Fiscal Monitoring 101 September 9, 2013

Transcription

1 Fiscal Monitoring 101 September 9, 2013 Office of Audit & Financial Compliance Matt Shilling Gary Wilson Mike Wurmlinger Promoting a flexible, innovative, and effective workforce system within the State of Michigan.

2 Introduction This session will cover: The requirements for monitoring. The fiscal monitoring process. Common problems and fixes. 2

3 Why do we monitor? 3

4 It s Federal Law. 4

5 Federal Citations 2 CFR Part Common Rule, Section.40 A-133 Subpart D, Section.400 Workforce Investment Act of 1998, Section CFR Part , (c), and

6 What is Monitoring? As the pass-through entity of the federal employment and training funds, the Workforce Development Agency must ensure the processes and procedures used by its grant recipients and subrecipients to administer federal funds are in compliance with the requirements of the federal awarding agencies and any additional State requirements. 6

7 What is Reviewed During a Fiscal Monitoring Visit? The reviews are based on the federal uniform administrative requirements and the federal cost principles. Topics include: Allowable Cost, Cost Allocation, Cost Classification, Budget Controls, Cash Management, Debt Collection, Equipment Management, Financial Reporting, Subgrantee Audit and Audit Resolution, Subgrantee Monitoring, Interest Income, Internal Controls, Procurement, and Program Income. 7

8 How is the Monitoring Conducted? The monitoring is conducted on-site at the administrative offices of the Michigan Works! Agencies and at the locations of their subrecipients. To cover all the requirements, we have spread them over three visits to each Michigan Works! area during each calendar year. Each visit typically lasts one week. 8

9 What Can You do to Prepare for a Monitoring Visit? Have requested documentation ready and available when the monitor arrives. Be available. 9

10 How is Compliance Monitoring Different from a Single Audit? Single Audits are a separate federal requirement under OMB Circular A-133. A few differences are that Single Audits: Regulate the amount of auditing based on the auditors determination of the entity s risk; low or high. Concentrate efforts on programs determined to be major under the regulations. Define level of materiality to which a particular matter is determine significant or important. Include an audit of the Entity s financial statements. 10

11 A Closer Look at the Topics 11

12 Allowable Cost, Cost Allocation, and Cost Classification Objective: To evaluate the Entity s system to ensure it is incurring necessary and reasonable costs and is only charging allowable and allocable costs to the grant, including allocating the costs to the extent a benefit was received. [2 CFR Part 220; 2 CFR Part 225; 2 CFR Part 230; 48 CFR Part 31] 12

13 Allowable Cost, Cost Allocation, and Cost Classification Supporting documentation for allocation bases. Basing the allocation on budget. Not recognizing accruals. 13

14 Audit and Audit Resolution Objective: To determine whether the Entity s audit tracking and resolution process are adequate to ensure compliance with Office of Management and Budget (OMB) Circular A-133 and the federal grant requirements. [Common Rule.26; 2 CFR Part ] 14

15 Audit and Audit Resolution Not tracking audits and/or resolutions. The $500,000 threshold is cumulative from all awards and contracts. A review still needs to be conducted if your organizations award is only $100,000 of the $500,000 or more cumulative total. 15

16 Budgeting Systems Objective: To evaluate the Entity s method for tracking and comparing actual expenditures or outlays to planned or estimated expenditures. [Common Rule.20(b)(4); 2 CFR Part (b)(4)] 16

17 Budgeting Systems Having an approved budget. Quarterly comparisons between actual and budgeted expenditures. Budget modification when there is 10% change between actual and budgeted expenditures. 17

18 Cash Management Objective: To evaluate the Entity s mechanism(s), including policies and procedures, to minimize the time between cash draws and the disbursement of those funds to pay allowable costs. Cash draws must be necessary and reasonable, and the timing and amount of such draws must be as close as possible to the actual disbursement of grant funds for the payment of allowable and allocable costs incurred by the grant. [Common Rule.20(b)(7); 2 CFR Part ] 18

19 Cash Management Excess cash on hand (more than 3-5 days). Including accruals in cash request. 19

20 Debt Collection Objective: To determine whether the Entity s debt collection process is adequate to ensure funds paid to a grantee in excess of the amount to which the grantee is finally determined entitled are collected and repaid to the federal awarding agency. [Common Rule.52; 2 CFR Part ] 20

21 Debt Collection Debts cannot be repaid with federal funds. Interest on the debts is based on the Current Value of Funds Rate Percentage published by the US Department of the Treasury. 21

22 Equipment Management Objective: To evaluate the Entity s system for the management and disposition of equipment purchased with grant funds. [Common Rule.32; 2 CFR Part ] 22

23 Equipment Management Equipment is federally defined as tangible, nonexpendable, personal property having a useful life if more than one year and an acquisition cost of $5,000 or more per unit. Inaccurate inventories: Location of the Equipment Wrong Serial Numbers 23

24 Financial Reporting Objective: To determine whether the Entity has an accounting system that allows it to maintain accurate and complete disclosure of the financial results of its grant activities and those of its subrecipients according to the financial reporting requirements of the grant. [Common Rule.20(b)(1); 2 CFR Part (b)(1)] 24

25 Financial Reporting MWA records do not agree with closeout reports submitted to the State; by totals and/or cost categories. Service provider invoice is not supported by the service providers records. WIA Youth costs not reported by actual In School and Out of School expenditures; just split 50/50. 25

26 Internal Controls Objective: To evaluate the internal controls the Entity has for effective control and accountability of all grant and subrecipient cash, real property, personal property, and other assets. [Common Rule.20(b)(3); 2 CFR Part (b)(3)] 26

27 Internal Controls No policies or procedures in place. Segregation of Duties. 27

28 Interest Income and Program Income Objective: To evaluate if the Entity is documenting interest income and program income correctly and using program income to provide additional services under the grant prior to drawing additional grant funds. [Common Rule.21(i) and.25; 2 CFR Part (k)(l) and.24] 28

29 Interest Income and Program Income Interest baring accounts are required for Non-Profits unless one of the following is documented: The Non-Profit receives less than $120,000 in federal awards per year The best available interest rate will not earn in excess of $250 per year on federal cash balances. The average minimum balance for the interest baring account is so high that it would be infeasible within the expected federal and non-federal cash resources. Interest on WIA and state funds can be used as program income. 29

30 Interest Income and Program Income Interest earned in excess of $100 for governmental and $250 for nonprofit and nongovernmental on all Non-WIA and non-state funds must be remitted back to the State at least quarterly for governmental and annually for nonprofit and nongovernmental. Important to have and follow an appropriate methodology to allocated interest income and program income back to all the benefiting and generating grants. 30

31 Procurement and Contract Administration Objective: To evaluate the Entity s procurement procedures for compliance with applicable federal and state laws and regulations, as well as, a system for the administration of its contracts, including the appropriate contract or subrecipient clauses. [Common Rule.36; 2 CFR Part ] 31

32 Procurement and Contract Administration Lack of documentation to support the steps followed in the procurement process. Independent Price Analysis Cost Analysis Excluded Parties Noncompetitive Procurements. Standards of Conduct. 32

33 Questions 33

34 Contact Information Matt Shilling (517) Gary Wilson (517) Mike Wurmlinger (517) Promoting a flexible, innovative, and effective workforce system within the State of Michigan.