State Transportation Department Works to Clarify New Law

January 1999 Issue
State Transportation Department Works to Clarify New Law
NYSSCPA Committee to Assist in Audit Trial Program
By James L. Craig, Jr., CPA
In an effort to clarify implementation and cost-benefit concerns of a 1998 state law that mandates using Federal Single Audit Act concepts in audits of state transportation funds disbursed to municipalities and authorities, the New York State Department of Transportation recently announced it would pay for 10 such audits in a trial program to resolve these open-ended issues.
The DOT's objective is to have auditors explore various approaches and field-test the new guidelines.
"This trial program will be conducted using guidelines developed by the DOT, but with a wide range of choices for the auditor and the municipality," said Thomas J. Goodfellow (Northeast), the department's director of the contract audit bureau. "It will be put in place if we are successful in passing legislation to defer the January 1 effective date of the law." The department of transportation worked to get the 1998 law passed in a move to improve the quality of audits involving state transportation funds. The legislation establishes a pilot program that requires municipalities and authorities that expend $100,000 annually on state funded transportation programs, which already are required to have a federal single audit, to have the state transportation expenditures audited by an independent public accountant.
When first exposed to the program, CPAs, municipalities, transportation authorities, and organizations representing these groups expressed concern about its potential cost and stressed the need for additional implementation guidance. Many local governments fear that the cost of such audits, borne by the governments, represents an unfunded state mandate.
The department of transportation devised the new "mini pilot program" in an attempt to address these concerns, and Goodfellow held a briefing in Albany on November 19 to discuss the proposed plan. Eugene Mahaney (Buffalo) attended on behalf of the Society's Government Accounting and Auditing Committee.
Participants at the briefing raised new questions. One CPA asked under which standards should the audit work be conducted. She stated that her firm reached the preliminary position that attestation standards may be appropriate rather than operating under the compliance statement on auditing standards. Another attendee questioned that since DOT was paying for these 10 pilot audits, would the department then be considered the client. Goodfellow responded that the DOT will give consideration to the issues raised and keep all interested parties informed, and he invited practitioners who want to participate in the trial study to contact him at (518) 457-4700.
The NYSSCPA Government Accounting and Auditing Committee, chaired by Gregory D'Alessandro (Suffolk), also will form a working group to provide feedback to Goodfellow and the DOT, and the committee welcomes participation by other Society members. Interested members should contact James L. Craig, Jr., at (212) 719-8350, (800) 633-6320, or jcraig@nysscpa.org. *

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