HOW TO WRITE A CORRECTIVE ACTION PLAN (CAP) Presented by Nancy Gates

1. HOW TO WRITE A CORRECTIVE ACTION PLAN (CAP) Presented by Nancy Gates Chief, Financial Policy and Compliance Division April 29, 2008

2. Outline • Audit Finding Timeline • Corrective Action Plans Do’s • Corrective Action Plan Don’ts • Format • Calendar • Example of a CAP

3. Audit Findings Timeline June - Nov Nov - Dec Jan - June KPMG Auditor Draft Mgmt. Letter Corrective Action Plans (CAP) Draft Notice of Finding (NFR) Comment Period Implement Corrective Actions Comment & Concurrence Period Final Mgmt. Letter Monthly Updates to CFO KPMG Auditor NOAA Internal Auditor Final NFR Review

4. Corrective Action PlansDo’s • Begin working on your CAPs as soon as the draft Management Letter is issued. • Draft issued – 1st week of December • Final issued – 3rd week of December • CAPs due – 2nd week of January • Use format provided with draft Management Letter. • Clearly state actions to be taken to remedy the finding with corresponding dates.

5. Corrective Action PlansDo’s • Provide overall date of completion and responsible party contact information. • Limit the use of “Ongoing” as a completion date. • Most corrective actions can be identified by a completion date. • Submit your CAPs by the due date. • Provide detailed monthly updates and status.

6. Corrective Action PlansDon’ts • Don’t state the CAP is not your responsibility. • Dispute the Notice of Finding and Recommendation (NFR) when issued; not when it becomes a CAP. • Don’t include negative comments about the auditors or audit process in the CAP. • Don’t use staff or resource shortages as the cause for the finding. • The auditors may see this as a vulnerable area for next year’s audit!

7. Corrective Action Plan Format • Title of Management Letter Comment: • Verbatim from Management Letter or IT NFR • Auditor’s Recommendation: • Verbatim from Management Letter including recommendation number or IT NFR. • Actions Taken or Planned: • Description of each corrective action and the estimated completion date for each corrective action step.

8. Corrective Action Plan Format • Projected Completion Date: • Date when all actions are to be completed. • Actual Completion Date • Date Finance Office considers the CAP to be complete. • Responsible Party: • Person coordinating all actions to assure timely completion; include phone number.

9. Corrective Action Plans • Monthly Updates to CAPs • Due 10 days after the 1st of the month. • Provide sufficient detail for the actions taken during the past month. • Be able to provide support for actions taken. • For example – if the CAP requires new policy to be written; provide copy of the policy with CAP update. • Delays in completing the CAP need to be thoroughly explained and new date provided. • All CAPs must be completed by June 30.

10. Corrective Action Due Date Calendar

11. Example of a Complete CAP Title of Management Letter Comment: Controls Over Reconciling Intragovernmental Transactions Should be Improved Contract Auditor’s Recommendation: 19. We recommend that the NOAA Finance Office investigate and resolve the unreconciled differences identified in TP00 in a timely manner. Once resolved, the applicable adjustments should be promptly recorded in the general ledger. Actions Taken or Planned: The NOAA Financial Reporting Division (FRD) is responsible for using queries of CBS Data Warehouse data to determine the Federal and non-Federal portions of each general ledger account balance in the NOAA trial balance for financial reporting purposes. In addition, for the Federal portions of each general ledger account balance, the same queries are used to determine the amount of each general ledger account balance attributable to each Federal trading partner (each Federal agency that we are engaged in the transactions with). For customer-based transactions, the CBS “TP Code” field is used to determine the trading partner. For vendor-based transactions, the CBS “Federal Agency Code” field is used to determine the trading partner. For reimbursable activity transactions, the CBS Project Code “Budget Initiative” field and the Data Warehouse Agency ID table is used to determine the trading partner for some reimbursable activity. When any of these fields contain incorrect, incomplete or inconclusive data with regards to the latest OMB A-11 guidance, a trading partner of “00” (unknown trading partner) is assigned for financial reporting purposes.

12. Example of a Complete CAP Prior to March 31, 2007, FRDwill identify codes that result in trading partners of “00” for review by the Accounting Operations Division (AOD), Budget Execution (BEX) and Line/Staff Offices. Prior to April 30, 2007, AOD, BEX & Line/Staff Offices will provide corrections and information needed for federal codes identified that result in unknown trading partners (AOD-Vendor & Customer tables; BEX & Line/Staff Offices-Reimbursable Project Code Budget Initiative Agency IDs). For federal reimbursable budget initiative codes resulting in Agency ID “4900,” the AOD and/or Line/Staff Offices will be required to assign a percentage split of customers for reporting trading partners. Prior to June 25, 2007, AOD, with review assistance from FRD, will enter all corrections for TP Codes, Federal Agency Codes and Budget Initiative Agency ID codes received into CBS to ensure that all transactions can be assigned to the correct trading partner code. Standard Operating Procedures for identifying TP00 transactions, correcting them and monitoring will be developed by March 31, 2007. Projected Completion Date: 6/25/2007 Actual Completion Date: 6/30/2007 Responsible Party: Mark P. Miller 301-444-2704

13. Example of a Complete CAP • UPDATE AS OF May 3, 2007: • 3 active CBS Customer #s that would result in TP '00' have been identified & corrected.  As of yesterday, no active • customer numbers that would result in TP '00' exist in CBS. • 63 active CBS Vendor #s that would result in TP '00' have been identified & corrected.  As of yesterday, no active vendor • numbers that would result in TP '00' exist in CBS. • Current Agency ID table (FY 2006 OMB A-11) has been submitted to systems staff to load into DW for use • Reimbursable projects with multiple federal sponsors (Agency ID 4900) • 111 active reimbursable project codes with multiple federal sponsors (Agency ID 4900) initially identified. • 94 projects deactivated • 17 remaining active 4900 projects with multiple federal sponsors (Agency ID 4900) • 4 exceptions - TP cannot be determined & will result in TP '00' (amounts available for materiality discussion) • 1 exception - agency ID information will be provided in quarterly data call • 7 exceptions - will be prorated to valid agency IDs during intra-government process • 5 NWS projects will be cleared before June 2007 • AOD provided with valid Agency ID codes & notified not to accept projects or activate future projects with • invalid Agency ID code. • Reimbursable projects with invalid Agency IDs = 2692 active CBS project codes - could result in TP '00' • We are in the process of working with the LOs to either deactivate the projects (for ones without TB) or assigning • valid Agency ID. • Still on target for June 30 completion date.

14. How to Write a CAP Questions?