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Field Review Worksheet - Wisconsin Department of Workforce Development_1_

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					State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                                       Possible Exceptions to
                                                                                    Grantee Internal Control Maturity - Field lead to substantiate                              Maturity
Ref                    Risk                        Internal Control Standard                                                                              Internal Control                       Documentation Reviewed          Test Plan
                                                                                         from observations, inquiry, and document review                                         Rating
                                                                                                                                                              Standard
Entity Level Control Environment
1       Board governance does not             Board oversight is proactive and     Reviewed 2009 full board and committee minutes for the seven                                            2009 Board & Committee Minutes        Obtain all Board and Committee meeting minutes for the current fiscal
        reinforce accountability and a strong effective                            meetings held. Per review and discussion with the Executive                                                                                   year. Review the minutes to determine the level of engagement of the
        tone at the top                                                            Director (Steve Terry), it appears the board is sufficiently                                                                                  Board by looking for follow-up questions, participation, attendance, etc.
                                                                                   engaged in monitoring and directing the activities of the agency.
                                                                                                                                                               None                5
                                                                                   Attendance, participation, and inquiry of applicable entity
                                                                                   issues (program business, financial transactions, etc.) were
                                                                                   reflected in the minutes provided.

2      There is no mechanism for reporting Whistleblower provisions facilitate     Besides COI mentioned in step # 4, CEP has complaint                                                    Employee Handbook                     Determine the agency's mechanism for reporting and investigating fraud
       fraud or abuse.                     reporting of improprieties              procedures and rules of conduct sections in its employee                                                Recovery Act Fraud Hotline poster     claims. Determine whether the system allows for anonymous reporting,
                                                                                   handbook. These guidelines outline in adequate detail what                                                                                    nonretribution, and independent investigation. Review all reported
                                                                                   constitutes misconduct and how violations of the agency's                                                                                     activity for the fiscal year to determine if the complaint was handled
                                                                                   policies will be handled. In addition, the handbook given to                                                                                  properly. Further, determine how the ethics hotline is communicated
                                                                                   each employee outlines what constitutes a grievance or                                                                                        and to whom (employees, vendors, customers, etc).
                                                                                   complaint and provides the step-by-step process for reporting
                                                                                   one. The established procedures include provisions for
                                                                                                                                                     CEP's policy does not
                                                                                   escalating the grievance or complaint to higher levels (to the
                                                                                                                                                         specify how a
                                                                                   next and subsequent supervisory levels) if the employee is not
                                                                                                                                                     complaint against the         4                                                                S:\Complaint
                                                                                   satisfied with how the issue has been resolved. However, there                                                                                                Resolution Process.
                                                                                                                                                       Executive Director
                                                                                   is no mention of how the complaint should be reported if it is
                                                                                                                                                      should be reported.
                                                                                   against the Executive Director. In regards to the anonymous
                                                                                   reporting of fraud, there is a "Recovery Act Fraud Hotline poster
                                                                                   with a toll free number that indicates "calls can be made
                                                                                   anonymously and confidentially." Per the Executive Director
                                                                                   and Finance Director, one complaint was settled in 2009 in favor
                                                                                   of CEP that was against the previous Executive Director. No
                                                                                   complaints have been made since this time to fieldwork date of
                                                                                   early March 2010.
3      Employees are not periodically        Employees whose work functions        CEP does not conduct criminal background checks. The HR                                                 System extract listing of employees   Review the agency's hiring policies and practices. Inquire if a criminal
       checked for criminal convictions      pose significant risk to the agency   manager indicated that one has not been done for any new hire                                           Personnel files                       background check is done and what is done if the employee has a
       leading the agency and state to       should receive background             in the 4 years he has been with CEP, but indicated that it could                                                                              criminal past to limit unwanted interaction (i.e. employees convicted of
       unwanted liability.                   screening                             be a consideration for a director level employee. On the other                                                                                embezzlement shouldn't be handling cash). Time permitting, take a small
                                                                                   hand, he was concerned about the legality of using a person's                                                                                 sample of new hires to prove background checks (e.g. criminal, degree
                                                                                   criminal background as the basis for not hiring an individual. In                                                                             verifications, references) were conducted.
                                                                                                                                                     Criminal background
                                                                                   part, his position was based on outside legal counsel's opinion
                                                                                                                                                      checks are not being         3
                                                                                   an organization has to be careful about conducting criminal
                                                                                                                                                          conducted.
                                                                                   background checks. In regards to drug testing, CEP reserves the
                                                                                   right to conduct a drug test if there is reasonable suspicion an
                                                                                   employee has a problem. This policy, including the manner in
                                                                                   which the test will be conducted, is in the employee handbook.
                                                                                   According to the HR mgr, personal references are generally
                                                                                   checked for potential new hires.



1fd70617-9f50-4511-8c62-b95e3b0bd7d0.xls                                                                                                                                                                                                                                                               Page 1 of 20
State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                                      Possible Exceptions to
                                                                                     Grantee Internal Control Maturity - Field lead to substantiate                              Maturity
Ref                    Risk                     Internal Control Standard                                                                                Internal Control                           Documentation Reviewed          Test Plan
                                                                                          from observations, inquiry, and document review                                         Rating
                                                                                                                                                             Standard
4     Employees are in violation of the    Conflicts of interest policy is          Agency has existing Conflict of Interest (COI) and Rules of                                               Conflict of Interest and Rules of     Review details of the agency conflict of interest program. Identify gaps in
      conflict of interest policy          communicated and monitored to            Conduct policies. All new employees receive these policies and                                            Conduct policies                      the process. Select applicable personnel, including senior management
                                           ensure that agency employees,            must sign as evidence of receipt and understanding of them.                                                                                     and board members, and test to see if COI statements for these
                                           board members, and their close           New Board members are made aware of the COI policy during                                                                                       individuals are on file in compliance with the agency conflict of interest
                                           relatives do not have an interest in a   orientation. However, senior mgt and the board are not               Board members and                                                          policy.
                                           business providing services or           required to periodically submit COI statements indicating          senior management are
                                           materials to the agency                  whether or not they have a potential conflict. In regards to all    not required to submit      3
                                                                                    agency employees, the COI policy specifies that "in the event a        COI statements
                                                                                    potential conflict does arise, its nature and extent must be fully       periodically.
                                                                                    disclosed immediately to the Executive Director." Reminders
                                                                                    are provided at least annually to employees on the existence of
                                                                                    the COI and other key policies.

5     Agency employees do not              Policies and procedures are           Obtained and reviewed the agency's written policies and                                                      Employee Handbook                     Inquire about policies and procedures for the key processes to determine
      consistently adhere to good          sufficient, periodically updated, and procedures. All new employees receive the personnel policies                                                 Accounting Procedures Manual Signed   existence, completeness, and relevance (time is of the essence, so
      business practices                   clearly communicated.                 handbook and acknowledge in writing that they have received                                                  acknowledgement forms from            detailed review is not advised). Inquire as to frequency of review and
                                                                                 and will adhere to CEP's policies (verified that this signed                                                 employees                             update, and the level of communication to ensure adherence. Policies
                                                                                 acknowledgement was on file for the two employees hired in                                                                                         and procedures may include, but not be limited to purchasing and
                                                                                 the past six months). The handbook is updated as needed but                                                                                        disbursements, accounting, IT, HR/payroll, expense reimbursement,
                                                                                 at least on an annual basis. CEP also has an accounting                                                                                            inventory, conflict of interest, and ethics.
                                                                                 procedures manual that has been distributed to the appropriate
                                                                                 individuals. The manual is updated from time to time. This
                                                                                 review also disclosed that the policies/procedures: 1)                        None                 5
                                                                                 sufficiently outline CEP's expectations regarding good business
                                                                                 practices and ethical conduct, and 2) provide sufficient detail on
                                                                                 the key accounting and other processes and controls
                                                                                 (purchasing, disbursements, use of credit cards, etc.).




6     Prior deficiencies are not           Management follows through on            Reviewed agency's audited financial statements and mgt letters                                            Audited Financial Statements - 2008   Obtain audit reports from internal and external sources over the past
      remediated                           action plans to mitigate findings        for the years ending 06/30/08 and 06/30/09. In WIPFLI's                                                   Management Letters - 2007/2008        year, as well as documentation related to fraudulent activity made aware
                                           from auditors and reported               opinion, the financial statements were fairly presented, and                                                                                    to management over the past 3 years. Determine the magnitude of any
                                           incidents                                there were no material weaknesses in internal controls over                                                                                     issues reported, extent of management response, and if procedures for
                                                                                    financial reporting. Likewise, there were no instances of non-                                                                                  this ORR review should be modified to determine if the root causes or
                                                                                    compliance with "Government Accounting Standards". One                     None                 4                                               risks related to these issues have been sufficiently addressed by
                                                                                    issue was reported as a result of the most recent audit                                                                                         management.
                                                                                    concerning the Finance Director being the system administrator.
                                                                                    The Finance Director indicated that the board is comfortable
                                                                                    with this situation given the mitigating controls that are in
                                                                                    place. See step #13 for further info.

Composite Average Maturity Rating for Entity Level Control Environment                                                                                                                  4.0



1fd70617-9f50-4511-8c62-b95e3b0bd7d0.xls                                                                                                                                                                                                                                                                  Page 2 of 20
State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                                     Possible Exceptions to
                                                                                 Grantee Internal Control Maturity - Field lead to substantiate                               Maturity
Ref                    Risk                     Internal Control Standard                                                                               Internal Control                        Documentation Reviewed          Test Plan
                                                                                      from observations, inquiry, and document review                                          Rating
                                                                                                                                                            Standard
Financial Reporting
7      Transactions are recorded to the    The agency periodically reconciles   All journal entries are prepared by the Fiscal Department staff                                          July 2009 - December 2009 bank         Test 1 - Obtain bank account reconciliations from July 2009 through
       general ledger incompletely or      its general ledger against           (Bev and Kathy) and approved by the Finance Director (Marci).                                            reconciliations                        present. Sample a couple of the reconciliations and verify that the
       inaccurately.                       independently maintained             Every month, a general ledger close out process is performed.                                                                                   reconciliation ties to the GL balance and the bank statement, any
                                           subledgers and bank accounts.        In conjunction with this, a checklist is completed including sign-                                                                              reconciling items are resolved timely, and that the reconciliation is
                                                                                offs by the persons performing the tasks. The Finance Director                                                                                  independently reviewed.
                                                                                reviews the G/L balances for reasonableness and also the
                                                                                account reconciliations. She has a back-up (Bev) who performs                                                                                   Test 2 - If agency maintains separate systems or ledgers (e.g. payroll and
                                                                                this review in her absence. The bank accounts are reconciled                                                                                    payables), obtain reconciliation between subledgers and general ledger.
                                                                                monthly by an accounting clerk and reviewed/signed-off by the                None                4                                              Sample a couple of the reconciliations and verify that the reconciliation
                                                                                Finance Director.                                    Obtained and                                                                               ties to the GL balance and the subledger(s), any reconciling items are
                                                                                reviewed bank reconciliations for the agency's two bank                                                                                         resolved timely, and that the reconciliation is independently reviewed.
                                                                                accounts from July 2009 - January 2010. Reviewed each for
                                                                                timely completion, proper review, and any unusual reconciling
                                                                                items. Also verified the reconciliation balances tie to the bank
                                                                                statement and G/L (ending balances on the reconciliation). No
                                                                                exceptions noted.
8     Receipts are not recorded in the     Management oversight to ensure       Obtained a listing of cash receipts for the period of 7/02/09 -                                          Listing of all cash receipts          Trace a sampling of ARRA program receipts into the bank account and GL.
      proper program accounts or are       that funds are accounted for and     2/23/10. None of these cash receipts were ARRA funds. Traced                                             Cash receipts log                Bank Review for reasonableness (e.g. if receipts are on a monthly interval,
      otherwise unaccounted for.           segregated properly                  several cash receipts for other grants to the bank account                                               statements                            inquire if no there are no receipts in any month), and verify if the receipt
                                                                                statements (total amount tested = $500,750.11) and verified                                              General ledger                        is recorded to the correct program.
                                                                                that the funds were booked to the correct program. No
                                                                                exceptions noted.
                                                                                Also, verified that there is segregation of duties over the
                                                                                preparation/handling of the cash deposits and other duties.                  None                4
                                                                                The front desk completes a log of all incoming funds each day
                                                                                and makes copies of the checks (cash is rarely received). The
                                                                                bank deposit is then prepared by the same person and taken to
                                                                                the bank. She has no other financial duties. The log, check
                                                                                copies, and the bank deposit receipt are given to the Fiscal Dept
                                                                                (Bev) for verification that everything is in agreement.




1fd70617-9f50-4511-8c62-b95e3b0bd7d0.xls                                                                                                                                                                                                                                                                Page 3 of 20
State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                                      Possible Exceptions to
                                                                                   Grantee Internal Control Maturity - Field lead to substantiate                              Maturity
Ref                   Risk                      Internal Control Standard                                                                                Internal Control                       Documentation Reviewed     Test Plan
                                                                                        from observations, inquiry, and document review                                         Rating
                                                                                                                                                             Standard
9     The agency does not maintain         Independent management review of       The Fiscal Department has a staff of three - the Finance                                                Financial statements             Inquire about management oversight of the accounting and financial
      adequate accounting oversight.       the financial statements, variance     Director, an accounting clerk, and an accounting assistant.                                             Board Minutes                    reporting processes. May include financial statement reviews, journal
                                           analyses against budget, manual        There is sufficient staffing for the various accounting tasks                                                                            entry reviews, and/or variance analyses between actual reported and
                                           journal entry reviews.                 which allows the Finance Director to adequately perform an                                                                               budgeted expenditures. Time permitting, review evidence of such
                                                                                  oversight role. This oversight includes reviewing/approving:                                                                             oversight.
                                                                                  manual journal entries, bank account and other reconciliations,
                                                                                  financial statements (including variance analysis against
                                                                                                                                                              None                5
                                                                                  budget), and pre-check and post-check runs (signs off on the
                                                                                  registers).                                           Besides the
                                                                                  Finance Director, the Executive Director and the board also
                                                                                  review the financials and budget variances.




10    Procedures and timetables for the    Use of financial reporting checklists Agency completes "Workforce Investment Act & Related                                                     Monthly CARS reports             Obtain evidence that agency has established sound procedures for ARRA
      financial closing and reporting      and timelines                         Grants" reports each month to the State of Wisconsin. No ARRA                                                                             government reporting, potentially including reporting timeline and/or
      process are not well established,                                          funds had been received during the period under review, but                                                                               checklists and inquire if these reflect current process and are being
      sufficiently documented, and                                               there were expenditures. Reviewed the report and supporting                                                                               followed consistently by accounting personnel.
      updated on a timely basis.                                                 documentation (G/L info) for the month of January 2010. They
                                                                                 are completed by the Finance Director pulling data readily
                                                                                 available within the SAGE MIP financial system. A checklist is
                                                                                 used and an internal spreadsheet to ensure that the reporting is             None                5
                                                                                 done accurately and timely. According to the Finance Director,
                                                                                 the reports are being submitted to the state each month
                                                                                 consistent with the established deadlines. No concerns noted.




11    ARRA financial reporting does not    Independent management review of       See comments above. Monthly reports are completed using                                                 Monthly CARS reports             Inquire as to how the agency prepares its ARRA reporting to the state.
      accurately represent agency          ARRA financial reporting against the   amounts and reports generated from the CEP's accounting                                                                                  Review documentary evidence that ARRA reporting is independently
      financial records                    agency financial systems and/or        system. Reports are prepared by the Finance Director and                                                                                 reviewed and verified for accuracy against the agency financial system
                                           records                                discussed with the Executive Director. Both the Executive                                                                                and/or agency records.
                                                                                  Director and the board reviews actual to budget financial                   None                5
                                                                                  information on a regular basis. Segregation of duties is also
                                                                                  maintained through journal entry preparation by employees
                                                                                  other than the Finance Director (the Executive Director does not
                                                                                  perform any accounting tasks).
12    The agency does not have the         Use of separate bank accounts,         The agency does not use separate bank accounts for each                                                 Statements of Revenues and       Inquire as to how the agency is properly segregating funding and
      capacity to meet the stringent       ledgers, and/or general ledger         funding source, but does maintain separate revenue/expense                                              Expenditures by funding source   expenditures between separate programs (e.g. separate GL accounts,
      program reporting segregation        accounts                               accounts for each program. The system enables reporting to be               None                5                                        separate subledgers, separate system, different bank accounts, etc).
      requirements of ARRA.                                                       done at the fund level.                                                                                                                  Assess the agency's ability to accurately segregate program reporting.




1fd70617-9f50-4511-8c62-b95e3b0bd7d0.xls                                                                                                                                                                                                                                                        Page 4 of 20
State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                                    Possible Exceptions to
                                                                                 Grantee Internal Control Maturity - Field lead to substantiate                              Maturity
Ref                   Risk                      Internal Control Standard                                                                              Internal Control                         Documentation Reviewed   Test Plan
                                                                                      from observations, inquiry, and document review                                         Rating
                                                                                                                                                           Standard
13    Access to the accounting system is   Access must be properly restricted   Obtained a download from the Sage MIP financial system                                                    Security access list           Test 1 - Obtain a download from the GL system of the access rights for all
      not properly restricted              to allow for SoD and/or detective    showing the "permission rights" each employee has been                                                                                   employees. Ensure that those with create, change, or delete capability
                                           controls are in place                granted. Verified that the system access is appropriate for the                                                                          (e.g. post journal entries, edit chart of accounts) are appropriate, which
                                                                                employees' assigned responsibilities and to maintain adequate                                                                            should typically not include executive management. Ensure each user
                                                                                segregation of duties with one exception. The Finance Director                                                                           access account is mappable to a current employee with relevant
                                                                                is the security administrator for the financial system. As                                                                               responsibilities, and multiple user access accounts are not assigned to
                                                                                previously mentioned, the board is comfortable with this                                                                                 one individual. Inquire if management reviews system access rights
                                                                                situation based on mitigating controls that are in place         Finance Director is the                                                 periodically.
                                                                                including: 1) the Finance Director does not have access to the   security administrator
                                                                                locked cabinet storing the blank check stock, and 2) two board                                  3                                        Test 2 - Review access for those individuals assigned to system
                                                                                                                                                    for the SAGE MIP
                                                                                members perform a review of key items every two months. The         financial system.                                                    administrator role who can assign security access. Ensure that system
                                                                                items (cash receipts, disbursements, journal entries, and credit                                                                         administrators do not retain access to perform user functions.
                                                                                card transactions) are independently and randomly selected.
                                                                                The board members document and sign off their review on a
                                                                                standard form (noted completion of this form for their review in
                                                                                Jan 2010). However, the risk could be further reduced if the
                                                                                permission right for creating manual checks was deleted.


Composite Average Maturity Rating for Financial Reporting Control Environment                                                                                                       4.4

Purchase to Pay
14    Duties and responsibilities are not Access must be properly restricted    A review of the system access report and a walkthrough of the                                             Security access listing        Obtain a download of the system access report for the purchasing and
      adequately segregated to maintain to allow for SoD and/or detective       processing with the Finance Director disclosed that adequate                                                                             disbursement functions. Ensure those who can process invoices or
      separation of purchasing, invoice    controls are in place                SoD are established. The purchasing, invoice processing and                                                                              vouchers for payment cannot add vendors, edit vendors (e.g. addresses
      processing, and receiving functions.                                      receiving functions are spread over three employees                                                                                      or bank account information), or conduct purchasing, receiving, or cash
                                                                                (accounting clerk, accounting assistant and executive assistant).                                                                        reconciliation functions. If proper segregation of duties is not present,
                                                                                No one employee has the ability to authorize and process                                                                                 verify if sufficient detective review controls are in place (e.g. review of
                                                                                transactions from beginning to end. Also, the management                    None                4                                        vendor master edit reports). Ensure each user account is mappable to a
                                                                                and board oversight of the procurement and accounting                                                                                    current employee with relevant responsibilities, and multiple accounts
                                                                                functions further strengthens the control environment.                                                                                   are not assigned to one individual. Inquire if management reviews
                                                                                As part of this review, no employees were identified who had                                                                             system access rights periodically.
                                                                                inappropriate access rights for the purchasing and
                                                                                disbursement functions.




1fd70617-9f50-4511-8c62-b95e3b0bd7d0.xls                                                                                                                                                                                                                                                         Page 5 of 20
State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                                      Possible Exceptions to
                                                                                 Grantee Internal Control Maturity - Field lead to substantiate                                Maturity
Ref                   Risk                       Internal Control Standard                                                                               Internal Control                       Documentation Reviewed           Test Plan
                                                                                      from observations, inquiry, and document review                                           Rating
                                                                                                                                                             Standard
15    Purchase orders or requisitions are   Management review and approval      The accounting procedures manual outlines the authorization                                               Accounting Policies and Procedures     Obtain a listing of expenditure authorization levels depicting positions
      not reviewed and approved by          of all purchase commitments         levels for agency employees and provide the guidelines for                                                Procurement Policy                     that may authorize certain thresholds of purchase requisitions and
      management.                                                               processing/approving purchases. The field office managers                                                 Disbursement listing and supporting    disbursements. Using the listing of all disbursements, review for
                                                                                authorize purchase orders and submit them to either the                                                   documentation                          adherence to authorization levels for purchase order or requisition
                                                                                Executive Director (approves all non-budgeted amounts over                                                                                       approval, also verifying if there is a separate requester and approver.
                                                                                $5000) or Finance Director for approval. They are then                        None                5
                                                                                processed by a Fiscal Dept staff member for payment. All
                                                                                contracts with outside parties are generally initiated by the field
                                                                                office managers, and then reviewed and approved by the
                                                                                Executive Director.

16    Expenditures are inappropriate and Management review and approval         See step #'s 14 and 15 above for the process review performed.                                            Accounting Procedures Manual           Obtain a listing of expenditure authorization levels depicting positions
      unauthorized.                      of all disbursements                   Selected a sample (9) of disbursements and reviewed the items                                             Disbursement listing and supporting    that may authorize certain thresholds of purchase requisitions and
                                                                                for adherence to proper authorization levels, proper use of                                               documentation                          disbursements. Using the listing of all disbursements, review for
                                                                                purchase orders (required for items over $100) and proper                     None                5                                              adherence to authorization levels for invoice or voucher approval across a
                                                                                approvals. No exceptions were noted.                                                                                                             sampling of transactions of varying amounts.



17    Contracts initiated by the grantee    The grantee obtains bids in         Using the sample selected for step # 16, testing was performed                                            Accounting Procedures Manual           Judgmentally select a sample of purchases/contracts. Determine if the
      are awarded on a basis other than     accordance with state purchasing    to verify adherence to CEP's procurement and bidding                                                      Disbursement listing and supporting    procurement and bidding requirements were followed (e.g. $5-$25k
      lowest qualified bidder.              rules                               requirements, as well as with federal/state requirements. All                                             documentation                          simplified bid; over $25k sealed bid). Determine if vendor selection
                                                                                bids reviewed followed the established requirements and the                   None                5                                              process was appropriate (e.g. documentation for bid analysis, use of
                                                                                decisions made were adequately documented. No exceptions                                                                                         lowest bid or adequate support if otherwise).
                                                                                noted.
18    Purchasing rules are circumvented The grantee obtains bids in             Using the disbursements file provided, data analysis was                                                  Disbursements listing and supporting   Using the listing of all disbursements, sort by vendors and review
      through serial purchasing of smaller accordance with state purchasing     performed on a sample of items to test for serial purchasing and                                          documentation                          cumulative payments per vendor that may indicate serial purchasing. For
      amounts.                             rules                                another sample was selected to test for proper use of sealed                                                                                     a sample of combined purchases over $25k, determine if a sealed bid was
                                                                                                                                                              None                5
                                                                                bids. No issues of non-compliance were noted.                                                                                                    used.


19    The agency does not pay vendors       Agencies ensure vendors are paid    As a general rule, payments are made within 30 days. A review                                             Accounts payable aging                 Obtain a current AP aging schedule. Ensure that vendors are paid within
      timely resulting in non-compliance    within 30 days in accordance with   of the current aging schedule disclosed that all accounts                                                                                        30 days of goods or invoice receipt (which ever occurs later). Note any
      with grant provisions.                the prompt payment statute          payable were less than 30 days old.                                           None                5                                              unusual vendors or long outstanding bills. Obtain explanations for
                                                                                                                                                                                                                                 unusual activity.

20    Inappropriate expenditures are        Expenditures are authorized against Selected a sample of disbursements (items selected for the                                                Disbursements listing and supportingUsing the listing of all disbursements, vouch expenses recorded to
      charged to the grant                  the appropriate programs            steps above). Reviewed the items for adherence to proper                                                  documentation                       supporting documentation to substantiate the expense (use original
                                                                                authorization and use of program funds. No exceptions were                    None                5                                           documentation if available). Determine if the expense is appropriate for
                                                                                noted.                                                                                                                                        the program (i.e. food should not be purchased with funds for
                                                                                                                                                                                                                              Weatherization and bulk purchase insulation should not be purchased
21    Invalid or unauthorized changes are Access must be properly restricted    Compared the vendor master file listing to a 10% sampling of all                                          Current Vendor Master List Employee Obtain the vendor master in an electronic format if possible. Using the
      made to the Vendor Master file.     to allow for SoD and/or detective     employees for any matches of names and or addresses. No                                                   system extract                      employee listing, search for a limited number of employee names and
                                          controls are in place                 duplicates were noted that didn't have a reasonable                           None                5                                           addresses in the vendor master (including those having access to edit the
                                                                                explanation.                                                                                                                                  vendor master). Review the vendor master for names of individuals
                                                                                                                                                                                                                              rather than companies or duplicate vendors, and inquire regarding

1fd70617-9f50-4511-8c62-b95e3b0bd7d0.xls                                                                                                                                                                                                                                                                Page 6 of 20
State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                                    Possible Exceptions to
                                                                                Grantee Internal Control Maturity - Field lead to substantiate                               Maturity
Ref                   Risk                      Internal Control Standard                                                                              Internal Control                       Documentation Reviewed         Test Plan
                                                                                     from observations, inquiry, and document review                                          Rating
                                                                                                                                                           Standard
22    Duplicate vouchers or invoices are   Systems may prevent or alert to     According to the Finance Director, the SAGE MIP financial                                                Disbursements listing                Test 1 - Inquire how duplicate payments are being prevented or detected.
      processed for payment.               duplicate payment processing, or    system does an edit to detect duplicate vouchers or invoices.                                                                                 Systems may issue a warning or prevent further processing of a duplicate
                                           management may detect through       Any duplicates are flagged. To her knowledge, there have been                                                                                 voucher or invoice if the vendor, invoice #, date, and amount are the
                                           periodic reviews                    no duplicate payments made to vendors that subsequently had                                                                                   same.
                                                                               to be retrieved.
                                                                               Performed data analysis to check for potential duplicate                     None                5                                            Test 2 - Using the listing of all disbursements, sort by vendor as the
                                                                               payments. A few were noted that had matching amounts and                                                                                      primary key, and then by invoice number and amount. Scan through
                                                                               invoice numbers. Six transactions were sampled and reviewed.                                                                                  payments having identical amounts and the same or similar invoice
                                                                               They were not duplicates (noted the amount billed was split                                                                                   numbers, and inquire for propriety.
                                                                               into two different fund codes).
23    ARRA funds are comingled with        Money appropriated by government There is no employee loan program per the Executive Director.                                               Disbursements listing                Inquire about the existence of an employee loan program. If one exists,
      employee loan programs               agencies to the agency is to be used During review of agency documentation, there was no evidence                                                                                 trace all disbursements to source of the funds, and determine if fund
                                           only as directed under contract      to indicate existence of an employee loan program.                          None                5                                            source is appropriate. Determine what the loans are for and what
                                                                                                                                                                                                                             interest rate is being used. Also determine if loan repayment is occurring
                                                                                                                                                                                                                             on a regular basis.
24    Cash on hand is misappropriated.     Petty cash accounts should have     The 8 offices have petty cash funds, but they are insignificant                                            Purchase orders and disbursement   Determine if the agency maintains any cash on hand. If cash on hand is
                                           adequate supporting                 ($50 limit). Receipts are maintained and submitted to the Fiscal                                                       receipts               significant (e.g. $200 or greater), review the procedures to determine
                                           documentation and only authorized   Dept. The Finance Director approves the disbursement and a                                                                                    adequacy of controls. Review current contents of the petty cash box,
                                                                                                                                                            None                4
                                           individuals should have access to   check is issued.                                                                                                                              including recent vouchers and additions, to determine volume of use.
                                           the cash box

25    Reimbursed employee expenditures Employee expense reports should         Reviewed the Executive Director's expense reports for a one                                              Employee expense reports             Determine adequacy of agency employee expense reporting and
      are inappropriate and unauthorized. be accompanied by substantiating     year period. All reports examined had proper supporting                                                                                       reimbursement policies, and for a sampling of paid expense reports
                                          receipts and be authorized by an     documentation. In each instance, approval was provided by the                                                                                 determine sufficiency of receipt support, reasonableness of expenditures
                                          independent manager.                 Finance Director. Although this was not higher level approval,                                                                                to support program or agency objectives, and authorization by
                                                                               no exception is being made to this situation considering that: 1)                                                                             appropriate level of management.
                                                                               the Finance Director indicated that the board delegated this
                                                                               responsibility to her, and 2) the expense reimbursements were                None                5
                                                                               less than $100 and were mostly for items not run through the
                                                                               corporate credit card (e.g., mileage and taxis). (Note: the
                                                                               Executive Director's credit card usage is reviewed by two board
                                                                               members including the head of the Finance Committee).

26    Procurement card transactions do     Procurement card transactions are   Adequate controls are maintained over the credit cards. The                                              File of credit card expenditures     Test 1 - Inquire how management reviews and approves monthly
      not represent authorized or          authorized by an independent        corporate cards have been issued to only a few individuals.                                              Credit card statements               procurement card activity for each employee card holder. Inquire how
      appropriate expenditures.            manager.                            Receipts for purchases are turned into the Fiscal Dept (Bev) for                                                                              any unreviewed activity is detected, and how unapproved activity is
                                                                               review and payment. Payment approval is provided by the                                                                                       handled.
                                                                               Finance Director. Since the credit cards are issued to director
                                                                               level employees, two board members also review and sign off                  None                5                                            Test 2 - Review procurement card charges for unusual payments, unusual
                                                                               on the credit cards transactions after the fact (noted their sign-                                                                            vendors, and payments made for goods and services not consistent with
                                                                               offs on one month's worth of transactions). Obtained the detail                                                                               state programs (for example, Televisions, "Snacks", gift cards, Christmas
                                                                               of credit card transactions for 7/1/2009 - 02/28/2010.                                                                                        decorations, etc). For any unusual charges obtain an explanation and
                                                                               Reviewed the expenditures for any large or unusual purchases.                                                                                 additional support.
                                                                               Nothing of concern was noted.

1fd70617-9f50-4511-8c62-b95e3b0bd7d0.xls                                                                                                                                                                                                                                                              Page 7 of 20
State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                                   Possible Exceptions to
                                                                                  Grantee Internal Control Maturity - Field lead to substantiate                            Maturity
Ref                    Risk                      Internal Control Standard                                                                            Internal Control                         Documentation Reviewed       Test Plan
                                                                                       from observations, inquiry, and document review                                       Rating
                                                                                                                                                          Standard
27    Procurement card expenditures are Procurement card transactions are        There were no material credit card transactions per review of                                           File of credit card transactions   Obtain all procurement card transactions for the current contract year.
      being used to circumvent the bid   authorized by an independent            the credit card expenditures for the test period (7/09 - 2/10).                                                                            Sort the payments by vendor and by date to identify possible misuse of
      process for expenditures exceeding manager.                                The credit card transactions during this period averaged only                                                                              the credit card. Review procurement activity for large transactions that
      the minimum bid threshold.                                                 about $2000 per month. As with other expenditures, credit                 None                5                                            alone or cumulatively over time (e.g. purchases are split to avoid any
                                                                                 card transactions must have a purchase order with receipts, and                                                                            single purchase limits) may exceed the minimum bid thresholds (e.g.
                                                                                 are approved at a higher level. They also are reviewed                                                                                     simplified bids for $5-$25k and sealed bids for $25+).
                                                                                 periodically by two board members.
28    Procurement card transactions are    Procurement card expenditures are Each purchase order details the program #, G/L account #, and                                               File of credit card transactions   Inquire how all authorized procurement card activity is recorded
      not posted completely and            reconciled to the general ledger  approving supervisor. Supporting documentation (receipts) are                                                                                  completely and accurately to the general ledger while ensuring that
      accurately to the General Ledger.                                      attached to each PO. The testing for other steps disclosed that               None                5                                            expenditures are properly recorded against the correct program.
                                                                             this was the case.


Composite Average Maturity Rating for Purchase to Pay Control Environment                                                                                                          4.9

Banking and Treasury
29    Banking signatories and instructions, Adequacy of segregation of duties,   The authorized signers on the agency's bank accounts are                                                System access report               Test 1 - Review bank signatories to ensure that signatories are current
      including those related to opening, and/or detective controls to           limited to the Executive Director, Finance Director and the two                                                                            employees with adequate seniority, and do not have access to record
      modifying, or closing accounts,       mitigate.                            chairs of the boards. Only the Finance Director has permission                                                                             financial transactions nor are responsible for preparing bank/cash
      check signatories, and EFT/wire                                            rights on the financial system (this situation was covered                                                                                 reconciliations.
      authorizations, are outdated and                                           previously). Blank check stock is locked in a drawer in the
      inaccurate (i.e. employees may no                                          accounting assistant's desk (Bev's). She has the only key. The                                                                             Test 2 - Review the check printing and endorsement process to ensure
                                                                                                                                                           None                4
      longer be with the agency or present                                       check stock is pre-numbered and logged when removed for the                                                                                that check stock is controlled (e.g. log maintained against secured stock
      segregation of duties conflict).                                           check runs.                                                                                                                                with sequential numbering), endorsement by authorized bank signatory
                                                                                                                                                                                                                            or secure computer signature, and checks over a large threshold require a
                                                                                                                                                                                                                            second signature by an executive. If manual checks are being used,
                                                                                                                                                                                                                            review for appropriate controls and segregation of duties.

30    Access to banking applications and   Adequacy of segregation of duties,    See comments above for step # 29 regarding segregation of                                               System access report               Test 1 - Review banking application system access report to ensure that
      related investment                   and/or detective controls to          duties. The agency does not make wire transfers. The EFT                                                                                   those who have access to disburse funds are current employees who do
      software/applications is             mitigate.                             transactions are limited to transfers between the corporate and                                                                            not have access to record financial transactions nor are responsible for
      inappropriate or outdated.                                                 payroll accounts.                                                                                                                          preparing bank/cash reconciliations.

                                                                                                                                                           None                5                                            Test 2 - Review EFT and wire transfer process to ensure that there are
                                                                                                                                                                                                                            adequate controls, such as a dual approval process, e.g. every wire
                                                                                                                                                                                                                            transfer/EFT is to be approved by a person other than the entry person.
                                                                                                                                                                                                                            These staff should not have access to record the transaction into the
                                                                                                                                                                                                                            general ledger or prepare the bank/cash reconciliation.
Composite Average Maturity Rating for Banking and Treasury Control Environment                                                                                                     4.5

Payroll




1fd70617-9f50-4511-8c62-b95e3b0bd7d0.xls                                                                                                                                                                                                                                                          Page 8 of 20
State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                                       Possible Exceptions to
                                                                                     Grantee Internal Control Maturity - Field lead to substantiate                             Maturity
Ref                   Risk                        Internal Control Standard                                                                               Internal Control                         Documentation Reviewed   Test Plan
                                                                                          from observations, inquiry, and document review                                        Rating
                                                                                                                                                              Standard
31    Duties and responsibilities are not    Restricted system access;              Payroll is housed on the SAGE MIP financial system. Verified                                             System access report           Test 1 - Through inquiry and system access report review, verify if there is
      adequately segregated to prevent a     segregation of duties between          through a review of the system access report, as well as a                                                                              segregation of duties between approvers of payroll changes (new hires,
      single employee from entering a        authorizing payroll changes, adding    walkthrough on the processing with the Finance Director, that                                                                           edit employees, terminations) and those who have access to change
      fictitious employee to the system      ee's and assigning pay; management     segregation of duties is appropriately set up. The board                                                                                payroll in the system.
      and getting them paid, or changing     review of system edit reports          authorizes payroll additions and other changes, including pay
      compensation data without              showing new hires, payroll changes,    rate increases, which then are entered to the system by the HR                                                                          Test 2 - Verify if changes to the payroll system are being independently
      authorization.                         and terminations                       manager. The paperwork is then passed to the Fiscal Dept that              None                5                                        reviewed against authorized changes. For instance, system edit reports
                                                                                    verifies the correctness of the changes processed on the                                                                                of payroll changes may be reviewed and validated against approved
                                                                                    system. The time sheets are entered to payroll by an                                                                                    employee payroll change forms (authorizing new hires, pay changes,
                                                                                    accounting clerk (Kathy). The Finance Director does a review                                                                            terminations) by a manager independent of those who have access to
                                                                                    and sign-off on the pre-check run (i.e., checks that are created                                                                        change payroll in the system.
                                                                                    vs. direct deposit) and then does so again on the post-check
                                                                                    run.

32    The input of time and attendance       Management review of time              All non-exempt employees complete and submit signed time                                                 Policies and Procedures        Test 1 - Verify that managers are reviewing and approving timesheets. If
      and other payroll related              approvals outstanding or time entry    sheets for each two week period which show the specific                                                  Employee timesheets            overtime is prevalent, inquire as to why. Ensure that overtime is being
      information is inaccurate or has not   outstanding, management review of      fund(s) that the time should be charged to. The time sheets are                                                                         approved, and inquire if workload is anticipated to continue to require
      received the proper approvals.         system edit reports for insufficient   approved by the employee's supervisor. The time sheets are                                                                              overtime if additional headcount would be more cost effective.
                                             hours or hours reported outside a      spot checked in the Fiscal Dept before they are entered to the
                                             prescribed threshold                   system by the accounting assistant (Kathy). In addition, the                                                                            Test 2 - Inquire how the agency tracks and records staff hours to
                                                                                    Finance Director samples time sheets each payroll period to                                                                             administer ARRA programs. Review time reported to ARRA programs for
                                                                                    verify that the time was recorded to the right fund. Overtime                                                                           reasonableness (e.g. total time reported per staff member does not
                                                                                                                                                               None                4
                                                                                    doesn't occur often, and needs to be approved ahead of time by                                                                          significantly exceed 8 hours/day, 40 hours/week; consider comparable
                                                                                    the employee's supervisor. The agency's policy requires all                                                                             agencies/programs).
                                                                                    changes in payroll data (e.g., new hires, pay rates, etc.) to be
                                                                                    authorized in writing. Besides the Finance Director, the HR
                                                                                    manager also verifies that the payroll changes are appropriate.
                                                                                    Selected a random sample of 10 timesheets and verified they:
                                                                                    were signed by the employee, were approved by the supervisor,
                                                                                    and showed the allocation of time to each program.
Composite Average Maturity Rating for Payroll Control Environment                                                                                                                      4.5

Fixed Assets
33     Agency does not maintain adequate Agency maintains appropriate               No fixed asset purchases have made since 7/1/09. As of the                                               WIPFLI audit report            Obtain a listing of all vehicles and equipment procured on behalf of ARRA
       recordkeeping to ensure proper     recordkeeping and tracking of usage       last WIPFLI audit, there was only $138,469 on the books (before                                          Disbursement listing           programs since 7/1/09, including funding source. Inquire how the agency
       segregation of program funding and                                           depr.) for fixed assets. Adequate recordkeeping and tracking                                                                            tracks actual use versus how it is designated for use in a program (e.g.
       use for its vehicles and equipment                                           are in place to ensure proper allocations to the right programs.                                                                        part time or full time use). For those vehicles and equipment purchased
                                                                                    The programs are segregated within SAGE MIP, and all expenses                                                                           with ARRA program funds, inquire if use is only for these program(s).
                                                                                    are appropriately allocated to each fund. The actuals to budget            None                5                                        Inquire how the agency ensures that all procurement and maintenance
                                                                                    variance analysis mentioned above is one method for ensuring                                                                            costs are charged to the appropriate program(s), and if physical inventory
                                                                                    that the charges are accurately booked. In addition, the                                                                                of the equipment is reconciled to financial records.
                                                                                    purchase orders: 1) specify which program the transactions
                                                                                    should be recorded to, and 2) are approved by senior
                                                                                    management.


1fd70617-9f50-4511-8c62-b95e3b0bd7d0.xls                                                                                                                                                                                                                                                           Page 9 of 20
State of Wisconsin - Office of Recovery and Reinvestment
Review of Sub-Recipients Receiving Multiple ARRA Awards
Field Review Program (Tier 1 review)

Agency: NW Wisconsin Concentrated Employment Program (Ashland)
Field Review Dates: 03/01/10 - 03/03/10
                                                                                                                                            Possible Exceptions to
                                                                           Grantee Internal Control Maturity - Field lead to substantiate                            Maturity
Ref                   Risk                     Internal Control Standard                                                                       Internal Control                 Documentation Reviewed   Test Plan
                                                                                from observations, inquiry, and document review                                       Rating
                                                                                                                                                   Standard
Composite Average Maturity Rating for Fixed Assets Control Environment                                                                                                    5.0




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