Transcript Slide 1

Implementation of
the American Recovery
and Reinvestment Act
A local government perspective
Jerry E. Durham,
CPA, CGFM, CFE
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Implementation of ARRA
in Tennessee
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Implementation of ARRA
in Tennessee
County Audit Response to ARRA:
Additional Audit/Review Procedures:
Completing a Questionnaire for all ARRA grants.
Performing real-time audit procedures (commando
raids).
 Put governments on notice that we are looking.
 Determine the ability to report for direct grants.
Established New Investigative Team
Composed of four investigators
Headed by Kevin Huffman, Investigative Coordinator
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Implementation of ARRA
in Tennessee
County Audit Response to ARRA:
Results of Real-time ARRA grant reviews:
Forty-six grants amounting to $15,389,964 in 11
Counties.
Four grants did not have separate accounting records.
Segregation of Duties controls were inadequate for 13
grants.
Risk Assessments had not been performed for 13 grants.
Action Plans had not been prepared for nine grants.
Section 1512 reports had not been filed for two direct
grants.
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Implementation of ARRA
in Tennessee
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Implementation of ARRA
State –
Prime
Recipient
Federal
Local
Govnt. Prime or
Subrecipient
Subrecipient
or Vendor
Subrecipient
or Vendor
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Implementation of ARRA
County
or City
•
•
•
•
Funds
Budgets
Types of Funds
Departments
Component Units
Other
Agencies
• Schools
• E-911
• Development
Districts
• Human Resource
Agencies
• State Agencies
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Implementation of ARRA
TARP
ARRA
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Implementation of ARRA
Before - Non-ARRA Grant
•
•
•
•
•
Title 1 Grant
Amount = $500,000
Certain Allowable Costs
Old CFDA Number
Standard Risk Assessment
to determine high risk
programs.
• Normal Reporting
After - ARRA grant
•
•
•
•
•
Title 1 ARRA Grant
Amount = $500,000
Same Allowable Costs
New CFDA Number
Defined by OMB as High
Risk
• Normal reporting plus new
reporting to TRAM Track
and/or Federalreporting.gov
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Implementation of ARRA
Before - Non-ARRA Grant
•
•
•
•
Title 1 Grant (cont’d)
Amount = $500,000
Not a cluster program
A-133 Internal Control
requirements
– N/A
– N/A
• Ability to identify grants
After - ARRA grant
•
•
•
•
Title 1 ARRA (cont’d)
Amount = $500,000
New Cluster Program
A-133 Internal Control
Requirements plus TRAM
requirements+?
– Risk Assessment
– Action Plan
• Separate Accounting
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Implementation of ARRA
Before - Non-ARRA Grant
•
•
•
•
Title 1 Grant (cont’d)
Amount = $500,000
N/A
Compliance Req.
• N/A
• What if this amount was
$1,500,000?
Before - ARRA grant
•
•
•
•
Title 1 ARRA (cont’d)
Amount = $500,000
Track Jobs Created/Retained
More Compliance Req.
• Subject to IGs Audit
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Implementation of ARRA
Status Report:
For June 30, 2009, very few grants were actually
received (39 Audits = 8 grants for $4,265,852).
Most ARRA grants will be received for FYE June
30, 2010.
Jobs created to date are relatively few (TN. First
Report, 9/30/09 for Grants = 8754.)
OIGs are coming. (DOE, Justice, USDA)
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Implementation of ARRA
 What this means to You - General:
Laser beam focused on auditors and governments.
Single Audits performed in the same way generally.
Recipients Signed a contract to follow TRAM
Directives.
Recipients Signed a contract to follow ARRA.
(Standard Terms and Conditions for ARRA Grants).
(e.g. Should contain requirement to report Fraud, Waste, and
Abuse to appropriate IG - M-09-10 & M-09-15)
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Implementation of ARRA
What this means to You:
 Compliance Supplement Addendum #1
Effective for Single Audits performed on or after June
30, 2009.
Cross-cutting requirements:
 Cannot use ARRA funds for Casino, Gambling Establishment,
Aquarium, Zoo, Golf Course, or swimming pool.
 Davis Bacon Act Applies.
 Buy American provision for Public Building Projects.
 Identify to first-tier subrecipients requirements to register with
CCR including obtaining a DUNS number.
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Implementation of ARRA
What this means to You:
 Compliance Supplement Addendum #1 (cont’d)
Cross-cutting requirements (cont’d):
 Special Tests and Provisions:
 Separate accountability in accounting records.
 Separate Identification and presentation of ARRA grants
on SEFA and Data Collection Form.
 Communication to subrecipients of ARRA award
information including Federal Award Number, CFDA
number, amount of ARRA funds, and separate
identification requirements on SEFA and Data Collection
Form.
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Implementation of ARRA
What this means to You:
 Compliance Supplement Addendum #1 (cont’d)
New Reporting to Federalreporting.gov.
Major Program Determination:
 Methodology used to identify A & B programs is unchanged.
 Any federal award that exceeds the Type A threshold and
contains “any”
amount of ARRA expenditures is
automatically a high-risk Type A program.
 Any cluster exceeding the Type A threshold that includes an
ARRA program is considered a “new” program and would
automatically be a high-risk Type A program.
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Implementation of ARRA
What this means to You:
 Compliance Supplement Addendum #1 (cont’d)
Changes have been made to program-specific
requirements.
OMB anticipates additional amendments to compliance
supplement. They will be effective for various dates.
In the future, extensions of time to submit the Single
Audit will be difficult, if not impossible, to get
approved.
In the future, submission deadline will be less that nine
mos.
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Implementation of ARRA
What this means to You:
 Compliance Supplement Addendum #1 (cont’d)
Monitoring Subrecipients
Whitehouse.gov/omb/circulars_a133_compliance_09toc
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Implementation of ARRA
What this means to You:
ARRA Reporting Requirements:
M-09-21guidance
(whitehouse.gov/omb/recovery_default):
Report no later than 10th day after the end of each
calendar quarter beginning on September 30, 2009.
 Prime recipients may delegate reporting responsibilities.
 Subrecipients are non-federal entities that are awarded funding
through a legal instrument of the prime recipient. Terms and
conditions of the Federal award are carried forward to the
subrecipient. A vendor is not a subrecipient.
 Prime recipient must report the identity of any vendor that
receives payments of over $25,000.
 Subrecipients may be required by the prime recipient to report
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certain data elements.
Implementation of ARRA
What this means to You:
ARRA Reporting Requirements (cont’d):
M-09-21 guidance (cont’d):
 Reporting will begin the quarter in which an award is made.
 Reporting is on a cumulative basis (except jobs).
 Ramifications of non-compliance with reporting requirements.
 Flagged as non-compliant.
 Withholding funds.
 Termination.
 Suspension and debarment.
 How to report payments.
 Key activities and time frames.
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Implementation of ARRA
What this means to You:
ARRA Reporting Requirements (cont’d):
M-09-21 guidance (cont’d):
 Key Activities and Time Frames (Original)
 Days 1-10.
 Days 11-21
 Days 22-29
 Day 30
 Extensions for Late Filing?
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In-bound Recipient Reporting (FederalReporting.gov) Timeline and Activities
Continuous
1 – 15 days after
end of Quarter
16 – 22 days after
end of Quarter
Prime
Recipients
Review
Data
Submitted
By Sub(s) 4
Prime
Recipients
& Subs
Enter
Draft
Reporting
2
Data
Agency, Prime
and Sub
Recipient
Registration
Initial
Submission
1
33 -90 days
after end of
Quarter
30 days
after end of
Quarter
23 – 29 days after
end of Quarter
Recipient
Reports
Published
on
Recovery.
gov
Agency
Review of
Data
Submitted
6
8
Prime
Recipients &
Subs Make
Corrections
Prime
Recipients &
Subs Make
Corrections
Next quarterly
reporting
cycle beginsupdates
reflected
cumulatively
3
10 days
after end
of
Quarter
5
7
9
Agency “View Only”
Agency Comment Period
Recipient Report Adjustments Possible
Report Status:
Draft
Initial
Submission
Final
Submission
Published
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Implementation of ARRA
What this means to You:
ARRA Reporting Requirements (cont’d):
M-09-21 guidance (cont’d):
Illustration – Federal agency awards $1,000,000 ARRA
grant to University A. A spends $200,000 to purchase
equipment from XYZ Corp. A sub-awards the $500,000
to University B. B spends $50,000 to purchase
equipment from 123 Corp.
Aggregate payments less than $25,000.
 Sub-awards
 Payments to individuals
 Payments to vendors
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Implementation of ARRA
What this means to You:
ARRA Reporting Requirements (cont’d):
M-09-21 guidance (cont’d):
 Calculating the number of jobs.
 Full-time equivalents basis.
 Collecting information from subrecipients and vendors
 Direct jobs vs. Indirect jobs.
 New Guidance (M-10-08, 12/18/09)
 Simplified calculation.
 Report Jobs for each quarter rather than cumulative.
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Implementation of ARRA
What this means to You:
Other OMB Guidance:
M-09-10 and 15 guidance.
 Standard terms and conditions.
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Implementation of ARRA
What this means to You:
OMB General:
Pilot Project (Internal Controls Reporting).
AICPA Letter.
Not responsible for auditing Job count.
Build America and Cobra compliance not subject to
Single Audit.
Capacity not subject to audit.
No more extensions to complete Single Audits.
Be sure private information is protected since on
website.
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Implementation of ARRA
What this means to You:
OMB General (cont’d):
Enter findings on Data Collection Form next year.
Report as a cluster when grant is “expended”.
M-10-05, 11/30/09.
 Identifying and Reporting Noncompliance.
M-10-08, 12/18/09.
 Changes to job number calculations.
Additional Guidance is coming.
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Implementation of ARRA
What this means to You:
GAO:
Fraud, Waste, and Abuse.
First report on Compliance with Section 1512.
RATB:
New reporting will be required of all grants in the
future.
Late Filing Extensions. (9/30, and 12/31)
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Implementation of ARRA
What this means to You:
Inspector General Report (DOE):
Internal Controls.
Capacity.
Communication.
Reports to Three Local Education Agencies
 Correct Previous Dept. of Audit Findings
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Implementation of ARRA
What to anticipate:
We anticipate numerous findings related to the
TRAM Directives and reporting. These findings
will be reported to the Federal Government to be
posted on their website. Based on our experience,
we do not expect wide-spread fraud.
Lessons from 9/11/2001 - Abuse.
Vs.
TARP/ARRA. We are now required to report
abuse.
Prosecutions – President, RATB, Comptroller,
DAs.
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Implementation of ARRA
What to anticipate:
Direct Grants reporting noncompliance.
Subrecipient monitoring responsibilities
noncompliance.
Fraud in contracts.
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Implementation of ARRA
Transparency and Accountability Funding:
Inspector Generals = $224,000,000.
GAO = $25,000,000
Recovery Act Transparency Board
$84,000,000
OMB = ??
=
Department of Audit = $0,000,000.
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Implementation of ARRA
Ten Steps to ARRA Compliance:
– The following websites are of importance with regard to
ARRA compliance:
– http://www.recovery.gov/- Federal ARRA Information
Website
– https://www.federalreporting.gov – Website where all
ARRA grant revenues and expenditures are reported by
grant recipients.
– http://www.tnrecovery.gov/ - ARRA General Information
website for the State of Tennessee.
– http://www.tn.gov/comptroller/ -Tennessee Comptroller’s
General Information and ARRA Website.
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Implementation of ARRA
Recovery Act and Related Bonds:
Build America Bonds.
Recovery Zone Economic Development Bonds.
Qualified School Construction Bonds.
Qualified Energy Conservation Bonds.
Qualified Zone Academy Bonds.
Other Bonds.
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Implementation of ARRA
How do we deal with
ARRA?
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Implementation of ARRA
How do we deal with ARRA?
A simple solution.
Responses to current internal control and
questioned cost findings.
A place to start for Local Governments County/Municipal Audit ARRA websites.
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ARRA Questions?
www.tn.gov/comptroller
Jerry E. Durham, CPA, CGFM, CFE
Technical Manager
Division of County Audit
615.401.7951
[email protected]
The Opinions expressed during this presentation were
my own. They do not necessarily represent the
views of the Comptroller, his representatives, or the
Department of Audit.
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