OMB A-133 Audits and Issues NCURA Region VI & VII Spring Meeting April 17-20, 2005 Maureen Rhea, Internal Audit University of Washington

OMB Circular A-133 Audits & Issues Agenda – A-133/Single Audit – Audit Process Overview – Areas of Audit Scrutiny

What is A-133? A-21? A-110? OMB Circular A-133 (Single Audit) – Federal Audit Regulations OMB Circular A-21 – Grantee Cost Principles OMB Circular A-110 – Administration of Grants

Purpose of Circular A-133 Establish standards for obtaining consistent and uniform audits of organizations expending Federal awards Annual audit required if entity receives federal funds of $500,000 or more in a year

Audit Process Who Audits A-133? External Auditors Governmental Audit Agencies (e.g., State Auditors) Private Audit Firm (e.g., KPMG, PWC)

Audit Process Auditor 1. Planning 2. Fieldwork 3. Summary & Final Report 4. Follow up Client 1. Entrance Conference 2. Interviews, provide documents, investigate exceptions 3. Respond to findings (negotiation, corrective action plan) 4. Demonstrate findings have been addressed

What Types of Issues are Reported? Inadequate internal controls – Authorization, separation of duties, documentation Noncompliance with laws & regulations – OMB Circulars A-21, A-110, award terms & conditions Questioned costs exceeding $10,000

Auditor Focus Allowability of expenses – How does expense benefit the specific grant? – Is there supporting documentation? – Authorized by PI or person with specific knowledge of grant?

Auditor Focus Allowability of Expenses – Salaries/Personnel Administrative & Clerical Salaries Level of Effort - if paid on the grant, work on the grant Salary certification and effort reports not signed/filed – Equipment – Travel – Office Supplies

Auditor Focus Allocation of Expenses – What is the allocation plan? – Is it documented? – Is it reasonable? – Is it reviewed occasionally?

Auditor Focus Allocation of Expenses – Rent – Lab supplies – Gift Certificates

Auditor Focus Cost Sharing – Has cost sharing promise been met? Mandatory – required by statute or as a condition of award Committed – not required by statute or as a condition of award – cost sharing is quantified (often as a percentage of effort) in the proposal or budget justification without corresponding funding request

Auditor Focus Cost Sharing – Market value vs. depreciation cost (GEAR UP)

Auditor Focus Program Income – “Gross income earned by the University that is directly generated by a sponsored activity or earned as a result of an award.” (OMB Circular A-110) – Program income identified in proposal? – Plan in place to use program income? – Use complies with sponsor regulations?