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Subrecipient Monitoring Under the Office of Management and Budget’s Circular A-133

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. Subrecipient monitoring basics

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Subrecipient Monitoring Under the Office of Management and Budget’s Circular A-133

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  1. 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

  2. Agenda • Subrecipient monitoring basics • Taking it a step further • Risk-based approach • Suggestions • Questions/comments

  3. Objectives • Provide some basic information and address common concerns related to subrecipient monitoring for internal auditors, external auditors, and other stakeholders

  4. Basics • OMB’s Circular A-133 Compliance Supplement outlines requirements for auditors related to subrecipientmonitoring • Includes collecting audit reports for applicable subrecipients and reviewing findings

  5. 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

  6. 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

  7. Basics, Continued • Specific Compliance Requirements, a pass-through entity is responsible for: • Determining subrecipient eligibility • Central contractor registration • Award identification • During-the-award monitoring • Subrecipientaudits • Ensuring accountability of for-profit subrecipients • Pass-through entity impact

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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.

  14. Questions/Comments ???

  15. Contacts • Colorado Office of the State Auditor • osa.ga@state.co.us • 303-869-2800

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