APRIL 2015
RURAL CAPITAL PROGRAM
State Authorization:
N. C. G. S. Article 2B of Chapter 136
N. C. Department of Transportation
Public Transportation Division (PTD)
Agency Contact Person – Program
Address Confirmation Letters To
Debra G. Collins, Director
Public Transportation Division
N.C. Department of Transportation
1550 Mail Service Center
Raleigh, NC 27699-1550
(919) 707-4687
(919) 733-1391
dgcollins1@ncdot.gov
Wayne Davenport, Lead Auditor, CICA, CFS
Single Audit Compliance Unit
N. C. Department of Transportation
1507 Mail Service Center
Raleigh, N.C. 27699-1507
(919) 707-4581
Fax (919) 715-2710
wdavenport@ncdot.gov
The auditor should not consider the Supplement to be “safe harbor” for identifying audit
procedures to apply in a particular engagement, but the auditor should be prepared to
justify departures from the suggested procedures. The auditor can consider the supplement
a “safe harbor” for identification of compliance requirements to be tested if the auditor
performs reasonable procedures to ensure that the requirements in the Supplement are
current. The grantor agency may elect to review audit working papers to determine that
audit tests are adequate.
The Single Audit Compliance Unit of the NCDOT Office of Inspector General reviews all single
audits, financial audits, and management letters of all “grantees”. We are looking at both the
presentation (information as to program, pass-through and state funding, NCDOT identification
numbers) and the dollar amounts presented versus our records. Any reports not received will be
requested.
Grants must be properly identified by program name (“Rural Capital Program”), DOT number
(“DOT-14”), and WBS number on the Schedule of Financial Assistance. This information is
available from the agreement with NCDOT; program name is on the first page while the WBS
number is on the second page. For Public Transportation Programs that disburse funds on an
annual basis, the WBS number and program name are in the comments section of the warrant.
Grantor and/or pass-through grantor, program title and CFDA number (if appropriate) should also
be included. Please do not combine like projects into one dollar amount since we would need to
call you for the breakdown; please report award amount, Federal pass-through, State share and
local share. On NCDOT’s confirmation from the Grant Master List (GML), these moneys are
shown as DOT number “DOT-14.”
I.
PROGRAM OBJECTIVES
The General Assembly appropriation for Public Transportation includes funds for the Rural
Capital Program. Grants are made under the rural capital program to provide funds to local
transportation systems in rural areas to purchase vehicles, communications equipment and
related capital equipment. The capital project may be funded through a separate grant
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agreement or as a part of the annual Community Transportation Program budget. If the
project does not receive federal funding assistance for vehicles, communications equipment
and related capital purchases, the source of funds is the Rural Capital Program.
The FY08 state appropriations bill (Section 21.18 of Senate Bill 1741) allowed the Public
Transportation Division (PTD) the ability to consolidate its rural funding programs for
vehicles, technology and facilities into one large capital program. Therefore, effective with
the FY07 grants, the funding for these programs has been consolidated.
II.
PROGRAM PROCEDURES
Eligible recipients are lead transportation agencies including local governments,
transportation authorities, nonprofit organizations and Indian Tribes. Funding applications
are submitted on an annual basis. Applications are received and reviewed by the Public
Transportation Division and submitted to the North Carolina Board of Transportation for
funding approval. Once approved, a grant agreement between the department and the
recipient is prepared and executed. The recipient can request advance payment for all
rolling stock line items upon receipt of a vendor invoice. The remaining costs are typically
reimbursed to the recipient once they have issued payment.
III. COMPLIANCE REQUIREMENTS
1.
ACTIVITIES ALLOWED OR UNALLOWED
1. Compliance Requirement - Funds must be expended in a manner consistent with
the project application, budget and agreement.
Audit Objective – Determine if funds were expended properly.
Suggested Audit Procedure
1. Ascertain that expenditures conform to the project budget.
2. Test expenditures and related records for compliance with the project budget.
2. Compliance Requirement - Vehicles and equipment, technology applications and
transit facilities acquired under the Rural Capital Program may be used only by:
- organization(s) as described in its application,
- organization(s) in coordinated services for a variety of elderly and/or persons
with disabilities,
- operators under lease or other contractual agreement to provide only the services
identified in the grant application or

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with the prior written approval of the Department of Transportation, vehicles
and equipment may be used for other purposes provided that these other uses are
consistent with uses outlined in the Community Transportation Services Plan (the
grantee has a copy) and do not interfere with the primary purpose of service
provision to elderly and disabled persons.
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
Vehicles and equipment acquired under the Rural Capital Program cannot be
used for the following purposes:
Policy Guidance for Transporting Passengers to Church and Religious Services
Federal and state funded vehicles may not be utilized for transportation to church and
religious services if the transportation is provided exclusively for this purpose and the
service is not open to the general public. The service must be provided in an open
door manner and marketed as such. The service must adhere to federal and state
guidelines regarding charter restrictions. Note, however, that the system cannot
restrict to whom the service is provided based on religious affiliation.
Policy Guidance for Transporting Passengers to Vote
Federal and state funded vehicles may not be utilized for transportation to a place of
voting or voter registration when the express purpose of the trip is to carry voters or
potential registrants. The reason for this policy is that the grants are not provided for
this purpose and there are potential partisan political activities that could occur that
are beyond the legitimate scope of the services offered by the grantee and beyond the
capability of the grantee, FTA, and the state to monitor.
Transportation to a place of voting or voter registration is allowed when provided
under the normal route structure/ service design of the system, with the service open
to any member of the general public, and not provided exclusively for the purpose of
voting or voter registration.
Audit Objective - Determine if the equipment is being used in a manner consistent
with the Community Transportation Services Plan, approved project application and
NCDOT policy guidance.
Suggested Audit Procedure - Examine trip data records, service related records, and
vehicle lease agreement for compliance.
Policy Guidance for Vehicle Leasing and Charter Services
The Public Transportation Division issued policy guidance on June 8, 2005,
regarding the use of federal and state funded vehicles for lease by other organizations
and for charter services. The policy statement is available from the Public
Transportation Division.
SOURCE DOCUMENTS
1. Federal Transit Administration (FTA) Circular 9040.1F “Non-Urbanized Area
Formula Program Guidance and Grant Application Instructions” effective October 1,
1998, Section VIII (www.fta.dot.gov).
2. 49 U.S.C. 5323(d) Charter Service School Bus Transportation
http://www.gpo.gov/fdsys/pkg/CFR-2010-title49-vol7/pdf/CFR-2010-title49vol7-part604.pdf
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3. 49 CFR 604 Charter Service
www.fta.dot.gov/laws/leg_reg_179.html
Audit Objective - Determine if the equipment is being used in a manner consistent
with the June 8, 2005, NCDOT policy guidance.
Suggested Audit Procedure - Examine trip data records, service-related records and
any vehicle lease agreements and charter documentation for compliance.
3.
CASH MANAGEMENT
1. Funds Advanced
Compliance Requirement – While project agreements specify that this is a cost
reimbursement program, the subrecipient may receive funds in advance of incurring the
cost for the purpose of paying vendors. If this occurs, the funds must be paid to the
vendor within three (3) days of receipt from the department.
Audit Objective – Determine if funds were advanced or paid on a reimbursement
basis.
Suggested Audit Procedure - Ascertain that funds received in advance of incurring
the cost were disbursed within three (3) days of receipt from NCDOT.
2. Proceeds from the disposition of vehicles and equipment
Compliance Requirement – Proceeds retained from the disposition of vehicles and
related equipment as established by the Department of Transportation, as applicable,
must be used for transportation purposes. The funds cannot go to the general fund; a
separate account is required.
Audit Objective – Determine if the proceeds from the disposition of vehicles and
equipment were deposited to the correct account. Determine where the proceeds were
used and if the proceeds were used correctly.
Suggested Audit Procedure - Ascertain that proceeds were used for appropriate
purposes.
4.
CONFLICT OF INTEREST POLICY
Compliance Requirement – N.C.G.S. 143C-6-23 requires each nonprofit entity
eligible to receive state funds to have a conflict of interest policy which addresses
conflicts that may arise when members of its governing body or its managing
employees are involved in the disbursement of state funds. The entity is required to
have a copy of their entity’s policy on file with the disbursing state agency before any
funds are disbursed; this policy shall be approved by the entity’s governing board and a
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notarized statement of the board’s action shall be attached. All members of the board
and management shall be familiar with and follow the policy and the legislation. The
entity should have written procedures of how the conflict of interest policy is enforced.
Audit Objective - Determine if the policy statement has been provided to the
disbursing state agency, to current members of the board and management and efforts
are made to follow the policy.
Suggested Audit Procedure
1. Obtain a copy of the policy and transmittal letter to the agencies disbursing state
funds to the nonprofit entity.
2. Verify the existence and enforcement of the entity’s procedures.
6.
EQUIPMENT AND REAL PROPERTY MANAGEMENT
1. Vehicle Maintenance
Compliance Requirement - Under the agreement between NCDOT and the local
grantee, the section on equipment requires that maintenance records be established for
each vehicle acquired with federal and state funds. The maintenance program must
meet the minimum maintenance requirements established by the vehicle manufacturer
Audit Objective – Determine that the maintenance records were established as
required by the agreement and that the agency has met the manufacturer’s minimum
maintenance requirements.
Suggested Audit Procedure - Inspect and test the maintenance records to determine if
the recipient has a maintenance program and that it meets the minimum maintenance
requirements as established by the vehicle manufacturer.
2. Procedures for disposition of vehicles and equipment
Compliance Requirement – Disposition of vehicles and related equipment must be in
accordance with procedures established by the NCDOT.
Audit Objective – Determine if any vehicles and equipment have been disposed of and
if it was according to procedure.
Suggested Audit Procedure
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1.
Interview responsible officials and review disposition records and determine
whether there were any disposals of vehicles or related transit equipment.
2.
Obtain current market values at date of disposal if the equipment was disposed of
locally and determine if the agency received an appropriate amount.
3.
Lease Agreements for Vehicles
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Compliance Requirement – The grant recipient must enter into a lease agreement for
vehicles that are not operated by the recipient. The sample lease agreement is provided
by NCDOT – Public Transportation Division and incorporates the required federal and
state provisions. A copy of each lease agreement is forwarded to NCDOT. A copy of
current lease agreements must be on file with NCDOT.
Audit Objective – Determine who operates the vehicles and that this is covered by the
lease agreement.
Suggested Audit Procedure - Determine if any vehicles are operated by other entities.
If so, check the agreement for required clause/provisions and a current period of
performance.
7.
MATCHING, LEVEL OF EFFORT, EARMARKING
Local Match
Compliance Requirement - The grantee must pay the amount/percentage as specified
in the State/Local project agreement or award letter, plus all sales/highway use tax and
the cost of options that the Department does not participate in funding. There is a 10%
(ten percent) local match requirement. Any costs in excess of the approved project
budget are the responsibility of the grantee.
Audit Objective – Determine the amounts or percentages or matching funds provided
were allowable and applied correctly.
Suggested Audit Procedure
1. Compare the total reported project cost with the expenditure category to determine
the allowability and unacceptability of claimed expenses and that the required
matching contributions were met.
2. Determine whether expenditures were supported by the project budget, were
applied correctly and were from an allowable source.
3. Test records/transactions
transaction/activities.
8.
to
match
for
compliance
with
allowable
PERIOD OF AVAILABILITY OF STATE FUNDS
Compliance Requirement - The eligible project costs are to be completed within the
specified time frame. Extensions to the period of performance must be approved by
NCDOT based upon justification provided by the grantee.
Audit Objective – Determine if costs were expended within the specified time frame
according to the agreement or award letter.
Suggested Audit Procedure – Verify that project expenses occurred within the period
of performance specified in the project agreement or an approved extension of the
period of performance.
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9.
PROCUREMENT AND SUSPENSION AND DEBARMENT
Compliance Requirement –Procurements shall be conducted in accordance with
instructions contained in North Carolina General Statute 143-129. Expenditures for
construction or repair work requiring the estimated expenditure equal to or more than
five hundred thousand dollars ($500,000); or a single class of supplies, materials, or
equipment estimated in an amount equal to or more than ninety thousand dollars
($90,000) must be contracted for only after a formal low bid process and approval by
NCDOT. A bid tabulation and governing agency resolution recommending award is
required for contract award to lowest responsible bidder.
No recipient is allowed to procure goods or services from a company, firm or
organization that has been suspended or debarred by the State of North Carolina or
Federal Government.
Circumventing these regulations by reducing large purchases to a series of small
purchases or by any other means is not permitted.
Audit Objective - Determine if procurements were conducted in accordance with
N.C.G.S. 143-129.
Suggested Audit Procedure – Examine procurements for adherence to regulations and
NCDOT guidance.
12. REPORTING
1.
Compliance Requirement - Grantees must submit an annual updated Public
Transportation Management System (PTMS) inventory.
Audit Objective – Determine if an accurate PTMS has been submitted.
Suggested Audit Procedure
1. Examine the PTMS for the most recently submitted application.
2. Verify the accuracy of the PTMS by checking the PTMS against a schedule
of fixed assets and/or on-site inventory. The PTMS should include all rolling
stock, equipment in the vehicle (mobile radios, cell phones, mobile data
terminals, etc.) and facilities.
2.
Compliance Requirement – North Carolina General Statute 143C-6-23 “Use of
State Funds by Non-State Entities,” and North Carolina Administrative Code
Chapter 9, Subchapter 03M “Uniform Administration of State Grants” addresses
reporting requirements for nongovernmental entities.
These regulations along with reporting forms may be accessed at:
https://www.ncgrants.gov/NCGrants/Regulations.jsp
https://www.ncgrants.gov/NCGrants/PublicReportsRegulations.jsp
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Audit Objective – Determine applicable reporting requirements.
Suggested Audit Procedure
1. Determine if the organization is subject to G.S. 143C-6-23.
2. Determine what type of filing/report should be made with the NCDOT.
3.
Projects that have federal, state and local funds:
Compliance Requirement - Grantees must submit quarterly DBE Report of
Awards and Report of Payments documenting actual utilization (CFR Parts 23 and
26, and the U.S. DOT DBE Final Rule, Federal Register dated February 2, 1999 Participation by Disadvantaged Business Enterprises in Department of
Transportation Programs). Additional required reports include Project Progress
Reports and reports of significant events (FTA Circular 5010.1D). Based on the
level of FTA funding, exclusive of transit vehicle purchases, recipients are
required to implement a DBE program. To monitor the progress of the DBE
program, recipients are required to submit quarterly reports based on a record
keeping system (49 CFR section 23.49, 23.11).
Audit Objective - Determine DBE reports are supported by adequate
documentation.
Suggested Audit Procedure
1. Review grantee’s DBE contract expenditures (as opposed to contract awards)
as outlined in 49 CFR Part 26.
2. Review the reports and trace the information to underlying data to determine
completeness and accuracy.
3. Determine that for all participation amounts reported, the firms have been
certified and that the certification is current. Participation by non-certified
firms is not allowed.
4.
Projects that have state and local funds:
Compliance Requirement - Grantees must submit quarterly MBE/WBE/HUB
Report of Awards and Report of Payments documenting actual utilization of
Minority Business Enterprise, Women Business Enterprise and Historically
Underutilized Business Enterprise as specified in all grant agreements executed
after October 1, 2006. To monitor the progress of the MBE/WBE/HUB program,
recipients are required to submit quarterly reports based on a record keeping
system.
Audit Objective - Determine MBE/WBE/HUB reports are supported by adequate
documentation.
Suggested Audit Procedure
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1. Review grantee’s MBE/WBE/HUB contract expenditures as defined in the
grant agreement and the NCDOT Public Transportation Division
Disadvantaged Business Enterprise External Procedures.
2. Review the reports and trace the information to underlying data to determine
completeness and accuracy.
3. Determine that for all participation amounts reported, the firms have been
certified and that the certification is current. Participation by non-certified
firms is not allowed.
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