Skip this Video
Download Presentation
"Stuff I didn't really want to hear"

Loading in 2 Seconds...

play fullscreen
1 / 53

"Stuff I didn't really want to hear" - PowerPoint PPT Presentation

  • Uploaded on

"Stuff I didn't really want to hear". A Programmatic Look At Fiscal Monitoring . Ted Davis, Manager, Career & Technical Education (CTE) Grants & MIS, Arizona Department of Education. An Increased Focus On Audit.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about '"Stuff I didn't really want to hear"' - calista

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
"Stuff I didn't really want to hear"

A Programmatic Look At Fiscal Monitoring

Ted Davis, Manager, Career & Technical Education (CTE) Grants & MIS, Arizona Department of Education

An Increased Focus On Audit
  • No one in Washington seems to be talking about the Cooperative Audit Resolution and Oversight Initiative – CAROI any more.
  • The Office of Inspector General (OIG) is conducting its own audits of eligible recipients and specific federal programs.
  • The Office of the Chief Financial Officer (OCFO), the U.S. Department of Education, is conducting assessments of state Title I and III fiscal monitoring.
Issues Related to

The A -133 Single Audits

  • Questions related to the quality or value of the A–133 audits.
  • The realization that smaller federal programs are not being audited.
    • Schools or districts that expend less than the $500,000.
    • Programs like Perkins, under the “risk provisions” of the A-133 guidelines, are being passed over for audit.
Related to Audit Is Fiscal Progam Monitoring
  • The first warning signs of a new, additional audit concern surfaced in 2005.
  • The OIG cited the failure of Louisiana, Colorado, Idaho and Florida to adequately conduct fiscal program monitoring activities.
  • In 2006 the Arizona Department of Education was cited for inadequate fiscal program monitoring of two of its flow-through programs.
OCFO Issues -
  • From the Office of the Chief Financial Officer, USDOE¹
    • 249 Findings
    • 48% - Related to procurement and distribution
    • 38% - Equipment controls
    • 9% - Audit issues –
      • Inadequate guidance related to recipient corrective plans of action.
      • Inadequate follow-through on corrective plans of action.
      • Reports not timely, inadequate or could not be found.

¹Fiscal Components of Title I & III Monitoring and a Summary of Recent Findings, James Evans, Managing Federal Education Grants Fall Forum, Nov. 30, 2006.

What Auditors Are Finding In Arizona
  • Labor distribution (Time & Effort Issues)
  • Eligibility & Comparability (NCLB-Title I Issues)
  • Documentation of transactions, cash management, allocations, schoolwide plans, comparability reports, etc…
  • Procurement
  • Supplanting
Forecasted Changes To EDGAR &

OMB Circular A-133

  • EDGAR rule making, which should go into effect in federal FY 2007, will affect direct/discretionary grant administration, including –
  • Pre-award review requirements of applicant administrative capability and financial responsibility.¹
    • Financial management.
    • Cash management.
    • Time accounting (time & effort).
    • Property management.

¹ Cost Allocation Confessions ,Ted Mueller, Indirect Cost Group, OCFO Presentation, Dec.1, 2006 Brustein & Manasevits Fall Forum

Audit & Program Montoring Overlap
  • Compliance with the provisions of your grant/program regulations and your approved grant application.
  • Procurement.
  • Property management.
  • Time & effort reporting/documentation.
  • Grant period issues – When may costs be charged to a grant; are they charged to the correct grant-year, etc.?
Can A State Conduct A

Program-Specific Audit?

  • Yes, even if the recipient has had a A133 Audit.
  • It includes recipients who expended less than $500,000.
  • Section 230(b)(2) of A-133 and Attachment B, Section 4.c.of OMB Circular A-87 make the costs of agreed-upon procedures engagements on LEA’s and other subgrantees allowable if expenditures are below the $500,000 threshold.
  • Two Conditions –
    • The scope is restricted to mainly program-specific requirements, rather than organization-wide ones.
    • The state must arrange and pay for the agreed-upon procedures engagements.
Why Program Monitoring?
  • It includes programs that often are not audited – such as the Perkins vocational programs.
  • Fiscal program monitoring is required per:
    • 34 CFR §80.40
    • OMB Circular A-133, Section 400(d)(3)
    • OMB Circular A-133, Section M, Subrecipient Monitoring, Compliance Requirements
A State's Programmatic

Preference Should Be -

  • Monitoring First
  • Audit – When you are out of other options

A Recipient's 1st Choice

Should Also Be Monitoring...

  • Lowers risk of “questioned costs” & having to return $$$
  • Greater flexibility
Monitoring Challenges (State)
  • Many professional educational staff “freak” ….
  • The basic answers include –
    • Staff training
    • A well designed monitoring guide
    • Recipient training
      • CTE director meetings
      • ACTEaz
      • Other venues..
Monitoring Challenges (Recipient)
  • Pay Attention!! Ask your counterparts that are being monitored, “What are they looking at?”
  • Attend any training the state is offering.
      • CTE director meetings
      • ACTE (state and national)
      • NACTEI, AEFFA, Thompson Pub., Brustein or other vendor, Federal workshops, AASBO
Monitoring Challenges (Recipient)
  • Review the areas being monitored in your state.
  • If you don’t already have procedures in place relative to those areas being monitored, set something up then ask “Does this cut it?”
  • You want to have something in place wherever there is a risk for questioned costs that would result in the state asking for $$ back…
  • A finding that asks you to change something beats the heck out of one that asks for $$ back…
Who Should Be Monitored

1st - Risk Analysis

  • Recipients who fail to submit their required A-133 audits to the ADE.
  • Recipients (under $500,000 in federal funds) who fail to submit their required financial statement audits per your state’s law.
  • Recipients that consistently fail to file their financial completion reports on time.
  • Recipients that consistently fail to file programmatic required reports on time.
  • Program staff identified concerns.
  • In response to concerns raised by recipient employees, board members, parents, etc.
  • Check out EDGAR 34 CFR § 80.12 – I talks about “risk”.
Fiscal Montoring Should Focus On Areas With The

Greatest Risk For Questioned Costs

  • Compliance with the provisions of your grant/program regulations and your approved grant application.
    • Grant period issues – Costs be charged to the correct grant and year; no obligations until grant substantially approved, etc.
  • Procurement.
  • Property management.
  • Time & effort reporting/documentation.
The Recipient's

Approved Grant/Plan

What The Monitor Will Look At...
  • Did the recipient perform those grant activities identified in their approved application?
  • Did they submit reports required by the grant, such as:
    • Mid-year and final narrative progress reports?
    • Financial completion reports?
    • Performance measures reports?
    • Etc.?
  • Did costs and expenditures appear to be allowable under the allowable costs provisions of the Act or regulations applicable to the actual grant and the appropriate OMB Circular (A-87 for K-12 programs) ?
What The Monitor Will Look At...(Cont.)
  • Did the recipient buy only items identified in its approved equipment/capital list?
  • Can the expenditure be traced back to the property management system through a requisition, the claim, the school’s/district’s general ledger, etc.?
  • Do expenditures included on the grant’s fiscal completion report track back to the correct revenue accounts, the general ledger, etc.?
  • Were costs coded correctly, relative to their approved use in the approved grant and USFR coding guidelines?
  • Etc.
What The Monitor Will Look At...(Cont.)

Grant Period -

  • Did the recipient have an approved or substantially approved grant in place before they began to obligate grant funds?
  • Were expenditures charged to the correct fiscal year?
  • EDGAR - 34 CFR § 76.707 & 76.708.
  • Some states have statutes that allow for the prepayment of certain expenses.
What A Recipient Should Do?*
  • Review your own plan at least quarterly – It says what your district agreed to do and it is ‘hanging out there’ for an auditor to see, so follow it or change it
    • Your budget
    • Your performance measures targets
  • Plan to amend your plan at least twice
    • Program modifications
    • Compare planned expenditures to actual
  • Check with your business manager and/or accounting clerk to insure that your plan and expenditures appear reasonable and coded to the right cost lines…

*Covering Your Tush…

What A Recipent Should Do?* (Cont.)
  • Ask questions
  • Review your requested and actual expenditures for equipment, training and other services
  • Document changes/amendment and the reason for…
  • If your state BG specialist tells you to can do something without an amendment –
    • Confirm the change in writing – email is fine…
    • Don’t just rely on a verbal approval –
    • Send a email that says something like “Per our discussion I am buying XXX with my unobligated equipment funds. If I misunderstood you or I need to do something else to document the change please let me know as soon as possible, etc.”

Most state email systems allow you to request a confirmation that an email was received, opened and assumed “read”. USE THE OPTIONS

What A Recipient Should Do?* (Cont.)
  • Keep SEPARATE notebooks for your plan, equipment acquisition, staff, etc.
  • Your “Approved Plan” Notebook should contain –
    • A copy of your approved plan
    • Any amendments
    • Emails related to change
    • Communication with your BG specialist
    • Changes documented by email
    • Anything else you feel is important
  • Make sure someone else in CTE in your district knows where this stuff can be found…
Property/Equipment Management - What The Monitor Should Look For...
  • Does the recipient have a capital asset list that meets the requirements of your state’s law? (State Law vs. 34 CFR § 80.32 of EDGAR)
    • Equipment costing $5,000 or more with a useful life of one year or more.
    • Addresses all the mandatory required information–
      • Location
      • ID information (tag, serial number, etc.)
  • Does the recipient maintain a stewardship* list for items costing less than $5,000? (State Law vs. 34 CFR § 80.20(b)(3) EDGAR)

* Arizona’s system, the Uniform System of Financial Records for Arizona School Districts (USFR) defines equipment subject to stewardship laws, to be equipment costing over $1,000 and less than $5,000.

Property/Equipment Management - What The Monitor Should Look For...

34 CFR § 80.20(b)(3) EDGAR

“(3) Internal control. Effective control and accountability must be maintained for all grant and subgrant cash, real and personal property, and other assets. Grantees and subgrantees must adequately safeguard all such property and assure that it is used solely for authorized purposes.”

Property/Equipment Management - What The Monitor Should Look For...
  • Did the recipient adequately document the acquisition of the asset?
  • Can you physically locate selected items of equipment?
  • Does the equipment appear to be being used for the purposes for which it was acquired and in the federal program that paid for its purchase?
  • Is there documentation to support the requirement that a physical inventory is conducted every 2 or 3 years, per the EDGAR or your state’s requirements?
  • Did the recipient dispose of assets in accordance with your state’s law or administrative guidelines?
Property/Equipment Management - So What Should A Recipient Do?
  • Document, document, document…
  • Don’t totally rely on your business office or procurement office.
  • Use the “low tech” approach –
    • Keep a 3 Hole Binder for each fiscal year in your office.
    • Keep copies of your purchase documentation.
      • The requisition to buy.
      • Receiving documents.
      • Claim.
      • Etc.
  • Maintain your own listing of equipment and where it is located.
  • Most districts have an automated inventory/stewardship system – reconcile it to your notebook at least three times a year.
Property/Equipment Management - So What Should A Recipient Do?
  • Have your own equipment check-out procedures and logs if you lend equipment out
  • Be sure to note when an item is lost, disposed of, transferred or “ripped off”
Procurement - Not For Amateurs
  • Monitors need training. The training should cover –
  • Their state’s basic requirements, relative to
    • Any existing guidance that relates to schools…
    • The basics, i.e.
      • Where the rules can be found: online at, their state’s procurement office; professional groups like the American Association of School Business Officials (AASBO)
      • Your state’s auditor general staffs’ online resources – guidance, the audit guide they will use, etc.
Procurement - Cont.
  • Procurement consortiums.
  • What is the threshold above which multiple verbal quotes are required… written quotes… quotes vs. written proposals (where price is not the primary factor), etc.
  • Ask to see a copy of the recipient’s procurement rules.
  • Etc.
Procurement - Cont.
  • The monitor’s goal –
  • An educated referral to the monitor’s financial program staff when there is a perceived concern.
Procurement - Cont.
  • Recipients need training. The training should cover –
  • Their state’s basic requirements, relative to
    • Any existing guidance that relates to schools…
    • The basics, i.e.
      • Where the rules can be found: online at; their state’s procurement office; professional groups like the American Association of School Business Officials (AASBO)
      • Your state’s auditor general staffs’ online resources – guidance, the audit guide they will use, etc.
Procurement - Cont.
      • Procurement consortiums.
      • What is the threshold above which multiple verbal quotes are required… written quotes… quotes vs. written proposals (where price is not the primary factor), etc.
      • Etc.
  • Use your regular local director’s meetings, professional development workshops, etc. to provide procurement training to your grant recipients.
Procurement - Cont.

Compliance with procurement rules is really the responsibility of a recipient’s business manager or procurement official, but it pays to know the basics –

  • You may have a new business manager, not familiar with your state’s rules.
  • A basic understanding of the rules helps keep the recipient from violating his or her institutions’ rules –
    • Requesting a conference speaker without a clear understanding of when quotes or bids are required…
    • Obligating your agency relative to a service, buying a piece of equipment, supplies, repairs, etc. in violation of the procurement rules
Time & Effort

(Personnel Costs)

Time & Effort - The Basics
  • Not one approved approach to time and effort reporting/allocations.
  • Employee costs can often represent a major program cost that are material to many grants.
  • Document, document, document.
Time & Effort - The Basics
  • Whatever approach you use it should be –
  • Reasonable
  • Allocable to the grant
  • Consistently treated
  • In line with the recipient’s own salary and the recipient’s accounting policies
  • Only charged to one source (no duplicate charges)
  • Documented, documented, documented…
Time & Effort - The Basics
  • The simplest situation is present when an employee works on a single program for the entire period funds are budgeted for.
  • A periodic certification that the employee works solely on that program, signed by the employee or supervisory official having first-hand knowledge of the work performed by the employee, would meet audit requirements.
  • The certifications need to be done at least semi-annually. (A-87 Attachment B (h)(3)).
Time & Effort - The Basics

Multiple Activities or Cost Objectives

  • When you have staff working on –
    • More than one federal award
    • A federal and a non-federal award
    • More than one allocated indirect activity
  • You need personnel activity reports or equivalent documentation or a statistical sampling system or other substitute system that has been approved by the cognizant federal agency.
Time & Effort - The Basics

Multiple Activities or Cost Objectives, Cont.

  • “Budgeted” doesn’t cut it…
  • You must adjust budgeted to actual at least quarterly
  • OMB Circular A-87 allows for reasonable budgeted charges on estimates, if they can be shown to be within 10% of actual…
  • Document, document, document
  • Smarter in the long run to just do actual time & effort reporting?
Time & Effort - The Basics

Multiple Activities or Cost Objectives, Cont.

  • Must meet personnel activity reporting standards –
    • Must reflect an after-the-fact distribution of the employee’s actual activity.
    • Must account for the Total Activity for which the employee is being compensated.
    • Must be prepared at least monthly and must coincide with one or more pay periods.
    • Must be signed by the employee.
    • The employee’s position/job description should support salary costs being paid from the grant?
Time & Effort - The Basics
  • Is There A Way Out Of A Finding In This Area If I Haven’t Been Keeping Time & Effort Records?
  • There is always “credible alternative documentation”.
  • Remember Audit Standards of Evidence – GAO Standards, Sections 7.48-7.60.
  • A lot of “after-the-fact” work to document staff time. A lot would depend on how much money is involved…
Monitoring Follow-up - For the Monitor
  • An OCFO (USDOE Financial Chief) state finding – inadequate follow-up procedures.
  • Monitors need –
  • Basic follow-up procedures –
    • By desk audit, phone, email, revisit – the reasonable approach depends on the finding or issue.
    • More extreme – schedule a program-specific audit.
    • The state program staff may place a “letter of concern” in the recipient’s A-133 audit folder and send a copy to the recipient’s current contracted A-133 audit firm, in the hopes that they will review your concern under the ‘Risk’ provisions on the A-133 guidelines.
Monitoring Follow-up - For the Recipient
  • Anticipate possible findings and attempt to formulate your corrective action and monitoring response in advance of a monitoring finding.
  • Actually implement changes that you promise in response to a monitoring finding. If problems pop up, contact your state staff contact as soon as possible and work something out.
  • Monitoring visits can result in “questioned costs” and a requirement that you must return funds. You don’t want a monitoring finding that the state has given you some “wiggle room” on to turn into a questioned cost because you failed to implement your agreed-to corrective action.
Your Library -

LEA – Eligible Recipients

  • Program law & applicable regulations.
  • Your school, district or college guidelines related to –
    • State financial reporting requirements.
    • State and local procurement requirements.
    • State and local inventory and personal property control requirements.
    • K-12, OMB Circular A-87.
    • College or university, OMB Circular A-21 ( When the college is the Tech Prep fiscal agent).
    • Nonprofits, OMB Circular A-122.
    • The consolidated audit requirements – OMB Circular A-133.
Your Library - Cont.
  • OMB Circular A-133; the Cross Cutting Section and Your Program-Specific Compliance Supplement
  • EDGAR (34 CFR 74 – 99)
  • Your State Financial Reporting Instructions for Schools/Colleges
  • Whatever Audit Compliance Questionnaire your state auditors utilize when they audit school districts or supply to contracted audit firms doing recipient A-133 audits
  • Your state’s education code of law
  • Recent state legislation related to your program
On-Line Resources -
  • Federal Program Offices –
  • Perkins Act –
  • OMB Circulars –
  • EDGAR –
  • Title 15, Current Bills, etc. – ALIS
  • Auditor General –
  • OIG Website – (Click on “Offices”, left-hand column, then select “Offices of Inspector General”, “home-page”.
Contact Information -
  • Ted Davis –
  • Arizona Department of Education
  • Career & Technical Education Section
  • Phoenix, AZ
  • 602-542-5349
  • [email protected]
Arizona Documents

That Affect Arizona's

Monitoring Activities..