Transcript Testing Criteria / Transactions – contd.

2011 National Extension and Research
Administrative Officers’ Conference
Session #33, May 24, 2011
1:30 p.m. – 2:45 p.m.
Anchorage ,Alaska
Federal Audits and IPIA Reviews:
Edward Nwaba, CPA
Branch Chief, Policy and Oversight Division
Office of Grants and Financial Management, NIFA-USDA
Oversight Activities
• Audits (Three types):
– OMB Circular A-133 (Single Audits)
– OIG / GAO Program Specific Audits
– NIFA Administrative / Financial Reviews
Oversight Activities contd.
• OMB Circular A-133 (Single Audits)
– Requires Non Federal entities that expend $500,000 or
more in a year in Federal awards, to have an audit – single
audit or program specific audit
– Established consistent and uniform standards for audits of
Federal recipients ( i.e. States, local governments, and nonprofit organizations)
• OIG / GAO Program Specific Audits
– Ascertain agency progress in implementing program
guidelines
– Determine recipient’s compliance with program
requirements
Administrative / Financial Reviews
• All other reviews other than Audits:
– Investigations – hotline complaints
• Mismanagement
• Misuse of funds
• Other complaints – not happy with program
– System Reviews – A-123 Internal Controls, etc
– Program Specific audits
• Program activities tie to plan of work
• Terms and Conditions of awards are met
• Other statutory requirements are met
Administrative / Financial Reviews contd.
• Agency identifies programs or recipients for review:
based on– To meet Statutory Requirements – e.g. Improper
Payments Information Act (IPIA), Hatch Act,
McIntire-Stennis Act
– New programs or recipients – program specific
– Per recommendation from program
– Whistleblower / Hotline complaints
• Reviews may include review of financial, compliance,
internal controls, and accounting systems
• Reviews can be on-site, or desk reviews
Recent OIG Audit
• Review of 1994 Tribal Land Grant Institutions –
OIG Audit No. 13011-3-AT
– Audit Objectives
• Evaluate NIFA controls over grants to the
1994 Land Grant Institutions
• Verify that the 1994 LGI’s were using grants
as intended per grant agreements
– Site visits
• Two LGI’s visited
Sample Findings – OIG Audit No. 13011-3-AT
Tribal colleges submitting few required reports including:
• OMB Circular A-133 Single Audit Reports
• Plans of Work for Endowment Interest Funds - received
25 out of 99 reports
• Annual Program Performance reports for Equity and
Research Grants
• Financial Status Reports (SF-269 / SF425)
• LGI’s claimed ineligible expenses:
– Improperly charged salaries and wages – employees
not working on project charged
– Equipment costs without adequate support
– Wrong project funded
– Drawdowns performed after award had expired
Recent NIFA Non-profit Audit
• Review of Non-profit Grantee
– Audit Objectives
• Evaluate whether grantee used grant funds as
intended per grant agreement
• Determine whether use of Federal funds complied
with Federal admin. requirements, cost principles
and implementing regulations
• Examined program income, program expenditures
expenditures, Personnel actions, use of facilities,
and procurement actions.
Sample Findings – NIFA Non-profit Audit
• Program income improperly classified as unrestricted
income
• Inconsistent treatment of accounting fees and
maintenance charges
• Costs charged to federal grants after the award
expiration date
• Travel advance improperly charged to NIFA award
Sample Findings – NIFA Non-profit Audit contd.
• IT costs improperly charged to federal grants – using
inappropriate allocation method
• Renovation costs improperly charged to federal grants
as indirect costs
• Severance Pay for unallowable activity charged to
federal grants
• Audit, insurance, legal and other services improperly
procured
Sample Findings from Other NIFA Reviews,
OIG / GAO and A-133 Audits
• Draw downs in excess of recorded expenditures
• NIFA awards treated as one pool of funds. Cost overruns on
one award absorbed by another unrelated award
• Commingling of grant funds
• Matching requirements were not met, or recipients claimed
unallowable costs as part of their matching contribution
• Grants not closed out timely
• Expenditures reported on SF-269/425 Financial Reports did
not reconcile to accounting records – SF-269/425
expenditures not supported by accounting records
• Equipment inventory not completed in more than two years
• SF-269/425 Financial Reports not filed or filed late
Sample Findings from Other NIFA Reviews,
OIG/ GAO and A-133 Audits contd.
• Cash Transaction Report SF-272 did not reconcile to the
General Ledger
• Inconsistent treatment of costs (i.e., certain indirect costs
were charged direct to NIFA awards, but allocated as indirect
costs on other awards)
• Time and effort reporting noncompliance
• Sub-recipient monitoring noncompliance
• Unexpended Carryover funds not properly documented and
accounted for
• Lack of separation of duties and incompatible functions
• Excess pension costs charged to awards
• Improperly charged salaries and wages to wrong account
• Unallowable building renovation costs charged to grant
awards
Improper Payments Information Act
(IPIA) site reviews
• IPIA Act of 2002 – Enacted under Public Law (P.L.
107-300)
• Requires Federal awarding agencies to do (Three things)
– Identify programs with high risk of making improper
payments
– Calculate / Estimate the annual amount of improper
payments
– If estimate exceeds threshold 2.5% of program
outlays and $10m Report estimate to congress
w/corrective action plan
What are Improper Payments? (Two types)
• Any payment that should not have been made, or that
was made in an incorrect amount (including
overpayments and underpayments) and payments to
ineligible recipients
• Any payment for an ineligible service, any duplicate
payment, any payment for services not received, any
payment that does not account for credit for applicable
discounts
Site Visit Selection
• Six institutions each year
– 4 (1862s)
– 1 (1890)
– 1 (1994)
Testing Criteria / Transactions
• Allowable Activities – Smith Lever as example
– Expenditures are allowable per plan of work / grant
agreement
– Smith Lever Act and 1444 funds
• Not used for unallowable building purchase or
repair activities
• Purchase or rental of land
• College course teaching activities
Testing Criteria / Transactions – contd.
• Allowable Costs –
– Expenditures are for allowable direct costs – indirect
costs and tuition remission are unallowable
– Payments are to proper payee / correct amount
– Retirements costs – 5% caps and 100% match
observed
Testing Criteria / Transactions –contd.
• Matching
– 100% match observed – section 3 (b) and 3(c)
– No matching requirement – section 3 (d)
– In-kind contributions not allowed as match for
formula grants
Testing Criteria / Transactions – contd.
• Period of availability of Federal funds
– Expenditures are for correct period
– Carry forward requirements are met
• 1862 section 3(b) and 3(c) – 100% for 5 years
• 1890 section 1444 – 20% for one year
Testing Criteria / Transactions – contd.
• Reporting
– Required reports filed timely
– OMB A-133 audit reports
– SF-269 financial status report
• April 1 for 1862s
• December 1 for 1890s
Testing Criteria / Transactions – contd.
• Special Tests and Provisions
– Plan of work – program specific requirements
– Interviewed project staff
– Compare salary charges to time and effort report
– T & E reporting procedures / frequency
Sample Findings from (IPIA) Site Reviews
• Grant funds improperly spent for unallowable grant
activities
• Grant funds improperly spent for unallowable college
course teaching activities
• Grant funds improperly used to fund college
scholarships & tuition remission expenditures
• Expenses reported in incorrect amount - Available
discounts not taken
• Improper Payroll charges for employees not working on
the grants charged – State funded employees improperly
paid using grant funds
Sample Findings from (IPIA) Site Reviews
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Expenses recorded in the wrong period
Improper application of established capitalization rules
Missing support for expenditures
Incorrectly recorded journal entries
Extension funds improperly used to fund retiree benefits
Thank You