Title I, Part A: Most Common Audit Findings

1. Title I, Part A: Most Common Audit Findings Sue Hawks Foster Education Program Specialist June 2013

2. Why is this important? We are required by federal law to: Issue a management decision on audit findings within six months after receipt of the subrecipient’s audit report and ensure that the subrecipient takes appropriate and timely corrective action [OMB Circular A-133]

3. Single Audit Process What is a Single Audit? An audit of an organization’s financial statements and a compliance audit of federal awards When is it required? A single audit will also be conducted if you expend $500,000 or more in a fiscal year in federal awards

4. Single Audit Elements When is it done? -Each year What time period does it cover? -State fiscal year Does it include all federal programs? -No Which federal programs does it cover? -Onlymajor programs What is a major program? -That requires a bit of explanation

5. Major Program Determination The auditors are to use a risk-based approach to determine which programs are major programs. How much money does the program get? Is it a low-risk program? Is it a high-risk program? What is the audit coverage?

6. Single Audits of LEAs(Sample)

7. Major Programs Example #1

8. Major Programs Example #2

9. Major Programs Example #3

10. What Programs at GaDOE?

11. What do the auditors look at? It depends…on the program being audited. Part 2 of the compliance supplement of the OMB Circular A-133 identifies what compliance requirements by program.

12. What do the auditors test? This is covered in part 4 of the compliance supplement This section is organized by compliance requirement. This section applies to LEAs and SEAs. After each requirement and subrequirement the programs that must adhere to the requirement will be listed in italics by name and CFDA number.

13. Audit Process LEA is notified of the audit Entrance conference is held Audit fieldwork – look at prior year finding Exit conference is held LEA is given a draft copy of the report and asked to respond Response placed in the report and report is released

14. Single Audit Example

15. Single Audit Reporting What needs to be reported? Opinion on financial statements Any significant deficiencies in internal control Opinion on compliance with requirements Findings Major programs audited Major program dollar threshold

16. Prior Year Findings Report on unresolved findings: Findings from prior years will continue to be reported until they are resolved. The management of the LEA has the responsibility for the resolution of the finding.

17. Audit Findings Audit findings shall be presented in sufficient detail for the auditee to prepare a corrective action plan and for pass-through entities (GaDOE) to arrive at a management decision.

18. Elements of a Finding Condition –The issue identified by the auditor. Criteria –The compliance requirement upon which the audit finding is based. Cause – The cause is what happened or did not happen for the condition to have occurred. Effect – The impact of the condition. Recommendation – The corrective action which needs to happen.

19. What we get and who gets it Financial Review (FR) gets a copy of the audit report and management letter FR reviews to see if the audit report has findings FR review response from LEA to see if their response addresses the finding If not, FR contacts LEA Federal award findings are sent to program for resolution

20. Resolving Audit Findings Federal programs are only involved with the resolution when the findings pertain to federal programs.

21. Federal Award Findings What Should I do? 1. Obtain the working papers of the auditors 2. Review federal laws, regulations, and guidance 3. Contact US ED, if unsure 4. Contact program staff at the LEA 5. Conduct an on-site review

22. What about Questioned Costs? Step 1: Contact the internal audit manager to obtain the working papers. Step 2: Review the working papers to determine: -why the costs were questioned -how the amount questioned was calculated -what was reviewedand why

23. New Aspects of the Policy 60 days to make a decision on questioned costs Decision needs to be approved by GaDOE management Decision needs to come from the program On an annual basis we will inform the Georgia Department of Audits regarding the amount of funds repaid Report on progress to Cabinet is provided by the GaDOE internal audit

24. When to Expand the Scope Why? You find expenditures which should have been questioned but were not. How to justify such an expansion?

25. Cost Benefit Example During your review you note the following: Program throws a party in a city park Five kegs of beer purchased at $99.99 a keg. Total cost $539.95. Food, beverages, and pavilion rental - $1,634.18. Rental of inflatable - $176.55.

26. Cost Benefit Example Questioned costs: $2,350.68 Percent change that they should be repaid: 100% Costs needed to document findings: $235.10 $2,350.68 > $235.10

27. Conducting a Financial Review When? If fraud, waste, or abuse is suspected. A tip, allegation, or complaint of wrong doing is received. Internal or external audit or investigation uncovers serious problems. Such a review is requested.

28. How to conduct a Financial Review This process is organized by compliance requirement in the subrecipient audit resolution guide. This is covered on pages 35-41 of the subrecipient audit resolution guide.

29. Where the audits are kept

30. Where can you get audit reports?

31. Single Audit Clearinghouse

32. Thank You If you have additional questions contact: Sue Hawks Foster Education Program Specialist 404.656.2636 Email: sfoster@doe.k12.ga.us