Transcript Subrecipient Monitoring Under the Office of Management and

Subrecipient Monitoring Under the
Office of Management and Budget’s
Circular A-133
Presented to the American Association of
State Highway and Transportation Officials
2011 Conference
July 27, 2011
Dianne E. Ray, State Auditor
Agenda
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Subrecipient monitoring basics
Taking it a step further
Risk-based approach
Suggestions
Questions/comments
Objectives
• Provide some basic information and address
common concerns related to subrecipient
monitoring for internal auditors, external
auditors, and other stakeholders
Basics
• OMB’s Circular A-133 Compliance Supplement
outlines requirements for auditors related to
subrecipient monitoring
• Includes collecting audit reports for applicable
subrecipients and reviewing findings
Basics, Continued
• Circular A-133 Responsibilities, Subpart D—
Federal Agencies and Pass-Through Entities
(Section .400)
– Identify Federal awards to subrecipients
– Advise subrecipients of requirements under law
– Monitor activities of subrecipients to ensure
award used for authorized purposes
– Ensure subrecipients receiving more than $500k
are meeting audit requirements
Basics, Continued
– Issue a management decision letter on findings
within 6 months of receipt of audit report and
follow up on subrecipeint action
– Consider if subrecipient audit report necessitates
adjustment of entity’s own records
– Require subrecipients to allow entity and auditors
to have access to all applicable records
Basics, Continued
• Specific Compliance Requirements, a passthrough entity is responsible for:
– Determining subrecipient eligibility
– Central contractor registration
– Award identification
– During-the-award monitoring
– Subrecipient audits
– Ensuring accountability of for-profit subrecipients
– Pass-through entity impact
Basics, Continued
• Factors that may affect the nature, timing, and extent
of during-the-award monitoring:
– Program complexity – Programs with complex compliance
requirements have a higher risk of noncompliance
– Percentage passed through – The larger the percentage of
program awards passed through the greater the need for
subrecipient monitoring
– Amount of Awards – Larger dollar awards of greater risk
– Subrecipient risk – Subrecipients may be evaluated as
higher risk or lower risk to determine the need for closer
monitoring. Generally, new subrecipients would require
closer monitoring. For existing subrecients, may require
closer monitoring if (1) history of noncompliance, (2) new
personnel, (3) new or substantially changed system
Basics, Continued
• Forms of monitoring noted in Compliance
Supplement:
– Reporting – Reviewing financial and performance
reports submitted by subrecipients
– Site visits – Performing site visits at the
subrecipient to review financial and programmatic
records and observe operations
– Regular contact – Regular contacts with
subrecipients and appropriate inquiries
concerning program activities
Take This a Step Further
• Is reviewing the audit reports enough?
– No.
• Can’t rely on audit report alone to meet
federal requirements
• A risk-based approach should be developed to
determine what other steps are needed
Risk-Based Approach
• Audit reports may not have findings related to
your transportation program because it may
not be considered a major program at the
subrecipient level
• Still need to consider risks for program at the
statewide level
• May need to do additional monitoring of
subrecipients to provide adequate coverage
for federal program requirements
Suggestions
• Network with other state agencies that may
have more experience with Single Audit
issues.
– Such as your state’s Department of Human/Social
Services or state’s transportation departments
More Suggestions
• The Compliance Supplement is not a secret
• Let your subrecipients and program staff know
that the Compliance Supplement is the basis
for audits and it should be reviewed each year.
• 2011 Compliance Supplement
– http://www.whitehouse.gov/omb/circulars/a133_
compliance_supplement_2011.
Questions/Comments
???
Contacts
• Colorado Office of the State Auditor
– [email protected]
– 303-869-2800