1. Monitoring & Oversight Adult Education and Literacy (AEL) Programs Brenda B. Williams Project Manager Texas Workforce Commission Regulatory Integrity Division Sub-recipient Monitoring October 9, 2014

2. Authority Monitoring by TWC and the Grant recipient are a requirement of the contract as noted in Section13: o §13.3 The Grantee shall develop and maintain a Subcontractor monitoring Center, acceptable to the Agency, covering any sub- contract it awards from this grant award… o §13.4 …The Agency retains the right to perform such monitoring an evaluation studies that it determines necessary and will report preliminary results to the Grantee and any Subcontractor before the monitoring and evaluation is concluded and the final results are made a matter of record.

3. Risk Assessment Before an entity is selected for a monitoring review a risk assessment is conducted with input from the AEL department. Project Managers (PM) are notified of the entities selected. (usually occurs at the beginning of the fiscal year and at the mid point). In FY15, 10 on-site reviews and 20 desk audits will be conducted.

4. Selecting the Review Date Selecting the Review Date The contact person listed on the contract is notified of the potential dates for the monitoring review by the PM. Once a date is selected, an Engagement Letter is emailed to the contact. (Approximately 13 weeks prior to the review) The Engagement Letter attachment should be signed as acceptance of the dates and returned to the PM.

5. Planning for the Review A preplanning meeting is held between the monitoring team, contract manager, AEL and other pertinent staff to share information and identify concerns. Information obtained assists in identifying the documents to be requested.

6. Document Request A document request letter is emailed approximately 8 weeks prior to the review (when possible). The document request letter will include the contracts being monitored and the Project Manager’s name and phone number. Date the documentation should be submitted. Format to submit documents.

7. Documents to be submitted: Organization chart Contracts, Non Financial Agreements and MOUs Cost Allocation Plan/Indirect Cost Rate General ledger and Check register for the review scope Chart of Accounts with descriptions Property inventory report relating to the respective contract with TWC (most current)

8. Documents to be submitted: Formal procurements over $150k, sole source and non- competitive procurements List of Bank Accounts, Bank Statements, Bank Reconciliations and trial balances during the scope Monitoring reports, schedules and risk assessments (if applicable)

9. Policies and Procedures Copies should be submitted in electronic format where available for the following: Accounting/Budget Financial Reporting Determining Cash Needs Personnel/Human Resources Travel Property Procurement Automation-Internal Controls Personally Identifiable Information (include controls for security of physical & electronic data) Monitoring and Oversight Contract Management Fraud Conflict of Interest Service Delivery Reporting/Performance Measures Program Eligibility Tracking Contract Deliverables *Does not include all program information.

10. Desk Review Once the Document Request Packet (DRP) is received the team will review the information during the desk review and determine the level of risk for the on-site visit. Any area of testing that can be completed during the desk review will be conducted. Areas that require testing on-site or additional follow-up will be brought to the field.

11. Desk Review – cont. One week prior to the review the PM will make contact to finalize the entrance time and date. The PM will also notify the contact of any special equipment or access needed while on-site. A list of documents/transactions to be tested on-site will be sent two-three business days prior to the entrance. (documents requested should be available when the team arrives.)

12. Entrance Conference During the entrance the team will inform the contractor of the areas to be reviewed and a potential exit date and time. Contacts will be identified for both the contractor and the monitoring team.

13. Field Review The PM establishes a time frame for reporting information to the contact and/or Executive. Processes will be gathered and interviews conducted while on-site. Potential issues will be discussed while on-site in order to ensure understanding. A debriefing will be conducted with the Executive or designee prior to the Exit.

14. Fiscal Testing Areas Disbursements Cost Allocation/Indirect Rate Cash Management Financial Reporting Procurements Property

15. Disbursements Testing Costs incurred will be tested in compliance with Financial Manual for Grants and Contracts (FMGC) and relevant OMB Circulars. Attributes to be tested for the transactions include: Allowable Reasonable and Necessary Adequately Documented Correctly Allocated Properly Classified and Recorded

16. Cost Allocation Plan/Indirect Rate Review current dated copy of approved cost allocation and/or indirect cost rate plan. Review the policy and procedures for how the plan is developed and approved.

17. Cash Management Testing Review Cash Forecasting policies and procedures. Walk through of cash forecasting process. Review bank reconciliations including bank statements, adjusting items and trial balances. Review any discrepancies between cash drawn and expenditures reported. Compare cash drawn and cash on hand. (Process for calculating the 3 day cash on hand)

18. Financial Reporting Trace expenditures reported in CDER to the general ledger. Review accruals, obligations and unpaid liabilities, if applicable.

19. Procurements Review competitive procurements over $150k, as well, as any non-competitive or sole source procurements. Micro purchases above $3k but less than $150k threshold amount.

20. Property Review policy and procedures for tracking computers and equipment purchased with grant funds. Review property inventory report of any equipment purchased with grant funds. Test a sample of property listed in the report during an inventory walk through to test property controls in place.

21. Security of Data Review policies and procedures in place for securing data. Interview staff to document process. Review controls in place for securing both hard copy and electronic documentation. Walk through of the facility where Personally Identifiable Information (PII) is maintained.

22. Exit Conference An exit conference will be held to discuss potential findings and/or observations. Issues that are resolved on-site will be listed on the supplemental report. If additional issues are determined after the team leaves the site the PM will contact the Executive.

23. After the Field Review Work papers will be completed once the team returns to the office. Additional documentation to resolve issues must be submitted within the time frame the PM indicates. Completed workpapers are submitted to the Field Director for review and comments.

24. Draft Reports A “Draft report” is issued 7 weeks after the on-site review. The Contractor will have 15 days from the date of the transmittal to respond and concur or not concur with the findings identified in the report. After the draft is returned it will be reviewed to determine if it addresses the finding. The PM will contact the Contractor, if clarification is needed.

25. Final Report The final report includes issues identified on-site that remain unresolved after the draft report. The report also includes Contractor comments. If additional actions are required Audit Resolution will work with the Contractor from that point forward.

26. Questions