ARRA Impact on State Government and Audit Issues

Presented by Rich Gilbert and Steve Blake

American Recovery and Reinvestment Act (ARRA) of 2009

Statement of Purpose:• To preserve and create jobs and promote economic

recovery• To assist those most impacted by the recession• To provide investments needed to increase

economic efficiency by spurring technological advances in science and health

• To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.

• To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases

South Carolina Action

• March 20, 2009 – Governor Sanford signs Executive Order 2009-03 establishing the South Carolina Stimulus Oversight, Accountability and Coordination Task Force

• April 9, 2009 – Task Force holds its first meeting

• June 29, 2009 Governor Sanford signs Executive Order 2009-09

Financial Impact – South Carolina

Loans - $153,753,500

Contracts - $1,556,984,706

Grants - $2,387,856,639

ARRA Funded Projects

• Medicaid • Fiscal Stabilization Funds• Transportation• Public Housing• Energy

Financial Impact – State Agency Category – Federal Funds Received

Social Rehab Services-$26.7

Million Regulatory-$4.5 Million

Executive& Administrative-$294.9 Million

Educational Enterprises-

$111.2 Million

Dept. of Transportation-$205.1 Million

Correctional & Public Safety-$23,2 Million

Conservation, Natural

Resources-$38.9 Million

Health-$35.3 Million

Top 5 Agencies Receiving ARRA Funds

+ARRA Impact on Single Audit

ARRA funded programs are consider “High Risk”

Schedule of Expenditures of Federal Awards (SEFA)

• Recipients must maintain records that identify the source and application of ARRA funds.

• Recipients must separately identify the ARRA expenditures on the SEFA and Data Collection Form

Recipients Responsibility

Recipients must notify subrecipients of the following:• Federal award number, CFDA number and amount of ARRA funds.• Subrecipient must separately account for ARRA funds and separately report ARRA expenditures on its SEFA• Subrecipient must separately report ARRA expenditures on the SEFA

Major Program Determination

Major Program identification is the auditor’s responsibility •The auditor shall use a risk-based approach to determine which Federal programs are major programs. •The auditor shall audit as major programs Federal programs with Federal awards expended that, in the aggregate, encompass at least 50 percent of total Federal awards expended.

2009 Major Programs

Dollar Threshold – $19,792,452

Major Programs – 21

Qualified Opinion on Compliance – 6

2010 Major Programs

STARS Expenditures – $6,652,392,728

Agency SFFA – $7,731,432,598

Type A Program Range – $19,957,178 to $23,194,298

Major Programs – Type A – 19; Type B - 3

Major Program Determination

• Major Program identification is auditor responsibility

• Impact on “Large” Loan balances [i.e. FFEL and Direct Lending]

• Exclude the entire cluster if loan program determined to be large

• Impact – much lower trigger for Type A program determination.

Recent Federal Directives

• Presidential Executive Memoranda April 10, 2010; “Combating ARRA Reporting Noncompliance”

• OMB Memoranda 10-34 “Updated Guidance”

OMB M-10-34

• Guidance on applicability of Recovery Act reporting requirements to Education Jobs

• Updated guidance on reporting procedures

• Changes for Federal contractors• Improving transparency of narrative

descriptions in recipient reporting