1. 1 Guidance for the American Recovery and Reinvestment Act of 2009 By David G. Bullock, Partner Macias Gini & O’Connell LLP

2. 2 Objective  An understanding of the impact of the recently passed American Recovery and Reinvestment Act of 2009 (the Recovery Act) on to recipients and subrecipients. American Recovery and Reinvestment Act of 2009  An understanding of the guidance from the Office of Management and Budget (OMB)

3. 3 Grant Funds  The Recovery Act results in more than $300 billion in grant funds covered by the recipient reporting requirements. −Special Reporting Requirements −Single Audit Requirements  The Congress is very committed to ensuring that Recovery Act funds are spent appropriately and that every effort be made to ensure that there is minimal waste, fraud, or abuse associated with these funds.

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5. 5 Timing of Impact?  Federal agencies are focused on taking steps that will allow them to quickly provide funds to various recipients for the purposes identified in the Recovery Act.  Immediate impact on grant reporting requirements to federal agencies.  More likely that significant spending will occur after June 30, 2009 … thus, expected to significantly impact FY 2010 and 2011 Single Audits.

6. 6 Official Web Site  The Recovery Act mandates that there be an unprecedented amount of accountability and transparency.  The Office of Management and Budget set up a web site (www.recovery.gov) to quickly establish a central point to disseminate information.www.recovery.gov

7. 7 The President’s Memorandum  The March 20, 2009 Memorandum  Ensuring Responsible Spending of Recovery Act Funds … Accountability and Transparency Merit-Based Decision Making Long-term Public Benefits, Optimizing Economic and Programmatic Results

8. 8 OMB Guidance  April 3, 2009 is latest OMB Guidance to Federal Agencies (http://www.recovery.gov/sites/default/files/m09-15.pdf ) −Section 2 “Agency Plans and Public Reporting”, see specifically Sections 2.10 – 2.12 −Section 5 “Grants and Cooperative Agreements”, see specifically Sections 5.6 – 5.9  Most Significant Update … Data Reporting Davis Bacon Buy American (iron, steel and manufactured goods)

9. 9 OMB Guidance (continued)  Recipients are generally required to clearly distinguish Recovery Act funds from non- Recovery Act funds.  New programs or existing programs that have significant changes in compliance requirements will be identified with a new Catalog of Federal Domestic Assistance (CFDA) number.

10. 10 OMB Guidance (continued)  Federal agencies will be performing risk assessments on Recovery Act programs and potentially designating some programs as high-risk for single audit purposes.  Such designations will affect major program determination and the scope of the audit going forward.

11. 11 OMB Guidance (continued)  There will be extensive reporting to federal agencies required from recipients and first-tier subrecipients Reporting requirements will be provided by Federal agencies in the standard terms and conditions of individual award agreements. 180 days from enactment (October 10, 2009) and quarterly thereafter (due within 10 days) Standardized guidance to come at least 45 days before October 10, 2009 Heavy emphasis on reporting either jobs created or jobs retained

12. 12 OMB Guidance (continued)  New Governance: Recovery Act Accountability and Transparency Board (the “Board”)  OMB will coordinate the Recovery Act activities until the Board is in place.  Then, OMB will support Board in its oversight role.

13. 13 OMB Guidance (continued)  Federal agencies are required to initiate additional oversight to address the unique implementation risks of the Recovery Act.  The expectation in this area is that federal agencies, in some cases partnering with states receiving federal funds, will establish defined strategies to prevent or timely detect waste, fraud, or abuse.

14. 14 OMB Guidance (continued)  Federal agencies are also expected to use the single audit process as a means of promoting accountability for Recovery Act funds.  In part, the OMB guidance states that this will occur through federal agency Offices of Inspectors General (OIGs) reaching out to the auditing profession and providing technical assistance and training.  Also, the OIGs will be performing follow-up reviews of single audit quality, with an emphasis on Recovery Act funds.

15. 15 OMB Guidance (continued)  The Federal Audit Clearinghouse (FAC) is also required to make publicly available on the internet all single audit reports filed with the FAC for fiscal years ending September 30, 2009, and later.  There will be a link from www.recovery.gov to the single audit reports. It is unclear at this time whether the reports required to be made public are only those with Recovery Act funds. www.recovery.gov

16. 16 OMB Compliance Supplement  OMB issued 2009 Compliance Supplement New Recovery Act guidance in Appendix VII Addenda to be issued at the end of each month, beginning with June 2009 −Add new programs −Modify existing programs −Add compliance requirements −Identify clusters

17. 17 OMB Compliance Supplement (continued)  OMB issued 2009 Compliance Supplement Recovery Act funds to be considered higher-risk Clusters with newly added Recovery Act funds should be considered a “new program” for purposes of risk assessment. Auditors to develop compliance requirements through award documents, OMB website, and framework in OMB Compliance Supplement Schedule of Expenditures of Federal Awards (SEFA) and the Data Collection Form

18. 18 Single Audits  The Recovery Act funds will have a significant impact on many of your single audits, thus, it is not too soon to begin your planning. Control procedures over federal expenditures are appropriate, working properly and adequately designed Additional controls to ensure that Recovery Act funds are separately identified and tracked New controls needed to meet the stringent reporting requirements back to federal agencies

19. 19 Questions