Financial Assistance Training Seminar Grants Management Exploring New Frontiers Phoenix Arizona June 9 – 11 2009 Single Audits The Cornerstone of G by jku88791


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									    Financial Assistance Training Seminar
 Grants Management: Exploring New Frontiers
               Phoenix, Arizona
               June 9 – 11, 2009

      Single Audits
The Cornerstone of Grants

                    Morgan Aronson
            National Single Audit Coordinator
               Office of Inspector General
 Steep Rise in Federal Grants
$ Billions                                               $450B
     250                                   $200B
     150                          $91B
     100               $24B
      50     $7B
       1960 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006

       CFDA lists more than 1,800 Federal assistance programs
  DOI Federal Assistance
                                                                        YEAR   DOLLARS
                                                                        2000   1,049,773,441
                                                                        2001   1,782,948,166
                                                                        2002   1,580,521,660
                                                                        2003   1,800,055,702
                                                                        2004   3,205,153,614
                                                                        2005   3,224,926,680
                                                                        2006   2,321,709,218
                                                                        2007   1,914,254,197
                                                                        2008   3,214,344,780
      ~ 4,500 recipients per year
      195 programs in the CFDA
Sources:, as of 5/27/2009;, as of 5/27/2009.
ARRA Funding
   Bureau of Reclamation--------------------$ 1 billion

   National Park Service---------------------$ 750 million

   Bureau of Indian Affairs------------------$ 500 million

   Bureau of Land Management------------$ 320 million

   U.S. Fish and Wildlife Service-----------$ 280 million

   U.S. Geological Survey-------------------$ 140 million
OMB Guidance for ARRA
OMB M-09-15, Section 5.6
• Non-federal entities are required by the Single Audit Act
  Amendments of 1996 and OMB Circular A-133 to have
  an annual audit of their Federal awards.

• Federal agencies will perform a risk analysis of Recovery
  Act programs and request OMB to designate any high
  risk programs as Single Audit major programs.
OMB Guidance for ARRA
OMB M-09-15, Section 5.7
• OMB will use the Compliance Supplement to notify
  auditors of compliance requirements which should be
  tested for Recovery Act awards. OMB will issue interim
  updates as necessary to keep Recovery Act requirements

• OIGs will perform quality control reviews to ensure
  single audits are properly performed. OIGs will perform
  follow-up reviews of Single Audit quality with emphasis
  on Recovery Act funds.
OMB Guidance for ARRA
OMB M-09-15, Section 5.8
• For fiscal years ending September 30, 2009 and later, all
  Single Audit reports filed with the FAC will be made
  publicly available on the internet.

• Federal agencies will prepare and submit to OMB
  synopses of single audit findings relating to obligations
  and expenditures of Recovery Act funding.


The Objective

Today’s Topics
• Utilize the single      • Add programs to the
  audit in grantee risk     Compliance
  assessments.              Supplement.
   – Timely submissions     – Purpose and
   – Audit opinions           applicability
   – Types of findings      – Overview
                            – Input from the
                            – Issuance timeline
                            – ARRA
Single Audit Submissions
• Has the grantee been audited in at least
  one of the two most recent periods?

• Has the grantee submitted its single
  audit report timely?
Prior Audits
• Single audit is required if grantee expended at least
  $500,000 in federal funds in a fiscal year.
• If grantee expended less than $500,000, there may
  still be prior audits.
   – “Yellow Book” audit
      • Opinion on financial statements
      • Review of internal controls
      • Report deficiencies in internal control, fraud, illegal acts,
        violations of provisions of contracts or grant agreements, and
   – State or local government requirement
   – Debt requirement
   – Management decision
Single Audit Submission
• To the Federal Audit Clearinghouse (FAC).
• Earlier of:
  – 30 days after receipt of audit report from auditor;
  – Nine months after end of audit period.
• Extensions
  – Currently, still permitted under Circular A-133.
  – Extension provision will be removed from Circular A-
    133 revision.
  – Ask grantee for proof of extension (agency
How do I determine existence of prior single audits and
timely submissions?

•   Federal Audit Clearinghouse
•   Operates on behalf of OMB.
•   Responsibilities:
    – Disseminate audit information to Federal agencies and the
    – Support OMB oversight and assessment of Federal award audit
    – Assist Federal cognizant and oversight agencies in obtaining
      Circular A-133 data and reporting packages.
    – Help auditors and auditees minimize the reporting burden of
      complying with Circular A-133 audit requirements.
Initial Date Received

              Form Date Received

Audit Opinions

• Opinion(s) on major program
Opinion Unit
• Major Program
  – Determined by the auditor.
  – Larger dollar programs (often but not always).
  – Detailed internal control and compliance
  – Applicable compliance requirements.
Types of Opinions
• Unqualified opinion – auditee complied, in all material
  respects, with the requirements of the major program.

• Qualified opinion – auditee complied, except for certain
  instances of material noncompliance, in all material
  respects with the requirements of the major program.

• Adverse opinion – auditee did not comply, in all material
  respects, with the requirements of the major program.

• Disclaimer of opinion – the scope of the auditor’s work is
  insufficient to express an opinion on the auditee’s
  compliance with the requirements applicable to the
  major program.
Audit Findings
• Financial statement findings vs. Federal
  award findings.

• Deficiencies in internal control.

• Instances of material noncompliance.
Financial Statement Findings
• “GAGAS Report”
• Focus on financial reporting
  – Effect on the financial statements
  – Material misstatements of financial information
• Usually, presented before Federal award findings
  in the audit report.
• Elements of a financial statement finding
  – Criteria         – Effect
  – Condition        – Recommendation
  – Cause
Federal Award Findings
• “A-133 Report” or “Major Program Report”
• Focus on major programs
  – Internal control over major programs
  – Noncompliance with laws, regulations, contracts, or
    grant agreements related to major programs
• Elements of a Federal award finding
  – Federal program       – Information to judge
    identification          perspective
  – Criteria              – Effect
  – Condition             – Recommendation
  – Questioned costs
Internal Control Deficiencies
• Significant deficiency vs. material weakness
• Financial statement findings
   – Deficiencies in internal control over financial report.
   – Examples
      • Inadequate controls for safeguarding of assets.
      • Inadequate segregation of duties in the procurement and
        disbursement process.
• Federal award findings
   – Deficiencies in internal control over major program
   – Examples
      • Lack of management review and approval of financial status reports.
      • Files of program beneficiaries do not include documentation
        verifying eligibility.
Material Noncompliance
• Financial statement findings
   – Violations of provisions of contracts or grant agreements
     that could have a material effect on the financial
   – Examples
      • Employees did not provide I-9 or W-4 forms to HR department.
      • Grantee is using an incorrect indirect cost rate.
• Federal award findings
   – Instances of material noncompliance with requirements
     applicable to the major programs.
   – Examples
      • Program funds were used for non-program purposes.
      • Grantee did not submit financial status reports.
What is it?
• OMB-issued document to assist auditors in
  performing single audits.
• Issued annually (every Spring).
• OMB issued the 2009 Supplement on May 26.
• 2009 edition is 1,259 pages long.
• 2009 edition includes 165 programs.
• Identifies existing important compliance
  requirements that the Federal government
  expects to be considered as part of a single audit.
• Without the Supplement, auditors would have to
  research the laws and regulations for each
  program to identify the requirements.
• More efficient and cost-effective single audit.
• Use of the Supplement is mandatory.
 Important Requirements
• Activities Allowed or         • Period of Availability of
  Unallowed                       Federal Funds
• Allowable Costs/Cost          • Procurement, Suspension and
  Principles                      Debarment
• Cash Management               • Program Income
• Davis-Bacon Act               • Real Property Acquisition and
• Eligibility                     Relocation Assistance
• Equipment and Real Property   • Reporting
  Management                    • Subrecipient Monitoring
• Matching, Level of Effort,    • Special Tests and Provisions
Part 2
Matrix of Compliance Requirements
• Identifies the programs in the Supplement.
  – Federal agency
  – CFDA number
• Associates each program with the applicable
Part 3
Compliance Requirements
• Describes each of the 14 requirements.
  – General description
  – Audit objectives
  – Suggested audit procedures
Part 4
Agency Program Requirements
• Detailed listing of the 165 programs
• Program objectives, procedures, and
  requirements specific to each program.
• Most common program-specific requirements
  –   Activities Allowed or Unallowed
  –   Eligibility
  –   Matching, Level of Effort, Earmarking
  –   Period of Availability
  –   Reporting
  –   Special Tests and Provisions
Auditor’s Process
1. Review program listing in Part 2 to identify
   applicable requirements.
2. Follow Part 3 guidance for testing applicable
   requirements (Internal control and
3. Review Part 4 to identify which of the
   applicable requirements have program-specific
   requirements, and test accordingly.
The Department’s Role
• Prepare and submit program write-ups for
  inclusion in the Supplement.

• Review and revise, as necessary, the
  program write-ups already in the
Revision Timeline
      Mid- to Late-September Core Team Kick-Off Meeting
        First week of October Agency submits list of programs to be
                              added or existing programs that
                              require major re-writing
      First week of November Agency submits drafts of added
                             programs and major re-writes of
                             existing programs
    Second week of November Agency submits information on all
                            other existing programs
           December – March Vetting and clearance – contractor,
                            OMB, agencies, Core Team, other
                        April Issuance
2009 Supplement
Appendix VII
• Background
• CFDA numbers – new or existing
• ARRA awards and major programs
• Award terms and conditions
• Presentation of ARRA awards in schedule of
  expenditures of federal awards
• Informing subrecipients
June 30, 2009 Addendum
• Listing of all new and existing CFDA numbers
  used to award ARRA funds
• Review of internal controls
• Special tests and provisions
  – separate accountability for ARRA funding
  – capability to manage increased funding under ARRA
  – competitive contracting
• Detailed write-ups (like Part 4) for ARRA
Future Addenda
• OMB will issue additional addenda as needed.
  – September 30 ?
  – December 31 ?
• Between the issuances of the addenda:
  – – “Recovery Oversight Office”
Contact Information

   Phone:    703-487-5357
   Fax:      703-487-5214

   Mail:     Department of the Interior
             Office of Inspector General
             12030 Sunrise Valley Drive
             Suite 230
             Reston, VA 20191

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