1. State Auditor’s Office March 10, 2010 Brad White, CPA Single Audit Coordinator

2. Define the scope of the A-133 single audit. Discuss what the auditor looks for and why. Discuss how your audit will be impacted by ARRA (Recovery Act). 2 Presentation Objectives

3. Who Needs A Single Audit? OMB Circular A-133 requires all grantees that expend over $500,000 in federal awards in a year to have a “single audit”. Which entities does this impact? The State of Washington - all state agencies and colleges/universities are combined into one “auditee”. Any local government that expends over $500,000 in federal awards in a year. Any not-for-profit that expends over $500,000 in federal awards in a year.

4. What is the Scope of a Circular A-133 Audit? Federal Awards Financial Statements Account- ability State Laws Performance Audit Citizen Hotline Whistle- Blower Fraud A-133

5. Who Uses the A-133 Single Audit Report? Federal Agencies The Public State Agencies that pass money to subrecipients

6. American Recovery and Reinvestment Act (ARRA) On Feb. 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009. The Recovery Act has three immediate goals: Create new jobs as well as save existing ones. Spur economic activity and invest in long-term economic growth. Foster unprecedented levels of accountability and transparency in government spending.

7. American Recovery and Reinvestment Act (ARRA)

10. American Recovery and Reinvestment Act (ARRA) – Recovery.Gov Washington State as of September 30, 2009: No. Amount ReceivedJobs Contracts271$229 million1,433 Grants1,450$1.1 billion33,053

11. American Recovery and Reinvestment Act (ARRA) – Recovery.Gov Washington State as of December 31, 2009: No. Amount ReceivedJobs Contracts504$3.9 billion1,600 Grants1,681$3.8 billion12,803

12. How will ARRA affect your audit? Although the goal of the Recovery Act was to disburse funds quickly to stimulate the economy, the Recovery Act did not relax any compliance requirements. The federal government is calling for increased auditor scrutiny on internal controls over Recovery Act funds.

13. ARRA - Audit Planning Your auditor will select certain federal programs to audit based on the program’s dollar amount and the risk of noncompliance in relation to other programs. ARRA-funded programs are considered inherently risky by the federal government and will likely be selected for audit in place of non-ARRA programs.

14. ARRA - Schedule of Expenditure of Federal Awards The OMB has stated that all expenditures funded by ARRA must be listed in a separate row in the SEFA and the title of the award should begin with the prefix “ARRA”. (2 CFR 176.210)

15. Typical Compliance Areas Cash Management Davis-Bacon Act Eligibility Equipment Mgt. Matching Level of Effort Earmarking Period of Availability Procurement Program Income Real Property Acquisition Reporting Changes in Project Scope and Budget Suspension and Debarment Cost Principles

16. What Does the Auditor Look For During a Single Audit? Deficiencies in internal controls over federal programs. Noncompliance with federal laws and regulations. Questioned Costs greater than $10,000, including: ▶ Unallowable costs ▶ Undocumented costs ▶ Unapproved costs ▶ Unreasonable costs

17. Three new “Special Provisions” were added to the auditor’s checklist for audits of FY2009 and FY2010: 1.Separate accounting for ARRA funds. 2.Proper presentation of ARRA funds on the Schedule of Expenditures of Federal Awards (SEFA). 3.Communicating ARRA requirements to subrecipients. ARRA – Special Tests and Provisions

18. Circular A-102 Common Rule, Section.20 Grantees must have a financial management system capable of: Preparing accurate and complete financial reports in accordance with the grant requirements. Maintaining records to substantiate amounts received, obligated, and expended from ARRA funds (note: you should be able to do this for any federal grant – not just ARRA grants). Tracking Your ARRA Grants

19. The following compliance areas have been emphasized by the Inspector General and OMB for ARRA grants: Using ARRA funds for allowable costs. Circular A-87 cost principles. Cash management. Reporting of grant information timely and accurately (e.g., Section 1512 reports). ARRA Priority Requirements 19

20. Other notable compliance areas in the Recovery Act: Procurement of goods and services with free and open competition, (including “Buy American” when applicable). Using federal funds to supplement and not supplant local funds (this could be waived for some grants). Davis Bacon Act prevailing wages. ARRA Priority Requirements 20

21. Subrecipient Monitoring Be sure to inform your subrecipients about: The allowable uses of ARRA grant funds. The CFDA number for their award. Reporting their ARRA expenditures on their annual Schedule of Expenditures of Federal Awards (SEFA). Registering with the Central Contractor Registration so their ARRA grant data can be submitted to: FederalReporting.gov ARRA Priority Requirements 21

22. Did you know?  No Recovery Act funds may be used for an casino, aquarium, zoo, golf course, or swimming pool. (Section 1604 of ARRA) ARRA – Unallowable Costs

23. Grantees cannot use their ARRA funds for the construction, alteration, maintenance, or repair of a public building or work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States. ARRA provides for waiver of these requirements under specified circumstances. ARRA – Buy American

24. Unless waived by a federal agency, a grantee must include the “Buy American” requirement in all contracts for construction, alteration, maintenance, or repair of a public building or public work. ARRA – Buy American

25. Federal prevailing wages apply to “construction” projects funded by ARRA. Grantees must include this provision in the terms and conditions of its contracts with the vendor. ARRA – Davis Bacon Act

26. Recipients of ARRA funds must comply with a new quarterly reporting requirement called “Section 1512”. Information being reported each quarter includes: ARRA funds spent, jobs created and retained, and amounts paid to vendors and subrecipients. If you are a “prime recipient” of ARRA funds, you must register with FederalReporting.gov. ARRA – Section 1512 Reporting

27. The End Any final questions?

28. Auditor’s Office Contacts Brian Sonntag, CGFM State Auditor (360) 902-0360 sonntagb@sao.wa.gov Brad White, CPA Single Audit Coordinator whiteb@sao.wa.gov