Audits: Sustaining Federal Dollars

Presented By: Tracy Jackson & Acy Butler (Silver Spring) Tracy Jackson (Seattle)

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− Single Audit is an audit of a non-Federal entity that includes a review of an entity’s financial statements, Federal awards and if applicable a schedule of prior year findings and the status

− 2 CFR Part 200 Subpart F (previously OMB Circular A-133), Audits of States, Local Governments, and Non-Profit Organizations, implements the law and provides the basic requirements that must be followed

− Required when the entity has expended $750,000 or more in Federal funds during the

non-Federal entity’s fiscal year

What are Single Audits?

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Purpose of Single Audits

− Safeguards Federal funds and protects against fraud, waste and abuse

− Promotes sound financial management and

effective internal controls

− Provides Federal agencies reliable and useful information pertaining to a recipients compliance with award requirements

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Who Performs Single Audits?

‾ Single Audits shall be conducted by an independent auditor in accordance with generally accepted government auditing standards (GAGAS).

‾ Independent auditor

– an external State or local government auditor; or

– a public accountant

Note: The costs of audits required by, and performed in accordance with, the Single Audit Act are allowable (2 CFR 200.425).

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Where are Single Audits submitted?

Here? No Silly Here…

− Single audits must be electronically submitted to the Federal Audit Clearinghouse (FAC) within 9 months of the end of the recipient’s fiscal year

Example: Fiscal Year End Date 12/31/2016 Due Date 9/30/2017

Responsibilities of the FAC: − Supports oversight and assessment of Single Audit requirements in accordance with

2 CFR 200 Subpart F. − Maintain an archive of Single Audit submissions − Provide information about Single Audits to Federal agencies and the public

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Why do we review Single Audits?

The Federal awarding agency must perform the following:

− Ensure that audits are completed and reports are received in a timely manner.

− Follow-up on audit findings to ensure that the recipient takes appropriate and timely corrective action.

− Evaluate to determine need for initiation of the Audit Resolution process for unresolved findings and questioned costs.

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What is our focus?

− Significant Deficiencies in Internal Controls

− Examples

− Inadequate segregation of duties in the procurement and disbursement process

− Deficiencies in award monitoring and oversight

− Material Noncompliance with Applicable Federal Regulations

− Examples

− Federal funds were used for non-program purposes

− Sub-Recipient Monitoring – Lack of financial and performance monitoring

− Questioned Costs ≥ $25,000

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Audit Resolution Specific to DOC, in accordance with DAO 213-5, Bureaus shall act promptly to resolve both the financial and nonfinancial findings identified in an audit report relating to their funded programs.

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The Process of Audit Resolution

─ After reviewing the reported audit findings, NOAA then issues a Management Decision Letter. The decision letter must state clearly: ─ Whether or not the audit finding is sustained ─ The reasons for the decision ─ Expected auditee action

─ Recipients are given due process to provide a written response and

supporting documentation

─ NOAA will issue an Audit Resolution Determination based on review of the recipients response and supporting documentation ─ Additional documentation may be requested

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The Process of Audit Resolution Continued…

─ The recipient can appeal the Audit Resolution Determination. The appeal process

is the last opportunity to provide evidence to support contentions ─ NOAA will not accept submission from recipients regarding an appeal after

the established deadline, unless requested by the Grants Officer

─ NOAA renders a decision on appeal. After a final decision is rendered, there are no other administrative appeals available

─ The resolution process may result in disallowed costs incurred by the recipient

and the establishment of a debt due to the Government

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The Process of Audit Resolution Continued…

─ Throughout each stage of the audit resolution process, audit resolution meetings are conducted with the recipient and Federal Program Officer ─ Audit resolution meetings provide the opportunity to:

─ Discuss results and next steps ─ Mitigates misunderstandings ─ Expedites the lead time for recipient to develop their response

and compile supporting documentation

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The Benefits of Audit Resolution

− Improves Federal program outcomes and operations

− Creates Increased Program Officer Involvement − Affords the Recipient an opportunity to correct

reported non-compliance issues (Financial and Non-Financial)

− Develops Transparency and Accountability

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How to Avoid Audit Findings

− Prepare a thorough, fact based proposal

− Review and tune-up financial, administrative, and project management systems and Standard Operating Procedures

− READ and UNDERSTAND before you sign

− Revisit award requirements frequently during the project

− If in doubt, ASK QUESTIONS and get answers and approval BEFORE acting

− Conduct routine risk assessments of your internal controls

− DOCUMENT, DOCUMENT, DOCUMENT!

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1. Single Audits safeguards Federal funds and protects against _______, ______, and _______

2. Can Common Compliance issues also lead to Fraud? a. Yes

b. No

3. One way to avoid Common compliance Issues is to: a. Read and Understand before you sign

b. Conduct routine risk assessments

c. Prepare a through, fact based proposal

d. All of the above

Fraud Waste

Abuse

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4. Federal awarding agencies only review Single Audits to verify submission? a. True

b. False

5. What happens if a Grantee fails to Appeal a Federal agencies Audit Resolution Determination?

Applicable Questioned Cost Are Sustained!!!!

6. Are Single Audits mailed to the Federal Audit Clearinghouse or electronically submitted?

Electronically Submitted

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7. The Management Decision Letter must clearly state? a. The amount of the award

b. The reason for the decision

c. Whether or not the audit finding is sustained

d. The amount of program profit

e. B and C

8. Single Audit guidance can be found under 2 CFR 200 Subpart? a. A

b. D

c. F

d. E

9. The expenditure threshold which requires a Grantee to have a Single Audit is?

$750,000

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Helpful Sources and Websites

− 2 CFR Part 200– Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards - https://www.federalregister.gov

− Department of Commerce Standard Terms and Conditions – Section D. Audits

− Department of Commerce Grants and Cooperative Agreements Manual – Chapter 13, Audits

− Federal Audit Clearinghouse – https://harvester.census.gov/facweb

− Grants Management Division, NOAA – http://www.ago.noaa.gov

− Office of the Inspector General, Department of Commerce - http://www.oig.doc.gov

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