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Recovery Act

Recovery Act. Single Audit Internal Control Pilot Project – ARRA Programs. Volunteer collaborative effort. Focus on more timely communication of significant deficiencies and material weaknesses in internal control over compliance for selected major programs with ARRA expenditures.

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Recovery Act

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  1. Recovery Act

  2. Single Audit Internal Control Pilot Project – ARRA Programs • Volunteer collaborative effort. • Focus on more timely communication of significant deficiencies and material weaknesses in internal control over compliance for selected major programs with ARRA expenditures. • Reporting required prior to the completion of the Single Audit and no later than 6 months after the Auditee’s year-end. • Theory was that it would allow Auditees to correct internal control deficiencies related to ARRA funds in a more timely manner to reduce potential future unallowable costs.

  3. Internal Control Pilot Project States • Alaska • California • Colorado • Florida • Georgia • Louisiana • Maine • Missouri • Nevada • North Carolina • Ohio • Oklahoma • South Dakota • Tennessee • Texas • Virginia

  4. Original Programs • DOL 17.255 – Unemployment Insurance • DOT 20.205 – Highway Infrastructure Investment Recovery Act • DOT Cluster 20.500/20.507 –Federal Transit - Capital Investment Grants • EPA 66.458 – Capitalization Grants for Clean Water State Revolving Funds • EPA 66.468 – Capitalization Grants for Drinking Water State Revolving Funds • DOE 81.042 – Weatherization Assistance for Low Income Persons • ED Cluster 84.394/84.397 – State Fiscal Stabilization Fund • Ed Cluster 84.010/84.390 – Title I Grants to Local Educational Agencies • HHS 93.713 – Child Care Development Block Grant • HHS 93.778 – Medicaid Assistance Program • Multiple Agencies – Research and Development Cluster

  5. Results • A total of 56 programs were audited. • In 11 cases the auditors did not report any deficiencies for the audited program. • Five of the 127 reported deficiencies were considered Material Weaknesses.

  6. Summary of Results

  7. Summary of Results - Continued

  8. Summary of Results - Continued

  9. Findings • In two cases the auditors reported the ARRA funds had been awarded to entities whose internal controls were inadequate to ensure Federal funds were used appropriately. • State agency had not previously managed Federal funds and consequently did not have detailed processes or policies for disbursing and managing Federal funds. • State agency began applying for Recovery Act funds in March 2009 but the Commission had not implemented a system of internal controls adequate to ensure that the funds were used appropriately.

  10. Findings - Continued • Internal controls were not adequate to ensure ARRA funds were properly reported. • Internal controls were not adequate to minimize excess unspent balances of ARRA funds at the grantee and subrecipient levels. • Internal controls were not adequate to ensure ARRA expenditures were allowable. • Procurement internal controls were inadequate. • Internal controls were not adequate to ensure eligible goods and services were provided to eligible individuals and entities. • Auditee’s were not providing subrecipients with timely information about Federal award requirements, increasing the risk of noncompliance with grant terms.

  11. Audit Resolution • Data Based on Responses Received From Federal Agencies • Cutoff Date – July 16, 2010

  12. Audit Resolution

  13. Unresolved Audit Findings • Five Education Findings Were Reported Corrected in State Single Audit • Texas

  14. Pilot Assessment • Sufficient Participation - YES • Useful information to auditees and Federal program management - YES • Effective audit resolution by Federal agencies • YES - HHS, Ed, Labor • NO - DOT, Energy, USDA

  15. Other Comments - States • Project elevates the importance of SA and program accountability • No substantial changes from current audit processes • Willing to participate in Phase 2 • More relief is needed • Compliance Supplement is needed earlier

  16. Potential Pilot Phase 2 - Considerations • Need immediate start – July 19, 2010 • Revise list of programs (consult with RATB, Agency & GAO inputs) • Provide State relief funds • Identify agency point of contact for program requirements and audit resolution for each program • Include universities and non-profits

  17. Concluding Remarks • John Fisher 816-426-3204 US Department of Health & Human Services Office of Inspector General Office of Audit Services

  18. QUESTIONS????

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