Dont Be Afraid of the Big_ Bad by yurtgc548


									Don’t Be Afraid of
the Big, Bad Audit

Practical Advice from a
Survivor and CNCS
       Session Objectives
o To better prepare participants for an audit by
  providing them with information to develop
  strong financial management systems;
o Identify at least three best practices for fiscal
  monitoring of their program; and
o Identify at least three best practices for
  preparing sub-grantees for an IG audit.

          Audit Readiness

              OMB Circulars
o Administrative Circulars: A-102 & A-110
o Cost Principles
  A-21 (Educational Institutions)
  A-87 (State and Local Government)
  A-122 (Nonprofit Organizations)

                Audit Process

Phases of The Audit Process

n   Planning
n   Fieldwork
n   Reporting
n   Resolution of findings

        Begins the day you get a grant
o Begins with having systems and procedures to
  account for federal assistance before grant
o Grantee should set up their systems to record
  operating costs separately from grant costs and
  record costs separately for each grant.
o Grantees should be familiar with OMB Circulars
  and which apply to them.

         Planning - Audit Process

Definition of Audit

    n Independent corroboration of management
    n Attestation of factual representations by
    n Confirmation of grant expenditures (these are
      costs claimed via Financial Status Reports
      and authorized in the budget)
         Planning - Audit Process

Objectives of an Audit
 (A-133 Audit or Inspector General Audit)
    nAgency   has internal controls (auditors test
    controls to determine the extent of tests for
    compliance and allowability)
    nCompliance with laws and regulations
    nFSR is accurate and submitted timely
    nIG Audit is more detailed than an A-133
    Audit, as it looks at program and fiscal files
                  Planning - Audit Process
Initial Contact
o When you are selected for an Audit you will first
  receive a letter from the Office of Inspector
  General (OIG)
o The audit work will most likely be performed by
  a contractor chosen by the OIG
o The audit will include both the grantee as well
  as a selection of sub-grantees (if applicable)

          Planning - Audit Process

Start off on the right foot with a
 successful entrance conference
n   Invite key participants (don’t forget your audit firm)
n   Confirm duration of fieldwork
n   Assign staff support for auditor requests
n   Request regular status briefings
n   Review logistical and administrative matters, office
    work hours, availability, request for documents &
                    Field Work

o Scope of audit
  n   Usually three most recently completed years
  n   All grantee and subgrantee records
o Areas to be reviewed at Parent Organization
  n   Internal Controls
  n   Program expenses (allowability) including Grantee
  n   Sub-grantee selection and monitoring

                    Field Work
o Areas to be reviewed at Subgrantee/Program
  n   Internal Controls
  n   Member or Volunteer Records
  n   Program expenses including Grantee Match
  n   Allowable Activities (Talk to members or volunteers)

        Common Audit Findings

o Types of findings
  n Questioned   Cost
  n Compliance
  n Internal
  n Comments for management
    (Corporation or grantee) consideration

      Common Audit Findings

o Internal controls
  n Lack  of written policies and procedures
  n Lack of segregation of duties (this is
    common for small organizations, Board
    of Directors involvement can help) such
    as the person who writes checks should
    not be the person who reconciles the
    bank statements
     Common Audit Findings

o Time & Activity Reporting
  n Lack of proper timekeeping systems
  n No timesheets or activity reports

  n Timesheets based on budgeted figures
    and not actual time

         Common Audit Findings

o Time & Activity Reporting A-87 (State or
 Local Government)
  n   If an employee works on a single Federal award –
      support for salary can be periodic certifications by the
      employee (at least semi-annually)
  n   If an employee work on multiple cost
      objectives/activities, support must be 1) after the fact, 2)
      account for total hours worked 3) be prepared at least
      monthly and 4) signed by employee and supervisor

                 Common Audit Findings

o AmeriCorps member Related Issues
  n Insufficient member records (eligibility, I-9 not sufficient
    unless you also use passport/State birth certificate)
  n Inadequate tracking of member hours-hours on
    timesheets do not agree with hours entered into WBRS
  n Failure to get background checks for members working
    with children or vulnerable populations
  n Improper or non-existent evaluations (mid-year and final)

  n Forms not entered on WBRS in a timely manner

                Common Audit Findings

o Time & Activity Reporting A-122
 (Nonprofit Organizations)
  n   Reports reflecting the distribution of activity of each
      employee must be maintained for all those whose
      compensation is charged (in whole or in part) to
      awards. The reports must reflect an after the fact
      determination of the actual activity of each employee.
      Budget estimates do not qualify as support.
  n   Activity reports must be signed by the employee and
             Common Audit Findings

o Accounting & Documentation
  n Lack of supporting documentation for required match

  n Accounting records do not identify expenditures by
    grant or costs to run the grantee organization
  n Financial Status Reports Not Reconciled to the
    General Ledger
  n Misclassification of Expenses (between budget

        Field Work-Finally Done!

o Exit Conference
  n   Invite key participants
  n   Receive summary of deficiencies or draft report
  n   Continue to work to gather information and address
  n   Plan initial response (there will be a 30 day
      response period)


o Audit Reports

  n   Draft report – expect to receive this at or as close
      to the exit conference as possible
  n   Response – due within 30 days from date of draft
      report (answer each item in question)
  n   Final report – will include grantee response and
      CNCS comments

Audit Resolution

o After receiving the final report from the
  Inspector General’s Office you will be in
  contact with the Office of Grants

                     Audit Process

o Audit Resolution
  n   Grantee & Corporation respond to the draft report
  n   Comments included in the report and the final
      report is issued (ensure to have your original
      response to IG available for OGM)
  n   Grantee and Corporation resolve the findings
  n   Corporation makes a management decision
  n   Grantee completes corrective action

Questions/Contact Information

Jason Patnosh,
Deputy Director-Community HealthCorps

Doug Gerry
Office of Grants Management


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