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. 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.

Internal Control Pilot Project States1. Alaska2. California3. Colorado4. Florida5. Georgia6. Louisiana7. Maine8. Missouri9. Nevada10. North Carolina11. Ohio12. Oklahoma13. South Dakota14. Tennessee15. Texas16. Virginia

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

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.

Summary of ResultsProgram Number

of States Audited

Total Number of Program Findings

DOL 17.255 8 11

DOL WIA Cluster 1 1

DOT 20.205 5 8

DOT Highways Cluster

2 3

EPA 66.458 1 0

EPA 66.468 1 0

DOE 81.042 3 3

DOE 81.041 1 1

ED Title I Grants to Local Education Agencies Cluster

3 4

Summary of Results - Continued

Program Number of States Audited

Total Number of Program Findings

ED Special Education Cluster

1 2

ED Vocational Rehabilitation Cluster

2 7

ED 84.048 1 2

ED 84.357 1 2

ED 81.367 1 2

ED State Fiscal Stabilization Cluster

4 4

USDA SNAP Cluster 2 8

DOJ 16.738 1 2

Summary of Results - Continued

Program Number of States Audited

Total Number of Program Findings

Research and Development Cluster

2 3

HHS 93.713 2 8

HHS 93.778 5 14

HHS TANF Cluster 1 6

HHS 93.563 1 5

HHS CSBG Cluster 1 5

HHS 93.658 2 7

HHS 93.659 2 9

HHS Aging Cluster 2 10

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.

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.

Audit Resolution

Data Based on Responses Received From Federal Agencies

Cutoff Date – July 16, 2010

Audit Resolution

Agency # Findings Resolved Unresolved

Labor 12 12 0

DOT 11 4 7

EPA 0 0 0

Energy 4 0 4

Education 23 10 13

USDA 8 0 8

Justice 2 0 2

DHHS 64 55 9

R&D (HHS) 3 3 0

Total 127 84 43

Unresolved Audit Findings

Five Education Findings Were Reported Corrected in State Single Audit

Texas

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

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

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

Concluding Remarks

John Fisher

816-426-3204

US Department of Health & Human Services

Office of Inspector General

Office of Audit Services

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