pennsylvania association of federal program coordinators · brief overview 4. history 1979: federal...

Pennsylvania Association of Federal Program Coordinators

May 8, 2017

PROPER USE AND FISCAL ACCOUNTABILITY FOR TITLE I FUNDS

TO MEET STUDENT AND TEACHER NEEDS

2

Agenda

• Brief Overview - History & Single Audit Process

• Compliance Supplement

• Title I, Part A Cluster

• PA Single Audit Reporting

• Conclusion

• Questions & Answers

3

BRIEF OVERVIEW

4

History

1979: Federal Audit RequirementAttachment P, Audit Requirements, to OMB Circular A-102,“Grants and Cooperative Agreements with State and Local Governments.”

1984: Single Audit ActEstablished uniform audit requirements and an organization-wide audit process for state and local government receiving federal funds.

1996: Single Audit Act Amendment• Raised the audit threshold from $25,000 to $300,000.• Revised the definition of “Major Program” to incorporate the risk-

based approach; & created uniform requirements for all recipients.

5

History

1997: OMB Circular A-133• Revised and renamed “Audits of States, Local

Governments, and Non-profit Organizations”.• Extended the statutory audit requirement to non-profit

organizations.• Placed states, local governments, universities and non-

profit organizations under the same audit process.• Increased the expenditure level from $25,000 to $300,000.• Set standards for consistency and uniformity for the audits

required by the 1996 amendments.

6

History

2003: OMB Circular A-133 Revised• Increased the threshold for Single Audit from $300,000 to

$500,000.• Increased the threshold for Cognizant Agency for audit from

$25 million to $50 million. • Provided for federal agency re-assignment of oversight

agency for audit.

2007: OMB Circular A-133 Revised• Updated the internal control terminology .• Simplified the audit reporting package submission

requirement to the Federal Audit Clearinghouse (FAC). The FAC serves as the central collection point, repository, and distribution center for single audit reports.

7

History

2013: OMB and the Council on Financial Assistance Reform (COFAR) Issue Guidance

• 2 Code of Federal Regulations (CFR) Part 200 – Uniform Administrative Requirements, Costs Principles, and Audit Requirements for Federal Awards.

• Increasing the threshold for Single Audit from $500,000 to $750,000.

• Effective for periods beginning on or after December 26, 2014.• Cost principles come into effect for new awards made after this

time as well as incremental funding increases to prior grants.• Subpart F, Audit Requirements, were effective for your LEA’s June

30, 2016 year-end.

8

Single Audit Process

Auditees’ Responsibilities• Prepare the Financial Statements and a Schedule of

Expenditures of Federal Awards (SEFA). The statements and schedule must be prepared for the same audit period.

• Select the auditor to conduct the audit. A grantee is responsible for selecting an auditor under Uniform

Grant Guidance (UGG). An auditor can include an independent licensed CPA or a federal, state or local government audit organizations that meets the general standards specified in Government Auditing Standards (GAS).

For example: many states and state agencies have their audits performed by state auditors. The term auditor does not include internal auditors.

9


• Ensure the auditor has the professional qualifications and technical abilities to conduct the audit; Consider the use of an auditor who is a member of the American Institute of Certified Public Accountants (AICPA) Government Audit Quality Center; members voluntary sign up and are committed to excellence in this area.

• Preparing a Corrective Action Plan for current-year audit findings and take action to correct the reported findings.

10


• Report on the Schedule of Prior Year Audit Findings the status of its corrective action for each prior-year finding until the finding has been corrected or the finding is no longer valid or warrants corrective action.

• Submission of Data Collection Form (SF-SAC Form) and the audit report to the Federal Audit Clearinghouse within 30 days of receipt of the auditor’s reports, but no later than 9 months after the end of the auditee’s fiscal year.

11


Auditor’s Responsibilities• Perform the audit in accordance with the Government Auditing

Standards.• Apply risk assessment procedures to determine which programs

will be audited.• Determine whether the financial statements and Schedule of

Expenditures of Federal Awards (SEFA) are presented fairly.• Gain an understanding of internal control over Federal programs

and test internal control over major programs.• Determine whether the auditee has complied with the compliance

requirements, which may have a direct and material effect on each of its major programs.

• Follow-up on prior audit findings.• Prepare specific components of the audit report and sections of

the SF-SAC. 12


Audit Findings – Statement of Findings & Questioned Costs

• Deficiency in internal control related to major programs tested –could be classified as material weakness or significant deficiency.

• Material noncompliance with the laws, regulations, or contract or grant provisions related to the major programs tested.

• For major programs tested, questioned costs which exceed, or are likely to exceed, $25,000 for each type of compliance requirement.

• Detected fraud, which affects a program, and misrepresentation of the status of a prior audit finding.

13

COMPLIANCE SUPPLEMENT

14

Compliance Supplement

• Provides guidance to the auditor regarding testing Federal programs.

• Provides audit guidance for Cluster of Programs identified by the Catalog of Federal Domestic Assistance (CFDA) number. A cluster of programs is a group of closely related programs that

share common compliance requirements and are considered one program for audit purposes.

• Provides a narrative description of each program and contains information to help the auditor understand the purpose of the program and how it operates.

• Provides guidance to the auditor on the auditing of programs not included in the supplement.

15

Compliance Supplement

• Prepared by U.S. Office of Management & Budget• Typically, released annually in the Spring• June 2016 is the most current supplement• Supplement is written on the national level• Commonwealth of Pennsylvania specific requirements not

included• Valuable resource for auditors and auditees

www.whitehouse.gov

16

TITLE I, PART A – CFDA #84.010

17

Applicable Compliance Requirements

• Activities Allowed or Unallowed• Allowable Costs/Cost Principles• Cash Management• Eligibility• Equipment and Real Property Management• Matching, Level of Effort, Earmarking• Period of Performance• Procurement and Suspension and Debarment• Reporting• Subrecipient Monitoring• Special Tests and Provisions

18

Activities Allowed and Unallowed

• Consolidation of Administrative Funds• Schoolwide Programs• Transferability

Can transfer funds into Title I but not out of Title I

• Small Rural Schools Achievement (SRSA) Alternative Uses of Funds Programs

Applies only to Local Educational Agencies (LEAs) with total average daily attendance of fewer than 600 students.

19

Activities Allowed and Unallowed

Common Audit Procedures

1. Cash Disbursements Testing• Maintain all applicable backup documentation

Purchase Orders Invoices Monthly bank statements

2. Payroll Testing• Maintain all applicable backup documentation

Payroll journal detailing pay period information Timesheets Collective bargaining agreements regarding rates of pay Fringe benefit backup

20

Allowable Costs/Cost Principles

Alternative Fiscal and Administrative Requirements

1. Common Audit Procedures• Obtain and review Pennsylvania Department of Education

(PDE) Reconciliation of Cash on Hand Quarterly Reports for accuracy and timeliness of filing

- due within 10 business days following the end of the calendar quarter

• Obtain and review PDE Final Expenditure Reports (Form PDE 2032) for grants closed within audit period for accuracy and timeliness of filing

- due within 30 days of close of grant or as soon as funds are liquidated, whichever comes first

21


2. Documentation of Employee Time and Effort• Applies only to consolidated administrative funds and schoolwide

programs.• Common Audit Procedures

If consolidating administrative funds . . . an employee who works on a single cost objective must furnish

a semi-annual certification that he/she has been engaged solely in activities.

an employee who works on multiple cost objectives, must maintain time and effort distribution records.

22


• Common Audit Procedures - continued If schoolwide program consolidates funds in a consolidated

schoolwide pool, no semi-annual certifications required. If schoolwide program but does not consolidate funds in a

consolidate schoolwide pool: An employee who works on a single cost objective must

furnish a semi-annual certification that he/she has been engaged solely in activities.

An employee who works on multiple cost objectives, must maintain time and effort distribution records.

23


3. Indirect Costs• Common Audit Procedures

– Obtain and review Restricted Indirect Cost Rate Certification from PDE.

– Verify that costs charged do not exceed maximum allowable under grant.

– Indirect costs cannot be charged to equipment or to indirect costs.

24


4. Unallowable Direct Costs to Programs• Common Audit Procedures

– Review separation leave costs, severance costs, and post retirement health benefits to ensure that costs are consistent with restrictions.

5. Unallowable Costs to Programs (Direct or Indirect)• Common Audit Procedures

– Cash disbursements and payroll testing

25

Cash Management

Common Audit Procedures• Review records to determine if interest was earned on

allocations received.• If so, review evidence to ascertain whether it was

returned to the appropriate agency. LEAs are required to return interest earnings on an annual basis. LEAs may retain up to $500 in interest earnings per year under UGG.

26

Eligibility

Individuals• Common Audit Procedures

– Only applies to targeted assistance programs. Must test sample of children to ensure appropriateness of inclusion to or exclusion from the program.

Group of Individuals or Area of Service Delivery a. School Attendance Areas or School

• Common Audit Procedures– Must review backup to ensure that proper schools were

selected.

27

Eligibility

b. Allocating funds to eligible school attendance areas and schools.• Common Audit Procedures

Review records to ensure that funds were allocated to each participating school in rank order on the basis of the total number of children from low-income families in the area or attending the school.

If serving schools with <35% poverty, ensure that minimum allocations of 125% were met.

28

Eligibility

c. Serving homeless children in non-participating school and children in local institutions for neglected or delinquent children• Common Audit Procedures

Ensure all applicable set-asides were met.

29

Equipment and Real Property Management

Common Audit Procedures• Obtain inventory listing of equipment purchased with

grant funds and test for compliance.• Consider any dispositions.

30

Matching, Level of Effort, Earmarking

1. Level of Effort – Maintenance of Effort• PDE prepares the calculation required

2. Level of Effort – Supplement Not Supplant• Common Audit Procedures

Ascertain if LEA used grant funds to provide services which they were required to make available under law.

Ascertain if LEA used grant funds to provide services which were provided with non-Federal funds in the prior year.

3. Earmarking• Ensure all applicable set-asides were made.

31

Period of Performance

Common Audit Procedures• Cash disbursements and payroll testing.• Review expenditure records to ensure that no more than

15% of the funding is carried over beyond the initial 15 months of availability (if received $50,000 or > in Title I, Part A funds).

32

Procurement and Suspension and Debarment

Under the “old” guidance, applies to procurement contracts for goods and services that are expected to equal or exceed $25,000.

33


Under UGG, there are five procurement methods:

1. Micro Purchases• $3,000 aggregate• No quotations• Equitable distribution among vendors

2. Small Purchases• Simple and informal procurement methods• <$150,000 – simplified acquisition threshold• Price and rate quotations must be obtained from adequate

number of qualified sources

34


3. Sealed Bids• > $150,000 – simplified acquisition threshold• Preferred for construction projects• Must be publicly advertised – low price bid wins

4. Competitive Proposals (for services)• > $150,000 – simplified acquisition threshold• More than one source for proposal• Usually used for fixed fee or cost reimbursement • Written method of evaluation and selection• Awards must go to “most advantageous” proposal

35


5. Sole Source• Must meet at least one of the criteria

– Single source availability– Public emergency– Written request has been made and approved– Competition is determined to be inadequate

36


Whether “old” guidance or new UGG:• Common Audit Procedures

– Test a sample of procurement contracts for compliance.– Test whether the LEA performed a verification check by

checking the System for Award Management (SAM) –collecting a certification from the entity, or adding a clause or condition to the covered transaction.

37

Reporting

Financial Reporting• Common Audit Procedures

Obtain and review Pennsylvania Department of Education (PDE) Reconciliation of Cash on Hand Quarterly Reports for accuracy and timeliness of filing (due within 10 business days following the end of the calendar quarter).

Obtain and review PDE Final Expenditure Reports (Form PDE 2032) for grant closed within audit period for accuracy and timeliness of filing (due within 30 days of close of grant or as soon as funds are liquidated, whichever comes first).

38

Reporting

Special Reporting• Common Audit Procedures

Verify that LEA filed Form PDE-2057 – Annual Financial Report (AFR) timely and accurately.

Verify that LEA filed required attendance data through the Pennsylvania Information Management System (PIMS).

39

Subrecipient Reporting

• First tier subrecipients are required to register in the Central Contractor Registration.

• Under new UGG, pass-through entities perform a risk assessment of subrecipients

• Common Audit Procedures– Review risk assessments that pass-through entities performed on

subrecipients– Pass-through entities should review documentation to ensure that

appropriate monitoring and follow-up is taking place. Determine if audited financial statements are being requested and reviewed. If there are audit findings, determine what follow-up was performed and if it was deemed appropriate.

40

Special Tests and Provisions

Participation of Private School Children• Common Audit Procedures

Verify the LEA conducted timely consultation with private school officials.

Review program expenditures to ensure that planned services were provided.

Verify that per pupil allocations for private school children equal those of public school children.

If services are provided under arrangement with a third-party provider, verify that there is a written contract that addresses services and that the LEA retains ownership of items purchased with the grant funds.

41


Schoolwide Programs• Common Audit Procedures

Verify that schools met the poverty eligibility requirements for school wide programs - 40%.

Review school wide plans to ascertain if required core elements are included.

42


Comparability• Common Audit Procedures

Obtain and review comparability assurances. Obtain and review detailed school data sheets and tie to

applicable backup documentation – per pupil expenditures or staff to student ratios.

Access to federal funds for new or significantly expanded Charter Schools

• N/A at LEA Level

43


Identifying Schools and LEAs Needing Improvement• No longer applies to Pennsylvania because of waiver for

ESEA flexibility.

High Quality Teachers and Paraprofessionals• Common Audit Procedures

In conjunction with payroll testing, verify that teachers and paraprofessionals have needed certifications.

44


Annual Report Card, High School Graduation Rate• Common Audit Procedures

Verify that High School Graduation Rate Data was provided to PA through PIMS.

Assessment System Security• Common Audit Procedures

Obtain evidence that LEA implemented a test security assessment.

45

PENNSYLVANIA SINGLE AUDIT REPORTING PACKAGE SUBMISSION

46

PA Single Audit Reporting

For 06.30.17 Year End Audits:• PA will no longer be requiring the electronic submission

of the single audit reporting package.

• In order for PA to track the submission of the single audit report to the Federal Audit Clearinghouse (FAC), PA is requiring that the confirmation from the FAC is sent to [email protected] email resource account along with the Single Audit or Program-Specific Reporting Package Checklist.

47

Conclusion

• Brief Overview – History & Single Audit Process

• Compliance Supplement

• Title I, Part A Cluster

• PA Single Audit Reporting

48

Questions & Answers

49

Who We Are

Serving Central Pennsylvania for over 87 yearsServing Central Pennsylvania for over 87 years

14 partners provide depth of knowledge14 partners provide depth of knowledge

100+ combined CPAs, Professionals & Support Staff100+ combined CPAs, Professionals & Support Staff

51

Our Community Leadership

52

Our Professional Commitment

53

Our History

• Proudly serving Lancaster County for over 87 years

• Recognized as an industry leader

• Our partners have a combined 350 years of experience

Professionalism

Trust

Responsiveness

Quality

54

Highest Standard is

IntegrityExtraordinary

Client Care

Exceptional Counsel &

Advice

First Professional

Resource

Our Vision

55

Industry Expertise

TEG

Auto Dealerships

Construction

Manufacturing

Not for Profit

Employee Benefit Plans

Medical & Dental

Governmental

Real Estate

56

Our Team

Partners - 14

Managers- 15

Supervisors- 9

Senior & Staff Accountants - 30

QuickBooks® Professionals– 12

Administrative & Information Technology - 21

57

Services Offered

Attest

• Employee Benefit Plans

• For Profit• Governmental• Not for Profit

Specialized Accounting

• Audit• Business

Continuity• Business Valuation• Fraud

Investigation• Internal Control

Review• IT Support• QuickBooks®

Tax

• Corporate• Estate & Trust• Individual• Multi-state• Sales & Use

58

What Differentiates Our Firm

• Business and Industry Expertise• Community Commitment• Long-term Relationships• Personal Involvement and Communication• Staff Continuity

Our Partners

59

Presented By

Krista Showers, CPA, CEBSPartner

[email protected]

Expert in Audits of:• Employee Benefits• Governmental Agencies• Single Audits

Member of:• American Institute of Certified Public

Accountants• Pennsylvania Institute of Certified

Public Accountants• Government Finance Officers’

Association• Central Pennsylvania Chapter of

Certified Employee Benefit Specialists• Pennsylvania Association of Federal

Program Coordinators

2013 Women of Influence Award60

What Differentiates Our Firm

LANCASTER OFFICE1705 Oregon Pike, Lancaster, PA 17601

Phone 717‐569‐2900 ∙ Toll Free 800‐448‐1384 ∙ Fax 717‐569‐0141

CAPITAL REGION OFFICE5000 Ritter Road, Suite 104, Mechanicsburg, PA 17055

Phone 717‐697‐2900 ∙ Toll Free 800‐448‐1384 ∙ Fax 717‐697‐2002

www.troutcpa.com

pennsylvania association of federal program coordinators · brief overview 4. history 1979: federal...

Documents