1. 1 AUDIT AND AUDIT RESOLUTION Peg Rosenberry, Director of Grants Management Claire Moreno, Audit Liaison, Office of Grants Management 9/18/2009 AMERICORPS GRANTEE MEETING

2. 2 Objectives Familiarize grantees with the OIG audit Process Familiarize grantees with the OIG audit Process Understand OMB A-133 Audits Understand OMB A-133 Audits Understand Compliance and Internal Control Findings Understand Compliance and Internal Control Findings Identify what to gather to prepare for an OIG audit Identify what to gather to prepare for an OIG audit Learn how to develop a corrective action plan Learn how to develop a corrective action plan Review common OIG audit findings Review common OIG audit findings Help minimize audit findings and questioned costs Help minimize audit findings and questioned costs

3. 3 Inspector General Audits IG audits and procedures are Corporation- specific IG audits and procedures are Corporation- specific They confirm compliance with CNCS regulations, grant terms and conditions and program requirements as well as the OMB Circulars and other requirements for federal assistance They confirm compliance with CNCS regulations, grant terms and conditions and program requirements as well as the OMB Circulars and other requirements for federal assistance Are usually Agreed-Upon Procedures, not audits Are usually Agreed-Upon Procedures, not audits They are performed by independent accounting firms on contract to the OIG They are performed by independent accounting firms on contract to the OIG

4. 4 A-133 Audits A-133 audits include both the entitys financial statements and review of federal awards A-133 audits include both the entitys financial statements and review of federal awards Include specific compliance components for managing federal grants Include specific compliance components for managing federal grants Provide guidance to your audit firm on what to test in your federal grants Provide guidance to your audit firm on what to test in your federal grants Are required if you expend more than $500,000 in federal funds in a fiscal year Are required if you expend more than $500,000 in federal funds in a fiscal year

5. 5 A-133 Audits will: Express an opinion on whether your financial statements are presented fairly and conform with good accounting practices Express an opinion on whether your financial statements are presented fairly and conform with good accounting practices Identify reportable conditions and material weaknesses Identify reportable conditions and material weaknesses Include a schedule of federal expenditures Include a schedule of federal expenditures

6. 6 OIG and A-133 Audits Check: If you have effective accounting procedures in place If you have effective accounting procedures in place If you maintain appropriate documentation to support all expenditures of the organization If you maintain appropriate documentation to support all expenditures of the organization If you have written policies and procedures in place to comply with all requirements If you have written policies and procedures in place to comply with all requirements If you maintain a good control environment If you maintain a good control environment

7. 7 Components of an OIG Audit Review of written policies and procedures for financial management Review of written policies and procedures for financial management Review of internal control policies and procedures Review of internal control policies and procedures Reconciliation of your general ledger to your federal financial reports Reconciliation of your general ledger to your federal financial reports Sampling of costs to ensure supporting documentation is maintained Sampling of costs to ensure supporting documentation is maintained Sampling of volunteer/participant files to ensure compliance with CNCS regulations Sampling of volunteer/participant files to ensure compliance with CNCS regulations

8. 8 Steps in OIG Process Notification letter Notification letter Entrance conference Entrance conference Survey phase Survey phase Field work Field work Exit conference Exit conference Draft report Draft report Response to draft Response to draft Final report Final report Audit resolution Audit resolution

9. 9 What is an OIG Compliance Review? Procedures to ensure grantees are complying with all CNCS and federal grants management requirements contained in: Procedures to ensure grantees are complying with all CNCS and federal grants management requirements contained in: Grant provisions Grant provisions CNCS regulations CNCS regulations OMB Circulars OMB Circulars

10. 10 What are Internal Controls? A system of good business practices relying on checks and balances to protect the organization A system of good business practices relying on checks and balances to protect the organization Procedures designed to provide reasonable assurance that an organization: Procedures designed to provide reasonable assurance that an organization: Protects resources against waste, fraud and inefficienciesProtects resources against waste, fraud and inefficiencies Has accurate and reliable financial and operating dataHas accurate and reliable financial and operating data Complies with its own organizational policiesComplies with its own organizational policies Complies with all required laws and regulationsComplies with all required laws and regulations

11. 11 Why have Internal Controls? Improve accountability to customers (federal government, CNCS, trustees, etc.) Improve accountability to customers (federal government, CNCS, trustees, etc.) Help organization achieve performance and budget targets Help organization achieve performance and budget targets Improve reliability of financial reporting Improve reliability of financial reporting Improve compliance with laws, regulations Improve compliance with laws, regulations Prevent loss of resources and public assets Prevent loss of resources and public assets Prevent loss of public trust Prevent loss of public trust

12. 12 Sample Policies and Procedures for Good Controls Authorization of Transactions Authorization of Transactions Cash Receipts Procedures Cash Receipts Procedures Payroll Procedures Payroll Procedures Records Retention Records Retention Segregation of Duties Segregation of Duties Budgeting Budgeting Financial Reporting Financial Reporting Travel Regulations Travel Regulations Personnel Policies Personnel Policies

13. 13 What are questioned costs? Auditors will question costs if the accounting records cant be traced back to appropriate supporting documentation that: Auditors will question costs if the accounting records cant be traced back to appropriate supporting documentation that: Demonstrates the expenditure was allowable and allocable to a grantDemonstrates the expenditure was allowable and allocable to a grant Shows an equitable basis of cost allocationShows an equitable basis of cost allocation Includes a specific dated invoice or receipt that identifies the specific costIncludes a specific dated invoice or receipt that identifies the specific cost Demonstrates the expenditure was properly authorizedDemonstrates the expenditure was properly authorized

14. 14 Preparing for an OIG Audit Start when you receive a Corporation grant Start when you receive a Corporation grant Review all requirements and develop written policies and procedures to comply with them. Handbooks are very useful Review all requirements and develop written policies and procedures to comply with them. Handbooks are very useful If you have subgrantees, train them on all grant requirements and establish a robust monitoring process to ensure they have systems in place to comply with all grant provisions and regulations If you have subgrantees, train them on all grant requirements and establish a robust monitoring process to ensure they have systems in place to comply with all grant provisions and regulations

15. 15 When you receive notification from the OIG Determine what years the audit will cover Determine what years the audit will cover Pull files from storage if you have already archived them for the years to be audited Pull files from storage if you have already archived them for the years to be audited Alert your subgrantees Alert your subgrantees Gather your policies and procedures Gather your policies and procedures Ensure your FFRs are reconciled to your financial records Ensure your FFRs are reconciled to your financial records

16. 16 During the Audit Be available to the auditors to answer questions, provide documentation Be available to the auditors to answer questions, provide documentation Contact the Corporation for policy clarification, if needed Contact the Corporation for policy clarification, if needed If you have subgrantees, attend the entrance and exit conferences at each subgrantee audited If you have subgrantees, attend the entrance and exit conferences at each subgrantee audited

17. 17 After the Audit Respond to all of the audit findings and recommendations Respond to all of the audit findings and recommendations Develop a corrective action plan to address the findings Develop a corrective action plan to address the findings

18. 18 What is a corrective action plan? Comprehensive documentation that describes what you have already done and what you will do to resolve the finding and address the recommendations Comprehensive documentation that describes what you have already done and what you will do to resolve the finding and address the recommendations It must include a timeline for completing all appropriate action It must include a timeline for completing all appropriate action

19. 19 What is a management decision? The Corporations response to the audit and your corrective action plan The Corporations response to the audit and your corrective action plan A document that resolves the questioned costs and determines whether or not they will be allowed or disallowed A document that resolves the questioned costs and determines whether or not they will be allowed or disallowed A document that describes what the organization has done or still needs to do to address the audit findings A document that describes what the organization has done or still needs to do to address the audit findings

20. 20 Common OIG Audit Findings Staff and/or volunteers do not maintain proper timesheets Staff and/or volunteers do not maintain proper timesheets The general ledger does not reconcile to the Federal Financial Report The general ledger does not reconcile to the Federal Financial Report Costs incurred outside of the budget period are charged to the grant. Costs incurred outside of the budget period are charged to the grant. Matching costs are not supported Matching costs are not supported

21. 21 More Common OIG Audit Findings Grantees charge staff time to the grant based on budgeted time, not actual time Grantees charge staff time to the grant based on budgeted time, not actual time Background checks are not completed or the documentation is missing Background checks are not completed or the documentation is missing Senior Corps and AmeriCorps volunteer eligibility requirements are not met Senior Corps and AmeriCorps volunteer eligibility requirements are not met

22. 22 Exercise Identifying the Consequences and Corrective Actions of Specific Audit Findings

23. 23 Questions?