FTA PROCEDURES TO PREVENT 

ANTIDEFICIENCY ACT VIOLATIONS 

Federal Transit Administration 

Report Number: FI-2007-047 

Date Issued: May 15, 2007 
U.S. Department of 

Memorandum

Transportation 

Office of the Secretary 

of Transportation 

Office of Inspector General 

Subject: ACTION: Report on the Audit of 

Procedures to Prevent Antideficiency Act 

Violations, Federal Transit Administration 

Report Number: FI-2007-047 

Date: May 15, 2007 

From: Rebecca C. Leng 

Assistant Inspector General for Financial 

 and Information Technology Audits 

Reply to 

Attn. of: JA-20 

To: Federal Transit Administrator 

This final report presents the results of our review of Federal Transit 

Administration (FTA) actions to prevent Antideficiency Act violations of grants 

funds. We first reported that the mass transit account of the Highway Trust Fund, 

which is used to fund transit formula and discretionary grants, had a negative 

balance of $77 million in fiscal year (FY) 2001. 

A detailed review the following year identified significant internal control 

weaknesses that allowed former FTA employees to use inappropriate accounting 

procedures to conceal overobligations, such as off-setting overobligations against 

available funding in other appropriations accounts and manipulating fund 

liquidation information in the Budget Execution Reports (SF-133) sent to the 

Department of the Treasury and the Office of Management and Budget (OMB).1

In June 2003, the Department reported to OMB and Congress that FTA committed 

a violation of the Antideficiency Act. In the Department’s FY 2005 appropriation, 

the House Appropriations Committee directed FTA to report how the agency had 

modified its accounting procedures and practices to prevent recurrence of 

Antideficiency Act violations. The Committee also directed our office to review 

FTA’s new procedures and report to the House and Senate Committees on 

Appropriations on the sufficiency of these new procedures.2

 

 

1

 OIG report on “Highway Trust Fund Financial Statements for Fiscal Years 2002 and 2001,” FI-2003-015, January 

24, 2003. 2

 House Report 108-671 accompanying the Departments of Transportation and Treasury and Independent Agencies 

Appropriations Bill, 2005. 
2

Our objective was to determine whether FTA has implemented sufficient 

accounting procedures and internal controls to prevent future Antideficiency Act 

violations in the grants program. We conducted this program audit in compliance 

with Generally Accepted Government Auditing Standards as prescribed by the 

Comptroller General of the United States, and conducted such tests as we 

considered necessary to uncover waste, fraud, or abuse. Our scope and 

methodology are described in Exhibit A. 

RESULTS 

We reviewed and tested the controls implemented by FTA to prevent and detect 

overobligations in the mass transit account for the grants program and concluded 

that these controls were properly implemented. FTA obligates grants funding 

through its grants management system, called the Transportation Electronic Award 

and Management (TEAM) system. TEAM has built-in automated controls to 

prevent overobligation by not allowing obligation transactions to be processed 

unless the account contains sufficient funds. 

FTA utilizes TEAM for budget execution, control of program funds, and tracking 

grants to transit agencies; and uses a wire transfer system—the Electronic Clearing 

House Operation (ECHO)—for making payments to grantees. An OIG contractor, 

KPMG LLP, tested the effectiveness of the controls in TEAM and ECHO. KPMG 

tested the following controls and concluded that they were effective in preventing 

and detecting overobligations: 

• Fund authority (apportionment, allotments) and obligations were accurately 

recorded in TEAM. 

• TEAM contained built-in edit checks that prevented obligations from 

exceeding available funds (allotment or suballotment). 

• TEAM automatically reduced available funds for the obligated amounts. New 

obligation requests were checked against the reduced fund balance to prevent 

future overobligation. 

• Payments made in the ECHO system were properly authorized and accurately 

recorded in both ECHO and the departmental accounting system. 

FTA also corrected interface problems between TEAM/ECHO and the 

departmental accounting system, called Delphi, for financial reporting. In 2003 

we reported that FTA could not electronically process grants transactions into 

Delphi and had to manually enter hundreds of millions of dollars of adjustments 

into the system. Today, all grants obligation and payment transactions are 
3

automatically entered into Delphi from TEAM/ECHO without manual 

intervention. 

Further, FTA and the Office of the Secretary of Transportation (OST) have 

implemented multiple review and reconciliation procedures to ensure that the 

Report on Budget Execution (SF-133) submitted to the Department of the 

Treasury and OMB accurately reflect fund usage activities. In addition to 

submitting the reports to OMB and Treasury on a quarterly basis, FTA prepares 

monthly budget execution reports for review by OST and reconciliation to 

authorized funds in the Apportionment and Reapportionment Schedule (SF-132). 

This monthly review helps identify potential overobligation between the quarterly 

submissions to OMB and Treasury. 

Based on our review and test results, we concluded that FTA has implemented 

sufficient controls to prevent and detect overobligations in the mass transit account 

for the grants program, as prescribed in its submission to the Congress.3

 FTA 

must remain vigilant in exercising these controls. 

This concludes our review and we are not making any recommendations. We 

appreciate the courtesies and cooperation of FTA and OST representatives during 

this audit. If you have any questions concerning this report, please call me at 

(202) 366-1496, or Earl Hedges, Program Director, at (410) 962-1729. 

 

3

 On April 25, 2005, FTA sent a letter to the House and Senate Appropriations Committees stating that it had 

implemented multiple review and reconciliation procedures and automated system controls to prevent the recurrence 

of overobliations. 
4 

EXHIBIT A. SCOPE AND METHODOLOGY 

To determine the effectiveness of accounting procedures and controls established 

by FTA to prevent violations of the Antideficiency Act, we conducted interviews, 

observed the daily processes, and tested documentation in the FTA Accounting, 

Budget, and Financial Systems Offices. We focused on the procedures and 

controls designed to prevent overobligation of agency program funds. We 

evaluated the policies and procedures implemented by FTA for its grants 

management system Transportation Electronic Award and Management (TEAM), 

Electronic Clearing House Operation (ECHO), and the Department’s Budget 

Execution Module. We contacted FTA Accounting, Budget, and Financial 

Systems Offices and OST’s Office of Financial Management and requested 

documentation on any system problems that would prevent full implementation of 

its policies. 

As part of the audit of the FY 2006 Highway Trust Fund financial statements, the 

OIG contractor—KPMG LLP—evaluated the effectiveness of controls for FTA’s 

TEAM and ECHO system operations. KPMG met with FTA officials, observed 

and tested the apportionments, allotments, reservations/obligations, and 

adjustments entered in TEAM and the apportionment values from the approved 

SF-132s to ensure that the allotments did not exceed the apportionment value(s) 

from the SF-132s. Each process was reviewed and documented. 

We conducted this review between June 2005 and April 2007, in accordance with 

Generally Accepted Government Auditing Standards prescribed by the 

Comptroller General of the United States, and included such tests as we 

considered necessary to provide reasonable assurance of detecting abuse or illegal 

acts. 

EXHIBIT A. Scope And Methodology 
5

EXHIBIT B. ACTIVITIES VISITED OR CONTACTED 

FTA 

Office of Accounting, Washington, D.C. 

Office of Budget, Washington, D.C. 

Office of Financial Systems, Washington, D.C. 

OST 

Office of Financial Management, Washington, D.C. 

EXHIBIT B. Activities Visited Or Contacted 
 6 

EXHIBIT C. MAJOR CONTRIBUTORS TO THIS REPORT 

Name Title 

Earl Hedges Program Director 

Mark Rielly Project Manager 

Ericka Harris Auditor 

Gina Sammons Auditor 

EXHIBIT C. Major Contributors To This Report