1. 1. oig audit 2. a-133 audit 3. federal monitoring 4. state (pass through) monitoring 2
TRANSCRIPT
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1. OIG Audit2. A-133 Audit3. Federal Monitoring4. State (Pass Through) Monitoring
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What types of audit violations are deemed “significant” by the U.S. Education Department?
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1. Time Distribution2. MOE3. Supplement, not supplant4. Over-Allocating5. Unallowable Expenses
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6. Illegal Procurement Practices7. Serving Ineligible Students8. Lack of Accountability for
Equipment/Materials9. Obligations Beyond Period of
Availability10.Matching Violations
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11.Excess Cost12.Lack of Appropriate Record Keeping 13.Record Retention Problems14.Late or no Submission of Required
Reports15.Allocations Improperly Approved
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16.Audits of Subrecipient Unresolved17.Lack of Subrecipient Monitoring18.Drawdown before they are needed or
more than 90 days after the end of funding period
19.Large Carryover Balances20.Discrepancies in Reports Filed
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21.Errors in Student Per Pupil Expenditures
22.Title I Comparability23.Lack of valid, reliable or complete
performance data
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1) Matching - “The Valencia Story”2) MOE – Oklahoma3) Supplanting/Time and Effort – New York
State
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• A 12 year nightmare
• Be careful what guidance you rely on
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• Beginning in 1999 Valencia received 7
Gear-up Awards
• Gear-up statute required a 50% match
• The official OPE application package listed “facilities” as an example of “match”
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“The value assigned to in-kind contribution in non federal match may not exceed the fair market
value of the property”
OPE Gear Up Packet
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February 2001-
OPE site visit facilities could not be used for match if “depreciation” or “use allowance” included in college’s indirect cost pool.
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VCC College did not include depreciation or use allowance in its indirect cost pool
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• OIG conducted audit to review VCC in-kind match documentation.
• Issue: Did VCC include depreciation or use allowance in indirect cost pool no
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2nd OIG visit October 2001› OIG – use of facilities violated non-supplant
provision, because existing facilities could never be used as a match
November 2001 – OIG informs VCC of no intent to pursue supplanting violation, but will return to VCC for 3rd visit.
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• Meeting in D.C. with VCC, OIG (Rich Rasa), OCFO (Ted Mueller)
• Discussion Points1. Professionalism of auditors 2. Site selection3. Calculation of match for 3rd visit
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• Methodology on match calculation – flawed
• Must be depreciation or use allowance, not fair market value
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• Refund $1,822,864 for match violation
• Final audit report May 2003
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1st PDL› Did not sustain audit findings› Does VCC have additional matching
contributions
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Between 2003-2010, VCC submitted data on additional match scholarships.
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Final PDL› VCC must refund $289,966
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VCC did not appeal What about statute of limitations? Five
years!
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Mitigating circumstances› 34 CFR 81.33 (page 135)
“unjust to compel recovery of funds because the recipient’s violation was caused by erroneous written guidance from the department.”
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ED’s Authority to Compromise Claims Against Grantees
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Assistant Secretary (OSERs) issued PDL to recover $583,943 of IDEA-Part B from Oklahoma based on Single Audit
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PDL identified 76 LEAs that violated maintenance of effort
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Oklahoma and ED jointly stayed the briefing before OALJ to pursue settlement
Based on additional documentation, amount reduced to $289,501
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Then ED compromised claim to $217,126 or 75%
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Oklahoma had taken: Corrective action Not practical or in public interest for ED
to continue the litigation See 76 F.R. 5363, 1/31/11
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Supplanting / Time and EffortNew York / Kiryas Joel
ACN 02K00032/2/11
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One public school, serving 123 students, all special needs
6,000 students in KJ attend private school
Receives $5,044,791 in Title I $772,842 in IDEA
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$276,443 in Title I funds used to pay part of the lease on the one public school building. KJ did not incur any additional lease costs as a result of providing Title I services.
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KJ could not provide adequate supporting documentation for $191,124 in salary expenditures for Title I.
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For Time and Effort violations resort to reconstruction (e.g. affidavits).
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1. Settlement – resolve questioned costs by mutual agreement 81.14 (page 132)
2. Voluntary Mediation – 81.13 (page 132)3. CAROI – relies on alternative and
creative approaches in resolving findings, but non-adversarial
4. Appeal before OALJ – Burden of proof on Auditee
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