AMERICORPS STATE AND NATIONAL SYMPOSIUM SEPTEMBER 12 14
AMERICORPS STATE AND NATIONAL SYMPOSIUM SEPTEMBER 12 – 14, 2017 ARLINGTON, VA
AMERICORPS STATE AND NATIONAL SYMPOSIUM SEPTEMBER 12 -14, 2017 ARLINGTON, VA Preparing for an Audit OIG and Single Audits
AUDITS MAKE YOUR ORGANIZATION BETTER • Process Improvement • Stronger Business Systems • Identification of Risks • Better Long-Term Results AMERICORPS STATE AND NATIONAL SYMPOSIUM
TYPES OF AUDITS OIG Audits Single Audits • Organizations are selected for audit by the Office of the Inspector General (OIG). Each fiscal year the OIG posts an annual audit plan to its website. • Required for any non. Federal entity that expends $750, 000+ in Federal funds during the entity’s fiscal year (2 CFR § 200. 501)
HOW THE OIG SELECTS AUDITEES • • Input from CNCS Issues Identified During Monitoring History of Prior CNCS OIG Audits OIG Risk Assessment OIG Hotline Tips OIG Experience/Interactions Single Audit Report Results
PREPARING FOR AN AUDIT Questions to ask prior to an audit: q Who will be engaged in audit process? q What is each individual’s role? q How will we coordinate with subrecipients, if applicable? q How will we document the audit process?
PREPARING FOR AN AUDIT Things to review prior to an audit: q Policies & procedures q Criminal history checks (NSCHC) q Member files q Match documentation q Timesheets q Monitoring tools/protocols
CARE AND FEEDING OF AUDITORS • Apply the platinum rule to your interactions. • Ensure the auditors have a comfortable, well-lit place to work from. • Maintain an open door and be flexible with your schedule.
CARE AND FEEDING OF AUDITORS • Communication is key to a positive audit experience. • Ask questions to ensure that you are clear on the process, auditor requests and expectations. • Auditors will often communicate concerns as they arise (in writing and/or verbally).
FINDINGS AND RECOMMENDATIONS Elements of a finding: • Criteria: What should the grantee be doing? • Condition: What is happening? • Cause: Why is this condition happening? • Effect: What is the impact of this condition? • Recommendation: What should be done to resolve the issue?
EXAMPLE OF A SINGLE AUDIT FINDING Audit Finding 2016 -001 – Written policies and procedures that conform to the Office of Management and Budget's (OMB) Uniform Guidance Criteria or specific requirement: The Office of Management and Budget's (OMB) uniform guidance requires nonfederal entities to have certain written policies and procedures surrounding the management of their federal award funding. 2 CFR § 200. 303. Condition: The Organization has written policies and procedures but has not made updates to implement the OMB's uniform guidance. Questioned costs: None identified. Context: This finding impacts the internal control for the accounting of federal funds.
EXAMPLE OF A SINGLE AUDIT FINDING Audit Finding 2016 -001 – Written policies and procedures that conform to the Office of Management and Budget's (OMB) Uniform Guidance Effect: Out-of-date written policies and procedures reduces the effectiveness of an organization’s internal controls and increases the likelihood of funds being misused. Cause: Management has not formally updated the policies and procedures to reflect the uniform guidance requirements. Recommendation: We recommend as part of reviewing the Organization's internal control environment, consider performing the following assessment: First, identify the policies and procedures the OMB has indicated are required to be written. Second, examine existing policies and procedures to determine where updates and changes are necessary. Third, consider whether new policies and procedures may be needed.
FINDINGS NEEDING FOLLOW UP Findings serious enough to impact the auditees ability to manage federal awards, such as: • A qualified or adverse opinion • A going concern, and/or • Material weaknesses
DETERMINING IMPACT ON AWARDS Findings that have an impact to CNCS awards include: • Findings directly related to a project funded by CNCS awards • Cross cutting findings that impact an entity’s ability to manage the CNCS awards, including, but not limited to: ØFinancial reporting ØCash management ØTracking of expenditures
RESOLUTION OF SINGLE AUDITS Single Audit conducted CNCS documents management decision in e. Grants Auditee begins corrective action CNCS determines what resolution is necessary Grantee provides documentation of the corrective actions CNCS conducts follow-up on completed corrective actions Direct Grantees
DIRECT GRANTEES’ RESPONSIBILITIES Single Audit Firm • • Conducts single audit for grantee who expends $750, 000 of federal funds during the grantee’s previous fiscal year Reports current status of recommendations made in previous single audits (if applicable) Auditee • Provides auditors with access to systems and documentation • Completes corrective action based on the finding recommendations • Transmits the single audit reporting packages to the Federal Audit Clearinghouse the earlier of 30 calendar days after receipt of the auditor's report(s) or nine months after the end of the audit period. CNCS Audit Resolution • Follows up on the status of corrective action for finding for single audits of grantees for which we have cognizance. • Issues a management decision regarding the resolution of findings in the grantee’s single audit for findings related to CNCS awards and cross cutting findings.
RESOLUTION OF SINGLE AUDITS Pass-Through Entities Single Audit conducted Pass-through sends management decision to CNCS Audit Resolution, GO & PO Pass-through Grantee Conducts resolution Subgrantee begins corrective action CNCS Determines what resolution is necessary and sends to pass-through grantee
RESPONSIBILITIES OF PASS THROUGHS • Follow-up with subgrantee regarding completion of corrective actions to address findings; those related to CNCS funding and cross-cutting findings that could impact the award. (CFR § 200. 331) Draft Management Decision • Issue a management decision within 6 months of the audit being accepted into the Federal Audit Clearinghouse (2 CFR § 200. 521)
MANAGEMENT DECISION ELEMENTS 1. Whether or not the audit finding is sustained. Make sure to include the finding reference numbers. (2 CFR § 200. 521) 2. The reasons for the decision, and the expected auditee action to repay disallowed costs or take other corrective actions. 3. A timetable for follow-up should be given if the auditee has not completed corrective action. 4. The appeal process, for any disallowed costs, available to the auditee. Draft Management Decision
SINGLE AUDIT BEST PRACTICES ü Ask questions and maintain open communication with the subgrantee and CNCS. ü Retain a copy of documentation provided by subgrantee related to corrective actions. ü Have a positive attitude and use the review of subgrantees’ audits as an opportunity to strengthen the capacity of your subgrantees.
RESOLUTION OF OIG AUDITS Phases of an OIG audit (pre-report): Audit Engagement Begins/ Entrance Conference OIG/Auditor Information Gathering Audit Fieldwork Exit Conference Draft Report CNCS/Auditee Response to Draft Report Draft Management Decision
RESOLUTION OF OIG AUDITS Who is responsible for what? Auditor/OIG • • Sends audit notification • letter Conducts field work at grantee site • Conducts entrance/exit conference Issues a draft report and reviews CNCS and • auditee responses Auditee Provides auditors with access to systems and documentation Invites appropriate parties to the entrance/exit conferences Responds to the OIG’s draft report CNCS Grants & Program Officer CNCS Audit Resolution • • Issues a letter explaining the audit and resolution processes Is available to answer questions about the audit process Participates in entrance and exit conference Responds to the OIG’s draft report • • Attends entrance and exit conference Responds to questions and provides clarification regarding program and financial grant requirements
RESOLUTION OF OIG AUDITS Phases of an OIG audit (post-report): Issuance of Final Audit Report Auditee Development of Corrective Action Plan CNCS Review of Corrective Action Plan and Supporting Documentation CNCS Issuance of Management Decision Auditee Implementation of Corrective Action Plan CNCS Issuance of Notice of Final Action Draft Management Decision
RESOLUTION OF OIG AUDITS Who is responsible for what? Auditor/OIG • • Issues the final audit report Reviews CNCS’s management decision Auditee • • Develops and implements a corrective action plan Provides CNCS supporting documentation needed to resolve findings CNCS Grants & Program Officer CNCS Audit Resolution • • • Reviews auditee corrective action plan and auditor work papers Issues a management decision and collection letter for disallowed costs Confirms all corrective actions are complete and issues a Notice of Final Action • • Assists audit resolution staff, as needed, in ensuring that corrective action taken is adequate Responds to questions and provides clarification regarding program and financial grant requirements
RESOLUTION OF OIG AUDITS Developing a “SMART” Corrective Action Plan • Specific: What detailed action is being taken? • Measurable: How can the action outcome be measured? • Attainable: What steps will you take to complete the action? • Realistic: What results can realistically be achieved? • Timely: When can the result(s) be achieved?
RESOLUTION OF OIG AUDITS Example of a “SMART” Corrective Action Plan • • • Specific: The Commission is updating its monitoring tool to include a requirement to check service agreements for member signatures and dates. Additionally, the Commission will emphasize the need for all members agreements to be signed and dated in its annual training of subsites. Measurable: The Commission will reduce the number of unsigned agreements to a nominal level through monitoring and training. Attainable: The Commission will review monitoring processes and training resources from other Commissions. Commission Program Officers will be responsible for implementing the monitoring and training. Realistic: The subsite will implement a checklist that will be attached to every member file outlining the file requirements. Timely: The monitoring tool will be updated by October 2017, and will be used for all FY 2018 site visits. Annual training will take place in November 2017.
RESOLUTION OF OIG AUDITS How will I know that resolution is complete? • CNCS has the responsibility to accept/reject the auditor’s recommendations and auditee’s corrective action plan. • The audit will remain open until all corrective actions are complete (no later than one year from the issuance of the audit report). • CNCS closes the audit by issuing the Notice of Final Action to the OIG
OIG RESOLUTION BEST PRACTICES ü Engage all involved parties early in the process. ü Ask questions and maintain open communication with the auditor and CNCS. ü Retain a copy of all documentation provided to the auditor. ü Begin corrective action as issues are identified. Don’t wait for the final report! ü Have a positive attitude and use the audit as an opportunity to strengthen your organization.
RESOURCES CNCS OIG website: https: //www. cncsoig. gov/ AICPA resources: http: //www. aicpa. org/Interest. Areas/Governmental. Audit. Quality/ Resources/Single. Audit/Pages/default. aspx Federal Audit Clearinghouse: https: //harvester. census. gov/facweb/ Audit Resolution resources on the Symposium flash drive: • Phases of the OIG audit process • Pre-Audit Checklist for OIG Audits • Single Audit Resolution for Pass Through Entities
Questions? Contact Audit. Resolution@cns. gov AMERICORPS STATE AND NATIONAL SYMPOSIUM
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