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Texas Education Agency Division of Federal Fiscal Monitoring Audit Findings and How to Avoid Them October 8, 2014
About the Presenter Roger Hingorani Manager Grant Review Unit Division of Federal Fiscal Monitors Texas Education Agency (512) October 8, 2014Copyright © 2014 by TEA2
Agenda Acronyms Used In This Presentation Division of Federal Fiscal Monitoring Reviews Conducted Common Findings How to Avoid Them Useful links October 8, 2014Copyright © 2014 by TEA3
Acronyms Used In Presentation CFR – Code of Federal Regulations FASRG – Financial Accountability School Resource Guide LEA – Local Education Agency NCLB – No Child Left Behind OMB – Office of Management and Budget PAR – Personnel Activity Report TEA – Texas Education Agency PER-DIEM – Daily Allowance for Expenses October 8, 2014Copyright © 2014 by TEA4
Division of Federal Fiscal Monitoring (FFM) Grant Review Unit (GRU) Conducts monitoring activities including both desk and onsite reviews as part of TEA’s annual risk assessment and investigations for complaints and/or management referrals of the discretionary and formula grants awarded to school districts, charter schools, regional education service centers and non-profit entities. Conducts reviews of annual financial reports for compliance with federal single audit requirements and issues management decisions related to audit findings pertaining to any federal awards passed through the TEA. October 8, 2014Copyright © 2014 by TEA5
Division of Federal Fiscal Monitoring (FFM) Monitoring Review Unit (MRU) Conducts monitoring activities including desk reviews of LEAs as part of the TEA’s annual risk assessment Monitoring for special conditions imposed on discretionary and formula grants awarded to school districts, charter schools, regional education service centers and other entities. October 8, 2014Copyright © 2014 by TEA6
January 28, 2014Copyright © 2014 by TEA7 Is Your School District in Compliance with Grant Requirements?
Division of Federal Fiscal Monitoring (FFM) Grant Review Unit 55 Desk and Onsite Reviews Conducted 41 Reviewed had Findings 27 had Findings with Questioned Costs $165, in Total Questioned Cost $157, in Questioned Cost Resolved through Corrective Actions Taken October 8, 2014Copyright © 2014 by TEA8
Common Findings - Financial Management Systems 1. Internal Controls - Effective Control Lack of Written Policies and Procedures Reporting of Expenditures for Reimbursement Credit Cards Travel Employee Reimbursements Inventory Controls Time and Effort Budgetary Controls Purchasing October 8, 2014Copyright © 2014 by TEA9
Common Findings – Payroll 2. Time and Effort Not adequately maintained or after-the-fact a.Periodic Certifications Prepared in Advance not after the fact Not signed by employee or supervisor b.Personnel Activity Report (PAR) Did not account for 100% of the time compensated Budgeted Hours Reported on PAR October 8, 2014Copyright © 2014 by TEA10
Common Findings – Payroll 2. Time and Effort continued… Not adequately maintained or Not after-the-fact c. Substitute Time and Effort Reporting System Not approved by TEA The employee did not work on a set schedule Semi-Annual Certificate not signed by employee and supervisor October 8, 2014Copyright © 2014 by TEA11
Common Findings – Payroll 3. Lack of Supporting Documentation Signed and Dated Job Descriptions Tutoring / Extra-duty Pay Supplemental Pay Agreement Time Sheets Documentation Demonstrating Highly Qualified Status October 8, 2014Copyright © 2014 by TEA12
Common Findings – Payroll 3. Lack of Supporting Documentation continued… Amounts Recorded in the Payroll Journals does not match with the payroll costs charged to the grant in the General Ledger Payroll costs charged to the incorrect grant period Payroll checks issued in midmonth every month prior to services being performed. Expenditures claimed for reimbursement not recorded in financial records October 8, 2014Copyright © 2014 by TEA13
Common Findings 4. Budgets/Amendments Positions not Approved in the TEA Approved Program Budget Encumbrances not Recorded in the General Ledger. Incorrect Fund Codes Used for Reporting Expenditures October 8, 2014Copyright © 2014 by TEA14
Common Findings 4. Budgets/Amendments – continued… Items Requiring TEA Approval Purchased without Approval(Capital Outlay Items) Cost Incurred from Class Object Codes not Approved in the Program Budget. Budget Amendments-25% Variance/Threshold October 8, 2014Copyright © 2014 by TEA15
Common Findings 5. Required Set Asides Amounts not appropriated/Identified in financial records to match amounts reserved for specific activities such as a Districtwide Parental Involvement or Districtwide Professional Development Activities as reported on Schedule PS-3101 of Consolidated Federal Grant Application October 8, 2014Copyright © 2014 by TEA16
Common Findings – Non-payroll 6. Lack of Source Documentation Third Party Documents such as an invoice/billing statement to support expenditure Lack of Approval from Authorized Personnel Lack of Purchase Order. Gift Cards without additional support October 8, 2014Copyright © 2014 by TEA17
Common Findings – Non-payroll 6. Lack of Source Documentation continued… Incomplete Receipts/Invoices Credit Card Statements without Backup Receipts Lack of Valid Contracts/Agreements for Professional/contracted Services Proof of Attendance: Registration/Certificate of Completion October 8, 2014Copyright © 2014 by TEA18
Common Findings – Non-payroll 7. Unallowable costs Necessary and Reasonable Non-Educational Fieldtrips Not Aligned with Camus/District Improvement Plan Attend out of town training available in city of domicile October 8, 2014Copyright © 2014 by TEA19
Common Findings – Non-payroll 7. Unallowable costs – continued… Travel Lack of Authorization for Travel Full PER-DIEM Claimed without attestation of actual funds expended Use of grant funds to attend training/conference unrelated to the Program. October 8, 2014Copyright © 2014 by TEA20
Common Findings – Non-payroll 7. Unallowable costs continued… Food Costs/Incentives Food for Staff Meetings/Development Full Meals for Parental Involvement Food as Incentives for Student Participation October 8, 2014Copyright © 2014 by TEA21
Common Findings – Non-payroll 8. Allocable Costs Goods / Services at the end of the grant period - Stockpiling of Supplies Cost Allocation Plans for: -Rent/Utilities -Maintenance and Repair Agreements -Other Shared Costs October 8, 2014Copyright © 2014 by TEA22
Common Findings - Other 9. Period of Availability - Pre-Award Costs Charged to the Grant without TEA Approval -Annual Subscriptions/Software Licenses- Outside of the Grant Period 10.Supplement / Supplant a. Curriculum Management Systems / Software b. State Mandated – Required Trainings – Books October 8, 2014Copyright © 2014 by TEA23
Common Findings - Other 11. Shared Service Agreements Lack of shared service agreement with member districts Agreement not clear about roles and responsibilities of fiscal agent and member district Lack of oversight by Fiscal Agent regarding expenditures of grant funds. October 8, 2014Copyright © 2014 by TEA24
Common Findings - Other Shoolwide Program: Consolidation of State, local & Federal Funds 12. Schoolwide Program out of Compliance Lack of Documentation to Demonstrate Needs Assessments School Improvement Plans Missing Key Elements Methodology demonstrating the accounting for expenditures from schoolwide pool at each participating campus Demonstration of supplement not supplant requirements on schoolwide program October 8, 2014Copyright © 2014 by TEA25
Common Findings - Other Shoolwide Program: Consolidation of State, local & Federal Funds Continued… 12. School Improvement Plan missing key elements Ten Required Components Goals, objectives, Targets based on Identified Needs Assessment (Comprehensive Needs Assessment) Listing of specific federal, State and local funds consolidated and amount each fund source contributed to the consolidated pool Demonstration of Intent and purpose of each federal program whose funds were consolidated. October 8, 2014Copyright © 2014 by TEA26
How to Avoid Findings Strong Internal Controls Policies and Procedures (P & Ps) Tone at the Top – Adherence to P & Ps and Compliance Requirements Organizational Structure - Identify reporting/supervisory responsibilities as well as assignment of authority and responsibilities Provide Adequate Training October 8, 2014Copyright © 2014 by TEA27
How to Avoid Findings Compliance with Statutory Requirements Program Statutes Elementary and Secondary Education Act (NCLB) Regulations Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (34 CFR 80 ) OMB Circular A-87 (Cost Principles for State, Local, and Indian Tribal Governments Guidance Non-regulatory Guidance Application Guidance October 8, 2014Copyright © 2014 by TEA28
Useful Website Links Texas Education Agency United States Department of Education Office of Management and Budget Code of Federal Regulations Office of Executive Councils, Chief Financial Officers Council https://cfo.gov/COFAR/ October 8, 2014Copyright © 2014 by TEA29
More Useful Links (TEA) TEA: Substitute System of Time-and-Effort Reporting TEA: Financial Accountability System Resource Guide TEA: Grants Grant Management Resources October 8, 2014Copyright © 2014 by TEA30
Copyright © Notice The materials are copyrighted © and trademarked ™ as the property of the Texas Education Agency (TEA) and may not be reproduced without the express written permission of TEA, except under the following conditions: 1.Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from TEA. 2.Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of TEA. 3.Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way. October 8, 2014Copyright © 2014 by TEA31
Copyright © Notice 4.No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts, Texas Education Service Centers, or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from TEA and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty. For information contact: Office of Copyrights, Trademarks, License Agreements, and Royalties, Texas Education Agency, 1701 N. Congress Ave., Austin, TX ; phone or ; October 8, 2014Copyright © 2014 by TEA32
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