Holding Agencies Accountable for Single Audit Results

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1 Holding Agencies Accountable for Single Audit Results (Single Audit Metrics) NGMA Monthly Training Luncheon Wednesday, February 11, 2015 Presented by Terry Ramsey 1

2 Learning Objectives Single Audit metrics and OMB M-14-17, Metrics for U ifor Guida ce Using Federal Audit Clearinghouse (FAC) data to support Single Audit Metrics Cooperative Audit Resolution 2

3 Federal Awarding Agency Responsibilities (2 CFR (c)(iv)) Develop a baseline, metrics, and targets to track, over time, the effectiveness of the Federal age cy s process to follo -up on audit findings and on the effectiveness of Single Audits in improving non-federal entity accountability and their use by Federal awarding agencies in making award decisions. 3

4 OMB M Metrics for Uniform Guidance Sept Update metrics data in January of each year Results will be evaluated by OMB and the Council on Financial Assistance Reform (COFAR) By January 2017 OMB & COFAR evaluate utility of metrics and consider whether to set goals. Includes metrics for: Administrative Overall Impact on Burden, and Waste, Fraud, and Abuse Single Audit 4

5 Single Audit Metrics Number of: 1. Modified Opinions for Higher Risk Major Programs 2. Audit Findings of Material Weaknesses in Internal Controls for Higher Risk Major Programs 3. Repeat Findings for Higher Risk Major Programs (Start FY 2015) 4. Major Programs selected for audit 5. Audit Objectives in the Compliance Supplement 2 2 This will be complemented by qualitative feedback from auditors on the extent to which the entire scope of work has been decreased. 5

6 Audit Resolution Paradigm Change Current Output Focus Issuing management decision letter (MDL) within 6 months New Outcome Focus Correcting underlying issue as evidenced by audit finding not repeating 6

7 Single Audit Metrics Modified Audit Opinions Objective: to work with grantees to identify conditions and risks causing modified audit opinions and obtain grantee commitment on a clear strategy to achieve a clean audit opinions with measurable milestones. Goal: Reduce modified audit opinions (i.e., no Qualified, Adverse, or Disclaimer of opinions). How is this different from current audit resolution? 7

8 Single Audit Metrics Process Use FAC data to identify higher risk programs a d progra e tities Pull audit report & identify findings of material non-compliance (MNC) Develop program/entity tracker Focus outcome goal of correcting deficiency and achieving unmodified audit opinion Use cooperative audit resolution 8

9 How can the FAC Help? 2012 and prior audits 2013 and future audits 12/31/2015 and future audits 9

10 Form SF-SAC (2012 and Prior) What programs have material weaknesses? How can we identify which audit finding caused the modified opinion or was a material weakness?

11 How can the FAC database help? By linking: Type of audit finding To Audit finding reference number 11

12 Types of Audit Findings Compliance Audit Findings: Modified Opinion Other Matters Internal Control Audit Findings: Material Weaknesses (MW) Significant Deficiency (SD) Other Audit Findings 12

13 Form SF-SAC (2013 Version) Federal Agency Prefix CFDA Extension Name of Federal program Amount expended ($) Research & Development Loan/Loan Guarantee ARRA Direct award Major program If yes, type of audit report on Major Program (Y/N) (Y/N) (Y/N) (Y/N) (Y/N) ARRA- Agriculture Program Name $2,525,252 N N Y Y Y U ED Program Name $1,000,000 N N N Y Y U Energy Program Name $363,636,363 N N N Y Y U HHS Program Name $500,000 N Y N Y Y U 3 Number of Audit Findings Compliance Findings Internal Control Findings Federal Agency Prefix CFDA Extension Name of Federal program Audit Finding Reference Number Type(s) of Compliance Requirement (s) Modified Opinion Other Matters Material Weakness Significant Deficiency Other Findings Questione d Costs (YYYY-### ) (Y/N ) (Y/N ) (Y/N ) (Y/N ) (Y/N ) (Y/N ) HHS Program Name ABCE Y N N N N N HHS Program Name FGH N N Y N N N HHS Program Name AC N N Y N N N Auto atically filled fro Federal A ards Page for each Federal a ard ith fi di gs Identifies how each audit finding affected each Federal award Identifies the type of compliance requirements corresponding to each finding

14 Example Modified Opinions CFDA DIRECT Y Modified Opinion Auditee Finding # N Y Total Pennsylvania 13-DPW DPW DPW DPW SW SW SW PA Total New Jersey NJ Total Grand Total

15 Single Audit Metrics Example Program X Fiscal Year Number of States Modified Opinions States that Became Unmodified in 2012 States that Remained Modified Opinion in 2012 States that Became Clean in 2012 Number of MNC Findings Number of Repeat MNC Findings N/A N/A N/A N/A N/A N/A 51 N/A Number of repeat MNC findings decreased by 9 from 2011 to *MNC = Material Non-Compliance 15

16 FAC Changes for Better Data FAC database linking type of audit finding to audit finding number to type of compliance requirement Standard finding number format Text based PDF single audit reports Identify repeat audit findings and prior year finding number Pass-through identify total amount passed through to subrecipient 16

17 Cooperative Audit Resolution Federal Awarding Agency Responsibilities (c)(3)(iii) Use cooperative audit resolution mechanisms to improve Federal program outcomes through better audit resolution, follow-up, and corrective action. 17

18 Cooperative Audit Resolution Means the use of audit follow-up techniques which promote prompt corrective action by improving communication, fostering collaboration, promoting trust, and developing an understanding between the Federal agency and the non-federal entity. This approach is based upon: (a) A strong commitment by leadership to program integrity; (b) Strengthening partnerships and working cooperatively; (c) A focus on current conditions and corrective action going forward; (d) Federal agencies offering appropriate amnesty for past noncompliance when audits show prompt corrective action has occurred; and (e) Federal agency leadership sending a clear message that continued failure to correct material audit findings will result in sanctions. 18

19 Audit finding Lifecycle of an Audit Finding Views of responsible officials Ma age e t s correcti e actio pla Grantor management decision Ma age e t s follo -up and preparing summary schedule of prior audit findings Auditor s follo -up and review of summary schedule of prior audit findings 19

20 Audit Finding Analysis An analysis of material non-compliance audit findings focused on the following: What is the issue-condition, criteria, cause, effect? Is the issue valid? Were other agency programs or Federal agencies affected by the audit finding? Are there impediments to correcting the issue? What actions are needed to successfully correct this issue? 20

21 Coordination Engaged regional grants management & program staff Joint effort Regional program and grants management staff Headquarters program experts Departmental and OIG single audit experts Coordinated effort with other Operating Divisions (OpDivs) for cross-cutting issues (e.g., eligibility determination and documentation) 21

22 Best Practices in Obtaining Unmodified Opinions Establish lines of communication with all stakeholders (e.g., grantee, auditor & Federal staff (program, grant management, OIG) Apply team approach to analyzing audit findings: Develop joint effort among Federal staff Involve people with financial, program, Single Audit resolution skills Engage the key parties Organize meetings Establish cooperative yet firm approach to ensure corrective action Allow time to focus on each key issue Follow-up Update the Compliance Supplement as needed 22

23 Process Improvement Strengthened tone to issue MDLs that more clearly address underlying issues Changed focus from individual audits to strengthened focus on program as a whole Modified process so that complex policy issues do not delay issuing MDL on audit findings which can be resolved 23

24 Other Internal training on single audit process Reaching out to grantee and their auditor Full context of audit finding not always clear from the written word Expanded to other programs when found similar issues or same grantee officials handling other program with material noncompliance Partnered with AICPA for Head Start Webinar 24

25 Tone At the Top ecretary s Progra I tegrity I itiati e Monthly meetings of Program Integrity Internal Control Senior Assessment Team Promptly engaging senior officials on policy/legal issues Staff dedicated to the project COFAR Strong Program Oversight initiative 25

26 Achieving Results Takes Time 9 month delay between entity FY end and date audit due to FAC Entities late in completing audits. Audit findings with complex policy & legal issues 26

27 Single Audit Metrics Focus FAC data base identification of high risk Outcome instead of output measure Cooperative Audit Resolution + agency coordination on cross cutting audit findings Unacceptable to have material audit findings repeat for multiple years $ - Target highest risk program/entities first 27

28 Your Questions 28

29 Speaker Contact Information Terry Ramsey U.S. Department of Health and Human Services 29

30 Administrative Metrics 1. Inventory of OMB-approved Information Collections for Grants and Cooperative Agreements 2. Number of OMB-approved Exceptions Focused on Program Performance Over Compliance 3. Number of Fixed Amount Awards Issued 4. Number/Impact of Agency Exceptions to the Provision of Federally Negotiated Rates 5. Number of Indirect Cost Rate Extensions Approved by Cognizant Agencies 30

31 Overall Impact on Burden and Waste, Fraud, and Abuse Metrics 1. Policy change that most reduced administrative burden, and dollar value of impact 2. Policy change that most increased administrative burden, and dollar value of impact 3. Policy change that most reduced risk of waste, fraud, and abuse, and dollar value of impact. 4. Policy change that most increased risk of waste, fraud, and abuse, and dollar value of impact 5. Stakeholder satisfaction with the opportunity to engage with the COFAR or Federal agencies during the policy development process. 6. Stakeholder perception of whether the policy outcome appears responsive to (if not 100% aligned with) their input. 7. Opportunities for greater stakeholder engagement. 31

Berks Area Regional Transportation Authority. Single Audit Report June 30, 2017

Berks Area Regional Transportation Authority. Single Audit Report June 30, 2017 Single Audit Report Table of Contents Page Report Distribution List 1 Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed