OMB Circular A-133 (PPT)
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OMB Circular A-133 (PPT)






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OMB Circular A-133 (PPT) Presentation Transcript

  • 1. OMB Circular A-133 Audits of States, Local Governments and Non-Profit Organizations Presented by Ann Holmes and Toni Lawson
  • 2. Presenters
    • Ann Holmes
    • Chief Financial Officer, CASL
    • [email_address]
    • 301‑226‑8804
    • Toni Lawson
    • Associate Director, ORAA
    • [email_address]
    • 301-405‑6275
  • 3. History of Single Audit
    • Each agency used to be responsible for its own audits
    • Audits were not coordinated
    • Inflated costs to Federal Government
    • Undue burden on Universities
  • 4. Single Audit Report
    • Financial statements
    • Schedule of expenditures of Federal awards
    • Auditors opinions on fair presentation of financial statements
    • Schedule of expenditures of Federal awards
  • 5. Single Audit Report
    • Auditors’ report on internal control & opinion on compliance
    • Auditors’ schedule of findings and questioned costs
    • Auditees’ corrective action plans; and
    • A summary schedule of prior audit findings
  • 6. A-133 Emphasis
    • Sets standards for audit consistency and uniformity
    • Identifies compliance requirements
    • Establishes criteria for testing internal controls
    • Tests for reasonable assurance that financial statements are accurate
  • 7. Risk Based Approach
    • Identify major programs based on expenditures in fiscal year
    • Review previous audit findings
    • Review new programs or those with regulatory changes
    • Review personnel or system changes at institution
  • 8. Risk Assessment
    • Focus is on high risk transactions
    • Cost sharing
    • Direct vs. F & A costs (F.6.b.)
    • Shared use items
      • Big order of lab supplies - is the expense allocated on a reasonable basis?
    • Related party transactions
  • 9. Circular Organization
    • General
      • Gives the purpose of the circular and definitions of frequently used terms
    • Audits
      • Specific information on audit requirements
  • 10. Circular Organization
    • Responsibilities defined for:
      • Auditees (the university)
      • Federal Agencies
      • Pass-Through Entities
      • Auditors
  • 11. OMB Circular A-133
    • Appendix
      • A.- Data Collection Form
      • B.- Compliance Supplement
  • 12. A-133 Subpart A Purpose
    • Sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of [Universities] expending Federal funds.
  • 13. A-133 Subpart A Definitions
    • CFDA Number
    • The number assigned to a Federal program in the Catalog of Federal Domestic Assistance (CFDA).
    • Examples:
    • 59.037 SBDC
    • 47.076 Education/Human Resources (NSF)
  • 14. A-133 Subpart A Definitions
    • Internal Control
    • Process designed to provide reasonable assurance of achieving the following:
      • Effective & efficient operations
      • Reliable financial reporting
      • Compliance with laws & regulations
  • 15. A-133 Subpart A Definitions
    • Pass-through Entity
    • A non-Federal entity that provides a Federal award to a subrecipient to carry out a Federal program.
  • 16. A-133 Subpart A Definitions
    • Subrecipient A non-Federal entity that expends Federal funds received from a pass-through entity to carry out a Federal program.
  • 17. A-133 Subpart B Audits
    • Defines:
    • Who is required to be audited
    • Determining subrecipient vs vendor
    • Frequency of audits
  • 18. Subcontract or Vendor?
    • Subcontractor
      • Performance measured against whether the objectives of the federal program are met
      • Has responsibility for programmatic decision making
      • Has responsibility for adherence to applicable federal program compliance requirements
  • 19. Subcontract or Vendor?
    • Vendor
      • Provides the goods and services within normal business operations
      • Provides similar goods or services to many different purchasers
      • Operates in a competitive environment
      • Provides goods or services that are ancillary to the project
      • Not subject to compliance requirements
  • 20. A-133 Subpart C Auditees
    • Auditee responsibilities:
    • Identify all Federal awards received (funds are listed in the A-133 report)
    • Maintain control over Federal program
    • Comply with laws & regulations
    • Prepare financial statements
    • Ensure audits are done & submitted when due
    • Follow up and take corrective action
  • 21. A-133 Subpart D Pass-through Entities
    • Responsibilities:
    • Identify Federal awards to subrecipient (CFDA#)
    • Advise subrecipient of Federal requirements
    • Monitor subrecipient for compliance
  • 22. A-133 Subpart E Auditors
    • Responsibilities:
    • Financial statements
    • Internal control
    • Compliance with regulations
    • Follow-up on prior audit findings
  • 23.  
  • 24. Pass-through Entity Responsibilities
    • Award Identification
      • Inform the sub-recipient of the federal award information (e.g. award name, CFDA)
    • During- the-Award-Monitoring
      • Monitor the sub’s use of funds through regular contact
    • Sub-recipient Audits
      • Ensure that entities of met the A-133 audit requirements
  • 25. Pass-through Entities (UM) Responsibilities
    • Measures for subrecipient compliance:
      • Sponsored Projects Subcontract Procedure Manual
      • Subrecipient’s A-133 Audit Certification
      • Subrecipient’s A-133 Audit Report
  • 26. Pass-through Entities (UM) Responsibilities
    • Subaward
      • used when a portion of a sponsored project is performed by another entity
      • states work to be performed, conditions to be imposed on subrecipient, flow-down of Federal regulations and laws, terms and conditions of prime award
      • constitutes a part of UM’s proposal to sponsor
  • 27. Pass-through Entities (UM) Responsibilities
    • Contents of subrecipient’s proposal:
      • Work statement
      • Budget
      • Schedule/Deliverables
      • Endorsement
  • 28. Pass-through Entities (UM) Responsibilities
    • PI/PD’s role:
      • Review and document subrecipient’s qualifications
      • Ensure subrecipient’s costs are reasonable
      • Initiate request to issue subaward and subsequent modifications to ORAA
      • Review and approve subrecipient’s invoices
  • 29. Pass-through Entities (UM) Responsibilities
    • PI/PD’s role, continued:
      • Monitor subrecipient’s performance to ensure satisfactory conformance with subrecipient’s statement of work
      • Receive and review subrecipient’s technical reports
      • Facilitate close-out, i.e. final technical reports and final invoices
  • 30. Pass-through Entities (UM) Responsibilities
    • ORAA’s role:
      • Draft subaward
      • Assign subaward a unique identification number (Q or Zxxxxx)
      • Issue/negotiate subaward with subrecipient
  • 31. Pass-through Entities (UM) Responsibilities
    • ORAA’s role, continued:
      • Forward fully-executed subaward to PI/PD or business officer
      • Manage and process subaward modifications
      • Facilitate close-out of subawards
      • Encumber funds authorized to subrecipient in FRS
  • 32. Pass-Through Entities (UM) Responsibilities
    • OCGA’s role:
      • Receive and incorporate subrecipient’s financial reports with reporting requirements of prime award
  • 33. Internal Controls
    • Sense of conducting operations ethically
    • Positive responsiveness to questioned costs
    • Staff knowledge of compliance requirements
    • Training programs
  • 34. Compliance Requirements
    • Ensure that funds were used only for activities that further the objectives outlined in the award document
    • 14 areas of review (A-N):
      • Emphasis on largest expenses
        • Employee compensation
        • F&A costs
        • Equipment
  • 35. Compliance & Internal Controls
    • A. Activities Allowed or Unallowed
      • Identify the types of activities allowed or prohibited
      • Test for proper classification & accumulation
      • Review Sub-awards to ensure activities are allowable
  • 36. Compliance & Internal Controls
    • B. Allowable Costs/Cost Principles
      • OMB A-21
        • Reasonable, Necessary, Allowable
        • Facilities & Administrative vs Direct
        • Disclosure Statement
        • Comparisons of budgets to actual costs
  • 37. Compliance & Internal Controls
    • C. Cash Management
      • Cost reimbursable*
      • Cash Advances*
      • Letter of credit*
      • *Funds requested are for actual expenses
  • 38. Compliance & Internal Controls
    • D. Davis-Bacon Act
      • All laborers and mechanics employed to work on construction projects financed by the Federal government must be paid prevailing wage rates.
  • 39. Compliance & Internal Controls
    • E. Eligibility
      • Who can participate in a Federal program and the amounts for which they qualify
      • Subrecipients are reviewed for eligibility
  • 40. Compliance & Internal Controls
    • F. Equipment and Real Property Management
      • Proper records & adequate safe guards
      • Disposition of equipment
      • Agency compensated if sold
      • Property tags in place
  • 41. Compliance & Internal Controls
    • G. Matching, Level of Effort
      • Comply with A-110 (section 23)
      • Test to determine if commitment met
      • Verify source of funds is allowable
      • Review effort requirements were met
      • Commitment from management to meet matching requirements
  • 42. Compliance & Internal Controls
    • H. Period of Availability of Federal Funds
      • Only cost resulting from obligations incurred during the funding period may be charged to the award
      • Test transactions charged after the award expired
      • Mechanisms for identifying awards about to expire
  • 43. Compliance & Internal Controls
    • I. Procurement, Suspension & Debarment
      • Purchases are made in compliance with A-110
      • Contracts are not made with entities or individuals that have been suspended or disbarred
      • University has existing codes of conduct
  • 44. Compliance & Internal Controls
    • J. Program Income
      • Gross income received that is directly generated by the federally funded project during the grant period
        • Verify income is added to the budget
        • Verify income was properly accounted for
  • 45. Compliance & Internal Controls
    • K. Real Property Acquisition & Relocation Assistance
      • Equitable treatment if property is acquired
  • 46. Compliance & Internal Controls
    • L. Reporting
      • Financial -Recipients should use standard financial reporting forms
      • Performance -at least annually must submit actual accomplishments compared to goals
      • Special Reporting -as required by the agency
  • 47. Compliance & Internal Controls
    • M. Subrecipient Monitoring
      • Ensure Compliance with Federal requirement
      • Reasonable assurances that subrecipients obtain required audits
  • 48. Subrecipient Monitoring
    • Subrecipient monitoring is a requirement in both OMB Circular A-110 and OMB Circular A-133
    • Get your PIs involved in reviewing progress reports and invoices
  • 49. Subrecipient Reports
    • Flow-down requirements make subs responsible for reporting
    • Final reports must incl. prime and subs
    • Subaward reports must be submitted prior to due date for reports to sponsor
    • PI (prime) approves reports (technical and program)
    • Subs should be closed before prime
  • 50. Keys to Good Subrecipient Monitoring
    • Write a good subaward document that includes a clear SOW.
    • ORAA uses the Federal Audit Clearinghouse to assess whether your subrecipient would be considered high risk
    • Think of yourself as a sponsor—make sure invoices certified by the subrecipient’s authorized official
  • 51. Approving the Subaward Invoice
    • Have the PI sign the invoice (or provide an email) authorizing the payment.
    • Sample statement for PI authorization:
      • In signing below I approve payment of this invoice and attest that the charges appear reasonable, and progress to date on this project is satisfactory and in keeping with the statement of work.
  • 52. Compliance & Internal Controls
    • N. Special Tests & Provisions
      • Student Financial Assistance
      • Federal Work Study
      • Loans
  • 53. Types of Audits
    • Pre-award ($1mil or greater)
    • Financial Statement
    • OMB A-133
    • Program
    • Disclosure Statement
    • F&A Cost Proposal
    • Procurement System Review
    • Property System Review
  • 54. Surviving an Audit
    • Question: When do you begin preparing for an audit?
    • Answer : The day you submit the proposal!
  • 55. Documents Required for Audit
    • Copy of Agreement
    • Proof of Salary Approval
    • Copies of ALL invoices paid on the account
      • Include P.O. if required for purchase
    • Cost Sharing Documentation
      • Cost Sharing worksheet/account
      • Don’t forget to include F&A on salaries/fringe benefits
  • 56. Documents Required for Audit
    • Effort Reports
      • Must match payroll charges – caution when preparing transfers
    • Sub-Awards
      • Copy of award
      • Copy of report or deliverable from sub.
      • Copy of approved final invoice
  • 57. Documents Required for Audit
    • Reconciliation Documentation
      • Proof that the charges were reviewed
      • Are charges valid
      • Are encumbrances correct
      • Have recipients been paid
  • 58. Key to Successful Audit
    • Organized Files
    • Documentation for expenses
    • Appropriate Approvals
    • Audit Trails
    • Knowledge of policies and regulations
  • 59. Transfer of Expenses
    • “ Transfer(s) must be supported by documentation that contains a full explanation of how the error occurred...”
    • “ An explanation that merely states ‘to correct error’ or ‘to transfer to correct project’ is not sufficient.”
    • “ It should be noted that frequent errors in the recording of costs may indicate the need to review the accounting system and/or internal controls.” (DHHS Grants Manual)
  • 60. Audits
    • Document! Document! Document! When transfers are required — “ Defend the Debit”
      • Auditors want to know why the award was charged for the expense
  • 61. Auditor Management
    • Don’t assume the auditor has basic knowledge of regulations
    • Understand all auditors questions
    • If you are not sure - check it out
    • Don’t ramble or provide additional information
    • Keep track of questions and responses
    • Accompany the auditors when they speak to PI
  • 62. Recent UM Audit Findings
    • Cost price analysis for reasonability of costs on “subcontract” only
    • Lack of documentation on Subawards
    • Expense Transfers missing complete explanations of why/how the error occurred
    • Charging Administrative salaries to awards not in the sponsor approved budget
    • Equipment on loan from federal government not in inventory system
  • 63. Possible Consequences for Noncompliance
    • Corrective Actions
    • Additional Special Award Terms and Conditions
    • Loss of Expanded Authorities
    • Cost Disallowance and Repayment
    • Termination of Award
    • Civil and/or Criminal Violations and Imposed Penalties
  • 64. Words to the Wise
    • “ If you don’t like being audited by an auditor, you will really dislike being audited by an angry auditor.” NCURA
  • 65. Questions?
    • ???