The U.S. Department of Transportation's Office of Inspector General (DOT OIG) has announced the initiation of an audit focused on the Federal Highway Administration's (FHWA) oversight of Federal highway formula funds allocated to Puerto Rico. The audit stems from concerns raised by multiple single audit reports (fiscal years 2022-2024) which identified significant issues with the Puerto Rico Highway and Transportation Authority's management of these funds, including a lack of supporting documentation and data inaccuracies for expenditures. The audit's objective is to evaluate the effectiveness of FHWA's oversight mechanisms for these funds, which total approximately $901 million between fiscal years 2022 and 2026 under the Infrastructure Investment and Jobs Act.

While this announcement does not impose immediate compliance obligations, it signals increased scrutiny on the management and expenditure of Federal highway funds in Puerto Rico. Compliance officers overseeing grant management or government contracting in this jurisdiction should anticipate potential inquiries or findings from this audit. The audit's findings could lead to revised oversight procedures by FHWA or corrective action plans for the Puerto Rico Highway and Transportation Authority, potentially impacting future fund disbursements or requiring enhanced internal controls and reporting.