Webinar PresentationAugust 25, 2010

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Sound Check

Agenda• Department Requirements and Expectations• Best Practices

– Using a Risk-Based Monitoring Approach– Monitoring American Recovery & Reinvestment Act (ARRA)

Funds– Monitoring Subrecipients for Financial Risk

• Charlotte Stevens, Director – Division of Education Finance, Louisiana Department of Education

– Web-Based Monitoring • Jennifer Morgan - Title I and Title II Senior Consultant, Colorado

Department of Education• Questions

What is Monitoring?

• More than on-site visits• Any action taken by grantee throughout

the life of a grant to ensure legal compliance and program performance

• Ongoing process

Department Requirements and Expectations

A pass-through entity shall..[m]onitor the activities of subrecipients as necessary to ensure that Federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and that performance goals are achieved.OMB Circular A-133__.400(d)(3), issued under the Single Audit Act of 1984, P.L. 98-502, and the Single Audit Act Amendments of 1996, P.L. 104-156.

Federal Requirements – Education Department General Administrative

Regulations (EDGAR)

Section 80.40 – State, Local and Indian Tribal Governments

• Grantees are responsible for managing the day-to-day operations of grant and subgrant supported activities. Grantees must monitor grant and subgrant supported activities to assure compliance with applicable Federal requirements and that performance goals are being achieved. Grantee monitoring must cover each program, function or activity.

Section 74.51(a) – IHEs, Hospitals, Non-profits, • Recipients are responsible for managing and monitoring each project,

program, subaward, function, or activity supported by the award. Recipients shall monitor subawards to ensure subrecipients have met [A-133] audit requirements in §74.26.

Federal Requirements Single Audit Act

• Single Audit Act,1996 Amendments, 31 U.S.C. §7502(f)(2)(B)

• Grantees must:– Monitor subrecipients through site visits, limited scope

audits, or other means;– Review subrecipient audits as necessary to determine

whether prompt and appropriate corrective actions have been taken;

– Require subrecipients to make records and financial statements available to independent auditors

A-133 Compliance Supplement

• Pass-through entity is responsible for during-the-award monitoring, through:– Reporting: reviewing subrecipient financial AND performance

reports;– Onsite reviews: review programmatic AND financial records and

observe operations;– Regular contact; OR– Other means

• STANDARD: Monitoring efforts must provide a reasonable assurance that a subrecipient administers Federal funds in compliance with laws and regulations and that performance goals are achieved

A-133 Compliance Supplement

• Additional requirements - American Recovery and Reinvestment Act (ARRA)– Pass-through entities are responsible for:

• informing first-tier subrecipients of the requirement to register in the Central Contractor Registration (CCR), including obtaining a Dun and Bradstreet Data Universal Numbering System (DUNS) number;

• keeping this information current (including performing periodic checks)

– Advises auditors to test the pass-through entity’s subaward review and approval documents to determine whether, before the award, the pass-through entity checked CCR to determine whether subrecipients were registered

• Review grant award agreements– Program-specific monitoring requirements– General Education Provisions Act (GEPA) Single

State Application, 20 U.S.C. §1232d• State must monitor agencies, institutions and

organizations responsible for carrying out each Program;

• provide technical assistance to these entities; and• correct deficiencies in Program operations that are

identified through monitoring

Additional Requirements

Federal Requirements - Conclusions

• Why do grantees have to monitor subrecipients? – It’s the law.

• How do grantees have to monitor?– It’s up to the grantee.

• How should you monitor, or, what does good monitoring look like?

Best Practices in Subrecipient Monitoring

Review and Revise Your Monitoring Plan

What makes up a monitoring plan?• Written set of policies and procedures that

guide the scope and frequency of monitoring activities, including follow up on corrective actions

• Monitoring schedule • Monitoring checklist• Risk assessment, i.e., what factors determine

the methods and frequency of monitoring subrecipients and programs?

Revising Program Monitoring Checklists

• Review current laws and regulations to ensure checklists cover all applicable program requirements

• Set forth requirements in plain language, cite to relevant law or regulation

• Identify method of verification and required documentation

• Identify cross-cutting monitoring requirements (e.g., cash management)

Scrutiny of Subrecipient Monitoring Plans

• A-133 Single Year Audit Review– Subrecipient monitoring included as a compliance

requirement– Suggested audit procedure: review of subrecipient

monitoring policies and procedures to gain an understanding of the scope, frequency and timeliness of monitoring activities

Scrutiny of Subrecipient Monitoring Plans

• Student Achievement and School Accountability Programs (SASA) review:– Includes subrecipient monitoring as a key requirement– State monitoring cycles, policies and procedures– Data collection instruments– Monitoring reports and feedback to LEAs– “High risk” identification process– Corrective action plans and SEA follow-up– SEA procedures for monitoring programs and activities

funded with Recovery Act funds

Using a Risk-Based Monitoring Approach

Risk Analysis

A-133 Compliance Supplement, Section M

A-133 Compliance Supplement, Section M

Examples from the Field

Using a Risk-Based Monitoring Approach

Using a Risk-Based Monitoring Approach

Adjusting the Monitoring Plan

Common A-133 Finding

• Hypothetical: Grantee’s monitoring policy requires a subrecipient assessed as a “significant risk” to undergo an annual onsite monitoring visit. Fifty subrecipients are classified as significant risks based on a risk assessment. However, the grantee only has resources available to perform 30 onsite visits that year.

• A-133 Audit Finding: SEA is unable to conduct onsite reviews of all subrecipients within a monitoring review cycle.

• Possible Solution: Perform a resource assessment as part of a risk-based monitoring approach– Identify available resources, and/or alternative resources – Tie monitoring activities to budget– Adjust monitoring schedule so that plan can be implemented

Additional Recovery Act Requirements

Increased Single Auditor Scrutiny of

Recovery Act Funds– Auditors required to report Recovery Act-related

significant deficiencies or material weaknesses in the Schedule of Findings and Questioned Costs

– Auditors instructed to consider whether control procedures in place over Recovery Act funds are appropriate, working properly and designed to prevent unallowable expenditures

– Consider whether additional controls and system requirements will be needed to ensure that Recovery Act funds are able to be separately identified and tracked, and that Federal reporting and subrecipient monitoring requirements are met

Increased Single Auditor Scrutiny of

Recovery Act Funds

– Recovery Act awards high risk under A-133 = greater scrutiny

– New Recovery Act expenditures may push subrecipients across the $500,000 A-133 audit expenditure threshold

Monitoring State Fiscal Stabilization Funds (SFSF) - Department Guidance

• Each state must have a comprehensive monitoring

plan for SFSF supported activities. Monitoring plans should address the following: – Monitoring schedule – Monitoring policies and procedures– Data collection instruments – Monitoring reports and feedback to subrecipients– Processes to verify that required corrective actions

are implemented

Scrutiny of Subrecipient Monitoring Plans

• State Fiscal Stabilization Fund (SFSF) review– Application and allocation procedures– Fiscal oversight policies and procedures– Subrecipient monitoring

• Policies and procedures• Monitoring schedule• Monitoring feedback and follow-up (corrective action/technical

assistance)• Process for prioritizing entities to be monitored (risk assessment)

– Maintenance of effort– Progress in the four education reform areas– Reporting

Monitoring Existing Recovery Act Programs

• Challenge– Current monitoring schedules do not account for

Recovery Act funds• Possible Solution

– Perform risk assessment, using size of Recovery Act funds as a risk indicator

– Adjust monitoring schedule to review a larger percentage of Recovery Act programs

Monitoring Existing Recovery Act Programs

• Challenge– Recovery Act adds additional program

requirements

• Possible Solution– Review legislation and OMB guidance– Adjust monitoring checklist to ensure full

compliance with Recovery Act requirements

Monitoring Existing Recovery Act Programs

• Challenge– Providing sufficient fiscal oversight

• Possible Solution– Review legislation and OMB guidance; adjust

monitoring checklist to ensure full compliance with fiscal requirements

– Provide additional fiscal oversight over drawdown activity, allowable costs

Monitoring Subrecipients for Financial Risk

Charlotte Stevens, Director Division of Education Finance

Louisiana Department of Education

Web-Based Monitoring

Jennifer Morgan, Senior ConsultantColorado Department of Education

Questions&

AnswersFurther questions? Email - RMSCommunications@ed.gov

Thank you for participating!Please complete an evaluation—

Your feedback is important. http://www.ed.gov/policy/gen/leg/recovery/rms-web-conferences.html

Department of Education (ED) Resources

• General Information, all ED Recovery Act Programs – http://www2.ed.gov/policy/gen/leg/recovery/programs.html

• SASA Monitoring–

http://www2.ed.gov/admins/lead/account/monitoring/indicators0910.pdf.

• IDEA Monitoring – http://www2.ed.gov/fund/data/report/idea/verificatvisit.html

• SFSF Applicant Information, including Guidance and ED’s monitoring plans and protocols– http://www2.ed.gov/programs/statestabilization/applicant.html

• ED OIG– OIG Recovery Act page

http://www2.ed.gov/about/offices/list/oig/recoveryact.html– Subrecipient Monitoring under AARA

http://www2.ed.gov/about/offices/list/oig/auditreports/fy2010/x05j0019.pdf.

• EDGAR: http://www2.ed.gov/policy/fund/reg/edgarReg/edgar.html

Other Resources

• Office of Management and Budget – OMB Circular A-133– June 2010 Compliance Supplement– March 2009 Compliance Supplement– March 2009, Compliance Supplement “Other OMB Circular A-133 Advisories

Appendix VII -- American Recovery and Reinvestment Act” http://www.whitehouse.gov/sites/default/files/omb/assets/a133_compliance/app_7.pdf

• US Government Accountability Office – GA0 May 2010 Recovery Act Report to Congress

http://www.gao.gov/new.items/d10604.pdf.

• AGA Partnership for Intergovernmental Management and Accountability, Risk Assessment/Financial and Administrative monitoring tools

– http://agacgfm.org/intergovernmental/resources.aspx

Other Resources

• Information on Colorado Department of Education’s C-FIRS web-based monitoring system

– http://www.cde.state.co.us/FedPrograms/NCLB/downloads/monit_cfirsusergd.pdf.

• Information on Louisiana Department of Education’s Financial Risk Assessment

– http://www.louisianaschools.net/lde/finance/2555.html

Disclaimer of Endorsement The resources on this slide contain hypertext links to information created and maintained by other public and private organizations. These links are provided for the user's convenience. The U.S. Department of Education does not control or guarantee the accuracy, relevance, timeliness, or completeness of this outside information. Further, the inclusion of links or pointers to particular items in hypertext is not intended to reflect their importance, nor is it intended to endorse any views expressed, or products or services offered, on these outside sites, or the organizations sponsoring the sites.

ARRA Contact Information

State Fiscal Stabilization Fund: State.Fiscal.Fund@ed.govTitle I, Part A Grants to LEAs: TitleI.ARRA@ed.govSchool Improvement Grants: SIGquestions@ed.gov Educational Technology - Enhancing Education Through

Technology: Title2D@ed.govIDEA, Parts B & C: IDEARecoveryComments@ed.gov Voc-Rehab, Independent Living Services & Centers for

Independent Living: RSARecoveryActComments@ed.gov

ARRA Contact InformationImpact Aid: impact.aid@ed.gov State Longitudinal Data Systems: slds@ed.govTeacher Quality Partnership: TQPartnership@ed.govTeacher Incentive Fund: TIF@ed.gov

ED-OIG Hotline: oig.hotline@ed.gov, 1-800-MIS-USED

General Info: 1-800-USA-LEARN (1-800-872-5327)

For archived and future web conferences: http://www.ed.gov/policy/gen/leg/recovery/web-conferences.html#schedule