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Costs Incurred by the Washington Metropolitan Area 


Transit Authority under 


Transit Security Grant No. 2009-RA-R1-0102 


OIG-13-112 August 2013
 
 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

 Washington, DC 20528 / www.oig.dhs.gov 

AUG 28 2013 

MEMORANDUM FOR: Brian E. Kamoie 

 Assistant Administrator 

 Grant Programs Directorate 

Federal Emergency Management Agency 

FROM: hards 

spector General for Audits 

Anne L. Ric

Assistant In

SUBJECT: Costs Incurred by the Washington Metropolitan Area 

Transit Authority under Transit Security Grant No. 2009-

RA-R1-0102 

Attached for your action is our final letter report, Costs Incurred by the Washington 

Metropolitan Area Transit Authority under Transit Security Grant No. 2009-RA-R1-0102. 

We incorporated the formal comments from the Associate Administrator for Policy, 

Program Analysis and International Affairs in the final report. 

The report contains three recommendations aimed at improving the Transit Security 

Grant program’s overall effectiveness. Your office concurred with all 

recommendations. Based on information provided in your response to the draft report, 

we consider the recommendations resolved and open. Once your office has fully 

implemented the recommendations, please submit a formal close-out letter to us within 

30 days so that we may close the recommendations. The memorandum should be 

accompanied by evidence of completion of agreed-upon corrective actions. Please 

email a signed PDF copy of all closeout requests to OIGAuditsFollowup@oig.dhs.gov. 

Consistent with our responsibility under the Inspector General Act, we will provide 

copies of our report to appropriate congressional committees with oversight and 

appropriation responsibility over the Department of Homeland Security. We will post 

the report on our website for public dissemination. 

Major contributors to this report are Brooke Bebow, Director; Lisa Vonder Haar, Audit 

Manager; Shamika Morris, Auditor; Shanelle Jones-Quintanilla, Program Analyst; and 

John Shiffer, Referencer. 

Please call me with any questions, or your staff may contact Mark Bell, Deputy Assistant 

Inspector General for Audits, at (202) 254-4100. 

Attachment 
 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Background 

The American Recovery and Reinvestment Act of 2009 (Recovery Act), as amended, 

appropriated $150 million for Public Transportation Security Assistance and Railroad 

Security Assistance. The Federal Emergency Management Agency (FEMA) administered 

these funds through its Transit Security Grant Program, which primarily funded 

operational packages for canine, mobile explosives screening, and antiterrorism teams, 

and capital projects for activities such as infrastructure protection. 

In 2009, FEMA awarded $9,560,064 to the Washington Metropolitan Area Transit 

Authority (WMATA) for the creation of antiterrorism teams (ATT). Specifically, the grant 

funded 20 Metro Transit Police Department sworn officer positions, which were used to 

form 5 permanent ATTs. From August 1, 2009, through June 30, 2012, WMATA 

reported project costs totaling $7,590,766. As of June 30, 2012, WMATA had been 

reimbursed for $1,058,080 of these costs. The majority of the claimed costs consisted 

of personnel expenses for the ATTs and overtime for the officers assigned to backfill the 

positions for the newly formed ATTs. 

Reimbursement for eligible project costs is based on the Department’s fiscal year (FY) 

2009 American Recovery and Reinvestment Act Transit Security Grant Program Guidance 

and Application Kit (Transit Security Grant Guidance); 44 Code of Federal Regulations 

(CFR) Part 13, Uniform Administrative Requirements for Grants and Cooperative 

Agreements to State and Local Governments; and 2 CFR Part 225, Cost Principles for 

State, Local and Indian Tribal Governments, formerly Office of Management and Budget 

(OMB) Circular A-87. The grantee must also comply with OMB Circular A-133 (Revised), 

Audits of States, Local Governments and Non-Profit Organizations. 

The objective of this audit was to determine whether costs claimed by WMATA were 

allowable, allocable, and reasonable according to the grant agreement and applicable 

Federal requirements. 

Results of Audit 

The reimbursed project costs of $1,058,080 were allowable, allocable, and reasonable. 

We reviewed an additional $2,701,174 of the $7,590,766 in reported project costs and 

determined that these costs were allowable, allocable, and reasonable. However, we 

identified three areas in which FEMA and WMATA can improve the management of the 

Recovery Act Transit Security Grant: 

WMATA inaccurately reported $194,284 in fringe benefit costs on its Federal 

Financial Report; 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

WMATA did not disclose more than $4.7 million in grant-related expenditures in 

FYs 2010 and 2011 as required by Federal regulations; and 

WMATA did not manage all grant-funded equipment inventory according to 

Federal regulations. 1 

Reporting of Federal Expenditures 

Federal Financial Report 

According to 44 CFR 13.20(b)(1), grantees’ financial management systems must allow 

for accurate, current, and complete disclosure of the financial results of financially 

assisted activities, according to the reporting requirements of the grant. Transit Security 

Grant Guidance requires grantees to submit quarterly Federal Financial Reports to FEMA 

that show the grant obligations and expenditures. 

As of June 30, 2012, WMATA reported cumulative expenditures of $7,590,766 on its 

Federal Financial Report. The report included $194,284 in fringe benefits costs that 

exceeded the grant’s allowable rate. This occurred because WMATA did not identify the 

unallowable fringe benefit costs before submitting the Federal Financial Report. 

Although WMATA had procedures for identifying allowable costs, it did not have a 

procedure to ensure that fringe benefit expenditures were not reported in excess of the 

grant’s allowable rate. According to WMATA, the unallowable fringe benefit costs were 

adjusted in its December 2012 Federal Financial Report. As of December 31, 2012, 

these costs had not been reimbursed. Without sufficient controls to ensure that 

expenditures are accurately reported, WMATA cannot ensure that requests for 

reimbursements do not include unallowable costs. 

Single Audit Reports 

All non-Federal entities that expend $500,000 or more in Federal awards in a year must 

obtain an annual audit as required by the Single Audit Act Amendments of 1996 and 

OMB Circular A-133. A single audit is intended to provide a cost-effective audit for nonFederal entities, in that one audit is conducted in lieu of multiple audits of individual 

programs. In preparation for a single audit, OMB Circular A-133 requires grantees to list 

individual Federal programs by agency and total Federal awards expended for that fiscal 

year. The special conditions of the grant award also require recipients to separately 

identify the expenditures for each grant award funded under the Recovery Act. 

1

 WMATA’s fiscal year begins on July 1 and ends on June 30 of the following year. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

WMATA did not disclose more than $4.7 million in Recovery Act Transit Security Grantrelated expenditures in FYs 2010 and 2011, as required by these regulations. Our office 

notified the audit firm responsible for performing the single audit of the nondisclosure 

of these project costs, and the audit firm reported this as a material weakness in its 

2012 single audit report. WMATA concurred with the audit firm’s recommendation for 

corrective action. 

Internal Controls for Safeguarding Assets 

According to 44 CFR 13.32(d)(3), a property control system must be developed to ensure 

adequate safeguards to prevent the loss, damage, or theft of grant-funded property. 

Also, property records must include the location of the property. 

WMATA did not manage grant-funded equipment inventory according to these 

regulations. During our site visit in March 2013, WMATA officials were unable to locate 

a Raman spectrometer, valued at more than $68,000.2

 The location of the spectrometer 

was unknown because ATT officers were not required to sign out equipment. In 

addition, the ATTs did not maintain a control system to track the location of the 

equipment. WMATA located the missing spectrometer 6 days after our site visit. 

However, without an adequate control system that includes tracking of equipment 

procured with grant funds, WMATA cannot ensure that equipment is properly 

safeguarded and available when needed. 

Recommendations 

We recommend that the Assistant Administrator, Grant Programs Directorate: 

Recommendation #1: 

Require WMATA to develop procedures to ensure that expenditures are accurately 

reported on its Federal Financial Reports. 

Recommendation #2: 

Verify that WMATA has implemented corrective action in response to the material 

weakness identified in the 2012 single audit report. 

2

 A Raman spectrometer is a handheld instrument that allows officers to rapidly identify unknown solid 

and liquid chemicals directly in the field. 

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 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Recommendation #3: 

Require WMATA to develop procedures for safeguarding assets procured with Recovery 

Act grant funds. 

Management Comments and OIG Analysis 

FEMA’s Response to Recommendation #1: FEMA concurred with this recommendation. 

FEMA’s Grant Programs Directorate will engage with WMATA to ensure that, by October 

2013, procedures are in place to report expenditures on Federal Financial Reports 

accurately. 

OIG Analysis: We consider FEMA’s actions responsive to the intent of this 

recommendation, which is resolved and open. This recommendation will remain open 

pending confirmation that WMATA has developed adequate procedures for accurately 

reporting its grant expenditures. 

FEMA’s Response to Recommendation #2: FEMA concurred with this recommendation. 

FEMA’s Grant Programs Directorate will engage with WMATA to ensure that, by October 

2013, an automatic reporting system has been created to prevent any further material 

weaknesses in future audits. 

OIG Analysis: We consider FEMA’s actions responsive to the intent of this 

recommendation, which is resolved and open. This recommendation will remain open 

pending confirmation that WMATA has developed an adequate automatic reporting 

system to prevent further material weaknesses in future audits. 

FEMA’s Response to Recommendation #3: FEMA concurred with this recommendation. 

FEMA’s Grant Programs Directorate will engage with WMATA to ensure that, by October 

2013, it develops a procedure for safeguarding grant assets at the officer level. 

OIG Analysis: We consider FEMA’s actions responsive to the intent of the 

recommendation, which is resolved and open. This recommendation will remain open 

pending confirmation that WMATA has developed a procedure for safeguarding assets 

purchased with grant funds at the ATT officer level. 

www.oig.dhs.gov 5 OIG-13-112 
 

 

 

 

 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix A 

Objective, Scope, and Methodology 

The Department of Homeland Security (DHS) Office of Inspector General (OIG) was 

established by the Homeland Security Act of 2002 (Public Law 107-296) by amendment 

to the Inspector General Act of 1978. This is one of a series of audit, inspection, and 

special reports prepared as part of our oversight responsibilities to promote economy, 

efficiency, and effectiveness within the Department. 

The objective of this audit was to determine whether costs claimed by WMATA were 

allowable, allocable, and reasonable according to the grant agreement and applicable 

Federal requirements. To accomplish our audit objective, we examined reimbursed 

project costs of $1,058,080 and selected a judgmental sample of $2,701,174 from 

WMATA’s total reported project costs of $7,590,766 for August 1, 2009, through June 

30, 2012. In conducting our audit, our tests and procedures included the following: 

Reviewing the Recovery Act, the grant application and award, Transit Security 

Grant Guidance, and Federal cost principles and grant administration 

requirements; 

Interviewing FEMA officials regarding their oversight of the Recovery Act Transit 

Security Grant awarded to WMATA; 

Interviewing WMATA officials to gain an understanding of their accounting 

system and applicable internal controls; 

Examining payroll records, vendor invoices, and other supporting costs for our 

judgmental sample of reported costs, as well as WMATA’s payroll and 

accounting procedures; 

Reviewing accounting transactions related to wages, overtime and fringe benefit 

payments, and related claims for FEMA reimbursements; 

Reviewing contract files for the vendors selected to provide equipment for the 

ATTs; 

Reviewing the single audit reports for the fiscal years ending June 30, 2011, and 

June 30, 2012, to identify issues and other conditions that could affect our audit; 

and 

www.oig.dhs.gov 6 OIG-13-112 
 

 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Reviewing WMATA OIG audit reports related to WMATA’s financial system. 

We relied on computer processed data provided by WMATA for information regarding 

transactions recorded in its accounting records. We conducted limited tests on this data 

against source documentation to ensure that the data were sufficiently reliable to be 

used in meeting our audit objective. 

We conducted this performance audit between August 2012 and May 2013, pursuant to 

the Inspector General Act of 1978, as amended, and according to generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based upon our 

audit objective. 

www.oig.dhs.gov 7 OIG-13-112 
 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix B 

Management Comments to the Draft Letter Report 

U.:>. l)epartmcnl or Homeland Sccuritv 

Washin ton. DC 20472 · 

JUL 1 2 2013 

MEMORANDUM FOR: Anne L. Richards 

Assistant Inspector General for Audits (010) 

Department of Homeland Security 

.-. ~ 

FROM: W ll ,\JDavid J. Kaufinan V)(JA.>Y'""" 

V Associate Administrator for 

Policy, Program Analysis and Internationa l Affairs 

Federal Emergency Management Agency (FEMA) 

SUBJECT: FEMA's Response to OIG-12-165-AUD-FEMA DRAFT 

REPORT: "Costs Incurred by the Washington Metropolitan Area 

Transit Authority under Transit Security Grant No. 2009-RA-R 1-

0102". 

Thank you for the opportunity to review and comment on 010-12-165-AUD-FEMr\ DRAfT 

REPORT: "Costs Incurred by the Washington Metropolitan Area Transit Authority under Transit 

Security Grant No. 2009-RA-Rl-OI 02". 

OIG Recommendation 1: We recommend that the Assistant Administrator, Grant Programs 

Directorate require WMA TA to develop procedures to ensure that expenditures are accurately 

reported on its Federal Financial Reports. 

FEMA Response to Recommendation 1: Concur. FEMA's Grant Program Directorate will 

engage with WMATA to ensure that procedures are in place within 90 days of the date of this 

response in order for all expenditures to be accurately reported on all federal Financial Reports. 

OIG Recommendation 2: We recommend that the Assistant Administrator, Grant Programs 

Directorate verify that WMA TA has implemented corrective action in response to the material 

weakness identified in the 2012 si11gle audit report. 

FEMA Response to Recommendation 2: Concur. FEMA's Grant Program Division will 

engage with WMA T A to ensure that an automatic reporting system has been created and 

implemented within 90 days of the date of this response in order to prevent any further material 

weaknesses in future audits. WMAT A is aware of this weakness and have indicated they will 

create an automatic report whicb will prevent this issue from arising in the future. 

www fcma.gov 

www.oig.dhs.gov 8 OIG-13-112 
g . ~ 

. OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

OIG Recommendation 3: We recommend that the Assistant Administrator, Grant Programs 

Directorate require "WMA T A to develop procedures for safeguarding assets procured with 

Recovery Act grant funds. 

FEMA Response to Recommendation 3: Concur. FEMA' s Grant Programs Pirectorate will 

engage with WMA T A to ensure that a more robust sign in and sign out procedure for safe 

guarding TSGP ARRA assets is implemented within 90 days of the date of this response. While 

WMA TA currently has a sign in and sign out system to safe guard assets; FEMA will work with 

WMATA to ensure another layer of safe guarding assets exist at the officer level. 

Thank you again for the opponunity to comment on OIG-12-165-AUD-FEMA DRAFT 

REPORT: "Costs Incurred by the Washington Metropolitan Area Jransit Authority under Transit 

Security Grant No. 2009-RA-Rl-0102" and for the work that you and your team have done to 

better inform us throughout this audit so that we may enhance the program's overall 

effectiveness. Please direct any questions regarding this response to Gary McKeon, FEMA' s 

Chief Audit Liaison, at 202-646-1308. 

2 

www.oig.dhs.gov 9 OIG-13-112 
 

 

 

 

 OFFICE OF INSPECTOR GENERAL 

 Department of Homeland Security 

Appendix C 

Report Distribution 

Department of Homeland Security 

Secretary 

Deputy Secretary 

Chief of Staff 

Deputy Chief of Staff 

General Counsel 

Executive Secretary 

Director, GAO/OIG Liaison Office 

Assistant Secretary for Office of Policy 

Assistant Secretary for Office of Public Affairs 

Assistant Secretary for Office of Legislative Affairs 

Departmental Recovery Act Coordinator 

Acting Chief Privacy Officer 

Federal Emergency Management Agency 

Branch Chief, Transportation Infrastructure Security 

Chief, Audit Branch, Grants Program Directorate 

Office of Management and Budget 

Chief, Homeland Security Branch 

DHS OIG Budget Examiner 

Congress 

Congressional Oversight and Appropriations Committees, as appropriate 

www.oig.dhs.gov 10 OIG-13-112 
 

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