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State Auditor’s Office April 22, 2010 Brad White, CPA Single Audit Coordinator Presentation Objectives Discuss how your audit will be impacted by ARRA (Recovery Act). Discuss what the State Auditor looks for and why. 2 Who Needs A Single Audit? OMB Circular A-133 requires all grantees that expend over $500,000 in federal awards in a year to have a “single audit”. Who does this impact? The State of Washington - all state agencies and colleges/universities are combined into one “auditee”. Any local government that expends over $500,000 in federal awards in a year. Any not-for-profit that expends over $500,000 in federal awards in a year. What is the Scope of a Circular A-133 Audit? Federal Awards Financial Statements A-133 Accountability State Laws Performance Audit Citizen Hotline Fraud WhistleBlower Single Audit Deadline Your A-133 Single Audit report must be submitted to the federal clearinghouse within 9 months after your fiscal year ends. Federal agencies have been instructed to deny requests for extensions to the 9-month deadline. The OMB has proposed new guidance that will require the auditor to report a finding in your audit report if you miss the 9-month deadline. (This is draft language as of the date of this conference). American Recovery and Reinvestment Act (ARRA) On Feb. 13, 2009, Congress passed the American Recovery and Reinvestment Act of 2009. The Recovery Act has three immediate goals: Create new jobs as well as save existing ones. Spur economic activity and invest in long-term economic growth. Foster unprecedented levels of accountability and transparency in government spending. American Recovery and Reinvestment Act (ARRA) American Recovery and Reinvestment Act (ARRA) ARRA - Schedule of Expenditure of Federal Awards The OMB has stated that all expenditures funded by ARRA must be listed in a separate row in the SEFA and the title of the award should begin with the prefix “ARRA”. (2 CFR 176.210) ARRA - Audit Planning Your auditor will select certain federal programs to audit based on the program’s dollar amount and the risk of noncompliance in relation to other programs. ARRA-funded programs are considered inherently risky by the federal government and will likely be selected for audit in place of non-ARRA programs. ARRA - Audit Planning Example of new ARRA clusters: CDBG State-Administered Cluster 14.228 Community Development Block Grants/State’s Program 14.255 ARRA Community Development Block Grants/State’s Program Immunization Cluster 93.268 Immunization 93.712 ARRA Immunization How will ARRA affect your audit? Although the goal of the Recovery Act was to disburse funds quickly to stimulate the economy, the Recovery Act did not relax any compliance requirements. The federal government is calling for increased auditor scrutiny on internal controls over Recovery Act funds. Typical Compliance Areas Cash Management Program Income Davis-Bacon Act Real Property Acquisition Eligibility Reporting Equipment Mgt. Changes in Project Scope and Budget Matching Level of Effort Earmarking Period of Availability Procurement Suspension and Debarment Cost Principles ARRA – Special Tests and Provisions Three new “Special Provisions” were added to the auditor’s checklist for audits of FY2009 and FY2010: 1. Separate accounting for ARRA funds. 2. Proper presentation of ARRA funds on the Schedule of Expenditures of Federal Awards (SEFA). 3. Communicating ARRA requirements to subrecipients. Tracking Your ARRA Grants Circular A-102 Common Rule, Section .20 Grantees must have a financial management system capable of: Preparing accurate and complete financial reports in accordance with the grant requirements. Maintaining records to substantiate amounts received, obligated, and expended from ARRA funds (note: you should be able to do this for any federal grant – not just ARRA grants). ARRA Priority Requirements Subrecipient Monitoring Be sure to inform your subrecipients about: The allowable uses of ARRA grant funds. The CFDA number for their award. Reporting their ARRA expenditures on their annual Schedule of Expenditures of Federal Awards (SEFA). Registering with the Central Contractor Registration so their ARRA grant data can be submitted to: FederalReporting.gov 16 ARRA Priority Requirements The following compliance areas have been emphasized by the Inspector General and OMB for ARRA grants: Using ARRA funds for allowable costs. Circular A-87 cost principles. Cash management. Reporting of grant information timely and accurately (e.g., Section 1512 reports). 17 ARRA Priority Requirements Other notable compliance areas in the Recovery Act: Procurement of goods and services with free and open competition, (including “Buy American” when applicable). Using federal funds to supplement and not supplant local funds (this could be waived for some grants). Davis Bacon Act prevailing wages. 18 ARRA – Unallowable Costs Did you know? No Recovery Act funds may be used for an casino, aquarium, zoo, golf course, or swimming pool. (Section 1604 of ARRA) ARRA – Buy American Grantees cannot use their ARRA funds for the construction, alteration, maintenance, or repair of a public building or work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States. ARRA provides for waiver of these requirements under specified circumstances. ARRA – Buy American Unless waived by a federal agency, a grantee must include the “Buy American” requirement in all contracts for construction, alteration, maintenance, or repair of a public building or public work. ARRA – Davis Bacon Act Federal prevailing wages apply to “construction” projects funded by ARRA. Grantees must include this provision in the terms and conditions of its contracts with the vendor. ARRA – Section 1512 Reporting Recipients of ARRA funds must comply with a new quarterly reporting requirement called “Section 1512”. Information being reported each quarter includes: ARRA funds spent, jobs created and retained, and amounts paid to vendors and subrecipients. If you are a “prime recipient” of ARRA funds, you must register with FederalReporting.gov. American Recovery and Reinvestment Act (ARRA) – Recovery.Gov Washington State as of September 30, 2009: No. Contracts 271 Grants 1,450 Amount Received Jobs $229 million 1,433 $1.1 billion 33,053 American Recovery and Reinvestment Act (ARRA) – Recovery.Gov Washington State as of December 31, 2009: No. Contracts 504 Grants 1,681 Amount Received Jobs $3.9 billion 1,600 $3.8 billion 12,803 ARRA – Section 1512 Reporting OMB Memo M-10-08 (Dec 18, 2009) A job created is a new position created and filled, or an existing unfilled position that is filled, that is funded by the Recovery Act; A job retained is an existing position that is now funded by the Recovery Act. The End Any final questions? Auditor’s Office Contacts Brian Sonntag, CGFM State Auditor (360) 902-0360 [email protected] Brad White, CPA Single Audit Coordinator [email protected]