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Training, Technical Assistance, Monitoring and A-133 Audits A-133 Audit Requirements In 1984 the Single Audit Act was enacted. This was to improve audit coverage of federal monies In 1997 OMB issued revised Circular A-133, Audits of States, Local Governments and Non-Profit Organizations Sets uniform standards for the audit of States, local governments, and non-profit organizations expending Federal awards A-133 Audit Requirements Requires audit of “non-Federal entities” expending more than $500,000 of Federal awards in a single year If expenditures are all in one Federal program, may be “program-specific” audit Otherwise, must be entity-wide Single Audit Who performs the county Single Audit? Auditor of State (AOS), or Independent Public Accountant (IPA) May be at county request or at AOS initiative AOS must approve scope of audit and perform quality assurance review What is the scope of an A-133 audit? Review 14 compliance requirements which cover all concepts of the program Review 50% of federal dollars/25% if low-risk auditee (but must cover all Type A high-risk programs) Report questioned costs over $10,000 (actual or projected), material non-compliance and material internal control citations “Major Program” Concept Risk-based approach used to determine “major programs” to be audited Requires identification of “Type A” and Type B” federal programs from Schedule of Federal Awards Expended Six basic steps to identify programs to be tested: Identify Type A programs Determine “high risk” Type A programs “Major Program” Concept Identify Type B programs Select “high risk” Type B programs Replace “low risk” Type A programs with “high risk” Type B programs Apply “percentage of coverage” rule at 50% or 25%, as applicable “Major Program” Concept Total Expenditures from Type A Programs Federal Schedule $500,000 to $10 million Greater than $300,000 $10 million to $100 million Greater than 3% of Federal Schedule $100 million to $1 billion Greater than $3 million “Major Program” Concept Before County With County Family Services Family Services Agencies Agencies Federal $4,804,402 $18,943,714 Expenditures Type A Type B “Major Program” Concept Before County With County Agencies Agencies Federal $4,804,402 $18,943,714 Expenditures Type A $300,000 $568,311 Type B $87,000 $87,000 Example – 2006 – As Reported Federal Program CFDA Amount Type Medicaid 93.778 $1,349,971 A - high CDBG 14.228 1,081,098 A – high WIA 17.258 862,268 A - low Highway Planning 20.205 321,552 A - low Homeland Security 97.067 226,883 B - high Home Investment Partnership 14.239 216,318 B – low Byrne Justice Assistance 16.738 152,457 B - low 17 Other Programs < 100k 593,855 Total Federal Awards $4,804,402 Example – 2006 – With County Agency Monies Included Federal Program CFDA Amount Type Medicaid 93.778 $3,717,224 A - high TANF 93.558 3,665,351 A - high Child Support (Title IV-D) 93.563 1,840,820 A - high Foster Care (Title IV-E) 93.658 1,675,325 A - high SSBG (Title XX) 93.667 1,145,455 A - high CDBG 14.228 1,081,098 A - high Child Care 93.575 929,237 A - high SNAP 10.551 862,416 A - high WIA 17.258 862,268 A - low 28 Other Programs <568k 3,164,520 Total Federal Awards $18,943,714 Hours and Cost Factors that influence audit hours and cost: 14 Administrative Requirements Applicable per AOS: Activities Allowed, Cash Management, Period of Availability, Reporting May be Applicable per AOS: Allowable Costs, Eligibility, Equipment and Real Property, Matching, Procurement, Subrecipient Monitoring, Special Tests and Provisions May not be Applicable per AOS: Davis-Bacon Act, Program Income, Real Property Acquisition/Relocation Assistance Hours and Cost Number of Case Files or Transactions Centralized Testing (RMS, Indirect Cost Programs) Condition of Records Retrieval Time of Records Cost Cost of a Single Audit is an allowable reimbursable cost County will be charged by AOS for time auditing county agencies Proportion of cost will be allocated to each county department A-133 Audit Report Components An opinion on the financial statements A report on the county’s internal controls – reportable conditions and material weaknesses Information on a county’s compliance with program requirements along with findings and questioned costs Could include a corrective action plan when there is an audit finding The Auditor’s Assessment of Internal Control and Compliance Testing The Auditor will: Identify your processes for administering “major” programs Identify “key” internal controls Test key controls Are the controls properly designed? Have the controls been placed in operation? Are the controls functioning as designed? The Auditor’s Assessment of Internal Control and Compliance Testing The results of the Auditor’s tests of internal control are used to assess control risk If control risk is low, the Auditor may reduce the extent of testing If control risk is medium or high, the Auditor may keep the extent of testing the same or increase the extent of testing The Auditor’s Assessment of Internal Control and Compliance Testing How can you encourage the Auditor to reduce the extent of testing? Document your processes and the related internal controls Maintain good documentation of your activities Establish and maintain an effective records retention process Document reviews of records, checks, authorizations and supervisory reviews Establish policies and procedures with reasonable flexibility Common Issues Missing case files Failure to monitor subrecipients Missing documentation in case files Improper claiming of building costs Non-compliance with procurement requirements/failure to document Common Issues Improper claiming of equipment costs Improper charges in cost pools RMS issues Interfund transfers charged as costs A-133 Audit Resolution Within six months of receiving a copy of the county’s Single Audit, ODJFS must: Issue a management decision on whether it sustains the audit finding(s) affecting their grant awards The reason for its decision The corrective action the county must take along with time frames Initiatives to Prepare for County A- 133 Single Audits Federal Grants Management Monitoring Reviews, Technical Assistance and Training Plan New consulting-based monitoring reviews Technical assistance, including consulting services Expanded training programs Core Principles Purpose is comprehensive and integrated model of technical assistance, training and monitoring, based upon eight core principles: Solution Oriented State and County Collaboration County to County Collaboration Differentiated Services Core Principles, cont’d Risk-Based Approach Integrated Technical Assistance, Training and Monitoring Leveraging Resources Maximizing Use of Technology Key Definitions Technical Assistance – needs-based, focused and solution-oriented provision of technical knowledge, guidance and information to meet federal and state expectations Fiscal Services – financial accounting and reporting issues Program Offices – program design and policy development ORAA – process design and enhancement Key Definitions, cont’d Training – broad-based, planned, structured educational programs to communicate federal and state expectations, and methods to effectively and efficiently meet these expectations and improve performance Division of responsibility by Fiscal Services, Program Offices, and ORAA would track that for technical assistance, noted above Key Definitions, cont’d Monitoring – risk-based reviews of county family services agencies administrative practices to gauge performance, provide information for improvement and identification of best practices, and identify training needs and provide technical assistance specific to the agency in question Relationship of Training, Technical Assistance and Monitoring Training tells you what you need to know and do to have successful federal grants management Technical Assistance tells you how to do it Monitoring measures how well you do it and identifies impediments to success County Agency Needs Support in navigating initial A-133 Single Audits Guidance on existing known county issues County-specific consulting assistance on request Assessment of the effectiveness of training and technical assistance Value-Added Services It is challenging and necessary to provide value-added technical assistance, training and monitoring which benefits county agencies Necessary characteristics include: Meet county agency needs for support and guidance Assist county agencies in improving efficiency and effectiveness of local operations Value-Added Services, cont’d Proactively assist counties in eliminating or reducing exposure to AOS A-133 Single Audit findings Meet federal requirements for provision of technical assistance, training and monitoring Eliminate ODJFS exposure to AOS A-133 Single Audit findings for inadequate county agency monitoring Methods of Providing Technical Assistance Should vary by: Size Available resources Preferences Specific methods: Consulting services Technical and practice aids Training Methods Regional meetings on defined topics Presentation at association conferences Video training Monitoring Objectives: Meet federal requirements Promote good management in county agencies Provide positive benefit to county agencies Monitoring, cont’d Components Guided Self-Assessments Risk Assessment On-Site Monitoring Reviews Technical Assistance Reports On-going Technical Assistance On-going Training Implementation Communicate plan to major associations OJFSDA OCDA PCSAO Identify pilot counties Develop Guided Self Assessment Develop Monitoring Assessment Tool Develop Technical Assistance Report Implementation, cont’d Conduct initial assessments and reviews – underway Issue initial Technical Assistance Reports - underway Develop critical technical assistance materials - underway Plan and develop critical training activities - underway Conclusion The state cannot do it all The state cannot achieve success by merely passing responsibilities to the counties The state and counties can only succeed by recognizing their shared responsibilities, within federal constraints, for administration of our federal programs Questions and Comments?
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