Sanction Procedures

The following procedures will be followed to ensure that information needed for audit review or resolution activities is submitted/received in a timely manner.
  1. Whenever an audit report is not received by the Department by its due date, or whenever additional material is needed from an audited entity in order to proceed with audit review and resolution activities, TRF-BTS staff will write to the entity requesting that the report, or other material, be submitted within 30 days. If the requested information is submitted, the matter will be considered closed.
  2. If the information is not submitted by the end of the 30-day period, TRF-BTS staff will write a second notification letter to the audited entity indicating that this is a second notice, and again request that the material be submitted within 30 days, or that the entity provide a written explanation of why the material cannot be provided within the second 30-day time frame. If the requested material cannot be provided within the second 30-day period, the explanation of the delay should also specify a date by which the material will be provided. The second notification letter should also inform the audited entity that TRF-BTS is considering the imposition of a fiscal sanction unless the requested information (or an acceptable explanation for not submitting it) is received.
  3. If the audit report and/or other requested materials are not received by the end of the second 30-day period, and the audited entity has not provided an acceptable explanation of why the material could not be submitted within that time frame, TRF-BTS staff will write to the audited entity and indicate either that the requested material has not been received or that an acceptable explanation for not submitting it has not been provided, and inform the organization that TxDOT is now in the process of considering the imposition of a fiscal sanction because of their failure to comply with previous requests.
  4. When it becomes necessary to inform an entity that TRF-BTS is considering the imposition of a fiscal sanction, TRF-BTS staff will research the status of the grant award and the Department’s payments to determine the possible sanctions available. Possible sanctions include:
    • Withholding the administrative and/or overhead costs (if the subgrantee’s expenditure reports clearly indicate an administrative expense amount) until the requested material is supplied.
    • Disallowing the administrative and/or overhead costs until the requested material is supplied.
    • Withholding 10% of the subgrantee’s reported allowable expenses (if the subgrantee’s expenditure reports do not clearly identify an administrative expense amount) until the requested material is supplied.
    • Suspending the grant until the requested material is supplied.
    • Terminating the grant.
    Generally, audit reports are due substantially after the close of a period for which funding has been provided, and requests for additional information needed to proceed with audit review and/or resolution will occur later. In most cases where TRF-BTS is considering the imposition of a fiscal sanction, it will have to be imposed in a current period for a failure to submit an audit report and/or other material related to funding provided in a prior period.
    In cases in which an entity has not provided an audit report and/or other information necessary for the review and resolution of audits for a period that is now closed, and TRF-BTS is not providing any funding to the entity for the current period, TRF-BTS will not provide any new funding to the entity for any program, from any source, until the requested material is provided.
  5. Once TRF-BTS staff has identified an appropriate sanction, they will prepare a brief report for review and approval by the TxDOT TRF Director.
    The report will explain the circumstances leading to the tentative decision to impose a sanction (e.g. what the entity failed to provide, what actions TRF-BTS took to obtain the information prior to considering the imposition of a sanction) and explain the reasons for the particular sanction being recommended. TRF-BTS staff will also prepare a proposed sanction letter to the entity describing the circumstances leading up to the decision to impose the sanction, what sanction will be imposed, when the sanction will begin, and what the entity will need to do to have the sanction lifted.
  6. Once a sanction has been determined and a proposed sanction letter prepared, the letter is sent to the audited entity indicating the imposition of a fiscal sanction which will remain in place until the audit or other requested material, or a satisfactory explanation of why it cannot be submitted, is received by TRF-BTS.
  7. If the imposition of the initial sanction does not result in the subgrantee providing the audit report or other requested materials, the sanction will remain in place for a period of up to three months from the effective date of the initial sanction. TRF-BTS will inform the sanctioned entity in writing each month that the sanction is being continued because of the organization’s failure to submit the audit report and/or other requested materials.
  8. Prior to the expiration of the three month period following the imposition of an initial sanction, TRF-BTS shall inform the audited entity, in writing, that TRF-BTS will impose further sanctions if the audit report or other requested material has not been provided within three months after the effective date of the initial sanction.
  9. When a sanctioned entity has submitted the information requested by TRF-BTS, and TRF-BTS has found it to be acceptable, the sanction will be lifted and any funds withheld during the sanction period will be returned to the subgrantee by the most convenient method as determined by TRF-BTS.
    However, if compliance with the audit requirements has been too late, and TRF-BTS no longer has the withheld funds available to return, the funds previously withheld will not be returned when the sanction is lifted. If, at any time during the period in which a subgrantee is under sanction, TRF-BTS’s normal grant renewal process is underway, TRF-BTS will not enter into a grant with the subgrantee during the next contract period unless the entity first provides the audit report and/or other requested material for the period for which the sanction is being imposed.
  10. If the audited entity has not submitted an audit report or other requested material necessary for the audit review and/or resolution process by the expiration of the three-month period following the effective date of the initial sanction, TRF-BTS will consider terminating all funding to the organization for failure to comply with the audit requirements of the grant.