A new federal audit raises questions about whether the Metropolitan Washington Airports Authority is properly managing $975 million in federal funding it received to build the Silver Line rail project.

The 20-page audit, by the Department of Transportation’s inspector general, identified several instances in which MWAA inappropriately used federal dollars to pay expenses unrelated to construction of the first phase of the $5.6 billion rail project — one of the largest infrastructure projects in the United States.

In one example, MWAA used $16,000 in grant money to pay for lobbying services, even though such expenses are not allowed under federal rules. The lobbying services were provided by former authority board members, according to the audit report, a copy of which was obtained by The Washington Post.

In another instance, the airports authority used grant money to pay $54,000 in expenses related to the second phase of the rail project, even though the money was earmarked for Phase 1.

Auditors found that the authority does not have a reliable system for tracking costs and determining which were eligible for federal dollars. Authority officials also could not provide supporting documentation for millions of dollars in expenses, auditors found. Although some of that money might have been spent properly, the authority lacked the records to prove it, the report said.

“Many of the findings included in this report, which covers a time period from 2009 to 2011, relate to issues identified earlier in a 2012 independent audit by KPMG which the Authority had requested, and efforts to address the issues have been underway since then,” MWAA spokesman Chris Paolino said in an e-mailed statement. He said the authority has revised its procedures to ensure that necessary documentation is kept in a centralized location. “We are confident we can account for all expenses in question,” he said.

Paolino later said the authority had returned to the government $15,500 for lobbying-related costs highlighted in the audit report.

With an estimated $289 million in federal funding still unspent, auditors said it is critical that safeguards be put in place to protect federal taxpayers’ investment in the project. The Federal Transit Administration, which is overseeing MWAA’s management of the project, agreed.

“FTA continues to work diligently with MWAA to ensure that internal controls are developed and implemented and we share the OIG’s concerns that MWAA must develop corrective actions for the deficiencies found in this and prior audits,” wrote FTA Administrator Peter M. Rogoff in his response to the inspector general’s findings. “We recognize that while some progress toward greater accountability has been made, more work remains to be done in the area of internal controls.”

FTA spokesman Brian Farber said that in the future, invoices submitted by MWAA will be closely scrutinized before payment is made and that the FTA will be aggressive in seeking repayment of ineligible expenses.

MWAA has been grappling with other criticisms, related to a series of delays that pushed back the opening of the first phase of the rail project. This week, officials announced that they had resolved most of the software issues that caused the most recent delays, and they said they expect to complete work on the rail line next month. No date has been set for passenger service to begin.

This most recent audit was an outgrowth of a previous investigation by the inspector general of authority operations, an examination in which auditors identified many examples of mismanagement and lax oversight. For instance, one top executive hired relatives for jobs at the authority, and another accepted Super Bowl tickets and other gifts from contractors doing business with the authority. In all, 10 people were fired or disciplined after the release of that report.

MWAA officials have touted their efforts to address many of the ethical and operational issues identified in that November 2012 audit. But the new report raises questions about whether the authority has done enough to correct problems that have emerged in recent years.

The federal auditors also said authority officials were less than forthcoming when it came to providing documents.

“MWAA took extended periods of time to provide the requested information, which was frequently incomplete and required additional follow-up requests,” the report says. “Ultimately our scope was limited to a review of documents MWAA provided by our final cut-off date of June 14, 2013 – 4 months after MWAA representatives committed to providing all requested documentation.”

Auditors found that the airports authority could not be counted on to identify ineligible expenses for which it had been reimbursed and was slow to return the money to the government when it did identify an improper reimbursement.

When auditors asked for a list of transactions that had been improperly charged to the government, MWAA officials said it would take 1,700 hours to compile such a list.

“Unfortunately, because the information requested by the IG was from an earlier time period, many of the documents the IG was seeking were not retrievable by the deadline the IG established,” Paolino said in the e-mailed statement. “Following that deadline, we continued to compile and centrally organize relevant records, including those in question by the IG. We now have readily available documentation for the expenses that have been questioned by the IG, and we look forward to sharing this documentation with the FTA.”

The audit was requested by Rep. Frank R. Wolf (R-Va.) and Rep. Tom Latham (R-Iowa). Latham is chairman of the House Appropriations subcommittee on transportation, housing and urban development, and related agencies; Wolf is a member of the committee.

Officials with the FTA, which is responsible for overseeing the federal grants to MWAA, said they concurred with the audit’s findings. They said a financial management system has been put in place for Phase 2 that may address many of the concerns raised in the most recent audit.

http://www.washingtonpost.com/local/trafficandcommuting/audit-questions-mwaas-handling-of-federal-funds-for-dc-areas-silver-line/2014/01/16/345ac5e4-7ef9-11e3-93c1-0e888170b723_story.html