1 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. 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. 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. 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. Assisting and supporting the CYS’ Children Services and Youth Units in ensuring delegate agency compliance with the funding sources program and fiscal requirements. Audits Unit: Purpose and Objectives

2 Contacts Fiscal Audits Harold Campbell – Director George Fielder – Auditor III Simeon Franks – Auditor Alma Alvarez – Auditor Tracie Berry – Auditor Yolanda Owens – Auditor Program Audits Darlene Perez – Assistant Carmen Pacheco – Supervising Prg. Aduitor Lois Dixon – Program Auditor Sandra Kidd – Program Auditor II Elizabeth Matias – Program Auditor Edrina McDonald – Program Auditor James Rodgers – Program Auditor

3 Overview – Fiscal Audits Programs Audited: HS/EHS, CDBG, WIA – Youth Key Regulations OMB Circular A-122, Cost Principles OMB Circular A-122, Cost Principles (2 CFR Part 230) OMB Circular A-133, Audit requirements OMB Circular A-133, Audit requirements Contract provisions Contract provisions Uniform Administrative Requirements Uniform Administrative Requirements 45 CFR Part 74 (HS/EHS) 45 CFR Part 74 (HS/EHS) 24 CFR Part 84 (CDBG) 24 CFR Part 84 (CDBG) 29 CFR Part 95 (WIA) 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 need to be reasonable, necessary and allocable Costs must follow additional principles listed in Attachment A of the Circular Costs must follow additional principles listed in Attachment A of the Circular Attachment B of the Circular prescribes treatment of costs Attachment B of the Circular prescribes treatment of costs

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

6 Web Sites US Government Printing Office Provides links to Code of Federal Regulations. Office of Management and Budget Provides links to all OMB Circulars such as A-133.

7 Audit Requirements: OMB Circular A-133 Applies to: Nonprofit Organizations Nonprofit Organizations Educational Institutions Educational Institutions Commercial Organizations 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 On-Site Review Debriefing Exit Report / Improvement Plan Follow-up on unresolved issues

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

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

11 Areas covered 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

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 Principles applies to ALL grantees, subgrantees, subrecipients & sub-awards Must maintain a system for administration of contracts Must maintain a system for administration of contracts Must provide for full and open competition Must provide for full and open competition

16 Fiscal Audits Questions?