there a review and authorization process whereby the direct costs are
identified, verified, approved, and charged to the project accounting
system? ____ ____ ____

36 Internal Control Self-Assessment Form

OVERHEAD YES NO N/A

3. Do procedures exist to ensure that direct costs are:

a. Coded or charged to the correct capital projects? ____ ____ ____

b. Correctly accumulated and correct in amount? ____ ____ ____

c. Reviewed for reasonableness? ____ ____ ____

d. Properly authorized? ____ ____ ____

BUDGET CONTROLS YES NO N/A

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? ____ ____ ____

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? ____ ____ ____

37 Internal Control Self-Assessment Form

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? ____ ____ ____

Capital Project/Grant Planning

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? ____ ____ ____

Capital Budget

1. Does the agency have detailed written procedures for formulating the
annual capital budget? If yes: ____ ____ ____

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.)? ____ ____ ____

2. Is the capital budget prepared in sufficient detail to provide a

meaningful tool by which to monitor capital project progress? ____ ____ ____

38 Internal Control Self-Assessment Form

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? ____ ____ ____

GRANTS MANAGEMENT YES NO N/A

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: ____ ____ ____

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? ____ ____ ____

39 Internal Control Self-Assessment Form

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? ____ ____ ____

Encumbrances

1. Does the agency track major encumbrances of grant balances for

project expenses? If yes: ____ ____ ____

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? ____ ____ ____

40 Internal Control Self-Assessment Form

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? ____ ____ ____

Grant Reporting

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? ____ ____ ____

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: ____ ____ ____

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? ____ ____ ____

41 Internal Control Self-Assessment Form

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? ____ ____ ____

Grant Close-Out

1. Does the agency have formal (written) policies and procedures in place
for closing out grants? ____ ____ ____

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? ____ ____ ____

PROJECT MANAGEMENT YES NO N/A

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: ____ ____ ____

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? ____ ____ ____

42 Internal Control Self-Assessment Form

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? ____ ____ ____

Project Management

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? ____ ____ ____

43 Internal Control Self-Assessment Form

IT CONTROLS YES NO N/A

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 Internal Control Self-Assessment Form

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? ____ ____ ____

18. Are adequate job set-up and execution procedures in place over:

a. Setting up of batch jobs? ____ ____ ____

b. Loading on-line application systems? ____ ____ ____

c. Loading system software? ____ ____ ____

d. Input and output media to be used? ____ ____ ____

19. Are there procedures in place for identifying, reporting, and approving
operator actions over:

a. Initial loading of system and application software? ____ ____ ____

b. System failures? ____ ____ ____

c. Restart and recovery? ____ ____ ____

d. Emergency situations? ____ ____ ____

e. Any other unusual situations? ____ ____ ____

20. Are logs used to record operator activities? If yes: ____ ____ ____

a. Are they reviewed by appropriate personnel? ____ ____ ____

21. Are the agency’s 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 Internal Control Self-Assessment Form

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? ____ ____ ____

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

and to recover from a virus infection? If yes, do they include: ____ ____ ____

a. Obtaining only recognized software from reputable sources? ____ ____ ____

b. Accepting only delivery of software in the manufacturer’s 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? ____ ____ ____

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 Internal Control Self-Assessment Form

IT CONTROLS YES NO N/A

a. Does the contingency or disaster recovery plan include:

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? ____ ____ ____

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 Internal Control Self-Assessment Form