Office of Inspector General

Audit Report

NHTSA’S OVERSIGHT OF MISSISSIPPI’S 

MANAGEMENT OF FEDERAL HIGHWAY SAFETY 

GRANTS NEEDS STRENGTHENING

National Highway Traffic Safety Administration

Report Number: MH–2013–040

Date Issued: February 6, 2013
U.S. Department of

Memorandum

Transportation

Office of the Secretary

of Transportation

Office of Inspector General

Subject: ACTION: Final Report: NHTSA’s Oversight of 

Mississippi’s Management of Federal Highway 

Safety Grants Needs Strengthening

National Highway Traffic Safety Administration

Report No. MH-2013-040

Date: February 6, 2013

From: Joseph W. Comé

Assistant Inspector General for

Highway and Transit Audits

Reply to 

Attn. of: JA–40

To: National Highway Traffic Safety Administrator

The National Highway Traffic Safety Administration (NHTSA) awards safety

grants to States for programs to reduce fatalities, injuries, and economic losses 

resulting from motor vehicle crashes. According to NHTSA, Mississippi has the 

highest rate of vehicle fatalities in the Nation and the third highest rate of alcoholrelated fatalities.1 For fiscal years 2007 through 2010, NHTSA provided 

$20.8 million in highway safety grant funds to the Mississippi Office of Highway 

Safety (MOHS).2 In addition to this amount, Mississippi transferred $36.3 million 

from its Federal-aid highway construction funds to the highway safety program 

under Section 154 of Title 23 United States Code (U.S.C.) to be used for alcoholimpaired driving programs.

3

At NHTSA’s request, we initiated an audit of Mississippi’s management of 

Federal highway safety grants. Specifically, our objectives were to (1) determine 

whether MOHS sufficiently administered the highway safety grant program to 

In January 2011, NHTSA designated Mississippi’s 

highway safety program as “high risk” because of deficiencies in its management 

of Federal funds and lack of conformance with Federal grant terms and conditions. 

Mississippi is the only State in the nation with a high-risk designation.

 1 These statistics are based on a 3-year moving average, for fiscal years 2008-2010, of fatalities per 100,000 people. 2 Pub. L. 109-59, “Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users” (SAFETEALU), authorized grant and transfer funds during the fiscal years covered by our audit. On July 6, 2012, Pub. L. 112-141, 

“Moving Ahead for Progress in the 21st Century (MAP-21) replaced SAFETEA-LU. 3 Mississippi does not have an open container law that complies with Federal requirements. Therefore, under 23 U.S.C. 

§ 154, it is subject to transferring 3 percent of its Federal-aid highway construction funds to its highway safety program 

for alcohol-impaired driving countermeasures, enforcement of laws prohibiting impaired driving, or hazard elimination. 

MAP-21 replaced the 3 percent transfer provision with a 2.5 percent provision.
2

ensure compliance with Federal grant requirements and (2) assess NHTSA’s

oversight of MOHS’s compliance with Federal grant requirements.

We conducted this review between June 2011 and November 2012 in accordance 

with Government auditing standards prescribed by the Comptroller General of the 

United States. As part of this audit, we interviewed NHTSA, State of Mississippi, 

and MOHS officials; reviewed MOHS’s financial management controls for 

administering Federal safety grants; and evaluated NHTSA’s actions for providing 

oversight of MOHS and enforcing its recommendations. In conducting our work, 

we selected a statistical sample of $10.4 million from a universe of $45.3 million 

in payment vouchers which allowed us to project the total amount of improper 

payments made by MOHS. Exhibit A provides more details on our scope and 

methodology.

RESULTS IN BRIEF

MOHS did not administer Section 154 alcohol-impaired driving transfer funds in 

accordance with Federal requirements. MOHS inappropriately entered into grant 

agreements with State and local law enforcement agencies, allowing them to 

conduct ineligible general law enforcement activities instead of focusing on 

alcohol-impaired driving enforcement, as required by Section 154. As a result,

ineligible enforcement activities occurred and MOHS made improper payments to 

its sub-grantees. MOHS subsequently made claims for reimbursement from 

NHTSA for these activities that were not directly related to alcohol-impaired 

driving.

4 We analyzed a statistical sample of $10.4 million in grant fund 

disbursements and identified improper payments totaling $102,218. Based on a 

statistical projection, we estimated that MOHS made approximately $7.1 million

in improper payments to its sub-grantees for ineligible transactions for fiscal years 

2007 through 2010.

5 MOHS’s misuse of Section 154 funds and its inadequate 

financial management controls6

 4 Office of Management and Budget Circular A-123, Appendix C (August 2006) classifies improper payments as a 

duplicate payment, a payment in an incorrect amount, a payment for an ineligible recipient or services, services not 

received, or a payment with insufficient documentation.

were likely contributing factors to these improper 

payments. Specifically, we found that MOHS had (1) inadequate accounting 

controls and processes to prepare Federal reimbursement vouchers, (2) inadequate 

documentation of financial transactions, and (3) improper segregation of duties 

and lack of supervisory review.

5 Our projection was based on the results of a statistical sample of $10.4 million, or 23 percent of $45.3 million, in 

grant fund disbursements for fiscal years 2007 through 2010. Our projection of $7.1 million in improper payments has 

90 percent confidence limits ranging from $4.7 million to $9.5 million. 6 49 Code of Federal Regulations (CFR) § 18.20 provides standards for State grantee financial management systems. 

State fiscal controls and processes must be sufficient to prepare reports and adequately track funds to determine proper 

use.
3

Through its oversight process, NHTSA documented significant deficiencies in 

MOHS’s administration of highway safety grants as far back as 2006, but has 

made limited progress in getting MOHS to address its weak financial management 

controls and poor conformance with grant requirements. NHTSA’s longstanding, 

though largely unsuccessful, efforts to obtain timely corrective actions culminated 

in its January 2011 designation of Mississippi as a high-risk grantee.7

We are making a series of recommendations to improve NHTSA’s oversight of 

MOHS and its efforts to obtain MOHS’s correction of weaknesses in the 

management of Federal funds.

The highrisk designation allows NHTSA to require that MOHS conduct additional 

monitoring and reporting on sub-grantees, and to seek NHTSA’s approval for 

certain expenditures. However, unlike other Operating Administrations, NHTSA 

does not have specific agency guidance on how and when to invoke the high-risk 

designation, or when to use remedies and sanctions against States for lack of 

compliance with Federal grant regulations. The lack of guidance may have 

delayed NHTSA’s decision to designate Mississippi’s highway safety program as 

high risk. Without agency guidance or criteria, NHTSA lacks a useful tool for 

determining when enforcement action is warranted and for clearly communicating 

to the States the consequences for noncompliance with critical oversight 

requirements.

BACKGROUND

NHTSA awards highway safety grants to States for programs to reduce fatalities, 

injuries, and economic losses resulting from motor vehicle crashes. These safety 

programs promote safety belt use and discourage alcohol-impaired driving, among 

other activities. States allocate Federal grant funds to other State agencies, local 

agencies including law enforcement agencies, and nonprofit organizations.

At the time of our review, Mississippi was 1 of 11 States that had not passed an 

open container statute that conforms to Federal requirements; therefore, during the 

time period covered by our audit, the State was subject to Federal statutes that 

required it to transfer 3 percent of its Federal-aid highway construction funds to its 

highway safety program.

8 These transfer funds must be used for alcohol-impaired 

driving countermeasures, enforcement of drinking and driving laws, or hazard 

elimination activities.9

 7 NHTSA can designate States as high-risk grantees under Uniform Administrative Requirements for Grants and 

Cooperative Agreements to State and Local Governments (49 CFR § 18.12), also known as the Grant Common Rule. 8 MAP-21 replaced the 3 percent transfer provision with a 2.5 percent provision. 9 Under MAP-21, hazard elimination activities have been replaced by the highway safety improvement program.
4

The Improper Payments Information Act (IPIA)10 provides a framework for 

agencies to use to test for improper payments, identify their causes, and implement 

solutions to reduce them. The Office of Management and Budget (OMB) 

established detailed requirements11

MOHS DID NOT COMPLY WITH FEDERAL REQUIREMENTS FOR 

ADMINISTERING HIGHWAY SAFETY GRANTS

to comply with IPIA. Executive Order 13520 

(November 2009) underscores the importance of reducing improper payments and 

eliminating fraud, waste, and abuse in Federal programs. OMB is working to hold 

agencies accountable for misusing taxpayer dollars and is creating stronger 

incentives for reporting, reducing, and recovering these erroneous payments.

Accordingly, NHTSA and MOHS are responsible for taking steps to reduce 

improper payments from Federal funds, such as payments for ineligible services, 

duplicate and incorrect payment amounts, and payments based on insufficient 

supporting documentation.

MOHS did not administer Section 154 alcohol-impaired driving transfer funds in 

accordance with Federal requirements, resulting in improper payments using 

Federal grant funds. Moreover, MOHS did not have sufficient financial 

management controls to ensure proper management of highway safety grant funds 

and to mitigate the risks of improper payments and fraud, waste, and abuse.

MOHS Did Not Comply With Requirements for Administering AlcoholImpaired Driving Transfer Funds

MOHS’s noncompliance with Federal requirements for administering Section 154 

transfer funds resulted in improper payments12

 10 Pub. L. No. 107-300 (2002).

to sub-grantees for ineligible 

general traffic law enforcement activities. Specifically, Mississippi did not 

exclusively use Section 154 funds for alcohol-impaired driving countermeasures

or enforcement of drinking and driving laws―such as concentrating on the 

enforcement of violations of the State’s driving under the influence (DUI) statute. 

Instead, MOHS inappropriately entered into grant agreements with State and local 

law enforcement agencies that permitted them to use Section 154 funds to conduct

general law enforcement activities, such as issuing citations for speeding and seat 

belt violations. Because of these inappropriate agreements and the ineligible 

general traffic enforcement, MOHS made improper payments to the law 

enforcement agencies and subsequently requested reimbursement for these 

payments from NHTSA.

11 OMB Circular A-123, Appendix C (August 2006). 12 For the purposes of this audit, we defined an improper payment as a duplicate payment, a payment in an incorrect 

amount, a payment for ineligible service, or a payment with insufficient documentation.
5

Specifically, our statistical sample of $10.4 million in grant fund disbursements 

for fiscal years 2007 through 2010 identified improper payments totaling 

$102,218. Based on our sample findings, we project that MOHS made improper 

claims to NHTSA for reimbursement of approximately $7.1 million for ineligible 

costs.13

The improper payments we identified resulted from MOHS making 

reimbursement claims for State and local law enforcement officers’ wages paid to 

the officers for conducting activities that did not meet Section 154 eligibility

requirements. Most notably, 93 of the 12714

Table 1. Types of Citations State and Local Law Enforcement 

Officers Issued Under Section 154 Projects

State and local police officers in our 

statistical sample, or 73 percent, did not issue any DUI citations during the time 

periods we analyzed. We found that only 147, or 5 percent, of the 2,926 citations 

that the 127 officers issued were for DUI violations (see table 1). The 127 officers 

issued DUI citations at a collective rate of 1 per 28.6 enforcement hours. Based on 

the grant agreement provisions, the low percentage of DUI citations issued, and 

the high percentage of law enforcement officers who did not issue any DUI 

citations, we concluded that Mississippi was not complying with Section 154

requirements. Exhibit B provides more detail on our analysis.

Law 

Enforcement 

Agencies

Number 

Officers

Hours 

Worked

Total 

Citations 

Issued

Seatbelt 

& Child 

Restraint 

Citations

Speeding 

Citations

Other 

Citations

DUI 

Citations

Percent 

of DUI 

Citations

State 68 992 1,791 157 870 749 15 0.8

Local 59 3,213 1,135 132 159 714 132 11.6

Total 127 4,205 2,926 289 1,029 1,463 147 5.0

Source: OIG analysis of a sample of 127 law enforcement officers

According to NHTSA, varying conditions can impact the citation average in 

different jurisdictions; but it has not and does not plan to establish a standard or 

performance target for the number or rate of DUI citations that should be issued 

within a given time frame. Lacking an established NHTSA standard or target, we 

used a reasonable baseline of one citation per 16 hours of duty time to test Section 

154 compliance. We judgmentally developed our baseline using 16 hours as the 

equivalent of two full-time 8-hour shifts during which alcohol-impaired driving is 

targeted. NHTSA officials agreed that our baseline is reasonable as a calculation 

tool for our audit. However, NHTSA did not want the baseline to be construed as a 

performance standard or target for States. Based on our analysis, only 21 of the 

127 officers met the baseline. As a result, there were significant variations in the 

 13 Our projection was based on the results of a statistical sample of $10.4 million, or 23 percent of $45.3 million, in 

grant fund disbursements for fiscal years 2007 through 2010. Our projection of $7.1 million in improper payments has 

90 percent confidence limits ranging from $4.7 million to $9.5 million. 14 The 127 officers were located in 22 jurisdictions.
6

number of DUI citations issued by officers. For example, 1 officer issued 26 DUI 

citations during a 4-week period, but another officer issued no DUI citations 

during a similar 4-week period.

Although some local law enforcement agencies designated full-time DUI officers, 

these officers did not always concentrate on DUI-related activities―indicating 

that Federal grant funds were used to supplant the costs of general law 

enforcement.15

MOHS Did Not Have Sufficient Financial Management Controls To 

Manage Federal Highway Safety Grants

Federal regulations prohibit the use of Federal funds for general 

expenses required to carry out other responsibilities of a State or its sub-grantees. 

Our analysis found that 14 designated full-time DUI officers worked general law 

enforcement activities under Section 154 grant agreements. The use of Section 154 

funds in these cases calls for the State and NHTSA to provide more consistent 

oversight to ensure full compliance with Federal requirements.

MOHS did not have sufficient controls16 to effectively manage Federal highway 

safety grants, including Section 154 transfer funds. We identified financial control 

weaknesses at MOHS that increase the risk of improper payments, including 

(1) lack of accounting controls and processes to prepare Federal reimbursement 

vouchers, (2) inadequate documentation of financial transactions, and (3) improper 

segregation of duties and lack of supervisory review. MOHS’s deficiencies in 

managing Federal funds violate the control requirements set forth in the Grant 

Common Rule17

MOHS did not have adequate accounting controls and processes to prepare 

Federal reimbursement vouchers and lacked an automated grants processing 

system. We identified mathematical errors, and omissions and duplications in the

manual system MOHS used to accumulate accounting data to prepare its requests 

for reimbursement from NHTSA. MOHS also lacked documentation to support 

some payments and could not reconcile grant fund balances in the State 

accounting system with grant fund balances in NHTSA’s grant tracking system. 

Further, outside our sample, we identified $232,981 in improper 

and the elements of internal control in the Government 

Accountability Office’s (GAO) Standards for Internal Control in the Federal 

Government. Although we did not identify any specific instances of fraud, internal 

controls serve as the first line of defense in safeguarding assets and preventing and 

detecting fraud, abuse, and improper payments.

 15 Supplanting is the replacement of existing State or local expenditures with the use of Federal grant funds and/or 

using Federal grant funds for costs of activities that constitute general expenses required to carry out the overall 

responsibilities of State, local, or federally recognized Indian tribal governments. 16 Standards for Internal Control in the Federal Government (GAO/AIMD-00-21.3.1) 17 49 CFR § 18.20. This section of the Grant Common Rule requires that grantees maintain fiscal controls and 

accounting procedures that permit sufficient tracking of grant funds to related expenditures to establish that funds have 

not been used in violation of restrictions and prohibitions of applicable statutes.
7

payments―duplicate Section 154 reimbursement amounts of $99,127 in wages of 

local law enforcement officials, $88,946 in payments of Section 154 contracts to a 

local State university, $30,148 in an erroneous adjusting entry, and $14,760 in 

unsupported costs.18

MOHS did not sufficiently document financial grant transactions, leaving an 

inadequate audit trail. MOHS staff made adjusting entries to financial records 

without an explanation or audit trail, and offset these adjustments against valid 

transactions. Moreover, MOHS did not sufficiently record grant-funded equipment 

with a cost of $1,000 or more to its equipment inventory.

19

MOHS did not properly segregate and supervise duties required to process grant 

claims from those required to reimburse vouchers. For example, one MOHS 

accountant was the final level of review for all sub-grantee claims for 

reimbursement, paid the claims, and prepared Federal reimbursement 

vouchers―functions that should be separated to reduce the risk of fraud, waste, 

and abuse. These functions were performed with little or no supervision. Not only 

was the accountant the only MOHS official with detailed knowledge of the 

highway safety grant payments and accounting transactions, but MOHS did not 

have a designated official, such as an internal auditor, to conduct periodic 

assessments of the MOHS internal controls. Periodic assessments would provide 

NHTSA and MOHS assurance that proper grant management financial controls

are in place and working effectively.

We identified nearly 

$100,000 in equipment that was not included in the inventory.

After we completed our audit work, NHTSA informed us that MOHS took action 

to correct internal control weaknesses in its financial management of the highway 

safety program. For example, MOHS hired a new finance manager and agreed to 

add a full-time auditor to its staff in fiscal year 2013; separated the review and 

approval of sub-grantee claims; began a process to reconcile State payment 

records to reimbursement claims to NHTSA; and included written procedures for 

inventory control and management in its revised policy and procedures manual.

However, NHTSA faces an ongoing challenge to ensure that MOHS effectively 

and fully implements these corrective actions in a timely manner.

 18 The improper payments of $232,981 are included in our overall estimate of $7.1 million in improper payments. 19 The Grant Common Rule requires a State to account for grant funds in compliance with State laws and procedures 

for expending and accounting for its own funds. State regulations require an inventory of equipment costing $1,000 or 

more.
8

NHTSA IDENTIFIED NEEDED CORRECTIVE ACTIONS BUT MADE 

LIMITED PROGRESS IN OBTAINING TIMELY COMPLIANCE

NHTSA documented significant deficiencies in MOHS’s administration of 

highway safety grants as far back as 2006, but had limited success in obtaining

MOHS’s correction of weak financial management controls, poor conformance 

with grant requirements, and overall unsatisfactory performance. NHTSA’s 

longstanding efforts to obtain corrective actions culminated in its January 2011 

designation of Mississippi as a high-risk grantee. However, NHTSA does not have 

specific agency guidance on how and when to invoke the high-risk designation, or

when to use remedies and sanctions on States with significant compliance issues.

NHTSA Identified Management and Compliance Deficiencies With 

MOHS’s Administration of Safety Grants That Remain Unresolved

NHTSA has longstanding issues associated with MOHS’s highway safety grant 

program deficiencies that have not been corrected. From 2006 through 2009, 

NHTSA conducted formal reviews of MOHS’s alcohol-impaired driving program 

and its highway safety grant program, resulting in both required and recommended 

corrective actions.20

In 2008, NHTSA informed MOHS of its noncompliance with Federal grant 

requirements, specifically MOHS’s inappropriate use and inadequate oversight of 

Section 154 transfer funds. In May 2010, NHTSA informed MOHS of the 

potential that the State’s highway safety grant program could receive a high-risk 

designation. However, NHTSA’s unsuccessful efforts to obtain corrective actions 

from MOHS culminated in its January 2011 designation of Mississippi as a highrisk grantee. This designation allows NHTSA to require that MOHS provide more 

detailed financial reports and additional project monitoring, obtain technical or 

management assistance, and obtain prior NHTSA approval of grant expenditures.

For example, based on its 2006 review, NHTSA identified 

deficiencies with and made recommendations designed to improve MOHS’s

impaired driving program. Additionally, NHTSA’s 2009 review resulted in 

recommendations for best practices and required financial management actions—

such as implementation of internal and budget controls and processes to comply 

with the Grant Common Rule; procedures to ensure that sub-grantees are timely 

reimbursed for valid claims; and reviews to ensure that grant activity reports and 

certifications are timely, complete, and accurate.

According to NHTSA, MOHS has made progress in addressing the longstanding 

required and recommended actions from its 2009 review. At the time of our 

 20 NHTSA differentiates between “required actions” that relate to States’ noncompliance with Federal and/or State 

statutes, regulations, rules, policies, and guidelines, and “recommended actions” that improve the State’s highway 

safety program by implementing best practices that do not specifically relate to statutes, regulations, rules, policies, or 

guidelines. According to NHTSA, it cannot mandate the State to act on recommended actions.
9

review, three financial management actions, required by the Grant Common Rule, 

and eight recommended best practices remained open. Accordingly, NHTSA faces 

a key challenge to ensure that MOHS sustains its efforts to address these actions.

NHTSA Does Not Have Adequate Guidance for Using Remedies and 

Sanctions Against High-Risk Grantees

NHTSA has not developed specific agency guidance or criteria on how and when 

to use its enforcement authority or how its regional offices should use remedies 

and sanctions against grantees that have been designated as high risk. NHTSA 

officials stated that they were reluctant to develop any criteria because of concerns 

that specific guidance would limit NHTSA’s flexibility to take unique 

enforcement actions against any particular grantee. Instead of developing agency 

criteria, NHTSA relies on the guidelines in the Common Grant Rule for 

designating a State as high risk and for using remedies and sanctions for high-risk 

grantees. This rule provides remedies and sanctions for failure to comply with 

grant regulations, including withholding funds pending correction of deficiencies, 

disallowing all or part of the cost of noncompliance, suspending or terminating all 

or part of the State’s highway safety program, or withholding future funding.

We recognize that NHTSA may rely on the Common Grant Rule to provide 

guidance on the range of available sanctions and remedies. However, in our 

opinion, without specific agency guidance or criteria, NHTSA lacks a useful tool 

for determining when enforcement action is warranted and for clearly 

communicating to the States the consequences for noncompliance with critical 

oversight requirements. Such guidance could permit flexibility in NHTSA’s 

implementation of specific enforcement actions while still providing NHTSA 

Regional Offices with a useful means to emphasize timely compliance when 

discussing grant oversight problems with their respective States. After 

documenting problems with MOHS’s administration of Section 154 alcohol 

transfer funds in 2008 and its noncompliance with the Grant Common Rule in 

2009, NHTSA took 2 more years to designate Mississippi’s highway safety 

program as high risk. More specific guidance establishing a timeline for such 

actions might have accelerated the process.

NHTSA could benefit from the experience of other Operating Administrations in 

developing guidance for using remedies and sanctions against high-risk grantees.

For example, the Federal Transit Administration (FTA) has guidance on using 

remedies and sanctions to reduce the risk of noncompliance. FTA’s guidance 

generally describes actions that regions can take and requires the designation of a 

grantee as high risk 1 year after notice of noncompliance. After 2 years, FTA 

places restrictions on the grantee’s future grant approvals involving 

noncompliance and restricts funds in existing grants until the grantee takes 

corrective measures. FTA plans to revise its guidance as part of a comprehensive 
10

review of its oversight program, in response to recommendations in our recent 

report on FTA grant oversight.

21

CONCLUSION

NHTSA’s infusion of millions of Federal grant dollars into State highway safety 

programs is intended to reduce fatalities, injuries, and economic losses resulting 

from motor vehicle crashes. Robust policies, guidance, and grant oversight is 

critical for NHTSA and State highway safety agencies as they implement 

important programs. Our work has demonstrated that NHTSA will need validated 

assurance from MOHS that it will comply with Federal grant requirements, 

implement satisfactory systems of grant financial management controls, and take 

actions to correct deficiencies. Without such assurances, NHTSA cannot ensure 

that MOHS’s claims for reimbursement are free from improper payments or that 

the risks of fraud, waste, abuse, and mismanagement of funds are mitigated.

RECOMMENDATIONS

We recommend that the National Highway Traffic Safety Administrator:

1. Work with MOHS to develop an action plan, with milestones, to:

a. Obtain technical assistance to identify and implement financial 

management internal controls to comply with the Grant Common Rule;

Government Accountability Office Standards for Internal Control; and 

other applicable laws, regulations, and program compliance requirements.

b. Implement improved processes to calculate reimbursement claims to 

NHTSA, such as an automated grants system used by other State highway 

safety offices.

c. Obtain independent assurance that proper grant management controls and 

financial and accounting procedures are in place and working effectively.

d. Develop guidance for monitoring the use of local officers as full-time 

driving under the influence officers to ensure appropriate use of Section 

154 funds.

2. Develop an action plan for monitoring Mississippi’s grant agreements with 

sub-grantees, once the high-risk designation is removed, to ensure compliance 

with Federal requirements.

 21 OIG Report Number MH-2012-168, “Improvements Needed In FTA’s Grant Oversight Program,” August 2, 2012. 

OIG reports are available on our Web site at http://www.oig.dot.gov.
11

3. Identify actions NHTSA will take to recover improper payments.

4. Develop guidance with parameters and timelines for designating State grantees 

as high risk, restricting or withholding grant funds from grantees, and 

implementing other available remedies and sanctions for noncompliance with 

Federal grant regulations or requirements.

AGENCY COMMENTS AND OFFICE OF INSPECTOR GENERAL 

RESPONSE

We provided NHTSA with our draft report on November 14, 2012, and received 

its response on January 18, 2013. NHTSA’s complete response is included as an 

appendix to this report. In its response, NHTSA concurred with all four of our 

recommendations and provided appropriate planned actions and target dates for 

completion. Accordingly, we consider the four recommendations resolved but 

open pending completion of planned actions.

ACTIONS REQUIRED

NHTSA’s planned actions for all four recommendations are responsive, and its 

target action dates are appropriate. In accordance with the follow-up provisions in 

Department of Transportation Order 8000.1C, we request that NHTSA provide 

information demonstrating completion of its planned actions within 10 days after 

action is taken. All four recommendations will remain open pending receipt of this 

information.

We appreciate the courtesies and cooperation of National Highway Traffic Safety 

Administration representatives during this audit. If you have any questions 

concerning this report, please call me at (202) 366–5630 or Kerry R. Barras, 

Program Director, at (817) 978–3318.

#

cc: NHTSA Audit Liaison, NPO–310

OST Audit Liaison, M–1
12

Exhibit A. Objectives, Scope, and Methodology

EXHIBIT A. OBJECTIVES, SCOPE, AND METHODOLOGY

We conducted our work from June 2011 through November 2012 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.

We reviewed the State of Mississippi, Office of Highway Safety (MOHS) Federal 

highway safety grant funding for fiscal years 2007 through 2010. Our objectives 

for this audit were to (1) determine whether MOHS sufficiently administered the 

Federal highway safety grant program to ensure compliance with Federal grant 

requirements and (2) assess the National Highway Traffic Safety Administration’s 

(NHTSA) oversight of MOHS’s compliance with Federal grant requirements.

To assess whether MOHS sufficiently administered the Federal grant program in 

compliance with Federal requirements, we reviewed key documentation including 

NHTSA’s grant policies, procedures, and program guidance. We reviewed the 

MOHS operating policies and procedures manual. We interviewed NHTSA

officials at Headquarters and Regional Offices in Atlanta, Georgia, and Fort 

Worth, Texas; and State of Mississippi officials including the MOHS Executive 

Director, program managers, legal counsel and accounting staff, and an MOHS 

contractor. We also interviewed officials from the Office of the Mississippi State 

Auditor, the Department of Finance and Administration, and highway safety grant 

recipients including the Mississippi Highway Safety Patrol in Jackson, 

Mississippi, and selected local law enforcement agencies.

To determine whether MOHS grant expenditures complied with Federal grant 

requirements, we tested a three-stage statistical probability proportional to size

sample of grant payments that occurred during fiscal years 2007 through 2010. We 

extracted a universe of $45.3 million in 337 payment vouchers from the 

Department’s financial accounting system, Delphi. We were unable to reconcile 

this universe to the $57.1 million in total grant and transfer reimbursements that 

NHTSA made to MOHS. Therefore, we used the Delphi-provided universe of 

$45.3 million to select the first stage of our sample―28 Delphi payment vouchers 

with a value of $10.4 million. We reconciled this sample to NHTSA’s Grant 

Tracking System, and to MOHS’s Federal reimbursement vouchers and grant 

financial records. However, annual grant fund balances in NHTSA’s Grant 

Tracking System did not reconcile to highway safety grant accounts in the State of 

Mississippi’s accounting system.
13

Exhibit A. Objectives, Scope, and Methodology

We also examined MOHS’s grant agreements with sub-grantees and tested the 

second and third stages of our statistical sample for conformance to Federal grant 

policies, procedures, and controls over grant payments and reimbursements. Our 

second stage sample contained 73 line items out of the 940 MOHS payments 

included in the 28 stage 1 vouchers, and our third stage sample contained 127 line 

items out of the 73 stage 2 line items. Our analysis included tests for improper 

payments, errors, irregularities, abuses, and illegal acts. To perform our tests, we 

made site visits to MOHS and the Mississippi Highway Safety Patrol, and traced 

supporting documentation such as grant agreements, reimbursement vouchers, 

purchase invoices and property inventories, payroll records and timesheets, travel 

records and expense reports, traffic citations, and other related documents to verify 

proper authorization, supervisory approvals, and recordkeeping, and to confirm the 

appropriateness and validity of payments and reimbursements.

To assess the extent to which MOHS had financial management controls in place 

to reduce the risk of fraud, waste, abuse, and mismanagement of funds during 

fiscal years 2007 through 2010, we reviewed MOHS’s financial management 

controls for administering Federal highway safety grants and tested a statistical 

sample of MOHS payments to sub-grantees, as described in the paragraph above,

for compliance with Federal grant requirements. Specifically, we reviewed GAO’s

Standards for Internal Control in the Federal Government to determine internal 

control standards relevant to the management of grant programs, the Grant 

Common Rule, OMB Circulars A-123 and A-87, the Improper Payments 

Information Act, and other relevant Federal guidance and regulations. We 

reviewed the State of Mississippi’s Finance and Accounting guidelines on internal 

controls in State agencies and interviewed an official in the State of Mississippi’s 

Finance and Accounting Office. We reviewed single audit reports on the 

Department of Public Safety and contacted a member of the certified public 

accounting firm and State Auditor’s Office regarding elements of the reports.

To assess NHTSA’s oversight of MOHS’s compliance with Federal requirements, 

we evaluated NHTSA’s policies, procedures, processes, and guidance for 

providing oversight to States to ensure that highway safety funds are used for 

appropriate safety and enforcement activities by grantees and sub-grantees, and to 

enforce actions States are required to take. We interviewed NHTSA officials at 

Headquarters and Regional Offices in Atlanta, Georgia, and Fort Worth, Texas,

and MOHS officials in Jackson, Mississippi. We examined NHTSA’s 

management reviews of MOHS and resulting corrective action plans. We assessed 

NHTSA’s requirements for overseeing high-risk grantees, evaluated NHTSA’s 

oversight and enforcement tools, and reviewed NHTSA’s legal authority for 

taking enforcement actions. We reviewed the chronology of events before and 

after MOHS’s high-risk designation and assessed actions NHTSA took to follow

up on MOHS’s outstanding required and recommended actions.
14

Exhibit B. Law Enforcement Officers’ Enforcement Activity Under 

Section 154 Agreements

EXHIBIT B. LAW ENFORCEMENT OFFICERS’ ENFORCEMENT 

ACTIVITY UNDER SECTION 154 AGREEMENTS

MOHS reimbursement claims to NHTSA for paying State and local law 

enforcement officers’ wages did not meet eligibility requirements for the Section 

154 transfer program. Both State and local law enforcement agencies used Section 

154 transfer funds to pay officers who conducted general law enforcement 

activities instead of enforcement activities directly related to alcohol-impaired 

driving. Details of our analysis follow.

We analyzed 1,791 citations issued by 68 State police officers in 9 substations, 

and 1,135 citations issued by 59 officers in 13 local jurisdictions. Only 147, or 

5 percent, of the 2,926 total citations issued were for DUI violations.

Of the 127 State and local officers, 93, or 73 percent, did not issue any DUI 

citations during the time periods we analyzed.

The 68 State officers in our statistical sample issued DUI citations at a collective 

rate of 1 citation per 66 enforcement hours.

• Of these, 58 issued 0 DUI citations, and the 10 remaining officers 

collectively issued 15 DUI citations.

• These 10 officers met our baseline of at least 1 citation per 16 duty hours.

The 59 local officers in our statistical sample issued DUI citations at a collective 

rate of 1 citation per 24 enforcement hours.

• Of these, 35 issued zero DUI citations, and the 24 remaining officers 

collectively issued 132 DUI citations.

• Of these 24 officers, 11 met our baseline of at least 1 citation per 16 duty 

hours.
15

Exhibit C. Major Contributors to This Report

EXHIBIT C. MAJOR CONTRIBUTORS TO THIS REPORT 

Kerry R. Barras Program Director

Name Title

Linda G. Morgan Project Manager

Ryan P. Sanders Senior Analyst

Maurice Toval Senior Auditor

Carlton H. Hamilton Auditor

Farrin Tamaddon Analyst

Harriet E. Lambert Writer-Editor

Amy J. Berks Senior Counsel

Petra Swartzlander Senior Statistician

Megha P. Joshipura Statistician
16

Appendix. Agency Comments

APPENDIX. AGENCY COMMENTS

Memorandum

U.S. Department

of Transportation

National Highway

Traffic Safety

Administration

Subject: Response to OIG Draft Report on NHTSA’s Oversight of 

Mississippi’s Management of Federal Highway Safety Grants 

Date:

 

From: Brian M. McLaughlin

Senior Associate Administrator

 Traffic Injury Control

Reply to

Attn. Of:

To: Joseph W. Come

Assistant Inspector General for

 Highway and Transit Audits

NHTSA Grant Monitoring Detected Deficiencies 

NHTSA carefully monitors States’ use of highway safety grants in accordance with the Regional 

Monitoring Policy which requires annual project file reviews, on-site monitoring of subgrantees, 

and voucher reviews. NHTSA also conducts a triennial Management Review in each State that 

addresses organization and staffing, program management, and financial management. For States 

that are designated high risk, the level of oversight heightens. In addition to regular oversight, 

NHTSA reviews all large individual project proposals before they are executed, as well as 

proposed out-of-state travel. We also require justifications for new federally funded positions, 

and increase voucher reviews during our more frequent on-site visits. 

NHTSA identified significant deficiencies in the Mississippi Office of Highway Safety (MOHS) 

management of NHTSA safety grant funds dating back to 2006. Since that time, NHTSA has 

been working to improve compliance with grant requirements by the State and MOHS. 

Specifically, NHTSA has been calling upon MOHS to improve its overall financial controls 

compliance with specific grant requirements. NHTSA has also made recommendations to assist 

the grantee in making the changes necessary to improve compliance with Federal requirements. 

In 2010, during a review to monitor the State’s progress in addressing some of these issues, 

NHTSA determined that MOHS used Section 154 transfer funds for ineligible expenses, and 

subsequently requested the DOT OIG to audit the MOHS to determine the extent of inappropriate 

use of Federal grant funds under Section 154. These funds are only allowed to be used for 

impaired driving countermeasures, but NHTSA determined that some of these funds were used 

for general traffic safety activities. While some progress was achieved, continued instances of 

inappropriate use of Federal funds and inadequate oversight by MOHS resulted in NHTSA 

designating MOHS as a high risk grantee in January 2011.
17

Appendix. Agency Comments

NHTSA continues working to ensure that MOHS becomes fully compliant with Federal 

requirements for the use of Section 154 funds and that the funds are used as intended by law. 

MOHS is working to implement the recommendations from NHTSA’s FY 2009 Management 

Review. In addition, MOHS must implement systems and procedures that would be constructive 

in leading to a discontinuation of its designation as a high risk grantee. Finally, NHTSA will 

implement an extended oversight plan for at least two years subsequent to MOHS’ de-designation 

as a high risk grantee, to further ensure compliance with the law and the implementation of 

effective internal controls by the State.

RECOMMENDATIONS AND RESPONSES

Recommendation 1: Work with MOHS to develop an action plan, with milestones, to:

a. Obtain technical assistance to identify and implement financial management internal controls 

to comply with the Grant Common Rule; Government Accountability Office Standards for 

Internal Control; and other applicable laws, regulations, and program compliance 

requirements.

b. Implement improved processes to calculate reimbursement claims to NHTSA, such as an 

automated grants system used by other State highway safety offices.

c. Obtain independent assurance that proper grant management controls and financial and 

accounting procedures are in place and working effectively.

d. Develop guidance for monitoring the use of local officers as full-time driving under the 

influence officers to ensure appropriate use of Section 154 funds.

Concur. NHTSA will continue to provide technical assistance and monitoring of grant funds 

relating to Section 154 grants as MOHS works to move beyond high risk grantee status and 

achieve full compliance with all Federal requirements. As part of these efforts, NHTSA will 

direct the State to complete an action plan with milestones that covers, at a minimum, the four 

areas touched upon in this recommendation. While completion of this action is contingent on 

MOHS, NHTSA intends to establish a goal of completing this plan no later than December 31, 

2013.

It is important to recognize that MOHS has made some significant improvements in response to 

NHTSA’s enhanced monitoring and oversight. These include:

• Hiring a Finance Manager in June 2012, who is experienced in governmental accounting 

and skilled in developing financial reports. She has completed NHTSA’s Managing 

Federal Finances Course, the Highway Safety Program Management Course, and 

DELPHI training. NHTSA Region 6 also provided her special orientation and Grants 

Tracking System (GTS) training in 2012.

• Creating an internal auditor position, as identified in the MOHS FY13 Highway Safety 

Plan. The position is schedule to be filled in January 2013.

• Developing a new MOHS Policies and Procedures Manual during FY 2012, which 

incorporates financial internal controls. MOHS also conducted staff training on the 

manual. NHTSA will work with MOHS to enhance and update the manual as necessary 

and to address monitoring of full-time and part-time officers used for Section 154 funded 

DWI patrols. NHTSA will also monitor implementation of MOHS policies and 

procedures. 

• Utilizing NHTSA’s grant tracking system and entering vouchers at the project level. 
18

Appendix. Agency Comments

Recommendation 2: Develop an action plan for monitoring Mississippi’s grant agreements with 

sub-grantees, once the high risk designation is removed, to ensure compliance with Federal 

requirements.

Concur. When the MOHS high risk designation is removed, NHTSA will continue to provide 

monitoring and oversight in accordance with the NHTSA Regional Monitoring Policy. The 

Policy requires an annual monitoring plan for each state. The Region will develop a monitoring 

plan that will supplement the minimum requirements with additional monitoring activities, 

including project proposal reviews, project file reviews, voucher reviews and on-site project 

monitoring. This monitoring plan will be designed to carefully monitor MOHS for at least two 

fiscal years following the discontinuation of the state’s designation as a high risk grantee. Since 

important elements of the plan will be dependent on particulars involving the state’s actions to 

emerge from the high risk designation, NHTSA intends to have the plan developed when the 

state is removed from high risk. NHTSA will also conduct a Management Review in Mississippi 

in FY 2015. 

Recommendation 3: Identify actions NHTSA will take to recover improper payments.

Concur. NHTSA is in the process of reviewing actions that may be required to recover any 

improper payments in Section 154 funds. To facilitate these efforts, NHTSA looks forward to 

the continued cooperation of the OIG in providing specific information used in the OIG’s 

analysis. Therefore, we request that OIG provide NHTSA with the specific statistical sample 

results used in its report. Subsequent to the receipt and review of this information and analysis 

of relevant legal authorities, NHTSA will determine the appropriate further actions. Our 

tentative goal for making this determination is March 31, 2013.

Recommendation 4: Develop guidance with parameters and timelines for designating State 

grantees as high-risk, restricting or withholding grant funds from grantees, and implementing 

other available remedies and sanctions for noncompliance with Federal grant regulations or 

requirements.

Concur. With the implementation of MAP-21, NHTSA will update grant administration and 

oversight policies and procedures, including procedures related to high-risk status. NHTSA will 

identify contributing factors and elements leading to implementation of special conditions, highrisk designation, and other sanctions. These factors may include questioned or incomplete 

vouchers, unallowable use of funds, inadequate project documentation, and other internal control 

deficiencies. NHTSA’s updated policies will include guidance based on the ongoing presence of 

these and other identified risk factors, and provides direction on how to consider and weigh these 

factors when evaluating whether to categorize a State as high risk.

We will update our grant administration and oversight policies and procedures by July 2014.