Finance & Administration Committee

Information Item IV-A

February 12, 2015

Financial Management Oversight (FMO) Update

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Washington Metropolitan Area Transit Authority

Board Action/Information Summary

TITLE:

Update on FMO Report

PRESENTATION SUMMARY:

Update the Committee on the status of WMATA's Corrective Action Plan (CAP) responses to the Federal Transit Administration's (FTA) Financial Management Oversight (FMO) report.

PURPOSE:

Provide a progress report on the status of all FMO CAP items, fulfillment of the FMO report's recommendations and identify next steps.

DESCRIPTION:

Key Highlights:

WMATA committed to 65 CAP items in response to FTA’s FMO findings and advisory comments.

Documentation has been submitted for 62 of 65 CAPs. Two Material Weakness CAP submissions, originally due September 8, 2014,

have been extended to June 30, 2015. The final Advisory Comment CAP has a committed due date of June 30, 2015.

Background and History:

The FMO report of June 10, 2014, identified nine separate findings, including three material weaknesses and six significant deficiencies. An additional five advisory comments were also identified. A total of 45 recommendations from FTA for addressing the findings and comments were included in the FMO report.

Discussion:

The FMO Dashboard contains the status as of February 4, 2015 of the 65 CAP items by finding level, the status of FMO-related training in key areas, a chart illustrating the quality and acceptance level of recent drawdown packages, and a summary of the number of FTA recommendations fulfilled based upon CAP submissions. On December 10, 2014, WMATA received a response letter from the FTA as a follow- up to our letter of October 15, 2014 that included corrective actions (or updates) to

Action Information MEAD Number:201289

Resolution: Yes No

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recommendations on 30-day and 60-day findings. The only follow-up action item included in this letter indicated that WMATA should revise its written policy to ensure that grants are closed out within 90 days of completion of grant activities to ensure compliance with FTA guidelines. In response, on December 23, 2014,WMATA submitted documentat ion to the FTA confirming that the Grants Management Manual grants close-out procedures were being revised to direct that grants should be closed out within 90 days of the completion of grant activities. WMATA is still awaiting the FTA’s response to this submission. On December 22, 2014, WMATA received FTA responses on additional or updated corrective actions taken in response to 90-day findings. Two Asset Management (AM) responses addressing two recommendations were deemed adequate. For a third AM finding and related recommendation, the FTA requested a copy of Property Custodian training materials and records. Several additional documents were requested in response to follow-up submissions addressing FMS access control recommendations. These documents include an updated database access form; updated access review procedures and supporting documentation; updated password settings for the STAT system; and a STAT user listing showing roles assigned to each user. All requested documents were submitted to the FTA on January 30, 2015 as required. In January 2015, outside counsel conducted Asset Management compliance training for Accountable Property Officers and Property Custodians who have responsibility for managing and tracking FTA-funded assets. Outside counsel also conducted training for applicable staff on FTA notification policies and procedures and the applicable documentation requirements. On January 29, 2015, WMATA received notification from FTA Region III of approval for a grants reimbursement drawdown for $63.8 million. This is the largest single draw approval received since the ECHO drawdown restriction was imposed in late March 2014. Since then, WMATA has drawn a total of $134.9 million in grant reimbursements. The newly-hired Director of Internal Compliance joined WMATA on January 26, 2015. FMO Follow-up reviews and long-term monitoring efforts will continue.

FUNDING IMPACT:

TIMELINE:

No funding impact; information item only Project Manager: Thomas J. Webster

Project Department/Office: OMBS/CFO

Previous ActionsJuly 2014 through January 2015 - Monthly presentations to FA committee on FMO status of FTA submissions and CAP items.

Anticipated actions after presentation

February 2015 and forward - complete remaining three CAP items and long-term compliance monitoring.

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RECOMMENDATION:

No recommendation; information item only.

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Update on Financial Management Oversight (FMO) Report

Finance & Administration CommitteeFebruary 12, 2015

Washington Metropolitan Area Transit Authority

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Purpose

• Provide monthly progress report on FMO Corrective Action Plans (CAPs), FTA feedback and follow-ups

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FMO Dashboard as of 01/30/2015

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FMO Dashboard – CAPs Status by Finding

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FMO Dashboard – Reimbursement Request Success Rates

0%

20%

40%

60%

80%

100%

Reimbursement Request Success Ratesas of 1/31/2015

Reimbursement Rate per Submission Cumulative Rate ($ Weighted)

97%

63%

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FMO Dashboard – Compliance Training

475

300

200

448

267

171

0 100 200 300 400 500

Procurement

Grants Management

Asset Management

No. Trained Staff Training Estimate

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FMO Dashboard – Completion of FMO Recommendations

FMO Finding DescriptionFMO Report Recommend.

FTA Confirmed Submission ("Adequate")

FTA Confirmation

Pending

Mat. Weak. II.1 Budget Controls 3 1 2

Mat. Weak. II.2 Federal Expend. Report. Controls 2 2 0

Mat. Weak. II.3 Procurement Controls 5 5 0

Sig. Defic. III.1 Audit Committee Oversight 2 2 0

Sig. Defic. III.2 Cash/Grants Mgnt Controls 4 3.5 0.5

Sig. Defic. III.3 FTA Funded Assets 8 7.5 0.5

Sig. Defic. III.4 Fin. Mgmt System Access 6 1 5

Sig. Defic. III.5 Controls over JOC 4 4 0

Sig. Defic. III.6 Improve Federal Fin. Report. 4 4 0

38 30 8

AC IV.1 - IV.5 Advisory Comments 7 N/A N/A

45 30 8All FMO Findings and Advisory Comments

Material Weaknesses/Signif. Deficiencies

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Summary Timeline

Final FMO Report received from FTA

June 10

30-day CAP items

submitted to FTA

July 10

August 9

60-day CAP items

submitted to FTA

90-day CAP items submitted

to FTA*

Sept. 8

June 30

Four immediate CAP items

submitted to FTA

* Excluding two extended items

Sept. 30

Two 150-day CAP items

submitted to FTA

30- & 60-day CAP

follow-ups from FTA

Oct. 1

Oct. 15

30- & 60-day CAP

follow-ups submitted

to FTA

90-day CAP

follow-ups from FTA

Oct. 22

Oct. 31

Extension dates

submitted to FTA

90-day CAP

follow-ups submitted

to FTA

Nov. 5

90-day CAP

follow-ups from FTA

Dec. 22

Dec. 10

30- & 60-day CAP

follow-ups from FTA

Dec. 23

30-day CAP

follow-up submitted

to FTA

90-day CAP

follow-ups submitted

to FTA

Jan. 30

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• On Jan. 28th, FTA approved WMATA’s largest manual reimbursement request to-date of $63.8M

• Outside counsel conducted Asset Management compliance training for 161 employees in January

• All FFY2013 & ‘14 grant applications submitted: $311M awarded; $274M in final (DOL) review; $148M PRIIA in FTA review

• New Director of Internal Compliance on-board January 26th

• WMATA submitted responses to the FTA’s 90-day follow-up letter on January 30th

Update

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