1. 1 Illinois State Board of Education Fiscal Year 2010 State Bilingual Directors Meeting September 30, 2009 – October 1, 2009 Crowne Plaza, Springfield, Illinois

2. 2 Preparing for an External Assurance Compliance Review Presented by: Robert Onyewuchi Principal Consultant Illinois State Board of Education External Assurance Division ronyewuc @ isbe.net (217) 782-7970 Paula Williams Principal Consultant Illinois State Board of Education External Assurance Division pawillia @ isbe.net (217) 782-7970

3. 3 Goals of External Assurance Division ISBEs Authority for Audits & Monitoring Reviews Selection Criteria Claims or Grants for Audits Audit Versus Monitoring Examination Announcement Letters Program Checklist Field Audit & Monitoring Procedures Audit Report & Response Procedures Monitoring Report & Procedures for Finding Resolutions Monitoring Questionnaire – Selected State and Federal Programs Topics of Interest

4. 4 Goal of the External Assurance Division of the ISBE The main goal of the External Assurance Division of the Illinois State Board of Education (ISBE) is to ensure the fiscal and programmatic integrity and compliance of all State and Federal grants and programs administered by the ISBE are in accordance with the applicable State and Federal laws, rules and regulations.

5. 5 State and Federal Legislative References for ISBEs Authority State Grants and Programs: The ISBE is required by Sections 2-3.32 and 2-3.33 of the Illinois School Code (ILCS) to audit and re-compute all claims for State moneys relative to the public school system of Illinois. Federal Grants and Programs: The Education Department General Administrative Regulations (EDGAR) at 34 CFR 80.40 and 34CFR 76.104 stipulated that grantees must monitor grant and subgrant activities to assure compliance with the applicable requirements and to certify that all appropriate procedures for the use of federal funds are in place.

6. 6 Selection of LEAs and other Entities for Audit or Monitoring Review An LEA or entity is selected for audit based on the following established criteria: Risk Assessments Audit or Monitoring Cycle Plan Complexity of the District Dollar Amount of Funding Referral Prior Years Audit or Monitoring Findings Changes in Personnel Other Indicators as may be deemed necessary

7. 7 Types of Claims and Grants to be Audited or Monitored The type and number of claims and grants to be audited or monitored by the External Assurance Division of the ISBE will vary according to the size of the Local Education Agency or Entity based on External Assurance Divisions established selection criteria. These claims and grants will be those filed by individual school districts, special education cooperatives, area vocational centers, regional offices of education, educational service centers, and other bona fide entities who receive educational funding from the ISBE in any given period.

8. 8 Audit versus Monitoring Examination The External Assurance Division conducts both audits and monitoring examinations of State and Federal grants and programs. The audit examinations are focused on State Categorical Programs like General State Aid, Transportation, Special Education Personnel and other State and Federal Grants that the Fiscal Years Activities have been finalized and the books closed. The monitoring examinations are focused primarily on Federal grants within the current year like Title I Low Income Grant, Title II Teacher Quality Grant, Title III (LIPLEPS)and other state and federal grants to earlier ensure that the funds are being spent as intended within the specified programs and activities. Monitoring reviews on State programs occur less frequent. Most reviews of State programs are conducted through audit examinations.

9. 9 Announcement Letter Based on specific criteria such as risk assessments, referrals, audit cycle, complexity of the district, dollar amount of funding, prior years findings, changes in personnel and other indicators, a district may be selected for an audit. Once a district is selected, an Announcement Letter is sent, informing the district of the upcoming audit or monitoring review within the next 45 days. The letter also includes a listing of the programs to be audited and specifies that the assigned auditor will contact the district or LEA to arrange for a mutually acceptable fieldwork audit or monitoring start date.

10. 10 Program Checklist In the Announcement Letter, a reference is made to a checklist of the documents and materials, by program, which need to be made available for review during the audit. The checklist can be obtained from the Illinois State Board of Education website at the following link: http://www.isbe.net/ea/htm/checklist.htm

11. 11 Field Audit and Monitoring Procedures Announcement letter already sent and a mutually acceptable audit date agreed upon by the district and the assigned audit staff. On the audit or monitoring begin date the assigned audit staff conducts an opening conference with the district designated officials. At the opening conference the name/s of the audit team, the listing of the claims to be audited, and the approximate time table for completion of the various audits are conveyed to the district staff including the closing conference requirements. During the opening conference phase the audit team obtains from the district the working arrangements, including LEA office hours. The audit team also obtain from the district a working space designation, availability of records and report and availability of assigned district personnel.

12. 12 Field Audit and Monitoring Procedures Continued… During the fieldwork examination the audit team or assigned auditor will review all grant expenditure reports and re-compute all categorical claims filed with the Illinois State Board of Education in accordance with written audit programs and procedures prepared by the External Assurance Audit Division. Upon completion of fieldwork in the district the assigned audit staff shall conduct a closing conference with the districts superintendent or designated official to inform the district of the audit results pending External Assurance Divisions internal peer review. After the internal peer review is conducted and the audit or monitoring work is approved an audit or monitoring letter will be issued to the district which contains the formal decision with respect to the audit adjustments, questioned costs and audit findings.

13. 13 Audit Report and Response Procedures 1.After the field work audit examination is completed, an audit finding report that includes the audit adjustments if any, enumerating all of the findings, is sent to the sub-recipient. 2.The sub-recipient is not required to respond to the findings that are noted in the audit report. 3.The audit adjustments that are indicated in the audit report will be reflected in the sub-recipients future claims. In cases of large negative audit adjustments an arrangement may be made with ISBE to spread the audit adjustment to the districts future claims over multiple years if the district met the criteria set.

14. 14 Monitoring Report and Procedures for Resolution of Findings 1.After the field work monitoring examination is completed, a monitoring finding report, enumerating all of the findings, is sent to the sub-recipient. The sub- recipient is then required to respond to the findings and the recommended corrective actions within 30 days of receipt of the report. 2.After 30 days – unless an extension has been requested and given, the sub-recipient will receive a telephone call and a past due letter indicating that they have not responded within the 30 day timeline and are then given a specific date to respond.

15. 15 3.After 15 days – unless an extension is given, the sub- recipient will receive an additional reminder with a specific date to respond. 4.Incomplete response – when a sub-recipient response is not adequate, lacks documentary evidence to demonstrate corrective action, or does not include a response to each finding, a verbal communication via telephone and/or written correspondence with specific details related to the response is provided with a specific date to respond. Monitoring Report and Procedures for Resolution of Findings Cont…

16. 16 5.Final Reminder – when a sub-recipient has not responded via written correspondence, a final reminder is sent indicating that failure to respond within a specific timeline will result in the freezing of funds. 6.Final Closing Letter – after an acceptable response is received and any specific funds are returned, a final monitoring closing letter is sent to the sub-recipient. Sub-recipient responses are scanned into the External Assurance shared drive for review and/or assistance during the next on-site monitoring visit to ensure that the noted deficiencies have been resolved. Monitoring Report and Procedures for Resolution of Findings Continued…

17. State and Federal Monitoring Questionnaire – a Summary 17

18. State and Federal Monitoring Questionnaire – a Summary 18

19. State and Federal Monitoring Questionnaire – a Summary

20. 20 References and Helpful Links United States Department of Education: http://ed.gov Office of Management and Budget (OMB) Circular A-87: http://www.whitehouse.gov/omb/circulars/a087/a87_2004.html#atta Illinois School Code: http://www.isbe.net/schoolcode State and Federal Grant Administration Policy and Fiscal Requirements and Procedures: http://www.isbe.net/funding/pdf/fiscal_procedure_handbk.pdf Education Department General Administrative Regulations (EDGAR) http://ed.gov/policy/fund/reg/edgarReg/edgar.html

21. 21 Question and Answer