Legislative Joint Auditing Committee by 79i0F5

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									Arkansas Association
     of Federal
    Coordinators

   September 23,
       2011
 Common Audit
Findings - Federal
   Compliance
         Overview (FY 2010)

•   214 school district and educational
    cooperative federal audits
•   83 entities with findings
•   Allowable Costs/Allowable Activities
    (19)
•   Davis-Bacon Act (28)
•   Eligibility (1)
    Overview (FY 2010) (cont.)
•   Equipment and Real Property
    Management (6)
•   Procurement and Suspension and
    Debarment (29)
•   Program Income (9)
•   Reporting (43)
•   Special Tests and Provisions (7)
    14 Compliance Requirements
•   Activities Allowed or Unallowed
•   Allowable Costs/Cost Principles
•   Cash Management
•   Davis-Bacon Act
•   Eligibility
    14 Compliance Requirements
              (cont.)
•   Equipment and Real Property
    Management
•   Matching, Level of Effort, and
    Earmarking
•   Period of Availability of Federal
    Funds
    14 Compliance Requirements
              (cont.)
•   Procurement and Suspension
    and Debarment
•   Program Income
•   Real Property Acquisition and
    Relocation Assistance
•   Reporting
    14 Compliance Requirements
               (cont.)
•   Subrecipient Monitoring
•   Special Tests and Provisions
      Common Major Programs
•   Title I, Part A Cluster
•   Special Education Cluster
•   State Fiscal Stabilization Fund
    Cluster
•   Child Nutrition Cluster
•   Education Jobs Fund (FY 11)
Activities Allowed or Unallowed
•   Unique to each federal
    program
•   Derived from the provisions of
    laws, regulations, or the
    provisions of contract or grant
    agreements
Allowable Costs/Cost Principles
•   Applicable Cost Circular - OMB
    Circular A-87, Cost Principles
    for State, Local, and Indian
    Tribal Governments
•   Costs must be allowable,
    reasonable, and documented.
    Allowable Costs/Cost Principles
                (cont.)
•   Circular addresses documentation of
    employee time and effort (semi-annual
    certifications or monthly personnel
    activity reports).
•   Circular addresses certain allowable
    and unallowable costs.
Allowable Costs/Cost Principles
            (cont.)
FY 10 findings primarily pertained to
employee time and effort
documentation, incorrect amounts
prorated to federal program, costs
coded in error to federal program,
costs not included in ARRA plan, and
excess indirect costs.
     Cash Management
School districts and educational
cooperatives are primarily
subrecipients; program funds
received on a reimbursement basis
based on specific APSCN procedures
             Davis-Bacon Act
•   Applicable to certain contracts in excess of
    $2,000, for construction, modernization,
    renovation, and repair activities
•   Required prevailing wage rate clauses
    must be included in applicable contract.
•   Certified payrolls from the contractor or
    subcontractor must be submitted weekly.
•   FY 10 findings addressed failure to include
    wage rate clauses or obtain certified
    payrolls.
                 Eligibility
•   Depending on the federal program,
    eligibility requirements generally
    apply to the student (e.g., free and
    reduced price meal application and
    verification process) or entity (e.g.,
    attendance area).
•   FY 10 findings pertained to failure to
    maintain supporting documentation
    pertaining to verification process.
    Equipment and Real Property
          Management

•   State of Arkansas capitalization
    threshold is lower than Federal
    government.
•   Accounting for capital assets
    purchased from federal programs
    must be captured in APSCN at the
    source of funds (SOF) level.
    Equipment and Real Property
        Management (cont.)
•   Federal disposition requirements (per
    unit fair market value of $5,000 or
    more at time of disposition)
•   Physical inventory must be taken
    periodically and reconciled to the
    equipment records.
Equipment and Real Property
    Management (cont.)
FY 10 findings pertained to failure to
record capital asset purchases, failure
to update equipment records for
deleted items, items could not be
located, or items were capitalized to
wrong program or fund.
    Matching, Level of Effort, and
            Earmarking
•   Matching includes requirements to provide
    contributions of a specified amount or
    percentage to match Federal awards.
•   Level of effort includes maintenance of
    effort and supplement not supplant.
•   Earmarking includes requirements that
    specify an amount or percentage that must
    be used for specified activities.
Period of Availability of Federal
            Funds
Federal awards may specify a time
period during which the Federal funds
may be utilized. ARRA funds are a
good example.
    Procurement and Suspension
          and Debarment
•   Subrecipients shall use the same
    State policies and procedures used
    for procurements from non-Federal
    funds.
•   Buy-American clause
•   Excluded Parties List System (EPLS)
    website addressed in Commissioner’s
    Memo FIN-10-047
Procurement and Suspension
   and Debarment (cont.)

FY 10 findings pertained to lack of
Buy-American clause in contracts,
failure to follow State law regarding
bidding and performance bonds, and
lack of internal control regarding the
checking for suspended or debarred
parties.
           Program Income
•   Income received that is directly
    generated by the federally funded
    project during the grant period
•   FY 10 findings pertained to
    insufficient amounts billed to
    operating fund by food services
    program for Provision 2 school
    districts.
Real Property Acquisition and
   Relocation Assistance
Rarely applicable to school districts
              Reporting
•   Annual financial reports
    required for certain federal
    programs
•   Such reports are compared to
    applicable budgets to
    determine variances in excess
    of 10%.
          Reporting (cont.)
•   ACSIP budget (each line item
    in total (function) and each
    column in total (object)
•   Other federal reports
    compared to budget for each
    function/object cell.
      Reporting (cont.)
FY 10 findings primarily
pertained to reported amounts
exceeding budgeted amounts
by more than allowable
variance, inaccurate counting
of meals, and inaccurate
reporting of expenditures in
the general ledger.
           Reporting (cont.)
•   Commissioner’s Memo LS-11-098
    dated March 15, 2011 addressed
    deadline for budget amendments and
    program adjustments for ACSIP
    programs.
•   New reporting for FY 11 (Federal
    Funding Accountability and
    Transparency Act (FFATA)
      Reporting (cont.)
FFATA reporting is applicable
to direct recipients of grants or
cooperative agreements (non-
ARRA funds) who make first-
tier subawards.
   Subrecipient Monitoring
Rarely applicable to school
districts and educational
cooperatives; such entities
rarely make subawards to
other entities
    Special Tests and Provisions
•   Comparability reports
•   Private school participation
•   Schoolwide programs
•   Highly qualified teachers and
    paraprofessionals
•   Separate accounting for ARRA funds
Special Tests and Provisions
           (cont.)
FY 10 findings primarily pertained to
accounting errors for ARRA funds,
lack of documentation to demonstrate
contact with private school officials,
lack of documentation for highly
qualified personnel, and lack of
documentation to support that
teachers participated in the needs
assessment process.
              Audit Findings
•   Opinion on compliance for
    each major program
    •   Instances of noncompliance
    •   Material instances of
        noncompliance
          Audit Findings (cont.)
•   Internal control over
    compliance
    •   Significant deficiency
    •   Material weakness
          Timeline
Most ARRA funds will remain
available for obligation until
September 30, 2011 and must
be spent by December 2011.
Arkansas Association
     of Federal
    Coordinators

   September 23,
       2011

								
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