Page 1 GAO-16-631R FHWA Administrative Expenses

441 G St. N.W.

Washington, DC 20548

June 24, 2016

The Honorable James Inhofe

Chair 

The Honorable Barbara Boxer

Ranking Member

Committee on Environment and Public Works

United States Senate 

The Honorable Bill Shuster

Chair 

The Honorable Peter A. DeFazio

Ranking Member 

Committee on Transportation and Infrastructure

House of Representatives

Highway Trust Fund: Administrative Expenses of the Federal Highway Administration

Section 1433 of Public Law 114-94, Fixing America's Surface Transportation Act (FAST Act), 

included a provision for GAO to submit a report describing the administrative expenses of the 

Department of Transportation’s (DOT) Federal Highway Administration (FHWA) funded from the 

Highway Trust Fund (HTF). Our objectives were to describe (1) the types and amounts of 

administrative expenses funded from HTF for FHWA programs and offices during the 3 most 

recent fiscal years (fiscal years 2013 through 2015); (2) the extent to which FHWA effectively 

designed tracking and monitoring internal controls over its administrative expenses as of 

September 30, 2015; and (3) the extent to which FHWA has the flexibility, under existing laws 

and regulations, to reallocate administrative monies funded from HTF between general 

operating expenses and other functions. 

We briefed the House Committee on Transportation and Infrastructure and its Subcommittee on 

Highways and Transit on April 27, 2016, and the Senate Committee on Environment and Public 

Works on May 2, 2016, on the results of our work. This report formally transmits the briefing 

slides as of May 11, 2016, with the final results of our work in response to the provision in 

Section 1433 of the FAST Act (see enc. I).

To address our first objective, we reviewed relevant legislation, FHWA budget documents, and 

general ledger data to describe and present the types and amounts of administrative expenses 

of FHWA funded from HTF during the 3 most recent fiscal years (fiscal years 2013 through 

2015). 

To address our second objective, we (1) obtained and reviewed applicable policies and 

procedures used by FHWA; DOT’s Office of Management and Budget (OMB) Circular A-123,

Management’s Responsibility for Internal Control Summary Report; relevant internal control risk 

assessments; and OMB Circular A-123 process documents to identify FHWA’s tracking and 

monitoring internal controls over its administrative expenses; and (2) determined whether 
Page 2 GAO-16-631R FHWA Administrative Expenses

FHWA effectively designed tracking and monitoring internal controls over its administrative 

expenses as of September 30, 2015, in accordance with Standards for Internal Control in the 

Federal Government.

1 We focused our review on the tracking and monitoring controls as they 

relate to general operating expenses because these expenses represented over 90 percent of 

administrative monies funded from HTF for fiscal year 2015. 

To address our third objective, we reviewed existing laws and regulations and relevant 

budgetary guidance to describe the extent to which FHWA has the flexibility to reallocate 

administrative monies funded from HTF between general operating expenses and other 

functions. We assessed the reliability of the data we used by reviewing relevant documentation 

and interviewing knowledgeable FHWA officials. We found the data to be reliable for the 

purposes cited in this report.

We conducted this performance audit from January 2016 to May 2016 in accordance with 

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 on our audit objectives.

In summary, we found that FHWA functions funded by administrative monies from HTF include 

(1) general operating expenses (salaries and benefits, equipment, travel, and other expenses);

2

(2) transfers to the Appalachian Regional Commission; and (3) specific programs consisting of 

the Disadvantaged Business Enterprise, Highway Use Tax Evasion, On-the-Job Training 

Support Services, Consolidation of Programs (Operation Lifesaver, Public Road Safety 

Clearinghouse, Work Zone Safety Grants, and National Work Zone Safety Information 

Clearinghouse), and Air Quality and Congestion Mitigation Measure Outcomes Assessment

Study. In our review of tracking and monitoring internal controls over general operating 

expenses, we found that FHWA had effectively designed these controls as of September 30, 

2015, for the significant business processes related to general operating expenses. 

Furthermore, we found that FHWA has limited flexibility, under existing laws and regulations, to 

reallocate administrative monies funded from HTF between general operating expenses and 

certain other functions.

We are not making any recommendations in this report. 

Agency Comments 

We provided a draft of this report to DOT for review and comment. In its response to our report, 

DOT indicated that FHWA will continue to implement tracking and monitoring internal controls to 

effectively manage its funding for general operating expenses provided to the agency under the 

FAST Act. DOT’s written comments are reprinted in enclosure II. Further, DOT provided 

technical comments that were incorporated, as appropriate. 

- - - - -

 1

See GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: 

November 1999). 

2

Other expenses consisted of utilities, supplies, rent, printing, transportation, and other services, including 

reimbursement to DOT’s Office of Inspector General for conducting annual financial statements audits.
Page 3 GAO-16-631R FHWA Administrative Expenses

We are sending copies of this report to the appropriate congressional committees and the 

Assistant Secretary for Administration at the Department of Transportation. In addition, the 

report is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have questions concerning this report, please contact me at (202) 512-9377

or clarkce@gao.gov. Contact points for our Offices of Congressional Relations and Public

Affairs may be found on the last page of this report. GAO staff who made key contributions to 

this report include Lynda Downing (Assistant Director), Steven Cohen (Assistant Director),

Patrick Frey, Diana Lee, Vivian Ly, Erika Szatmari, and Estelle Tsay-Huang.

Cheryl E. Clark

Director

Financial Management and Assurance 

Enclosures
Page 4 GAO-16-631R FHWA Administrative Expenses

Enclosure I: Briefing for Congressional Committees

See next page for presentation.
Highway Trust Fund: Administrative Expenses 

of the Federal Highway Administration

Information Presented to the

Senate Committee on Environment and Public Works

House Committee on Transportation and Infrastructure

Page 5 GAO-16-631R FHWA Administrative Expenses
Background

• Section 1433 of Public Law 114-94, Fixing America’s Surface 

Transportation Act (FAST Act), included a provision for GAO to 

submit a report describing the administrative expenses of the 

Department of Transportation’s Federal Highway Administration 

(FHWA) funded from the Highway Trust Fund (HTF). 

Page 6 GAO-16-631R FHWA Administrative Expenses
Objectives

• Our objectives were to describe the following:

1. The types and amounts of administrative expenses funded 

from HTF for FHWA programs and offices during the 3 most 

recent fiscal years (fiscal years 2013 through 2015). 

2. The extent to which FHWA effectively designed tracking and 

monitoring internal controls over its administrative expenses 

as of September 30, 2015. 

3. The extent to which FHWA has the flexibility, under existing 

laws and regulations, to reallocate administrative monies 

funded from HTF between general operating expenses and 

other functions. 

Page 7 GAO-16-631R FHWA Administrative Expenses
Scope and Methodology

• To address our first objective, we took the following action:

• Reviewed relevant legislation, FHWA budget documents, and general ledger data 

to describe and present the types and amounts of administrative expenses of 

FHWA funded from HTF during the 3 most recent fiscal years (fiscal years 2013 

through 2015). 

• To address our second objective, we took the following actions:

• Obtained and reviewed applicable policies and procedures used by FHWA; the 

Department of Transportation’s Office of Management and Budget (OMB) Circular 

A-123, Management’s Responsibility for Internal Control Summary Report; 

relevant internal control risk assessments; and OMB Circular A-123 process 

documents to identify FHWA’s tracking and monitoring internal controls over its 

administrative expenses.

• Determined whether FHWA effectively designed tracking and monitoring internal 

controls over its administrative expenses as of September 30, 2015, in 

accordance with Standards for Internal Control in the Federal Government.

1 We 

focused our review on the tracking and monitoring controls as they relate to 

general operating expenses because these expenses represented over 90 

percent of administrative monies funded from HTF for fiscal year 2015. 1See GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). 

Page 8 GAO-16-631R FHWA Administrative Expenses
Scope and Methodology (continued)

• To address our third objective, we took the following action:

• Reviewed existing laws and regulations and relevant 

budgetary guidance to describe the extent to which FHWA 

has the flexibility to reallocate administrative monies funded 

from HTF between general operating expenses and other 

functions. 

• We assessed the reliability of the data we used by reviewing 

relevant documentation and interviewing knowledgeable FHWA 

officials. We found the data to be reliable for the purposes cited 

in this briefing.

Page 9 GAO-16-631R FHWA Administrative Expenses
Scope and Methodology (continued)

• We conducted this performance audit from January 2016 to May

2016 in accordance with 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 on our audit objectives.

Page 10 GAO-16-631R FHWA Administrative Expenses
FHWA Functions Funded by 

Administrative Monies from HTF

• 23 U.S. Code § 104(a) provided monies for administrative 

expenses of FHWA to be used to

− administer the provisions of law to be funded from appropriations for the 

Federal-aid and other highways programs;

− make transfers to the Appalachian Regional Commission; and

− reimburse, as appropriate, the Office of Inspector General of the 

Department of Transportation for conducting annual audits of financial 

statements.

• Other statutes authorize the Secretary of Transportation to 

deduct sums as necessary from administrative monies made 

available under § 104(a) to carry out specific programs.

• Funds authorized for each fiscal year remain available until 

expended.

Page 11 GAO-16-631R FHWA Administrative Expenses
FHWA Functions Funded by Administrative 

Monies from HTF (continued)

General 

Operating 

Expenses

• Salaries and Benefits

• Equipment

• Travel

• Othera 

Transfers • Appalachian Regional Commission

Programs • Disadvantaged Business Enterprise

• Highway Use Tax Evasion

• On-the-Job Training Support Services

• Consolidation of Programs: Operation Lifesaver, Public 

Road Safety Clearinghouse, Work Zone Safety Grants, 

and National Work Zone Safety Information Clearinghouse

• Air Quality and Congestion Mitigation Studyb (funding 

authorized from funds made available for fiscal year 2013) 

aOther expenses consisted of utilities, supplies, rent, printing, transportation, and other services, including reimbursement to the Office of Inspector General of the Department of 

Transportation for conducting annual financial statements audits. 

bThe full title of this program is Air Quality and Congestion Mitigation Measure Outcomes Assessment Study.

Page 12 GAO-16-631R FHWA Administrative Expenses
FHWA Obligations Funded by Administrative 

Monies from HTF for Fiscal Years 2013 through 2015

Page 13 GAO-16-631R FHWA Administrative Expenses
Design of Internal Controls to Track and 

Monitor General Operating Expenses

• Internal control is an integral component of an organization’s 

management that provides reasonable assurance that the 

following objectives are being achieved:

- effectiveness and efficiency of operations, 

- reliability of financial reporting, and 

- compliance with applicable laws and regulations.1 

1See GAO/AIMD-00-21.3.1. 

Page 14 GAO-16-631R FHWA Administrative Expenses
Design of Internal Controls to Track and Monitor 

General Operating Expenses (continued)

• We found that FHWA had effectively designed tracking and 

monitoring internal controls over its general operating expenses 

as of September 30, 2015, for the significant business processes 

related to general operating expenses:

- Human Resources/Time and Attendance;

- Procure to Pay;

- Travel Management; and

- Property, Plant and Equipment.

Page 15 GAO-16-631R FHWA Administrative Expenses
Design of Internal Controls to Track and Monitor 

General Operating Expenses (continued)

• Examples of key internal controls for tracking and monitoring 

FHWA administrative expenses:

• Human Resources/Time and Attendance: 

• Time and Attendance approving officials review and 

approve time and attendance in the Consolidated 

Automated System for Time and Labor Entry. 

• Human Resources specialists review and process 

authorized employee promotions in a timely manner. 

• Procure to Pay: Contracting Officer’s Representatives/ 

Contracting Officers perform contract reviews, which include 

desk audits, formal audits where required, and final 

negotiations with contractors prior to payment. 

Page 16 GAO-16-631R FHWA Administrative Expenses
Design of Internal Controls to Track and Monitor 

General Operating Expenses (continued)

• Travel Management: Designated employees and approving 

officials review and approve travel authorizations for accuracy 

and reasonableness.

 

• Property, Plant and Equipment: The Office of Information 

Technology (IT) Services (for IT assets) or the Office of 

Management Services (for non-IT assets) assesses the 

justification for purchases of long-lived assets prior to 

processing the procurement requests. 

Page 17 GAO-16-631R FHWA Administrative Expenses
Limited Flexibility to Reallocate 

Administrative Monies Funded from HTF

• FHWA has limited flexibility, under existing laws and regulations, to 

reallocate administrative monies funded from HTF between general 

operating expenses and certain other functions. These other functions 

funded by administrative monies from HTF include transfers to the 

Appalachian Regional Commission and specific programs. 

• Limitations include the following:

• General operating expenses and transfers to the Appalachian 

Regional Commission are subject to obligation limitations 

specified in annual appropriations acts.

• Specific programs are subject to maximum and minimum funding 

provided by their authorizing statutes. 

• Funding cannot be used for any purpose not authorized by 

statute.

Page 18 GAO-16-631R FHWA Administrative Expenses
Limited Flexibility to Reallocate Administrative 

Monies Funded from HTF (continued)

Page 19 GAO-16-631R FHWA Administrative Expenses
Limited Flexibility to Reallocate Administrative 

Monies Funded from HTF (continued)

• For fiscal year 2015, Congress authorized $440.0 million of 

administrative monies for FHWA to be funded from HTF. FHWA’s 

annual appropriations for fiscal year 2015 gave FHWA the flexibility to 

obligate up to a total of $429.3 million for general operating expenses 

and transfers to the Appalachian Regional Commission. If FHWA 

obligated the entire $429.3 million for these two functions, it would 

have $10.7 million available for specific programs (subject to funding 

limitations set out in authorizing statutes).

• Based on the specific program needs, budget decisions, and any 

minimum funding requirements (e.g., for the Consolidation of 

Programs), FHWA determines how much to allocate to each of the 

three functions (general operating expenses, transfers, and specific 

programs) from the available monies in a given fiscal year. 

Page 20 GAO-16-631R FHWA Administrative Expenses
Page 21 GAO-16-631R FHWA Administrative Expenses

Enclosure II: Comments from the Department of Transportation

(100544)
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