Review of FY2007 Real
Property Audit Findings and
Effect of Prior Year CAPs
NOAA Real Property Management Conference
May 6, 2008
Mary Ann Whitmeyer
05/6/2008
Requests for Information
Improving filing
Changing data call to quarterly
Why all of the requests?
– Comfort level with auditors
– Requests from DOC/NOAA Finance
– Confidence in FRPM
05/6/2008
Audit Components
KPMG will be the auditor again this
year.
Interim field work dates are Seattle July
21 – August 1, Boulder, Kansas City,
Norfolk July 28 – August 1.
Final field work is scheduled for
October 6 – 10.
05/6/2008
Audit Components
Notification of Finding and
Recommendation (NFR) work to make this
more specific and the recommendation
more meaningful
Management Letter
Corrective Action Plan
05/6/2008
Notification of Finding and
Recommendation
In FY 07 there were five Real Property,
Facility and Logistics Office findings.
Two of the findings involved operating
leases.
Three of the findings were related to CWIP
projects.
05/6/2008
Notification of Finding and
Recommendation
NFR-17
– Version 1 A lease was incorrectly classified
with the budget object class code 32-30
(Capital Leases of Buildings & Structures)
instead of 23-20.
– Version 2 A lease was capital, but was
reported on the operating lease schedule
05/6/2008
Corrective Action Plan
Did not concur. Finance advised against
providing any corrective action plan. Research
showed that although the lease was capital for
budget purposes (no threshold), it was not
evaluated for FASAB. The FMV was less than
the $200K capitalization threshold so it was not
capitalizable for FASAB purposes.
Decided to review determination of all operating
leases >$200K
05/6/2008
Notification of Finding and
Recommendation
NFR-19 The Beaufort Bridge was
completed on February 28, 2007 and
reported in the 3rd Qtr. Real Property
financial statement submission, although
the NOAA Finance Office did not approve
the preliminary Form 37-6. Finance also
did not remove the NOAA portion of the
costs until September 30, 2007
05/6/2008
Corrective Action Plan
Shared with Finance. Both the CWIP
Policy and Real Property’s policy were
modified to clarify handling of donated
assets and to emphasize that CWIP items
should not be capitalized until all
certifications have been received on the
NF 37-6.
05/6/2008
Notification of Finding and
Recommendation
NFR- 41 Depreciation for the new
Beaufort Lab Administration Building was
not calculated accurately.
05/6/2008
Corrective Action Plan
Currently the many entries at year end are
not captured between the September
close (September 5 for FY08) and year
end close resulting in the need for manual
calculations. Working to implement a
change to Federal RPM which will allow
the year end entries to be captured.
05/6/2008
Notification of Finding and
Recommendation
NFR – 42 Lease with rent remaining over
$53M was not included in the operating
lease footnote and operating lease
footnote contained a mathematical error.
05/6/2008
Corrective Action Plan
Revised LRB checklist and LDW to include info
about cancellation clause.
Reviewed leases greater than $200K at HQ.
Revised internal control policy to provide
deadline for adjustments in reporting
requirements received from Finance/DOC
Adjustments to FRPM reports to pick up
cancellation clause
05/6/2008
Notification of Finding and
Recommendation
NFR-43 Additions to Real Property were
not recorded timely.
– Pribilof Islands Property
– WSO St. Paul
05/6/2008
Corrective Action Plan
Action required of both PPMD and Real
Property. Real Property is required to
send a reminder to CWIP Project
Managers 30 days prior to the scheduled
BOD.
05/6/2008
Prior Year Findings and
Corrective Action Plans
“Those who ignore history are
doomed to repeat it.”
05/6/2008
Prior Year Findings and
Corrective Action Plans
Prior CWIP findings can be characterized
as being similar to current findings – main
issue is timeliness.
FY96 – FY02 repeated findings regarding
capital leases,
– under funding of budget authority
– not enough documentation in the files to make
a determination
– Inadequate training of personnel
05/6/2008
Prior Year Findings and
Corrective Action Plans
FY04 hired E&Y to evaluate large
population of leases.
FY04 Noncompliance with OMB Circular
A-11 Resulting in creation of LDW.
FY05 Hired E&Y to develop a new LDW
– LDW for budget purposes (findings were
based on budgetary resources)
– LDW for financial accounting purposes
05/6/2008
Prior Year Findings and
Corrective Action Plans
FY06 Finding for lease support
documentation not matching LDW
FY06 Beginning of audit for OMB Circular
A-123 compliance (internal controls vs.
financial)
In FY06 and FY 07, A-123 scrutinized the
LRB process and checklist and the LDW
approval signatures
05/6/2008
Conclusion
The CWIP issues continue to be a problem.
Solution is outreach/working with PPMD and line
offices to communicate importance of timely
reporting.
Leases are big vulnerability – increased GSA
oversight causing lags in getting agreements in
place. Resulting in increased stand still
agreements, holdovers.
– Criticality of proper lease determination worksheet
preparation, documentation, review unchanged
– Lease spreadsheets used to develop the future lease
payment liability reported and must be updated
annually
05/6/2008