Office of Compliance Internal Audit Division ____________________________

1. Office of ComplianceInternal Audit Division____________________________ Delegate Agency Fiscal Overview April 6, 2009

2. Delegate Agencies Fiscal Overview Introductions___________________________________________________________________________________________________________________________________________________________________________ • Ragland and Associates, LLC Gabriel Rodriguez, MPM Consultant to Office of Compliance Delegate Agency Fiscal Overview

3. Delegate Agency Fiscal OverviewAgenda________________________________________________________________________________________________________________________________________________ I. Office of Compliance Overview II. Understand your Contract III. Documentation • Annual Audit • What is it? • Audit Firm selection • Common Issues • Compliance Audits • OMB Circular A-133 (Single Audit) • OMB Circular A-122 (Post Payment Audit) VI. Agreed-Upon Monitoring Procedures VII. Training • Deficiencies • Causes & Most Common • Common Questions • Questions Delegate Agency Fiscal Overview

4. Delegate Agency Fiscal Overview_____________________________________________________________________________________________________________________________________________________________________________ I. Office of Compliance Overview Delegate Agency Fiscal Overview

5. Delegate Agency Fiscal OverviewI. Office of Compliance Overview_____________________________________________________________________________________________________________________________________________________________________________ • Mission The Office of Compliance promotes a culture of ethical conduct and a commitment to compliance with laws, city policies, procedures, rules and ordinances. The Office addresses compliance in the areas of equal employment opportunity, sexual harassment, workplace violence, employee safety, hiring, promotions, delegate agency audits, departmental audits and personnel rules. The Office encourages educational training and guidance and promotes a culture of inclusion. Delegate Agency Fiscal Overview

6. Delegate Agency Fiscal OverviewI. Office of Compliance Overview_____________________________________________________________________________________________________________________________________________________________________________ • Divisions & Policies Diversity & Equal Employment Opportunity • The Diversity and Equal Employment Opportunity Division manages the City’s Equal Employment Opportunity (“EEO”) Plan and promotes diversity efforts. • The division oversees:1) complaint resolution; 2) education, awareness and training; 3) monitors the underutilization of protected classes, barriers to inclusion and provides recommendations for corrective action. • The City of Chicago seeks diversity in its workforce and ensures that all applicable federal, state and local laws and ordinances prohibiting discrimination are followed. Delegate Agency Fiscal Overview

7. Delegate Agency Fiscal OverviewI. Office of Compliance Overview_____________________________________________________________________________________________________________________________________________________________________________ • Divisions & Policies – cont’d Hiring Compliance • Hiring Compliance monitors and audits the hiring procedures under the City of Chicago’s Hiring Plan. • Hiring Compliance seeks to ensure fair and competitive hiring by: 1) monitoring compliance with the Shakman decree by ensuring that potential applicants are free of any political influence; 2) reviewing and seeking to resolve complaints of hiring or promotions; 3) monitoring compliance with collective bargaining agreements as they apply to union employees in the areas of promotions, transfers and layoffs. • The Hiring Plan prevents risks from becoming liabilities by creating checks and balances to deter, detect and address issues relating to the hiring process. Delegate Agency Fiscal Overview

8. Delegate Agency Fiscal OverviewI. Office of Compliance Overview_____________________________________________________________________________________________________________________________________________________________________________ • Divisions & Policies – cont’d Internal Audit/Process Improvement • The Internal Audit Division protects the City’s assets and helps to ensure that internal controls are enforced by City departments. • The Internal Audit Division, has three primary missions: 1) safeguard the City’s assets through audits and reviews; 2) to ensure our clients are in compliance with City, State and Federal regulations; and 3) to assist our clients in improving their processes for greater efficiency and effectiveness. • We help you prevent, detect, and correct any systems or activities that could expose the city to loss revenue or sanctions • We are proactive and not reactive. Delegate Agency Fiscal Overview

9. Delegate Agency Fiscal OverviewI. Office of Compliance Overview_____________________________________________________________________________________________________________________________________________________________________________ • Divisions & Policies – cont’d Legal Compliance • The Legal Compliance Division is responsible for City-wide adherence to policies, procedures and federal, state and local laws. • The Office provides assistance to operating departments on issues they face in areas as diverse as grants management, safety, privacy, and finance, by providing them with the tools to enhance processes and monitor effectiveness. • The Office provides and coordinates training and process reviews on key areas of legal compliance. Delegate Agency Fiscal Overview

10. Delegate Agency Fiscal OverviewI. Office of Compliance Overview_____________________________________________________________________________________________________________________________________________________________________________ • Divisions & Policies– cont’d Retaliation Prohibited • The City encourages the general public, its employees and contractors to raise compliance issues, including potential violations of policies and processes. • The Office of Compliance has an open door policy that encourages employees to uphold the standards of conduct. The City of Chicago, through its Whistleblower Ordinance prohibits employees from retaliating against, punishing or penalizing another person for complaining to, cooperating with or assisting the Office of Compliance. • Need More Information? • For further information about Office of Compliance services, training or complaint resolution, please contact the Office of Compliance helpline at (877) 532-0007. Delegate Agency Fiscal Overview

11. Delegate Agency Fiscal OverviewI. Office of Compliance Overview_____________________________________________________________________________________________________________________________________________________________________________ Our office is located at: Office of Compliance - Internal Audit 333 S. State Street - Suite 540 Chicago, IL 60604 Contact Name: Ms. Alyse Hutchinson Deputy Director of Internal Audit Division 312-747-5749 Delegate Agency Fiscal Overview

12. Delegate Agency Fiscal Overview_____________________________________________________________________________________________________________________________________________________________________________ II. Understanding your Contract Delegate Agency Fiscal Overview

13. Delegate Agency Fiscal OverviewII. Understanding your Contract_____________________________________________________________________________________________________________________________________________________________________________ Contract • The contract is your starting point …. Read it in its entirety. • Fully understand the requirements, obligations, and responsibilities • When in doubt, contact your program liaison and obtain an answer • Be sure to obtain a signed budget whenever a revision or amendment is completed. • Visit the City of Chicago’s web site to download available copies at www.cityofchicago.org. Delegate Agency Fiscal Overview

14. Delegate Agency Fiscal Overview_____________________________________________________________________________________________________________________________________________________________________________ III. Documentation Delegate Agency Fiscal Overview

15. Delegate Agency Fiscal OverviewIII. Documentation_____________________________________________________________________________________________________________________________________________________________________________ Documentation • Keep a complete set of the voucher, as it will be needed for the post-payment reviews (invoices, cancelled checks, payroll journals, bank statements, etc.) • To support your payroll taxes, submit a copy of the payroll summary, bank deposit slip, cancelled check (both sides), and/or bank statement. • Procure a copy of the final signed budget after every revision. • Maintain current copies of your Policies and Procedures Manual. Develop and Implement, if not in existence. Delegate Agency Fiscal Overview

16. Delegate Agency Fiscal OverviewIII. Documentation_______________________________________________________________________________________________________________________________________________________________________________ Documentation(cont’d) • Depending on the size of your agency, develop and maintain a Cost Allocation Plan, suitable to your current programs. • When in doubt about the allowability and appropriateness of a program’s related expenditure, obtain written authorization from the funding department and keep it with your copies. • At the end of the fiscal year, make sure to contact the funding department to find out the source of the funding received. This information is critical to your auditors when planning the agency’s annual fiscal audit. Delegate Agency Fiscal Overview

17. Delegate Agency Fiscal Overview_____________________________________________________________________________________________________________________________________________________________________________ IV. Annual Audit Delegate Agency Fiscal Overview

18. Delegate Agency Fiscal OverviewIV. Annual Audit_____________________________________________________________________________________________________________________________________________________________________________ I.I What is it? • An annual audit of an agency’s financial statements by an outside, independent accounting firm supports accountability and financial disclosure to external parties, including existing and potential funding entities, as well as the public. A quality and useful audit depends on the quality of the accounting firm employed, and the agency’s level of preparation achieved prior to audit beginning. Delegate Agency Fiscal Overview

19. Delegate Agency Fiscal OverviewIV. Annual Audit_____________________________________________________________________________________________________________________________________________________________________________ I.I What is it? (cont’d) • An audit under Office of Management and Budget (OMB) Circular A-133 is required of non-federal entities that expend $500,000 or more in a year of Federal awards. Office of Management and Budget is part of the Executive branch of the United States. Agencies that do not meet this requirement are not required to undergo an A-133 audit, but a financial statement audit is still recommended. Delegate Agency Fiscal Overview

20. Delegate Agency Fiscal OverviewIV. Annual Audit______________________________________________________________________________________________________________________________________________________________________________ I.II Audit Firm Selection - Best Practices • A change in auditors should be considered based on: results of annual evaluation of the independent accounting firm, any agency dissatisfaction with the accounting firm, or when a new approach is desired. • Qualities to consider in an independent accounting firm include: level of experience, industry knowledge, timeliness of performance, and communication skills. • Agency should assist accounting firm with the annual audit during all phases as requested, review the audited financial statements and provide any necessary management feedback at the completion of the audit. Delegate Agency Fiscal Overview

21. Delegate Agency Fiscal OverviewIV. Annual Audit_____________________________________________________________________________________________________________________________________________________________________________ TECHNICAL EVALUATION: SELECTING A QUALIFIED AUDITOR • Technical evaluation is important for two reasons: • Provides a systematic framework for selecting an auditor on the basis of your organization’s established criteria; • Documents that the auditor was selected fairly. • Consider separate evaluations for technical ability and price. • Require auditors to meet certain minimum standards: • Appropriate state licensing requirements (contact the IL Department of Professional Regulations at 312-814-4500 or use the license look-up feature at www.dpr.state.il.us. • Applicable independence standard • Have a record of responsible work, • Years, quality, and appropriateness of experience • Comply with applicable requirements for peer review and continuing professional education Delegate Agency Fiscal Overview

22. Delegate Agency Fiscal OverviewIV. Annual Audit_____________________________________________________________________________________________________________________________________________________________________________ • Organizations should never select auditors without considering five basic elements of an effective audit procurement process: • Planning (determining what needs to be done and when) • Fostering competition by soliciting proposals (writing a clear and direct solicitation document and soliciting it appropriately) • Technically evaluating proposals and qualifications (knowledgeable persons should evaluate the ability of prospective auditors to effectively perform the audit) • Preparing a written agreement (documenting the expectations of both the entity and the auditor) • Monitoring the auditor’s performance (periodically reviewing the progress of that performance) PLANNING • Define the entity to be audited. • Delineate the scope of the financial audit. • Determine the proper financial statements and schedules to include in the audit. Delegate Agency Fiscal Overview

23. Delegate Agency Fiscal OverviewIV. Annual Audit_______________________________________________________________________________________________________________________________________________________________________________ • Determine the specific audit requirements. • Professional requirements imposed by accounting bodies • Requirements of funding agencies • Determine whether the Single Audit Act applies to your organization. • Identify the attributes necessary in the auditor. • Experience in auditing grant-funded programs and non-profit organizations • Adequate and sufficient continuing professional education • Peer review • Licensure • Decide how to evaluate prospective audit firms. • Although price is important, technical qualifications should be a critical criterion in selecting an auditor. Delegate Agency Fiscal Overview

24. Delegate Agency Fiscal OverviewIV. Annual Audit_____________________________________________________________________________________________________________________________________________________________________________ • Review legal requirements. • Ensure that both the procurement process and the audit itself will meet legal requirements contained in applicable laws regulations, and terms of grant agreements. • Consider a multi-year agreement. • First year of an audit involves significant start-up costs. • Consider a multi-year agreement if authorized to do so. • Perhaps a one-year agreement with option to extend • Should not contract for more than 5 years. • Evaluate the option to rotate auditors. • Infuses the audit process with fresh views and new perspectives. • Can allow organization to take advantage of lower priced audits. • Carefully consider advantages and disadvantages of auditor rotation as well as any applicable legal requirements. Delegate Agency Fiscal Overview

25. Delegate Agency Fiscal OverviewIV. Annual Audit______________________________________________________________________________________________________________________________________________________________________________ • Establish a work schedule. • For both your organization and the audit firm. • Develop and adhere to a schedule that sets forth dates by which certain milestones in the audit process must be reached. COMPETITION AND SOLICITATION: COMMUNICATING AUDIT REQUIREMENTS • Most reliable method is the Request for Proposal (RFP). • Clearly written • Set forth all terms conditions, and evaluation criteria, as well as scope of the work required • Be sufficiently well distributed and publicized to ensure full and open competition • Consider compiling a list of potential auditors from general and professional directories and from past experience with audit firms. Delegate Agency Fiscal Overview

26. Delegate Agency Fiscal OverviewIV. Annual Audit______________________________________________________________________________________________________________________________________________________________________________ What Should be Included in the RFP? • Should include enough information to provide bidders with a common basis to prepare proposals that will address the audit needs of your organization. • Be sure that RFP conforms with the laws, regulations, and grant terms applicable to your organization. • Include, at a minimum: • Name and address of your organization • Entity to be audited, scope of services to be provided, and specific deliverables • Period to be audited (with an explanation if the RFP calls for a multi-year procurement) • Name and telephone number of a contact person at your organization • Format in which you want proposals to be prepared Delegate Agency Fiscal Overview

27. Delegate Agency Fiscal OverviewIV. Annual Audit___________________________________________________________________________________________________________________________________________________________________________ • Address to which proposals should be delivered or sent • Date and time proposals are due • Number of proposal copies to be submitted • Criteria to be used in evaluating the bid and their relative importance to each other • Method and timing of payment • Any other important points, including consequences if due dates are missed or work does not meet audit standards • Proposals may also include: • The work of your organization • What is to be audited (financial statements, etc.) • Description of your organization’s accounting system, administrative controls, records, and procedures Delegate Agency Fiscal Overview

28. Delegate Agency Fiscal OverviewIV. Annual Audit_______________________________________________________________________________________________________________________________________________________________________________ • Whether the Single Audit Act applies to this audit • Identification of appropriate auditing standards • Whether data from prior years (audit reports, management letters, etc.) will be available, whether material prior year audit findings remain open, and whether any audits of sub-recipients are required. • Requirements for workpaper retention and for making workpapers available to the organization as well as governmental auditors if they request them • Expected audit products, required format of the audit report, and any required progress reports • Assistance to be provided by your organization, such as staff support (which can reduce your audit costs) • Expected work schedule (timing of field work, issuance of reports, etc.) Delegate Agency Fiscal Overview

29. Delegate Agency Fiscal OverviewIV. Annual Audit_______________________________________________________________________________________________________________________________________________________________________________ • RFP should ask bidders: • How they would conduct audit in first and subsequent years • Qualifications of audit organization, management, and staff, including experience in auditing like entities • Policies on notification of changes in key personnel • Whether the proposed staff have received continuing professional education (general and in governmental accounting/auditing) during the last 2 years • Whether audit firm has received a positive peer review within the last 3 years • Whether they are independent, as defined by applicable auditing standards • Whether they have been the object of any disciplinary action during the past 3 years • The audit fee Delegate Agency Fiscal Overview

30. Delegate Agency Fiscal OverviewIV. Annual Audit_______________________________________________________________________________________________________________________________________________________________________________ • Evaluation of RFPs for technical criteria: • Audit firm’s understanding of the audit requirements, including the needs of your organization and the final products to be delivered • Soundness of technical approach, including the meeting of your organization’s specific deadlines and benchmarks • Qualifications of the audit firm • Qualifications of the audit team • Rating the proposals: • Evaluate proposals as submitted. • Make a list of strengths and weaknesses for each to support its technical rating. • After completion of the technical evaluation, review the prices offered by the bidders. Delegate Agency Fiscal Overview

31. Delegate Agency Fiscal OverviewIV. Annual Audit______________________________________________________________________________________________________________________________________________________________________________ • If more information is needed before selecting a proposal, meet with the bidders who have a reasonable chance of being selected to allow them to respond to your concerns. • If applicable, request the submission of revised proposals by a specified date. • Do not disclose proprietary information submitted by other bidders. • Select proposal that is most advantageous to your organization. Delegate Agency Fiscal Overview

32. Delegate Agency Fiscal OverviewIV. Annual Audit_______________________________________________________________________________________________________________________________________________________________________________ THE WRITTEN AUDIT AGREEMENT Written agreement signed by both parties must be obtained. • Helps to avoid misunderstandings and possible future litigation. • Written agreement should specify: • Audit scope, objective, and purpose • Deadlines for the work to be performed • Audit cost • Report format • Type and timing of support to be provided to the auditor by your organization • Professional auditing standards to be followed in performing the audit • Independence of the audit firm to the audited organization (auditee) • Terms for making changes to the scope of the agreement • Ownership of the workpapers (audit firm), retention period, and requirement for availability to the auditee and governmental auditors upon request Delegate Agency Fiscal Overview

33. Delegate Agency Fiscal OverviewIV. Annual Audit____________________________________________________________________________________________________________________________________________________________________________ AUDIT MONITORING • Most effective way to ensure that your organization receives the type and quality of audit services specified in the agreement. • Allows problems to be addressed in a timely manner. Methods for monitoring the audit firm and progress of the audit: • Periodic progress reports • Holding regular status meetings to discuss issues that need to be resolved • Meeting after the completion of audit fieldwork Delegate Agency Fiscal Overview

34. Delegate Agency Fiscal OverviewIV. Annual Audit______________________________________________________________________________________________________________________________________________________________________________ I.III Common Issues Relating to Audits 1. Audit Performance * Hiring unlicensed CPA’s to perform audit * Hiring licensed CPA’s who are not experienced with OMB Circular A-133 2. Single Audit Report Deficiencies * The “Schedule of Expenditures of Federal Awards” is omitted * The “Schedule of Expenditures of Federal Awards” is missing”: - CFDA numbers - Pass-through grant identifying numbers - Name of pass-through agencies Delegate Agency Fiscal Overview

35. Delegate Agency Fiscal OverviewIV. Annual Audit______________________________________________________________________________________________________________________________________________________________________________ Common Issues Relating to Audits (cont’d) - Names of federal grantor agencies - City’s contract number(s) awarded to agency * No corrective action plan addressing audit findings * Management letter/comments that are federal findings are excluded from the single audit report * The opinion of the independent auditors does not refer to the audit being performed in accordance with Government Auditing Standards Other Reporting Deficiencies * Late submissions of reports (even with approved extensions) Delegate Agency Fiscal Overview

36. Delegate Agency Fiscal OverviewIV. Annual Audit______________________________________________________________________________________________________________________________________________________________________________ Other Reporting Deficiencies (cont’d) * Late submissions of reports (even with approved extensions) * Omitted management letter * Submitting Certification of Federal Expenditures forms to the City with errors (i.e. not signed, not notarized, no expenditure amount listed, wrong fiscal year listed, or not fully completed). Communications with City of Chicago * Not responding to letters and phone calls * Submitting audit reports only to lead department as opposed to the lead department(s) and Internal Audit * Not making revisions to reports submitted when deficiencies were noted Delegate Agency Fiscal Overview

37. Delegate Agency Fiscal Overview______________________________________________________________________________________________________________________________________________________________________________ V. Compliance Audits Delegate Agency Fiscal Overview

38. Delegate Agency Fiscal OverviewV. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ OMB Circular A-133 Single Audit Report Reviews (Mandated) Audit Requirements A. Single Audit • Any agency receiving expending federal funds under your City and other agreements totaling $500,000 or more during your fiscal year, must submit an audit conducted in accordance with the Single Audit Act Amendments of 1996, OMB Circular A-133, the compliance requirements set forth in OMB Compliance Supplement, and any additional testing and reporting required by the City. • If an A-133 audit is required, that audit must cover the time period specified by OMB Circular A-133 and its implementing regulations. You must submit the audit reports within six months after the end of the audit period. If you anticipate not having the audit ready by then, please contact the Office of Compliance and request an extension to file. Delegate Agency Fiscal Overview

39. Delegate Agency Fiscal OverviewV. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ OMB Circular A-133 Single Audit Report Reviews - cont’d • If your organization has expended federal funds under this and other agreements totaling less than $500,000 during your fiscal year, you must submit to the City a notarized “Delegate Agency Certification of Federal Expenditures” form certifying that your organization is exempt from Federal audit requirements for that year pursuant to OMB Circular A-133, Section .200(d). B. Program-specific audit C. Exemption when Federal awards expended are below thresholds Agreed-upon procedures monitoring (“limited scope audits”) Delegate Agency Fiscal Overview

40. Delegate Agency Fiscal OverviewV. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ • Basis for determining Federal awards expended: • Expense should be based on when the activity related to the award occurs. • Sanctions for not complying with Federal audit requirements: • Withholding a percentage of Federal awards until the audit is completed satisfactorily; • Withholding or disallowing overhead costs; • Suspending Federal awards until the audit is conducted; or • Terminating the Federal award. • Auditee responsibilities • Identify all Federal awards received and expended and the Federal programs under which they were received. • Maintain internal control over Federal programs to provide assurance that Federal awards are being managed in compliance with laws, regulations, and provisions of grants and contracts. Delegate Agency Fiscal Overview

41. Delegate Agency Fiscal OverviewV. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ • Comply with all applicable laws, regulations, and provisions of contracts or grants related to each Federal program. • Ensure that audits are properly performed and submitted when due. • Follow up and take corrective action on audit findings. • Components of a non-profit organization’s audit report: • Financial Statements (auditee’s responsibility) • Statement of Financial Position • Statement of Activities • Statement of Functional Expenses (for Voluntary Health & Welfare Organizations) • Statement of Cash Flows • Notes to the Financial Statements Delegate Agency Fiscal Overview

42. Delegate Agency Fiscal OverviewV. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ • Schedules and Other Supplementary Information (auditee’s responsibility) • Schedule of Expenditures of Federal Awards • Other supplementary schedules required by funding agencies • Corrective Action Plan (for current year findings) • Summary Schedule of Prior Audit Findings • Auditor’s Reports (auditor’s responsibility) • Opinion of Financial Statements and Supplementary Schedule of Expenditures of Federal Awards • Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards • Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 Delegate Agency Fiscal Overview

43. Delegate Agency Fiscal OverviewV. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ • Schedule of Findings and Questioned Costs • Section I: Summary of Audit Results • Section II: Financial Statement Findings • Section III: Findings Related to Federal Awards • Audit report submission requirements • To the Federal Single Audit Clearinghouse: • Data Collection Form (Form SF-SAC) • One copy of the audit report package for each Federal agency when the schedule of findings and questioned costs disclosed audit findings relating to Federal awards that the Federal funding agency provided directly or the summary schedule of prior audit findings reported the status of any audit findings relating to Federal awards that the Federal funding agency provided directly. Delegate Agency Fiscal Overview

44. Delegate Agency Fiscal OverviewV. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ • The Single Audit Process: Some Things the Auditor Does Before and During the Audit • Pre-planning and planning • Development for overall strategy for the expected scope and conduct of the audit. • Review of appropriate standards, regulations, and guidelines. • Obtain understanding of auditee and its industry. • Obtain understanding of reporting requirements • Is an A-133 required? • Single audit or program-specific audit? • Determine reporting requirements. • Communicate with funding agencies, as needed. • Confirm report submission deadlines. • Obtain understanding of: • Auditee’s internal control over financial statements Delegate Agency Fiscal Overview

45. Delegate Agency Fiscal OverviewV. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ • Compliance requirements that could have a direct and material effect on major Federal programs • Internal control related to compliance requirements • Perform tests of internal controls • Perform preliminary assessment of audit risk at the financial statement level and the major program level. • Consider level of materiality at the financial statement level and at the major program level. • Establish audit approach and develop audit programs. Delegate Agency Fiscal Overview

46. Delegate Agency Fiscal OverviewV. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ • Compliance testing of major Federal programs • 14 types of compliance requirements for Federal programs • Allowable Activities >> Allowable Costs • Cash Management >> Davis-Bacon Act • Eligibility >> Program Income • Equipment and Real Property Management • Matching, Level of Effort, Earmarking • Period of Availability of Federal Funds • Procurement and Suspension and Debarment • Real Property Acquisition and Relocation Assistance • Reporting • Sub-recipient Monitoring • Special Tests and Provisions Delegate Agency Fiscal Overview

47. Delegate Agency Fiscal OverviewV. Compliance Audits_____________________________________________________________________________________________________________________________________________________________________________ Voucher documentation audits (Post payment (A-122)) (Mandated) • In order to monitor the expenditure of funds passed from the City to the delegate agencies, the City has established a systematic approach to audit delegate agency reimbursement vouchers to ensure compliance with Federal, State, and City regulations. • For selected delegate agency vouchers, Internal Audit requests complete supporting documentation including invoices, canceled checks (front and back), payroll records, leases, et. al. • This documentation is audited for compliance with applicable Federal, State, and City regulations and for compliance with the budget and terms of the delegate agency contract with the City. Should any non-compliant expenditure be found, the agency is required to reimburse the City for these costs. • If the delegate agency does not respond to our requests, for A-133 report or A-122 audit, as a last resort, a lien is placed on the future reimbursements of the delegate agency from the City. Delegate Agency Fiscal Overview

48. Delegate Agency Fiscal Overview V. Compliance Audits______________________________________________________________________________________________________________________________________________________________________________ Voucher Documentation Audits – cont’d Vouchering for reimbursement • Advance vs. request for reimbursement • Reimbursement requests must be made only after an expenditure has been incurred • Agency should record the following for every reimbursement request made: • Check Number • Date • Amount • Payee • Applicable contract number • Account Number • Amount charged Delegate Agency Fiscal Overview

49. Delegate Agency Fiscal Overview V. Compliance Audits_____________________________________________________________________________________________________________________________________________________________________________ Voucher Documentation Audits – cont’d • Reimbursement requests should represent only expenditures that are allowed and that have been incurred (and paid) • Vouchers should be submitted to awarding agencies on a periodic basis according to approved contract terms and at frequency to help insure a positive cash flow. Delegate Agency Fiscal Overview

50. Delegate Agency Fiscal Overview______________________________________________________________________________________________________________________________________________________________________________ VI. Agreed-Upon Procedures Delegate Agency Fiscal Overview