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TRANSPORTATION SUBSIDY PROGRAM
AUDIT REPORT NO. 237
August 21, 1996
Generally, our audit found that the management controls for the Commission's Public Transportation Subsidy Program (PTSP) were adequate. However, we are recommending several improvements to the controls, as well as enhancements to PTSP's compliance with applicable laws and regulations. We did not identify any instances of fraudulent acts.
Our most significant recommendations include separating program duties; improving the safeguarding of Metrocheks; periodically evaluating whether the program achieves quantifiable program goals and is cost-effective; and ensuring compliance with Commission policies and procedures.
We found that approximately eighteen percent of the participants we surveyed (eight out of forty-five individuals) began using public transportation because of the subsidy. These results are comparable to findings obtained by the General Accounting Office (GAO) during a similar survey performed government wide. Because the Commission has not established quantifiable program goals, we were unable to evaluate whether the program is achieving the Commission's expectations on employee commuting habits or is cost-effective.
The Office of Administrative and Personnel Management, which administers the program, generally concurred with our findings and recommendations (see Appendix A). In addition, we received comments from the Office of the Executive Director, the Office of the Comptroller, and the Southeast Regional Office (attached). We have modified the report as appropriate to reflect the comments received.
OBJECTIVES AND SCOPE
The audit objectives were to evaluate the adequacy of the management controls for the PTSP, its compliance with applicable laws and regulations, and the effectiveness of the program in achieving its mission.
We focused on fiscal year 1995 activities at headquarters and three field offices: the Central Regional Office (Denver), and the Boston and San Francisco District Offices. We did not review contracting issues (e.g., the organization of contracting documentation) because they were included in another audit (Audit No. 239).
During the audit, we interviewed program officials, performed analytical procedures, surveyed Commission staff, reviewed prior audit reports, compared aspects of the Commission's program with those at other government agencies, and reviewed supporting documentation, among other procedures.
The audit was performed in accordance with generally accepted government auditing standards between September 1995 and April 1996.
Public Law 103-172 and its predecessor, P.L. 101-509 (Section 629), enable federal agencies to participate (i.e., use appropriated funds) in state or local government programs that encourage employees to use public transportation. The intent is to conserve petroleum, reduce congestion, and improve air quality. In January, 1992, the Commission established a Public Transportation Subsidy Program (PTSP) under the provisions of these laws. Commission regulation SECR 5-9 contains detailed policies and procedures implementing the program.
The headquarters program is administered by the Office of Administrative and Personnel Management (OAPM). The Program Manager receives the subsidy (i.e., Metrocheks) every other month from the Washington Metropolitan Area Transit Authority (WMATA), and distributes them to nine Disbursing Agents (generally, Administrative Officers). In turn, the Disbursing Agents provide two Metrocheks, each costing $21, to PTSP participants every other month, one for each month.
When receiving Metrocheks, the participants sign a receipt log. The Disbursing Agent records the disbursement data in an automated spreadsheet (see Appendix B), which is used by OAPM in reconciling PTSP records with Metrochek purchases, and the current inventory of Metrocheks. The spreadsheet contains the names of all staff assigned to the Disbursing Agent, whether or not the employee participates in the program. The OAPM Operations Officer performs semi-annual reviews to evaluate compliance with program policies and procedures.
The field offices have established PTSP programs in coordination with their local and state governments. They are required to develop policies and procedures for ordering, recording, and disbursing subsidies which ensure that program assets are safeguarded and accurate records are maintained.
In fiscal year 1995, the total cost of PTSP subsidies was approximately $473,100. The headquarters program cost $294,500, while those in the field offices cost $178,600. During fiscal year 1995, there were approximately 1,170 participants in the headquarters program and 777 participants in the field offices.
We generally found the management controls were adequate. No instances of fraud were detected during the audit. As discussed below, we are recommending several improvements to the PTSP's management controls.
Separation of Duties - Enrollment and Termination of Participants
Currently, Disbursing Agents enroll and terminate staff from the program, record disbursement data in the automated spreadsheet, and maintain custody (including distribution) of Metrocheks. Adequate separation of duties requires that the responsibilities of authorizing transactions, recording transactions, and custody of assets be separated to limit the risk of fraudulent acts occurring.
Under current procedures, a Disbursing Agent could record disbursement data in the spreadsheet for someone not participating in the program, and then take the Metrocheks for his or her own use. Based on the current procedures, it is unlikely that the fraudulent act would be detected.
The Office of Administrative and Personnel Management, in consultation with the divisions and offices, should designate someone other than the Disbursing Agent to enroll and terminate PTSP participants, and maintain a list of current participants (also see Recommendation C).
The Operations Officer should, during the semi-annual review, include steps to detect fraudulent acts. For example, the Operations Officer could contact a random selection of staff recorded as receiving Metrocheks to confirm that the staff actually received them.
Separation of Duties - Accuracy of Financial Records
The automated spreadsheets maintained by Disbursing Agents contain formulas which total the number of Metrocheks given to participants. The software does not have controls to prevent unauthorized modifications to these formulas, which could be done either inadvertently or intentionally to conceal fraudulent acts.
For example, a Disbursing Agent could alter the formula to increase the apparent number of Metrocheks given to participants. The Disbursing Agent could then convert the additional Metrocheks to his or her own use. Based on current procedures, the fraudulent act would likely not be detected.
The spreadsheet lists all employees in the office(s) covered by the Disbursing Agent. Listing only staff who participated during the current fiscal year would help reduce the risk of recording errors and fraud.
OAPM should ask the divisions and offices to appoint additional staff to assist the Disbursing Agents in performing their responsibilities. The intent is to separate the Disbursing Agent's responsibility for recording disbursement data from the responsibility to maintain custody of the Metrocheks.
OAPM, in consultation with the Office of Information Technology, should improve the security of the automated spreadsheet (for example, by using different software that does not allow unauthorized users to modify formulas). If this change is not feasible or cost-effective, then OAPM should periodically review the spreadsheet formulas by manually counting the number of participants receiving Metrocheks, and comparing that number with the total given by the formula and OAPM's records of active participants.
OAPM should ask the designated enrollment manager (see Recommendation A) to record only active participants in the automated spreadsheet.
Improve the Safeguarding of Metrocheks
Disbursing Agents typically receive Metrocheks from the Program Manager one to two days before distributing them to participants. For fiscal year 1995, the average total dollar value of Metrocheks received by each Disbursing Agent was approximately $5,712. Some Disbursing Agents receive even more; for example, during the disbursement period of August/September 1995, two Disbursing Agents each received $9,450 worth of Metrocheks.
The headquarters imprest fund totals only $5,000, and yet its safeguarding procedures include a safe, locked cash drawers, and a security guard. Metrocheks are portable, high value cash equivalents. Currently, Disbursing Agents keep them in a locked desk drawer. Security procedures should be enhanced to further reduce the risk of theft.
Also, each Disbursing Agent maintains a reserve of Metrocheks with an average value of approximately $600 after the bi-monthly distribution. The Program Manager stated that OAPM attempts to limit the number of Metrocheks in reserve, but the current level of reserves appears excessive.
OAPM, in consultation with the Office of the Comptroller, should consider alternative safeguarding procedures for Metrocheks. Some possible procedures include: (1) providing or making available safes or secure cabinets to each Disbursing Agent; (2) during the distribution period, require Disbursing Agents to return Metrocheks at the end of the day to the Program Manager, who has a safe; (3) reducing the time period between the Program Manager's distribution of Metrocheks to Disbursing Agents and their subsequent distribution to participants; and (4) reducing the dollar value of reserves maintained by Disbursing Agents based on an analysis of the number of participants, historical data, and other supporting documentation.
We reviewed purchase requisitions, receipt documents, purchase orders, and other financial records. Generally, we found that these documents agreed. We found minor mathematical errors or omissions in three of the six purchase requisitions for fiscal year 1995. Despite these errors, the Commission did receive (based on the dollar value of the purchase requisition) the corresponding number of Metrocheks.
The Administrative Officer in the San Francisco District Office (SFDO) prepares purchase orders, receives subsidies, provides the subsidy to the Disbursing Agent, and prepares financial reports for the SFDO PTSP. These duties should be separated to reduce the likelihood that fraudulent acts will occur.
During our audit, the SFDO improved the separation of duties by having another employee verify the receipt of the subsidy and perform reviews of the financial records. Currently, the field offices are not required to have PTSP records independently reviewed.
OAPM should consider requiring field offices to periodically perform independent reviews of their PTSP records.
COMPLIANCE WITH LAWS AND REGULATIONS
As part of the audit, we evaluated the extent to which the PTSP complied with applicable laws and regulations. Our findings are set forth below.
Establish Program Goals
Executive Order 12191 requires federal agencies to establish quantifiable ridesharing (that is, use of public transportation, carpools, and other multi-occupancy travel modes) goals for its employees.
The Executive Order is one of the authorities cited by the Commission's regulation for the establishment of the PTSP. The Commission has not yet established quantifiable program goals as required by the executive Order, making it more difficult to evaluate the program's effectiveness.
OAPM should establish quantifiable program goals to help evaluate the PTSP's effectiveness.
Evaluate the Program's Effectiveness
The Office and Management and Budget (OMB), in a June 1992 memorandum, required federal agencies to collect data to help evaluate the PTSP. However, the Commission has not yet evaluated the program. In September 1993, GAO reported that the SEC "had not prepared an evaluation plan or conducted assessments to meet the OMB requirements." OMB requires that the extent (e.g., how often, depth of analysis) of the evaluation be proportional to the program funding level. The OMB memorandum stated, "The evaluation should attempt to quantify:
- Changes in existing employee commuting habits because of the program;
- Other measures the agency has taken to encourage the reduction in single-occupant vehicle use for commuting purposes;
- By fare subsidy program site, the number of vehicle parking spaces provided for employee parking by the agency, another Federal agency, or a building lessor; the amount, if any, charged employees (on a daily or pro-rated daily basis) for such parking; and the difference in rates charged for certain classes of vehicles (compact cars, van pools, bicycles); and
- The costs and benefits derived from the program through currently available quantifiable measures such as reduced parking spaces; increases in riders per vehicle per parking space; improved employee job satisfaction measures--on time performance, productivity, and morale improvements, and/or other measures."
An evaluation of the program would also comply with the spirit and intent of the Government Performance and Results Act (GPRA), which requires federal agencies to more effectively plan, budget, execute, evaluate and account for federal programs.
In May of 1994, in an apparent response to the GAO report, a subcontractor of WMATA gathered data on Commission staff commuting. However, the subcontractor did not analyze the data or provide a conclusion about the program's effectiveness.
The Commission's regulations (SECR 5-9) require the field offices, but not headquarters, to prepare an annual report which includes an evaluation of their programs' effectiveness. However, many of the field offices are not preparing the evaluation. OAPM has not assigned anyone the responsibility for following-up on these reports.
OAPM's justification for continuing the program during fiscal year 1995 was that the program "has been received enthusiastically by workers at all grade levels from its initiation... It is a morale builder for the employees who benefit from it each month." A similar justification was used for fiscal year 1996. This justification is not sufficient under OMB's guidance, as described above.
OAPM should periodically evaluate the PTSP to determine whether it is achieving quantifiable program goals and is cost-effective. The evaluation should be based on the OMB guidance, program goals (see Recommendation H), field office evaluations (see Recommendation J), and other supporting documentation (e.g., our audit results on the effectiveness of the program - see page ten).
OAPM should designate someone to review and follow-up on the field offices' annual PTSP reports.
Update Grade Level of Participants
OMB requires federal agencies to record the grade level of participating employees in order to evaluate the effectiveness of the PTSP. We selected a judgement sample of forty-five participants, and found that the grade level was not recorded or current for eighteen participants.
OAPM should remind Disbursing Agents to maintain current information on the participants' grade level. OAPM should review this information periodically.
Require Participants to Return Metrocheks
The Commission's regulations require participants who cannot use Metrocheks (because of leave, travel, changes in the method of commuting, or separation) to return them, or to reimburse the government. The Employee Clearance Process includes procedures for returning the subsidy or reimbursing the government.
SECR 5-9 states, "In the headquarters, [the] subsidy is distributed on a bimonthly basis and in two allotments, one for the current month in which receipt was acknowledged, and one for the following month. Therefore, [the] subsidy should be used only in the month for which it was intended. Using the subsidy in any other manner could have the following implication...If an employees receives [a] subsidy bimonthly, and all of it is used during the first month of issue, and a sufficient part of the second month is consumed with leave or travel, the employee is required to reimburse the Government for the month in which leave or travel occurred..."
We found that some Disbursing Agents apparently do not understand this policy. They told us that both Metrocheks could be used in the first month.
We selected nine individuals who separated from the Commission in fiscal year 1995, before they could have used (based on the SECR criteria) both Metrocheks. We found that four of them did not return the Metrochek or reimburse the government for the entire amount. During the audit, the Program Manager reminded the Disbursing Agents of the Commission's policy.
OAPM should periodically verify (e.g., during the Operations Officer's semi-annual review) that Disbursing Agents are complying with the Metrochek use policy.
Enforce Eligibility Requirements
We were told by a Disbursing Agent that the subsidy is given to female employees on maternity leave. We did not identify any instances of this occurring because the data were not readily available. The program is limited to staff who regularly use public transportation for commuting to and from work.
OAPM should remind the Disbursing Agents of the program's eligibility requirements.
Update SECR Citation
The SECR 5-9 cites P.L. 101-509, Section 629 as criteria for the PTSP. However, this law expired in December 1993. It was replaced by Public Law 103-172, the Federal Employees Clean Air Incentives Act.
OAPM should update SECR 5-9 in the next revision to reflect the new criteria for the program.
EFFECTIVENESS OF THE PROGRAM
We surveyed forty-five participants in order to evaluate the effectiveness of the headquarters program. Our sample selection was judgmental and therefore may not be representative of the population.
We found that eight of the forty-five participants (approximately 18%) began using public transportation as a result of receiving the subsidy. This response is comparable to GAO's findings from its government wide survey. Seven of the forty-five participants indicated that they would significantly reduce their use of public transportation if the program did not exist.
Appendix C contains more information on our survey results.
EFFECTIVENESS OF THE HEADQUARTERS PROGRAM
Our second audit objective was to evaluate whether the
headquarters program is encouraging employees to use public transportation as means to
conserve petroleum, reduce congestion, and improve air quality, as intended by the
Public Laws and Executive Order.
In order to evaluate the effectiveness of the headquarters program, we sent questionnaires to a judgement sample of forty-five participants. Our sample is not necessarily representative of the population of participants.
We reviewed the responses and found the following:
- 8 participants began primarily
using public transportation as a result of the program, while 37 participants
were already primarily using public transportation in order to commute to and from work.
- 36 participants stated that
they would continue to use public transportation either as much as they current do,
or slightly less if the program did not exist. 7 participants stated that they would
significantly reduce their use of public transportation; and 2 participants did not
respond to this question.
- 25 participants suggested
increasing the subsidy as a means to further encourage the use of public transportation.
- 17 participants stated that
flexible work schedules were an important factor in their ability to use public transportation.
- Participants stated that
they use public transportation for the following reasons :
- 28 individuals stated to receive the Metrochek;
- 19 individuals stated because it is quicker than driving;
- 25 individuals stated convenience;
- 5 individuals stated they usually do not have access to a car;
- 22 individuals stated the high parking costs;
- 22 individuals stated the ability to do other things while commuting to work; and
- 10 individuals provided other reasons (e.g., stress of driving).
- Participants stated that the most important reason for using public transportation was:
- 13 individuals stated to receive the Metrochek;
- 5 individuals stated because it is quicker than driving;
- 13 individuals stated convenience;
- 2 individuals stated they do not have access to car;
- 10 individuals stated the high parking costs;
- 3 individuals stated the ability to do other things while commuting to work; and
- 6 individuals provided other reasons (e.g., stress of driving).
Associate Executive Director
Office of Administrative and Personnel Management
|SUBJECT:||Transportation Subsidy Program Audit Report (No. 237)|
|DATE:||August 21, 1996|
Attached is our audit report on the Commission's Transportation Subsidy Program. We have modified the report to reflect the comments received on prior drafts. The courtesy and cooperation of you and your staff during this audit are appreciated.
|cc: ||Paul Bognaski
Mary Jo Kenney