2015 AASHTO Internal/External Audit Sub-Committee
Annual Business Meeting
July 23, 2015 – Portland, Oregon

Call To Order
o 1:35 by Dan Kahnke, Minnesota, Chair

Roll Call
o Roll call of states was conducted by Darrin Player, SC, Secretary. The count yielded 32
states in attendance, which was a quorum. Bylaws state a simple majority is needed for
a quorum which would be 27 states.

Approval of the 2014 Business Meeting Minutes
o Minutes were distributed to all members attending the meeting. A motion to adopt the
minutes with no changes was seconded, and further approved by the members.

Host States for Future Conferences
o 2016 – Washington DC
o 2017 – Montana
o 2018 - Kentucky (Alice Wilson stated they were very interested however had to wait on
a changeover of administration at the Transportation Cabinet to commit (should know
January/February 2016). Tennessee also mentioned being interested in hosting.

Thank You Oregon – Dan Kahnke thanked Oregon for all their hard work and hosting an
outstanding conference.

Awards – Dan Kahnke
o Past Peer Review Chair Awards were presented to Alan Pinkerton and Judy Robertson
on behalf of the Task Force for their outstanding work leading the Peer Review Task
Force.
o David Campbell Quality Award was presented to Sandra Healy, Idaho, for recognition of
her many important contributions to Internal Audit over the years. Award was accepted
by Carri Rosti of Idaho.

Old Business – Marlene Hartinger, Oregon, Vice Chair
o Marlene stated that SCOFA approved funding for the National Compensation Matrix.
o The next step in the process is for the AASHTO Board of Directors to approve and no
action has been taken yet.

New Business – Dan Kahnke
o Dan mentioned that Virginia had experienced some push back on use of the External
Audit Guide and the NCM, possibly a lawsuit. The engineering firm stated the state did
not adopt the Guide however Jenet, AASHTO, had all voting information and ended any
action at the time. Dan stated he just wanted everyone to know this was happening and
just be prepared and the Board and AASHTO is willing to help in any way it can.
o A motion to revise the Audit Subcommittee Bylaws to clearly define Voting Quorum was
made and language for the change was distributed to the members prior to the meeting
(attached). The motion was seconded, and further approved by the members.
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 1
o
A motion to establish a new task force for Innovative Audit Practices/Continuous
Auditing/Data Analytics was made. Discussion was held regarding the task force on
7/20/15 after the regular conference agenda. A chair has been named and several
members have signed up to participate. The motion was seconded, and further
approved by the members
Task Force Reports
o David Campbell Quality Award – award was presented earlier in the meeting by Dan
Kahnke.
o
Peer Review Task Force – Alan Pinkerton, Arkansas
 During the past year the task force:
 Completed peer reviews and issued reports for: Nevada, Missouri, Oregon,
West Virginia, and Arizona
 Staffed the fall 2015 peer reviews for Colorado
 In the process of staffing Winter 2015, Spring 2016 peer reviews for
Alabama, Idaho, and Minnesota
 Received Peer Review request form from Arkansas
 Updated the web pages and the peer review portal
 Vickie Murphy, Montana, will be rotating off the task force. Alan Pinkerton,
Arkansas, will remain on the task force for one year as past chair. The new
chair will be Benito Ybarra, Texas. Tennessee will be added to the task force
for next year.
 A written report was submitted to the Board and distributed to the
members prior to the meeting (report attached).
o
Uniform Audit & Accounting Guide - Gerry Dobek, Connecticut, Co-Chair
 Most updates were given during the 07/22/15 panel on the external audit
guide.
 Written report was submitted to the Board and distributed to the members
prior to the meeting (report attached).
 Gerry discussed the time line for the most recent update to the Guide. He
stated the task force will not rush but hope to complete update by end of year.
 Jenet, AASHTO, discussed the SCOFA voting and process
 Carri, Idaho, suggested documenting the process. The members agreed and
Jenet will do and add to the committee website.
o
Internal Audit Guide Task Force – Alice Wilson, Kentucky and Stephen Kirk, Illinois
 Written report was submitted to the Board and distributed to the members
prior to the meeting (report attached)
 Since the written report was issued the Internal Audit Guide task force has
added 3 new practice aids
 The task force continues to work on practice aids which are mini audit programs
for various types of DOT internal engagements and asked for additional
members and that states send other audit programs to the task force for review
and possible development of practice aids.
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 2
o
ACEC Liaison Committee – Dan Kahnke
 Dan gave an overview of the committee meeting held on Monday, 7/20/15.
 A discussion was held regarding a simpler process for minor changes and the
committee will be working on this process.
 A survey of states was recommended by the committee regarding cognizant
audits. This will be developed and distributed soon.
 The committee has not met via monthly teleconference as it had in the past.
This will be reactivated.
 The committee meets in person at the annual Audits Conference. All state
members are invited to attend and share their opinions and concerns and issues
alongside the ACEC representatives.
o
Other New Business
 The Board met on Sunday, 7/19/15, to review the 2014 Annual Meeting
financial report from Georgia. The report was accepted and distributed to the
members prior to the business meeting (report attached)
 Benito Ybarra, Texas, mentioned the ACGA (American Center for Government
Auditing) which focuses on providing support for Government Auditors and free
webinars. He stated you can find this group on the IIA website.
 Carri Rosti, Idaho, stated we should update the task forces and members on the
committee website. Darrin, SC, stated he would make sure he had all the task
force members and work with AASHTO to get the website task forces and
members updated.
o
Meeting Adjourned
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 3
ATTACHMENTS
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 4
Proposed Changes to AASHTO Audit Subcommittee Bylaws
to Define Voting Quorum
Current Text:
ARTICLE VII: Meetings
There shall be an annual meeting of the subcommittee. The site shall be determined by a vote of the
membership, two years in advance of the meeting. Preference will be given to geographical distribution.
Special meetings may be held at a time and place established by the board of directors.
The FHWA liaison and the USDOT IG or a liaison from that group shall be invited to all annual meetings.
Following the annual meeting, a closeout shall be held by the host state, the next year’s host state and
the officers of the subcommittee.
Proposed Revisions:
ARTICLE VII – MEETINGS AND VOTING
Meetings
There shall be an annual meeting of the subcommittee. The site shall be determined by a vote of the
membership, two years in advance of the meeting. Preference will be given to geographical distribution.
Special meetings may be held at a time and place established by the board of directors.
The FHWA liaison and the USDOT IG or a liaison from that group shall be invited to all annual meetings.
Following the annual meeting, a closeout shall be held by the host state, the next year’s host state and
the officers of the subcommittee.
Voting
Only members of the subcommittee shall be eligible to vote on matters before the subcommittee. A
vote will be taken of all members present at the annual meeting. Except as otherwise specified herein,
all votes shall be by simple majority. Each member shall have one vote and may delegate the vote to be
cast on their behalf.
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 5
AASHTO Subcommittee on
AUDITS
Chair: Daniel Kahnke, Minnesota
Vice Chair: Marlene Hartinger, Oregon
Secretary: Darrin Player, South Carolina
2015 AASHTO AUDIT SUBCOMMITTEE ANNUAL MEETING
Activities Report of the
Task Force on _Uniform Audit & Accounting Guide
Wednesday July 22, 2015 / 1:30pm —3:30pm
Hilton Portland and Executive Tower, Portland, Oregon
Teleconference: (866) 299-7945, access code: 2465716#
The following report is provided to members of AASHTO Audit Subcommittee regarding the activities of
the ___ Uniform Audit & Accounting Guide________________________ Task Force for the time period
beginning after the August 2014 Annual Meeting to the July 2015 Annual Meeting.
Task Force Membership
Co-Chairs:
Gerry Dobek
John Whiteside
Members: The Audit Guide Task force is composed of members from 28 State DOTs and DC, 2
representatives from AASHTO and 3 from FHWA.
Summary of Activities and Accomplishments from August 2014 to July 2015, including
recommendation to continue or disband task force / sub-task force / sub-committee
We have monthly 1 hour calls to discuss topics, issues, and sub task reporting on the first
Monday of every month.
The co-chairs participate in calls with ACEC. On the conference calls we discussed the following
items:
 The process of updating the audit guide.
 It was agreed that The Task Force’s subgroup and ACEC subgroups will discuss how they
want to handle issues and drafting edits. The subgroups will discuss the items ACEC
noted for review/edit noted in ACEC’s suggestion letter.
 A timeline was developed for updating the audit guide.
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 6
The task force has been updating the audit guide. A draft of audit guide has been submitted to
be posted to the AASHTO web site for review. It was anticipated having the audit guide done
for AASHTO’s annual internal/external audit meeting, however, extra time was given to the
subgroups to complete their tasks. In addition, unforeseen circumstances caused a delay in
Scot Gormley incorporating all the updates. The work to update the audit guide included:





Sub-groups were formed to update different sections of the audit guide.
A timeline was developed for the update.
The sub-groups worked with ACEC’s subgroups.
The audit guide and status updates were discussed on the monthly task force teleconference
and the conference calls with ACEC.
The audit guide was edited.
Status Update for the Audit Guide Update Task Force Sub-groups.





Chapters 6, 7 and Overtime Premium – Randy Knoche: They met with the ACEC sub-group and
have updated this section. They have submitted the updated sections to Scot Gormley for
editing. There are other issues brought up by ACEC that the sub-group did not address in this
revision. The issues were superior performance, ratio analysis on labor and the labor testing
section. These issues will be deferred until the next update.
Chapter 8 – Marsue Morrill: They met with the ACEC sub-group and have updated this section.
They have submitted the updated sections to Scot Gormley for editing.
Yellow Book Review and Report Example – Margaret Cole: This section has been updated. They
have submitted the updated sections to Scot Gormley for editing. The report example will be
moved from the audit guide to the AASHTO website so that it can be kept up to date.
Audit Guide Chapter 12, Cognizant and Oversight – Dan Parker: Dan updated this section
incorporating the new 23CFR172. He made changes based on comments from this sub-group
ACEC sub-group. The updated section has been submitted to Scot Gormley for editing.
Editor and Designer – Scot Gormley: The draft of the audit guide is finished. A copy was sent to
Gerry Dobek (AASHTO Co-chair) and Dan Purvine. Gerry has sent a copy to Jenet Adem at
AASHTO to be posted on the AASHTO website for review and comment.
The team has been working on the following additional areas:



Received monthly updates from FHWA on cost recovery and proposed rulemaking
(23cfr172). 23CFR172 has passed.
Discussed the Safe Harbor program and received updates from FHWA and any test
states on the task force. Seems to be working well. A number of small firms have been
approved to use the rate and many have contracts (mostly sub or with an LPA). The
FHWA had considered opening up the program to additional states. The decision was
not to extend the program to additional states.
Discussed CEI Direct Costs or “Tools of the trade” because of inconsistency between
firms and probably states. May need to provide some guidance but not dictate since
appears more of a contractual issue. This issue is still early in the development stage –
will be working on in the future.
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 7


Discussed what rate to use if the consultant is a joint venture. The consensus was that
the individual firms should be viewed as sub-consultants, and use their own rates.
Discussed proposed best practices guidance for the Accounting for Design-Build Projects
to help develop consistent treatment of these costs throughout the industry. – will be
working on in the future.
Action Items for Subcommittee Membership Voting
We will need to vote on the approval of the audit guide. [Through email voting process]
We recommend continuing the Uniform Audit and Accounting Guide Task Force.
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 8
AASHTO Subcommittee on
AUDITS
Chair: Daniel Kahnke, Minnesota
Vice Chair: Marlene Hartinger, Oregon
Secretary: Darrin Player, South Carolina
2015 AASHTO AUDIT SUBCOMMITTEE ANNUAL MEETING
Activities Report of the
Task Force on Peer Review
Wednesday July 22, 2015 / 1:30pm —3:30pm
Hilton Portland and Executive Tower, Portland, Oregon
The following report is provided
to members
AASHTO Audit
regarding the activities of
Teleconference:
(866)of299-7945,
accessSubcommittee
code: 2465716#
the Peer Review Task Force for the time period beginning after the August 2014 Annual Meeting to the
July 2015 Annual Meeting.
Task Force Membership
Chair:
Alan Pinkerton, AR
Members:
Vickie Murphy, MT
Benito Ybarra, TX
Phillip Henry, DE
Pam Fredrick, WY
Joel Griggs, SC
Summary of Activities and Accomplishments from August 2014 to July 2015, including
recommendation to continue or disband task force / sub-task force / sub-committee
During the year, we:





Completed peer reviews and issued reports for Nevada, Missouri, Oregon, West Virginia, and
Arizona.
Staffed the Fall 2015 peer review for Colorado
Are in the process of staffing Winter 2015, Spring 2016 peer reviews for Alabama, Idaho, and
Minnesota
Have received Peer Review Request Form from Arkansas
Updated the web pages and the peer review portal
Action Items for Subcommittee Membership Voting
None
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 9
AASHTO Subcommittee on
AUDITS
Chair: Daniel Kahnke, Minnesota
Vice Chair: Marlene Hartinger, Oregon
Secretary: Darrin Player, South Carolina
2015 AASHTO AUDIT SUBCOMMITTEE ANNUAL MEETING
Activities Report of the
Task Force on Internal Audit Guide
Wednesday July 22, 2015 / 1:30pm —3:30pm
Hilton Portland and Executive Tower, Portland, Oregon
The following report is provided
to members
AASHTO Audit
regarding the activities of
Teleconference:
(866)of299-7945,
accessSubcommittee
code: 2465716#
the Internal Audit Guide Task Force for the time period beginning after the August 2014 Annual Meeting
to the July 2015 Annual Meeting.
Task Force Membership
Chair:
Alice Wilson, KY (co-chair)
Stephen Kirk, IL (co-chair)
Members:








FHWA – Danial Parker
Georgia – Becky Greenway
Idaho – Sandra Healy
Michigan – John/Jack Cotter
North Dakota – Daryl Splichal
South Carolina – Joel Griggs
Texas – Benito Ybarra
Wyoming – Kristin Burkhart
Summary of Activities and Accomplishments from August 2014 to July 2015, including
recommendation to continue or disband task force / sub-task force / sub-committee
The Internal Audit Guide task force had several teleconferences and exchanged several emails discussing
practice aids to add to the AASHTO Internal/External Audit Subcommittee website for state DOTs to use
when conducting internal audits. The task force finalized the Internal Audit Guide and placed it on the
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 10
AASHTO Audit Subcommittee website along with two practice aids: DBE and MPO. The task force has
two practice aids ready for review and concurrence: Materials and Federal Aid Billing & Funds
Management. We anticipate placing these Practice Aids on the website in the immediate future upon
adoption of the final versions by the task force.
The task force continues to work on several other practice aids and hopes to issue more throughout the
upcoming year. Some practice aids that are close to completion include: Procurement Card and Cost
Allocation Plans. We have assigned Construction Contract Administration and Subrecipient Monitoring
and those are in progress.
We have several practice aids that are on our list to do, and have received practice aids from a few state
DOTs. These are in various stages of detail and completeness so the Task Force decided to assign them
to members to format and edit as needed for posting.
Action Items for Subcommittee Membership Voting
None
2015 AASHTO Internal/External Audit Committee Annual Meeting
Subcommittee Business Meeting Minutes 07/23/15 - DRAFT
Page 11