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Audit Office

Safe Harbor Indirect Cost Rate Test Program

FHWA Pilot Program - Washington State Selected to Participate 

WSDOT has been chosen as one of the ten states across the nation to test the “Safe Harbor” indirect cost rate. Safe Harbor is a pilot program that is intended to remove a potential, initial financial barrier that may otherwise prevent or inhibit new, small, and disadvantaged architectural and engineering (A/E) consulting firms from entering the State-administered, Federally-funded engineering services market.

Many new and/or small firms do not meet Federal grant financial accounting requirements that are required to work on federal fund projects (49 CFR 18.22(b) and 48 CFR part 31). Safe Harbor provides new and/or small firms with an indirect cost rate that is to be used in the billing rates. 

September 2013 - Safe Harbor Updates 

The Safe Harbor Pilot program is being called the “Path to Compliance”. Use of the safe harbor rate will allow a firm time to develop an indirect cost rate in accordance with the Federal Cost Principles based on the actual cost of the firm.

The safe harbor test period is July 1, 2013, through June 30, 2016. The program will be evaluated after one year.

At the end of the three year program, a firm that is approved to use the Safe Harbor rate should be able to meet all the steps listed on the Pathway to Compliance (docx, 36kb) document and provide a FAR-compliant Indirect Cost Rate.

Prior to admission in the Safe Harbor Pilot Program, a firm must be able to meet the timekeeping requirements described in the Pathway to Compliance document, and must sign the Certification of Safe Harbor Indirect Cost Rate (docx, 20kb) form before being provided with a Safe Harbor rate letter.

The Safe Harbor indirect cost rate option is 110%. Use of this rate is optional to the firm, and this rate will not be subject to audit.

Who can qualify to use this Safe Harbor rate?

The safe harbor rate may be applied new agreements, or new task orders. 

  • The safe harbor rate may be used by both primes and sub-consultants. 
  • The safe harbor rate is available for Local Program agreements. 
  • If your firm has had a FAR compliant Indirect Cost Rate in the past, you would not be permitted to use the safe harbor rate. 
  • Consulting firms that use the safe harbor rate will still be required to have an accounting system capable of accumulating and tracking direct/indirect labor and other direct costs by contract, segregating indirect costs, and removing unallowable costs. 
  • The safe harbor rate is not intended for field-based agreements. 
  • Safe Harbor would be a choice for eligible firms, of any size. Each eligible firm will have the choice of using the safe harbor rate of 110%, or providing a FAR compliant indirect cost rate. 
  • The WSDOT Internal Audit Office will be responsible for determining whether a firm is eligible to use the Safe Harbor rate.

 Please check back on this website for further updates.  


Mission and Scope of Work

The Internal Audit Office helps WSDOT accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, internal control, and adherence to laws, rules, regulations, and agency policies.

The WSDOT Internal Audit Office offers a variety of services including internal audits; audits of agreements and contracts with external service providers such as consultants, railroads and utilities; management requested investigations into inappropriate governmental activity such as fraud, waste and abuse of state resources; monitoring internet and e-mail abuse by employees; and a wide range of management advisory services including responding to employee questions regarding the Washington State Ethics Law.

The WSDOT Internal Audit Office also conducts investigations as requested by the Washington State Auditor's Office and the Washington State Executive Ethics Board.

Audit and Consulting Services

Activities may include management consultation in a wide range of business areas, including providing opinions relating to the state ethics law and associated rules, audits, reviews, analyses, or advisories. This group responds to special requests for consultative advisories which provide executive management with alternatives and recommendations regarding a course of action for solutions to specific financial, compliance, and/or operational problems. An audit is a comprehensive examination of a functional or program area, segmented into manageable topics. It has greater depth, broader scope, more extensive field work, and a longer duration than a review. In contrast to an audit, a review evaluates a function or activity in answer to more specific, limited objectives and does not include all of the components of an audit.

Marie Steffen, Manager, (360) 705-7055, steffem@wsdot.wa.gov


Agreement Compliance Audit Services

The Agreement Compliance Audit Services provides internal and external training, management consultation, audits, and reviews. Audits and desk reviews are performed as a service to WSDOT management to assist in managing external contracts for the department. In addition, special analyses of cost and pricing data is provided to ensure that costs charged to WSDOT by consultants and other external groups are accurate, reasonable, and comply with applicable federal and state regulations. In addition, a comprehensive FAQ has been developed and provided by the Agreement Compliance Audit Branch to assist the consulting industry in conducting their work more efficiently with WSDOT.

Martha Roach, Manager, (360) 705-7006, roachma@wsdot.wa.gov

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Investigations

Investigations is responsible for investigating and determining whether fraud, waste, or abuse has occurred, or is likely to occur, within the department. The office uses both reactive and proactive investigative strategies. Reactive investigations occur when allegations of rule violations are made and/or criminal wrongdoing is suspected. Investigative cases may involve WSDOT employees, vendors, contractors, and/or consultants doing business with the Department. Proactive strategies include education and consultation activities designed to identify and prevent fraud, waste and abuse in the workplace.

Jeff Tawney, Manager, (360) 705-7008, tawneyj@wsdot.wa.gov


Audit Office Ethics Services (under revision)

Audit Office Authority

The Internal Audit Office was designated by the Deputy Secretary of Policy as the department's central place for receiving requests for clarification of the 1994 Ethics Law.

Background
The 1994 Legislature passed into law Engrossed Substitute Senate Bill (ESSB) 6111. This bill established ethical standards for all state officers and employees within the executive, legislative, and judicial branches of government. The standards were codified in a single chapter of the Revised Code of Washington (RCW) Chapter 42.52, Ethics In Public Service. The new law took effect January 1, 1995.

Steve McKerney, Director, (360) 705-7003, mckerns@wsdot.wa.gov


State Ethics Board Advisory Opinions

The complete list of Advisory Opinions issued by the Executive Ethics Board can be accessed on the Executive Ethics Board homepage. The address is
http://ethics.wa.gov/index.htm


WSDOT Audit Charter

This document describes the authority and responsibility delegated to the Director of the WSDOT Internal Audit Office.

If more detailed information is desired regarding the charter, please contact
Steve McKerney, Director of Audits, or Jeri Sivertson, Assistant Director of Audits, at
(360) 705-7003.

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External Audits on WSDOT

As a means to ensure government serves the citizens of Washington by promoting accountability, fiscal integrity and openness, independent third party audits assess the effectiveness, efficiency, results, compliance with legal or policy requirements, and management controls of it programs. Read More Here

Jesse Daniels, External Audit Liaison, (360) 705-7035, danielje@wsdot.wa.gov 

References

  • RCW 43.88-State Budget and Reporting Accounting System
  • Office of Financial Management, State of Washington Policies, Regulations, and Procedures, Part 6, Internal Control and Auditing
  • 23 Code Federal Regulations (CFR), Chapter 1: Part 12, Federal Aid Highway Programs: State Internal Audit Responsibilities Part 172, Administration of Negotiated contracts
  • 49 CFR Part 90, Audits of State and Local Governments
  • 48 CFR Federal Acquisition Regulations
  • U.S. General Accounting Office Government Auditing Standards
  • American Institute of Certified Public Accountants Auditing Standards
  • Institute of Internal Auditing Standards
  • Information Systems Control and Auditability Standards
  • Washington State Department of Transportation Audit Office Policy and Procedures Handbook
  • Washington State Department of Transportation Audit Office Audit Guide for Consultants
  • Initiative 900 - Authorizing the State Auditor's Office to conduct performance audits of state and local governments.
  • RCW 44.28 - Joint Legislative Audit and Review Committee (JLARC)