For Audits of Architectural and Engineering (A/E ...

1 For Audits of Architectural and Engineering (A/E) Consulting FirmsUNIFORM AUDIT & accounting GUIDEUNIFORM AUDIT & accounting GUIDEA merican Association of State Highway and Transportation Officials t h e v o i c e o f t r a n s p o r tat i o n2012 Edition Copyright 2013, by the American Association of State Highway and Transportation Officials. All Rights Reserved. This book, or parts thereof, may not be reproduced in any form without written permission of the publisher. Printed in the United States of America. AASHTO uniform Audit & accounting Guide (2012 Edition) i AASHTO uniform Audit & accounting Guide (2012 Edition) ii EXECUTIVE COMMITTEE 2012 2013 OFFICERS: PRESIDENT: Michael P.

2 Lewis, Rhode Island VICE PRESIDENT: Mike Hancock, Kentucky SECRETARY-TREASURER: Carlos Braceras, Utah EXECUTIVE DIRECTOR: John Horsley, Washington, D C REGIONAL REPRESENTATIVES: REGION I: James P. Redeker, Connecticut Chris Clement, New Hampshire REGION II: Eugene Conti, North Carolina Sheri LeBas, Louisiana REGION III: Mark Gottlieb, Wisconsin Paul Trombino, Iowa REGION IV: John Cox, Wyoming John Halikowski, Arizona IMMEDIATE PAST PRESIDENT.

3 Kirk Steudle, Michigan AASHTO uniform Audit & accounting Guide (2012 Edition) iii AASHTO ADMINISTRATIVE SUBCOMMITTEE ON INTERNAL/EXTERNAL AUDIT Finance and Administration Subcommittee Chair Vice Chair Carri A. Rosti, CPA Judson D. Brown, CPA Manager, Office of Internal Review Director, External and Construction Audit Idaho Transportation Department Virginia Department of Transportation Box 7129 1401 East Broad Street, 14th Floor, Room 1403 Boise, ID 83707-1129 Richmond, VA 23219 (208) 334-8834 (804)

4 225-3597 Secretary AASHTO Liaison Dan Kahnke, CGFM Jenet Adem Audit Director Director of Finance and Administration Minnesota Department of Transportation American Association of State Highway and Transportation Officials395 John Ireland Blvd. 444 North Capitol Street, Suite 249 St. Paul, MN 55155 Washington, DC 20001-1539 (651) 366-4140 (202) 624-5816 FHWA Liaison Dave Bruce FHWA National Review Team Leader Federal Highway Administration Program Management Improvement Team 12300 West Dakota Avenue Lakewood, CO 80228 (720) 963-3723 AASHTO uniform Audit & accounting Guide (2012 Edition)

5 Iv Transportation Internet Links Alabama Missouri Alaska Montana Arizona Nebraska Arkansas Nevada California New Hampshire Colorado New Jersey Connecticut New Mexico Delaware New York District of Columbia North Carolina Florida North Dakota Georgia Ohio Hawaii Oklahoma Idaho Oregon Illinois Pennsylvania Indiana Rhode Island Iowa South Carolina Kansas South Dakota Kentucky Tennessee Louisiana Texas Maine Utah Maryland

6 Vermont Massachusetts Virginia Michigan Washington Minnesota West Virginia Mississippi Wisconsin Wyoming Federal Highway Administration (FHWA) AASHTO uniform Audit & accounting Guide (2012 Edition) v ACKNOWLEDGMENTS Discussions among AASHTO members at the regional level and at annual AASHTO meetings led to the creation of the first edition of the uniform Audit & accounting Guide, as released in March of 2001.

7 The guide was designed to assist Engineering consultants, independent CPAs, and State DOT auditors with the preparation, and/or auditing, of Statements of Direct Labor, Fringe Benefits, and General Overhead (indirect cost rate schedules). Over the years, many people have contributed to the guide by providing input, conducting research, attending working sessions, facilitating meetings, editing, proofreading, and providing other support. The participants included representatives from State Departments of Transportation, the FHWA, the ACEC, public accounting firms, and AASHTO. Their knowledge, time, travel funding, and supplies were greatly appreciated in the nationwide team effort that led to this 2012 edition of the guide.

8 Scot P. Gormley, External Audit Manager with the Ohio Department of Transportation, served as the primary designer and editor of this 2012 Edition of the guide, with additional support and assistance provided by Dan Purvine of A/E Clarity Consulting and Training, LLC. AASHTO uniform Audit & accounting Guide (2012 Edition) vi Preface ABOUT THIS GUIDE his uniform Audit and accounting Guide was developed by the American Association of State Highway and Transportation Officials (AASHTO) Audit Subcommittee with assistance from the American Association of State Highway and Transportation Officials, the Federal Highway Administration (FHWA), and the American Council of Engineering Companies (ACEC).

9 The AASHTO Audit Subcommittee is comprised of the senior audit representative from each State s transportation or highway department. This guide was developed over several years and initially was approved by AASHTO at the organization s 2001 annual meeting. During 2007, the members of the Audit Subcommittee approved the establishment of a Task Force to update the guide, which resulted in the release of the 2010 Edition. This was necessary to ensure that the guide was consistent with current auditing standards and procedures, accounting principles, and Federal regulations. The 2010 update also addressed questions and concerns expressed by various parties, including the FHWA, State DOT audit agencies, Architectural and Engineering design firms (hereinafter referred to as A/E firms or Engineering consultants ), and public accounting firms.

10 These questions and concerns were brought about through current practice and, in part, through the findings and recommendations from an audit performed by the Department of Transportation s Office of Inspector General (OIG).1 This 2012 Edition of the guide incorporates several updates, refinements, and clarifications necessary to reflect changes in the statutory and regulatory framework applicable to A/E contracts that have occurred since the publication of the 2010 update. This 2012 guide should be used as a tool by State DOT auditors, A/E firms, and public accounting firms that perform Audits and attestations of A/E firms.