2011 National Extension and Research Administrative Officers’ Conference

1. 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

2. Oversight Activities • Audits (Three types): • OMB Circular A-133 (Single Audits) • OIG / GAO Program Specific Audits • NIFA Administrative / Financial Reviews

3. 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 non-profit organizations) • OIG / GAO Program Specific Audits • Ascertain agency progress in implementing program guidelines • Determine recipient’s compliance with program requirements

4. 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

5. 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

6. 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

7. 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

8. 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.

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. Site Visit Selection • Six institutions each year • 4 (1862s) • 1 (1890) • 1 (1994)

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. Sample Findings from (IPIA) Site Reviews • 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

24. Thank You