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GRANTS WORKSHOP

Single Audit Findings Analysis J o n a t h a n V a n D y k , D i r e c t o r o f C a s h M a n a g e m e n t / G r a n t s

Workshop Agenda

Audit Findings Follow up

Grants Workgroup Updates

Audit Findings Overview

Tips to Avoid Audit Findings

Causes of Audit Findings

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Grants Workgroup Updates

Grant Information Sharing Website Update Newsletter section: the

December newsletter was added to the site. Click here.

Training Opportunities section:

The Period of Performance workshop PowerPoint was added to the site (see Quarterly Workshop). Click here.

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Objectives

1. Understanding Federal Compliance

requirements.

2. Understanding causes of audit findings.

3. Understanding the steps to develop a

corrective action plan.

4. Understanding tips to avoid audit findings.

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Single Audit: Provide an independent examination of an entity ’s

compliance with laws and regulations in accordance with UG Subpart F and the Compliance Supplement (12 types of compliance requirements). Is required for a non-Federal entity that expends

$750,000 or more in Federal awards during the non-Federal entity ’s fiscal year.

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Audit Findings: Per UG 200.5, audit findings are

deficiencies which the auditor is required to report in the schedule of findings and questioned costs (requirement established by 200.516 (a)):

1) Significant deficiencies and material weaknesses in

internal control over major programs 2) Material noncompliance with the provisions of Federal

statutes, regulations, or the terms and conditions of Federal awards related to a major program

3) Known questioned costs that are greater than $25,000 for a type of compliance requirement for a major program

4) Known questioned costs that are greater than $25,000 for a Federal program which is not audited as a major program

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Tennessee Single Audit Report: 2018 Single Audit Report.

Prior Year Single Audit Reports.

4 types of noncompliance were common: Allowable costs/activities Eligibility Subrecipient monitoring Reporting

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3 Years Comparison

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COMPLIANCE REQUIREMENT Sum of 2018 Sum of 2017 Sum of 2016Activities Allowed or Unallowed 9 12 16Allowable costs/cost principles 16 23 20Cash Management 2 2 2Eligibility 11 16 11Equipment and Real Property Management 0 0 0Financial Statement Findings 0 0 2Matching, Level of Effort, Earmarking 6 7 5Other 5 3 6Period of Performance 5 7 3Procurement and Suspension and Debarment 1 0 1Program Income 0 2 1Reporting 7 11 8Special Tests and Provisions 6 11 8Subrecipient Monitoring 12 6 11Grand Total 80 100 94

Primary Causes of Noncompliance:

Lack of training.

Inadequate internal controls.

Insufficient subrecipient monitoring.

Inadequate review process/procedures.

Lack of supporting documentation.

Lack of written policies/procedures.

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UG 200.511 outlines the auditee’s

responsibility for follow-up and corrective

action on all audit findings:

1. Prepare a summary schedule of prior audit findings (SSPAF).

2. Prepare a corrective action plan (CAP) for current year audit findings.

Note: These templates (SSPAF & CAP) are available on

the Grants Information Sharing website.

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Effect of Noncompliance: If a non-Federal entity fails to comply with Federal

statutes, regulations or the terms and conditions of a Federal award, the Federal awarding agency or pass-through entity may:

1. Impose additional specific award conditions, per UG 200.207 (b).

2. Furthermore, take additional action which could include losing Federal funding (Ineligible for future federal funding or forego grants), per UG 200.338 .

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Examples of Noncompliance:

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Misuse Grants

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Summary Schedule of Prior Audit Findings (SSPAF): UG 200.511(b).

1. Report the status of all audit findings included in the prior audit’s schedule of findings and questioned costs.

2. Include audit findings reported in the prior audit’s summary schedule of prior audit findings (SSPAF) except audit findings listed as corrected,

no longer valid, or not warranting further action.

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Components of SSPAF: SSPAF Template

1. When audit findings were fully corrected, the

summary schedule only needs to:

a) List the audit findings

b) State that “corrective action was taken.”

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2. When audit findings were NOT corrected or were only

partially corrected, the summary schedule MUST:

i. Describe the reasons for the finding's recurrence.

ii. Plan corrective action.

iii. Provide any partial corrective action that was

taken.

Note: When the corrective action taken is significantly

different than what was previously reported to the Federal

agency, the summary schedule MUST provide an explanation.

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3. If the auditee believes that the audit findings are no longer valid or do not warrant further action, the summary schedule MUST describe the reasons for this position. A valid reason for considering an audit finding as not warranting further action is that ALL of the following have occurred: i. Two years have passed since the audit report in

which the finding occurred was submitted to the FAC. ii. The Federal agency or pass-through entity is not

currently following up with the auditee on the audit finding and

iii. A management decision was not issued.

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Background of Corrective Action Plan. Per UG 200.26 , Corrective Action is defined as

action taken by the auditee that: a) Corrects identified deficiencies; b) Produces recommended improvements; or c) Demonstrates that audit findings are either invalid

or do not warrant auditee action.

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Required Components of the Corrective Action

Plan: UG 200.511(c) and CAP Template. The corrective action plan MUST provide the following: a) The name of contact person responsible for

corrective action. b) The corrective action planned. c) The anticipated completion date. d) If the auditee does not agree with the audit findings

or believes corrective action is not required, then the corrective action plan MUST include an explanation and specific reasons.

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Steps to Develop Corrective Action Plan: Step 1. Identify the root cause related to the audit

finding

Step 2. List the individuals who will be accountable for the results of the corrective action

Step 3. Create solutions that address the root cause

Step 4. Set deadlines

Step 5. Monitor progress of the corrective action plan

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Tips to Avoid Audit Findings

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Review Allowable Costs for the Grant

Are not normally Federal allowable costs

Tips to Avoid Audit Findings

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Review Allowable Costs for the Grant (Continued)

Always double check for allowable costs when providing

Speedcharts to billing agencies (e.g. MVM, STS, etc)!

Tips to Avoid Audit Findings

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Review Allowable Costs for the Grant (Continued)

Know which costs are allowable or unallowable (e.g.

terminal leave is generally not allowable as a direct cost unless specifically allowed by the Grantor).

Tips to Avoid Audit Findings

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Review Allowable Costs for the Grant (Continued) Re-allocations – MUST always be done in a timely

fashion! If Period of Performance ends on 9/30 Grant allows for a 90 day window to incur expenditures Should be performed by 12/29 and no later To stay within the Period of Performance

Tips to Avoid Audit Findings

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Review Allowable Costs for the Grant (Continued) Accounts Payable invoices received from Subrecipients: Review to specifically look for unallowable costs (e.g. Entertainment costs, memberships, etc.). Maintain this documentation

(within grant retention requirements).

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Tips on Reporting

Increase controls on report review process before

submitting Federal financial reporting forms: To detect items keying errors To detect transposing numbers To detect misclassifications, etc.

Tips to Avoid Audit Findings

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Tips on Reporting (Continued)

Develop formal written procedures governing the

preparation of Federal reports: To be used by preparer of the report. And create a checklist for manager/director review.

Tips to Avoid Audit Findings

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Tips on Reporting (Continued)

Remember to include the Travel authorization amounts

under unobligated balances: Travel has not yet occurred.

Tips to Avoid Audit Findings

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Tips on Reporting (Continued)

Follow Federal Financial Report directions carefully on

the SF-425 or ACF 696 forms: TN reports on a cash basis. Federal share of unliquidated obligations are

obligations incurred but not yet paid.

Tips to Avoid Audit Findings

Q & A

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CONTACT INFORMATION

Jonathan Van Dyk Phone: 615.741.9562

E-mail: Jonathan.VanDyk@tn.gov

Mary Lou Goins Phone: 615.253-8502

E-mail: Mary.Goins@tn.gov

Jeong Robinson Phone: 615.770-3978

E-mail: Jeong.Robinson@tn.gov

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