Audits Unit: Purpose and Objectives

1. Audits Unit: Purpose and Objectives • To conduct annual fact-based program and fiscal audits on each delegate agency and partner. An exception to this policy may be granted in certain cases where CYS determines that it is necessary to conduct a special review or investigation of an agency in lieu of a standard audit. • Using evidence and facts to document potential areas of compliance and noncompliance based on the funding source program and fiscal requirements. • Investigating complaints as it relates to program and fiscal concerns of a CYS’ delegate agency. • Assisting and supporting the CYS’ Children Services and Youth Units in ensuring delegate agency compliance with the funding sources program and fiscal requirements.

2. Fiscal Audits Harold Campbell – Director 312-743-4932 hcampbell@cityofchicago.org George Fielder – Auditor III 312-743-4905 georgefielder@cityofchicago.org Simeon Franks – Auditor III 312-743-4920 sfranks@cityofchicago.org Alma Alvarez – Auditor II 312-743-4914 almaalvarez@cityofchicago.org Tracie Berry – Auditor II 312-743-4919 tberry@cityofchicago.org Yolanda Owens – Auditor II 312-743-4913 yowens@cityofchicago.org Program Audits Darlene Perez – Assistant Director 312-743-1948 dperez@cityofchicago.org Carmen Pacheco – Supervising Prg. Aduitor 312-743-2014 cpacheco@cityofchicago.org Lois Dixon – Program Auditor II 312-743-4909 ldixon@cityofchicago.org Sandra Kidd – Program Auditor II 312-743-4911 skidd@cityofchicago.org Elizabeth Matias – Program Auditor II 312-743-4910 elizabeth.matias@cityofchicago.org Edrina McDonald – Program Auditor II 312-743-4915 emcdonald@cityofchicago.org James Rodgers – Program Auditor II 312-743-4904 jrodgers@cityofchicago.org Contacts

3. Overview – Fiscal Audits Programs Audited: HS/EHS, CDBG, WIA – Youth Key Regulations OMB Circular A-122, Cost Principles (2 CFR Part 230) OMB Circular A-133, Audit requirements Contract provisions Uniform Administrative Requirements 45 CFR Part 74 (HS/EHS) 24 CFR Part 84 (CDBG) 29 CFR Part 95 (WIA) See handout for Summary of OMB Circulars

4. Cost Principles: OMB Circular A-122 • Circular establishes principles for determining allowable costs for nonprofit organizations. • General principles: • Costs need to be reasonable, necessary and allocable • Costs must follow additional principles listed in Attachment A of the Circular • Attachment B of the Circular prescribes treatment of costs

5. Cost Principles • Direct Costs • Costs that can be identified with a final cost objective • Indirect Costs • Costs incurred for common or joint objectives • Cost Allocation Plan • Process of assigning the cost of an item shared by two or more programs • Cost Classification • Allowable: salaries, travel • Unallowable: fines, penalties, donations • Allowable with conditions: advertising • Allowable with prior approval: equipment

6. Web Sites • US Government Printing Office http://www.gpoaccess.gov/cfr/index.html Provides links to Code of Federal Regulations. • Office of Management and Budget http://www.whitehouse.gov/omb/circulars/index.html Provides links to all OMB Circulars such as A-133.

7. Audit Requirements: OMB Circular A-133 Applies to: • Nonprofit Organizations • Educational Institutions • Commercial Organizations Threshold - $500,000 Total expenditures from Federally Funded programs during the organization’s fiscal year Due 6 months after the end of the fiscal year Follow Procurement Procedures Agreed Upon Procedures

8. Monitoring Process • Audit is scheduled, 2 to 3 weeks in advance • Records Request is sent 1 to 2 weeks in advance, Program and Fiscal monitoring instruments are available at https://cys.mycopa.com • On-Site Review • Debriefing • Exit Report / Improvement Plan • Follow-up on unresolved issues

9. Areas covered • Accounting records • General Ledger • Chart of Accounts • Bank Statements • Cash Receipts and Disbursements Journal • Vouchers • To Be Submitted Monthly • Confirm payments • Disbursements - Allowability of Costs Charged to the Program - Adequate Supporting Documentation (Purchase Orders, Invoices, Cancelled Checks, etc.)

10. Areas covered Internal Controls • Proper Authorization • Segregation of duties • Financial Status Report • Financial Procedures Manual • Include at a minimum the following policies: • Financial Reporting • Payroll • Purchasing/Procurement • Cash Management • Cost Allocation Plan • Property Management • Record Retention • Payroll record review • Payroll register • Time Records

11. Areascovered • Bank Reconciliations • Deposits are done in a timely manner • Adjusting items are researched and resolved in a timely manner • Bank account balance reconciles with cash account balance in the general ledger • Filing Confirmation • Federal Payroll (941), State Payroll Tax (IL941), • IRS – 990 for exempt 501(c), Secretary of State - AG 990, • Consultants - 1099

12. Common Findings • Inadequate Policies & Procedures • Lack of proper financial records • Inadequate supporting documentation • No bank reconciliation • Costs are not consistent with budget, revision is needed • Time activity not approved by supervisor • Lacks adequate segregation of duties • Inadequate contract for consultants. Contracts must specify rate of pay and length of time

13. Examples of Audit Questions • Does the agency have internal controls for mail processing, cash receipts and cash disbursements? • Are delegate agency bank statements reconciled on a monthly basis? • Has the agency implemented procedures to determine allowability, allocability and reasonableness of costs as required? • Has the agency provided adequate documentation to demonstrate timely payment of employee benefits?

14. Examples of Audit Questions • Are financial reports current and available? Do they contain information pertaining to grant expenditures and income? • Have prior year salaries or other prior year costs been charged to the current year?

15. Ways For Improvement • Read contract, understand requirements • Costs must be separated by fund • Fiscal Policies should be reviewed at least annually, approved by the board of directors and should be distributed to all appropriate staff Procurement procedures should be followed • Principles applies to ALL grantees, subgrantees, subrecipients & sub-awards • Must maintain a system for administration of contracts • Must provide for full and open competition

16. Fiscal Audits • Questions?