Department of Transportation


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Frequently Asked Questions

Overhead Reviews

Are there rules regarding the procurement or selection of CPA firms to perform this work? Is there a limitation on cost?
A licensed and experienced firm must be selected. There are no specific rules regarding the procurement of a CPA firm. There are no restrictions regarding the location of the CPA firm, and it is acceptable to use a firm that already performs its financial statement audits. Overall, the cost must be reasonable in relation to the services performed. It would be prudent to hire a CPA firm that has undergone a current peer review that's been accepted by the AICPA Peer Review Program with a Pass rating before enlisting its services. Peer review requirements are detailed by Generally Accepted Government Auditing Standards (GAGAS) in the Yellow Book.
Is there a recommended list of Certified Public Accountant (CPA) firms who do this type of work?
NJDOT cannot legally provide a recommended list of CPA firms. However, any independent licensed CPA firm who has experience performing audits in accordance with GAGAS and FAR, Subpart 31 would be qualified.
Is reimbursement allowed for the cost of these audits?
Yes, the cost of overhead audits is allowable in the consultant’s overhead rate calculation.
Can I still be audited by NJDOT-hired CPA firms, if I prefer to do so?
No, once a consultant or sub-consultant reaches or exceeds the NJDOT Disadvantaged or Emerging Small Business Enterprise, or State of New Jersey Small Business Enterprise Categories 1 and 2 thresholds, an NJDOT- hired CPA firm will not perform the required overhead audits.
Will a Federal Acquisition Regulations (FAR) audit done by a cognizant Federal agency, or another State Department of Transportation, be acceptable to NJDOT?
Yes, as long as the required cognizant agency letter of concurrence is provided.
Can I send the overhead rate submission package to NJDOT by email?
Yes, NJDOT requires electronic submission. The complete package should be sent to the DOT.ActAudit@dot.nj.gov email.

Overhead and Direct Cost Settle-Up Reviews

Do consultant submission requirements apply to sub-consultants?
Yes, these requirements apply to both prime and sub-consultants.
When did the most recent overhead and direct cost submission requirements go into effect?
The submission requirements went into effect immediately for the 2014 consultant audit period. The six (6) month due date requirement went into effect for the 2015 consultant audit period.
Where should the completed overhead and direct cost settle-up schedules packages be sent and when are they due?
All overhead audits and direct cost schedules, including all contracts where the firm performed both as a prime consultant and as a sub-consultant, should be emailed to DOT.ActAudit@dot.nj.gov within six (6) months of the consultant's fiscal year end.
What should the completed overhead and direct cost settle-up schedules packages include?
The overhead submission package at a minimum should include an indirect cost schedule, a signed NJDOT Article 59 certification, financial statements, a completed AASHTO ICQ, and a completed National Compensation Matrix (NCM).

The direct cost submission package must include an Excel version of the Direct Cost Settle-Up Submission template along with a signed, scanned version of this template in a Portable Document Format (PDF) file. Both the Consultant Agreement Modification (CAM) Detail and Contract Summary template schedules must be completed. The CAM Detail schedule should reflect any direct cost adjustments, as well as adjustments to overhead based on the audited or approved (for exempt firms) overhead rates. All adjustments must be identified to the basic agreement and the appropriate CAM and task order.

What happens if the required overhead and direct cost schedules are not submitted timely?
Failure to submit to the NJDOT within six (6) months of the close of the firm’s fiscal year may result in the suspension of new contracts or CAM's awarded to the firm. This will remain effective pending the firm’s compliance.

Direct Cost Settle-Up Reviews

Are consultant's notified of settle-up audit acceptance?
NJDOT will review each submission and formally notify the firm of its acceptance or of any needed revisions (all revisions must be either confirmed or addressed by the consultant within ten (10) business days of notification).
What happens after revisions to the original submitted direct cost schedules have been agreed to and accepted?

Upon final acceptance, the firm will be advised of any amounts due to NJDOT or due to the firm. A summary schedule which identifies the amounts by contract and CAM/task order will be provided. The NJDOT provided schedule will also identify the prime consultant on those contracts where the firm performed as a sub-consultant. Payment for all monies due to NJDOT for agreements where the firm performed as the prime consultant should immediately be forwarded to:

NJDOT Cashier
1035 Parkway Avenue
PO Box 600
Trenton, NJ 08625-0600

The payment should be accompanied by a copy of the supporting summary schedule. For those contracts where the firm was a sub-consultant, a copy of the CAM Detail schedule, or the pertinent parts thereof with contracts pertaining to the prime consultant, should immediately be forwarded to the appropriate prime consultant along with the proper payment. The prime consultant is responsible for payment to the NJDOT Cashier. For any amounts that are due to the firm, a payment voucher can be submitted to the applicable NJDOT Contract Manager, or to the prime consultant for forwarding to the Contract Manager. Payment will be limited to the contract/CAM/task order ceiling.

How will the direct cost settle-up process deal with sub-consultants for amounts due?
Settle-up documents should be submitted by the sub-consultants to the appropriate prime consultant along with any payment amounts due NJDOT, only after final review and formal acceptance by NJDOT. The prime consultant must then forward the schedules and any payment due NJDOT to the NJDOT Cashier.
Can the consultant bill for additional hours if, as a result of the audit, the adjusted cost is below the contract ceiling?
All hours must be negotiated and approved by the Contract Manager. The consultant’s firm should identify all costs currently incurred on a project, rather than inform the Contract Manager years later of additional costs.

On-Site Direct Cost Reviews

Why are on-site direct cost reviews performed by NJDOT?
On December 14, 2016 NJDOT issued a direct cost audit policy change that no longer required an independent CPA firm to audit a consultant's annual direct costs. Due to the elimination of a direct cost audit requirement, NJDOT will perform on-site reviews of consulting firms.
How are consultants notified if selected for an on-site direct cost review?
NJDOT will notify each consultant by email with the date of review and the consultant location we have on file. We ask that firms confirm their address and availability on the requested review date. In addition, our notification email will include an engagement letter that should be signed and promptly emailed back to us.
How should I prepare for the review?
The engagement letter will detail documentation you must have for our site visit. Every effort should be made to ensure documentation is provided to us at the time of our arrival.
Will NJDOT provide the specific invoiced costs to be reviewed prior to arrival?
No. NJDOT will test a sample of invoices for costs related to the time period specified in the engagement letter, however we will not provide the specific invoice numbers until the day of our visit.

Quality Assurance Reviews

What constitutes a Quality Assurance Review (QAR)?
NJDOT will review reports and working papers of consultant-hired CPA firms. CPA firms must perform work in accordance with GAGAS, Title 48 Part 31 of FAR, specific contract provisions, and applicable State of New Jersey Circular Letters. The recommended AASHTO Review Program must be used by consultant-hired CPA firms to ensure that all required steps are performed. For further guidance, the AASHTO Audit Guide should be used.
What happens if a consultant receives notice of an unacceptable QAR?
The consultant will be required to correct all deficiencies noted in the QAR within 30 days. Additional costs related to the correction of these deficiencies will not be eligible for reimbursement.
What happens if a consultant fails to resolve QAR deficiencies within the time frame allowed?
If a consultant fails to resolve deficiencies within the 30 day period, it will not be in compliance with NJDOT's audit requirements, and is ineligible for reimbursement on any NJDOT Contracts/CAM's until all cited deficiencies are corrected.

Miscellaneous

Are current New Jersey Department of the Treasury contracts for auditing services available?
The current auditing services contract is available on the New Jersey Department of the Treasury's eProcurement system NJSTART. Search contracts by Contract/Blanket Description T2458 Auditing Services.


Last updated date: February 20, 2020 2:25 PM