1. AUDITS

2. Session Objectives To familiarize participants with the Inspector General Audit Process To better prepare participants for the audit by providing them with information to develop strong financial management systems Inform participants of common audit findings

3. What is an Audit? Independent corroboration of management assertions (such as Financial Reports) Verification of factual representations by grantee (for example: Member information, or Financial Cash Transaction Reports)

4. What is an Audit? Confirmation of grant expenditures (these are costs claimed on Financial Status Reports and authorized in the budget)

5. Office of Inspector General (OIG) Conducts and supervises audits and investigations related to Corporation programs and operations Keeps the Corporation’s CEO and Congress informed about problems and deficiencies in programs and operations as well as the need for implementing corrective action

6. What is an OIG Audit? Performed by an OIG Auditor or by an OIG-selected Independent Public Accounting Firm (IPA) OIG Audit Managers are involved, whether the audit is performed by an OIG auditor under the Audit Manager’s supervision or the Audit Manager serves as the Task Monitor for an IPA.

7. What is an OIG Audit? An OIG Audit examines a Corporation program or activity and recommends solutions to issues

8. Audit Process Scope of Audit –Usually three most recent completed years –All grantee and sub-grantee records

9. Self-Checks Do Member files contain all required eligibility documentation? Do Member contracts comply with grant requirements? Have required mid-term and exit evaluations been prepared, discussed, signed and filed?

10. Self-Checks Do the hours reported in the Web- Based Reporting SystemOnCorps agree with the Member timesheets? Were living allowances paid per grant requirements and was 15% of Member support paid with cash match?

11. Self-Checks Are match and in–kind donations documented? Are they allowable? Do the match and in-kind donations support the grant (are they necessary for the grant)

12. Efficient Accounting System must Distinguish grant versus non-grant related expenditures Identify costs by program year Identify costs by budget category Differentiate between direct and indirect costs (administrative costs)

13. An Efficient Accounting System Accounts for each award/grant separately Maintains Federal/non-Federal matching funds separately Records in-kind contributions as both revenues and expenses

14. An Efficient Accounting System Allows management to easily obtain financial reports at both the summary or detailed levels Accounting Information and documents correlate to financial reports

15. Common Audit Findings INTERNAL CONTROLS - Lack of written policies and procedures - Lack of segregation of duties (common for small organizations), person who writes checks should not be the person who reconciles the bank statements

16. Common Audit Findings TIME & ACTIVITY REPORTING Lack of proper timekeeping systems No timesheets or activity reports Timesheets based on budgeted figures and not actual time

17. Time & Activity Reporting A-87 If an employee works on a single Federal award, support for salary can be periodic certifications by the employee (at least semi-annually) If an employee works on multiple cost objectives/activities, support must be 1) after the fact, 2) account for total hours worked 3) be prepared at least monthly and 4) signed by employee and supervisor

18. Time & Activity Reporting A-87 Reports reflecting the distribution of activity of each employee must be maintained for all those whose compensation is charged (in whole or in part) to awards. The reports must reflect an after the fact determination of the actual activity of each employee. Budget estimates do not qualify as support.

19. Time & Activity Reporting A-122 Activity reports must be signed by the employee and supervisor

20. Common Audit Findings MATCH Match is not sufficiently supported, claimed match activity is not in the approved budget and claimed match is not reasonable and necessary

21. Common Audit Findings MATCH: WHAT IS MISSING? –Lack of proper documentation for time and activity –Match activity not included in approved budget –Match activity not necessary to operate the grant and amounts matched not reasonable

22. Common Audit Findings AMERICORPS MEMBER ISSUES Failure to get background checks for Members working with children or vulnerable populations Incomplete or non-existent evaluations (mid- year or final) Insufficient Member records (eligibility, I-9 not sufficient unless you also use passport/state birth certificate) Inadequate tracking of Member hours, hours on timesheets do not agree with hours entered into WBRS

23. Common Audit Findings ACCOUNTING & DOCUMENTATION Accounting records do not identify expenditures by grant or costs to run the grantee organization Costs claimed don’t line up with budgeted amounts Misclassification of Expenses (between budget categories) Lack of supporting documentation for required match

24. Records Retention Retain all financial records: –3 years from date of final Federal Financial Report –If there is an on-going audit- 3 years from final audit resolution

25. Resources www.cncsig.gov FYI-Subscribe@cncsoig.gov http://www.americorps.gov/for_orga nizations/manage/index.asphttp://www.americorps.gov/for_orga nizations/manage/index.asp