single audits presented by: the division of internal evaluation and assessment (diea), assistant...
TRANSCRIPT
SINGLE AUDITS
Presented by: The Division of Internal Evaluation and Assessment (DIEA), Assistant Secretary – Indian AffairsAlaska Providers Conference December 1st – 4th, 2015
Presentation Outline
Responsibilities of ALO/Auditee Audit Requirements Standards for Tribal Management Systems Best Practices for Tribal Accounting Advanced Federal Funds Common Audit Findings Corrective Action Plans Finding Resolution and Closure
Responsibilities of ALO/Auditee
Audit Liaison Officer (ALO)Division of Internal Evaluation and Assessment (DIEA)
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Authority: Indian Affairs Manual (5 IAM 2)
1. Serves as the liaison office between Bureau of Indian Affairs (BIA), Bureau of Indian Education (BIE), and Office of Self-Governance (OSG) and the Departments’ Office of Financial Management and Office of Inspector General.
2. Provides required reports to designated Departmental officials on the status of unresolved audits and audit-related debt;
Audit Liaison Officer (ALO) (contd.)
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3. Reviews all single audit reports submitted to the IA and assigns those reports to the applicable Awarding Indian Affairs Official for resolution actions;
4. Tracks compliance with the requirements that a management decision must be rendered within180 days of the FAC Completed Date and that a decision on questioned costs is made within 365-days.
Audit Liaison Officer (ALO)(contd.)
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5. Provides technical assistance to recipients, awarding officials and other IA employees upon request;
6. Provides notification to awarding officials when recipients have failed to submit single audits; and
7. Establishes and maintains an automated tracking system to provide management information on the status of single audits.
8. Notifies Indian Affairs’ Offices of crosscutting (findings affecting multiple Offices) findings and coordinate the resolution efforts on those findings.
Responsibilities of the Tribe/Auditee
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Authority: 2 CFR Part 200
Identify and account for Federal awards
Maintain internal controls over Federal awards
Comply with requirements relating to awards
Prepare Required Financial Statements, etc.
Ensure that the audit required is properly performed and submitted when due to: Federal Audit Clearinghouse Division of Internal Evaluation and Assessment
(DIEA)
Tribe/Auditee’s Responsibilities (Contd.)
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Ensure that All 2 CFR Part 200 requirements are met
Follow-up and take corrective action on audit findings
Prepare summary schedule of prior year audit findings and corrective action plan
Submit Financial Status Reports (SF425) on time
Audit Requirements
Audit Requirements
P.L. 93-638, as amended - Indian Self-Determination and Education Assistance Act Submission to Secretary Investment of Advanced Funds
P.L. 104-156 - Single Audit Act of 1984 (1996 Amendment) Raised threshold to $300,000 Same as P.L. 93-638
Audit Requirements (continued) 25 CFR 900 - Contracts under the Indian
Self-Determination and Education Assistance Act Standards for Tribal Financial Systems
43 CFR Part 12 - Administrative and Audit Requirements and Cost Principles for Department of the Interior Programs This part prescribes administrative requirements
and cost principles for grants and cooperative agreements entered into by the Department.
Audit Requirements
OMB Circular A-133 - Audits of State, Local Governments, and Non-Profit Organizations
New Uniform Guidance Effective December 26, 2014 2 CFR 200 – Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards
Websites
2CFR (Uniform Guidance) http://
www.ecfr.gov/cgi-bin/text-idx?node=2:1.1.2.2.1
§200.110 Effective/applicability date Other References
Single Audit Act Amendments of 1996 (P.L. 104-156)
Single Audit Act of 1984 (P.L. 98-502) www.cfda.gov Federal Audit Clearinghouse
Comparison Chart for A-133 and 2CFR
www.whitehouse.gov/sites/default/files/omb/financial/grant_reform/audit-requirements-text-comparison.pdf
Audit Requirements
Tribal entities that expend over $500,000 in total Federal awards in a fiscal year are required to submit a Single Audit reporting package to Indian Affairs and the Federal Audit Clearinghouse within the earlier of 30 days after receipt of the audit report or 9 months after the end of the fiscal year.
The $500,000 threshold will be raised to $750,000 for Tribal fiscal years beginning after December 26, 2014 under 2 CFR 200.
Audit Requirements
Tribal Fiscal Year Audit Delinquent After7/1/2014 – 6/30/2015 3/30/2016
(mainly schools)
*1/1/2015 – 12/31/20159/30/2016
7/1/2015 – 6/30/2016 3/31/2017
10/1/2015 – 9/30/2016 6/30/2017
What is Included in a Single Audit Report
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Auditor’s Opinion Over the General Financial Statements and Schedule of Expenditures of Federal Awards
Financial Statements and Footnotes Schedule of Expenditures of Federal Awards and Footnotes Internal Control Reports Compliance Reports Summary Schedule of Prior Year Audit Findings Schedule of Current Year Audit Findings & Questioned
Costs Corrective Action Plan
What happens if audit report is not submitted on time?
Sanctions for not Submitting Single Audit Report
Sanction Levels
Level 1 Tribe is limited to monthly advance payments of all contract funds, including contract support funds.
Level 2 If the Tribe fails to file all of its required reports by the close of its following fiscal year, the awarding official will continue monthly advance payments of all contract funds but will withhold all contract support payments until the Tribe is current with its single audit report submissions.
Level 3 If the Tribe fails to submit its required reports by the end of the year in which Level 2 sanctions were imposed, the awarding official will initiate non-emergency re-assumption of the contracted programs.
Submission of the Single Audit Report
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Authority: P.L. 100-297 Section 2505 (b) & P. L. 93-638 Section 450c(F) 2 CFR Part 200
Send a copy (electronically if possible) of the Single Audit Report to : (must also be submitted to Federal Audit Clearinghouse)
Office of the Secretary-Indian AffairsDivision of Internal Evaluation and Assessment (DIEA)12220 Sunrise Valley DriveReston, VA. 20191(Includes express mail)Email: [email protected]
Single Audit Report Submission Under 2 CFR Part 200
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Authority 2 CFR Part 200
The audit shall be completed and the data collection form described in paragraph (b) of this section and reporting package described in paragraph (c) of this section shall be submitted within the earlier of 30 days after receipt of the auditor’s report(s), or nine months after the end of the audit period, unless a longer period is agreed to in advance by the cognizant or oversight agency for audit.
When a Tribe is Exempt from Submitting an Audit Report?
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Entities that expend less than $500,000* in Federal awards for a given year are exempt from Single Audit Act Reporting requirements for that year. These transactions include disbursement of pass-through
funds to sub-recipients.
Circular A-133 states that the cost of auditing an entity which expended less than $500,000* in Federal awards and therefore exempt from the Reporting requirements cannot be charged to a Federal award.
IA awarding officials are required to obtain a certification from Tribes that have expended less than $500,000* in Federal awards and thus, are exempt from the Reporting requirements for that fiscal year. *(Changed to $750,000 for fiscal years beginning on or after December 26, 2014)
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Single Audit Report Submission (Cont’d)
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All auditees must submit the reporting package and the data collection form electronically to the Federal Audit Clearinghouse (FAC) (200.512(d)).
FAC submission process will be changed to require that submissions be in text-based PDF and unlocked to improve accessibility.
FAC responsible to make the reports available on a Web site (200.512(g)).
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Single Audit Reports on the Web - PPII
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Auditors and auditees must ensure reports do not include protected personally identifiable information (PPII) (200.82 & 200.512(a)(2)).
Auditee must sign statement that (200.512(b)(1)): Reports do not include PPII. Authorizes FAC to make reports publically
available on a Web site. Exception for Indian tribes meeting definition in
200.54 No exception for tribal organization not meeting the
200.54 definition.
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Exception for Indian Tribes (200.512(b)(2))
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Tribal reports may include confidential business information that would be redacted under the Freedom of Information Act.
May elect to not authorize the FAC to make reporting package publically available on the a Web site.
If elected, Indian tribe must: Submit reporting package directly to pass-through entities. Make reporting package available for public inspection as
required by the Single Audit Act. Election must be made each year
Standards for Tribal Management Systems
Website for Standards
Tribal Management Standards § 900.39 What is the difference between a standard
and a system? (a) Standards are the minimum baseline requirements
for the performance of an activity. Standards establish the ‘‘what’’ that an activity should accomplish.
(b) Systems are the procedural mechanisms and processes for the day-today conduct of an activity. Systems are ‘‘how’’ the activity will be accomplished.
Standards for Tribal Management Systems
Authority: 25 CFR 900 (F) When carrying out self-determination
contracts, the Indian tribes or tribal organizations shall develop and maintain systems that meet these minimum standards for management Sec. 900-35, 900-36
These systems are evaluated by an independent auditor through the annual Single Audit Sec. 900-40(b)
Standards for Tribal Management Systems
Authority: P.L. 93-638 Sec. 900.35 ; 25 CFR 900.45
The minimum standards set for the Indian tribes or tribal organizations are: Financial Reporting – Accurate and Complete Accounting Records – Sufficiently Detailed Internal Controls – Effective Control and
Accountability Budget Controls – Expenditures compared to Budget Allowable Costs –reasonable, allowable, and allocable Source Documentation – Invoices, Payroll Records Cash Management – Accurate, Current, and Complete
Best Practices for Tribal Accounting
Best Practices for Tribal Accounting
Use an appropriate accounting system and ensure that staff are well trained in its operation
Follow standards issued by the Governmental Accounting Standards Board in GASB 34
Identify and account for Federal awards
Maintain internal controls over Federal awards
Best Practices for Tribal Accounting
Comply with requirements relating to awards
Maintain source documents for every charge made to Federal awards
Submit required Federal financial and narrative reports
Prepare required financial statements
Best Practices for Tribal Accounting
Ensure that advanced Federal funds are used only for their intended program and are not loaned (even temporarily) to another program
Ensure that advanced Federal funds are properly insured or collateralized
Advanced Federal Funds
Advanced Federal Funds
Authority: 25 CFR Sec 450e-3; P.L. 93-638
It is Indian Affairs’ policy to ensure that Federal funds are properly safeguarded and are used only for the authorized purposes as described in the award agreement.
Deferred Revenue
What is Deferred Revenue?
Accounting Definition: Receipts of cash for which asset recognition criteria have been met (cash received and deposited in the bank), but for which revenue criteria have not been met (expenditures not completed).
Example: Tribe received BIA cash in advance for a contract, but has not incurred the expenditures for which the money was intended.
Deferred Revenue and CashThe balance sheet should always show cash and cash equivalents equal to or exceeding the deferred revenue liability.
If the advanced Federal funds (deferred revenue) are invested, it must be in short-term investments so that it is available to cover the expenses of the programs.
Deferred Revenue and CashTribal Balance Sheet – Special Revenue FundAssets
Cash $500,000
Investments 200,000
Prepaid Expenses 10,000
Total Assets $710,000
Liabilities and Fund Balance
Accounts Payable $20,000
Deferred Revenue 400,000
Total Liabilities $420,000
Unassigned Fund Balance 290,000
Total Liabilities and Fund Balance $710,000
Investment of Advanced Federal Funds Invest the funds in “obligations of the United
States” or those guaranteed by the U.S.
Invest in registered mutual funds that invest exclusively in the same types of securities;
Deposit the funds in an insured account (e.g., the FDIC);
Deposit the funds in a fully collateralized account.
Investment of Advanced Federal FundsExample of footnote from an actual audit:
Note 2 - CashAt December 31, 2013, the carrying amount of the Tribe’s deposits was $500,000 and the balance per bank statements was $620,000 of which $250,000 was covered by FDIC insurance and the remainder was uninsured and uncollateralized.
How can we tell from this footnote whether the Tribe was in compliance with Indian Affairs’ policy?
Investment of Advanced Federal FundsExample of footnote from an actual audit:
Note 2 - CashAt December 31, 2013, the bank balance of the Tribe’s deposits was $1,250,000 of which $250,000 was covered by FDIC insurance and $1,0000,000 was covered by the Securities Investor Protection Corporation (SIPC).
The Tribe’s deferred revenue totaled $1,250,000.Is this compliance?
Investment of Advanced Federal Funds
The Tribe is not in full compliance.
The SIPC is not a government agency.It was established by the securities industry. Investors can recover losses only in limited cases.
What does SIPC Protect? SIPC - What SIPC Protects
Use of Advanced Federal Funds
Advanced funds can be used only for the Federal programs covered by the contracts and annual funding agreements.
Funds cannot be used for tribal programs not authorized by the Indian Self Determination and Education Assistance Act.
Use of Advanced Federal Funds
A use of cash provided by Indian Affairs for any purpose other than to pay costs for programs included in an Indian Affairs’ funding agreement will be a misapplication of funds and a potential disallowed cost which must be repaid. Definition is found in Indian Affairs Manual.
Audit Quality
Factors to Consider when Hiring an Audit Firm to Conduct the Single AuditDemonstration of qualifications: Availability of staff with appropriate technical
abilities The extent of the firm’s experience with Tribal
organizations and Federal grants and contracts Results of the external peer review Results of Federal agencies’ quality control
reviews Participation in quality improvement programs
such as the AICPA’s Governmental Audit Quality Center
Common Audit Findings
Common Audit Findings
Failure to submit Single Audit report on time
No documentation for expenditures charged to Federal awards
No documentation to support eligibility requirements
Improper accounting of payroll costs charged to Federal awards
Not filing or late filing of quarterly expense reports (SF 425) and annual narrative reports
Common Audit Findings
Procurement policy not followed Property management Insufficient cash available to cover
deferred revenue Inadequate segregation of duties Character investigations not being
performed
Corrective Action Plans
Corrective Action Plans
Needs to address the finding Corrective action planned will resolve the
finding and will prevent the finding from being repeated
Estimated completion date of the corrective action
Name of person responsible for the implementation of the corrective action plan
Not the same as a management response
Management Response
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Management Response is not required May also be called views of responsible officials No specific format if one is provided
Finding Resolution and Closure
Finding Resolution
The awarding official makes a determination that the corrective action plan adequately addresses the finding and the implementation of the corrective action plan will prevent the finding from being repeated.
If questioned costs are involved, the awarding official has made a management decision to allow or disallow those costs.
Finding resolution is communicated to the Tribal entity through a Findings and Determination letter. Appeal rights are included with the Findings and Determination.
If there are disallowed costs the awarding official will notify the Interior Business Center to issue a bill of collection to the Tribal entity.
Audit Closure
The audit is considered closed when the awarding official determines that the corrective action plan for all Federal award findings is sufficient and any identified questioned costs are allowable.
If there are disallowed costs, the audit will not be closed until those costs are collected.
Report is Closed When
No findings – closed when issued to awarding official
Findings with questioned costs – costs are allowable, closed when Awarding Official management decision is received by DIEA
Findings with questioned costs – costs are disallowed, closed when costs are repaid or a revised MD by Awarding Official determines them to be allowable
Contact Information
Office of Internal Evaluation and AssessmentMichael Oliva, DirectorDivision of Internal Evaluation and AssessmentOffice of the Assistant Secretary – Indian Affairs12220 Sunrise Valley DriveReston, VA 20191Phone: (703) 390-6537 Fax: (703) [email protected]
Single Audit Submission: [email protected]
Office of Internal Evaluation and Assessment – Single Audit TeamLaurel Luckey, Auditor(703) [email protected]
Jean Jeffrey, Auditor(703) [email protected]
Department of the Interior – Office of the Inspector General
Morgan Aronson, National Single Audit CoordinatorDOI - OIG12030 Sunrise Valley Drive, Suite 230Reston, VA 20191Phone: (703) 487-5357 Fax: (703) [email protected]
Federal Audit Clearinghouse
www.harvester.census.gov
Phone: 800-253-0696
Address of Federal Audit Clearinghouse and Contacts
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For questions concerning: Form SF-SAC and 2 CFR Part 200 submission questions, contact the Federal Audit Clearinghouse by email, phone, or fax. [email protected] AddressFAC Processing Center1201 E. 10th StreetJefferson, IN 47132(301) 763-1551 (voice) (800) 253-0696 (toll free) (301) 763-6792 (fax)
Interior Business Center
www.doi.gov/ibc
Indirect Cost Services
Mailing Address:2180 Harvard Street, Suite 430Sacramento, CA 95815
Email: [email protected]: 916-566-711 Fax: 916-566-7110
IBC – Bills of Collection
Interior Business CenterAttn: BIA Billing Dept7301 W. Mansfield Ave - Mail Stop D-2770Denver, CO 80203Phone 1-888-345-0029Fax 303-969-7075email: [email protected]
Civilian Board of Contract Appealswww.cbca.gsa.gov
For all IT related questions, contact Arthur Hawkins at [email protected]
For other issues, contact J. Gregory Parks, Chief Counsel at [email protected]
Courier/Overnight Mail:6th Floor, 1800 M Street, N.W.Washington, DC 20036
U.S. Postal Service Mail:1800 F Street, N.W.Washington, DC 20405
Phone:Clerk of the Board Phone: (202) 606-8800Chairman of the Board Phone: (202) 606-8820Fax: (202) 606-0019
On behalf of the Division of Internal Evaluation and Assessment, Assistant Secretary, Indian Affairs, we thank you for your interest and participation.
Safe travels!