Audit Findings

Report
Texas Education Agency
Division of Federal Fiscal Monitoring
Audit Findings and How to Avoid Them
October 8, 2014
About the Presenter
Roger Hingorani
Manager
Grant Review Unit
Division of Federal Fiscal Monitors
Texas Education Agency
(512) 463-9918
[email protected]
October 8, 2014
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Agenda
•Acronyms Used In This Presentation
•Division of Federal Fiscal Monitoring
•Reviews Conducted
•Common Findings
•How to Avoid Them
•Useful links
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Acronyms Used In Presentation
• CFR – Code of Federal Regulations
• FASRG – Financial Accountability School Resource Guide
• LEA – Local Education Agency
• NCLB – No Child Left Behind
• OMB – Office of Management and Budget
• PAR – Personnel Activity Report
• TEA – Texas Education Agency
• PER-DIEM – Daily Allowance for Expenses
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Division of Federal Fiscal Monitoring (FFM)
• Grant Review Unit (GRU)
• Conducts monitoring activities including both desk and
onsite reviews as part of TEA’s annual risk assessment and
investigations for complaints and/or management referrals
of the discretionary and formula grants awarded to school
districts, charter schools, regional education service
centers and non-profit entities.
• Conducts reviews of annual financial reports for
compliance with federal single audit requirements and
issues management decisions related to audit findings
pertaining to any federal awards passed through the TEA.
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Division of Federal Fiscal Monitoring (FFM)
• Monitoring Review Unit (MRU)
• Conducts monitoring activities including desk
reviews of LEAs as part of the TEA’s annual risk
assessment
• Monitoring for special conditions imposed on
discretionary and formula grants awarded to school
districts, charter schools, regional education
service centers and other entities.
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Is Your School District
in Compliance with
Grant Requirements?
January 28, 2014
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Division of Federal Fiscal Monitoring (FFM)
Grant Review Unit
• 55 Desk and Onsite Reviews Conducted
• 41 Reviewed had Findings
• 27 had Findings with Questioned Costs
• $165,348.57 in Total Questioned Cost
• $157,444.14 in Questioned Cost Resolved through
Corrective Actions Taken
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Common Findings Financial Management Systems
1. Internal Controls - Effective Control
Lack of Written Policies and Procedures
Reporting of Expenditures for Reimbursement
Credit Cards
Travel
Employee Reimbursements
Inventory Controls
Time and Effort
Budgetary Controls
Purchasing
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Common Findings – Payroll
2. Time and Effort
Not adequately maintained or after-the-fact
a.Periodic Certifications
Prepared in Advance not after the fact
Not signed by employee or supervisor
b. Personnel Activity Report (PAR)
Did not account for 100% of the time
compensated
Budgeted Hours Reported on PAR
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Common Findings – Payroll
2. Time and Effort continued…
Not adequately maintained or Not after-the-fact
c. Substitute Time and Effort Reporting System
Not approved by TEA
The employee did not work on a set
schedule
Semi-Annual Certificate not signed by
employee and supervisor
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Common Findings – Payroll
3. Lack of Supporting Documentation
Signed and Dated Job Descriptions
Tutoring / Extra-duty Pay
Supplemental Pay Agreement
Time Sheets
 Documentation Demonstrating Highly
Qualified Status
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Common Findings – Payroll
3. Lack of Supporting Documentation continued…
Amounts Recorded in the Payroll Journals
does not match with the payroll costs
charged to the grant in the General Ledger
Payroll costs charged to the incorrect grant
period
Payroll checks issued in midmonth every
month prior to services being performed.
Expenditures claimed for reimbursement
not recorded in financial records
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Common Findings
4. Budgets/Amendments
Positions not Approved in the TEA
Approved Program Budget
Encumbrances not Recorded in the
General Ledger.
Incorrect Fund Codes Used for
Reporting Expenditures
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Common Findings
4. Budgets/Amendments – continued…
Items Requiring TEA Approval Purchased
without Approval(Capital Outlay Items)
Cost Incurred from Class Object Codes not
Approved in the Program Budget.
Budget Amendments-25%
Variance/Threshold
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Common Findings
5. Required Set Asides
Amounts not appropriated/Identified in
financial records to match amounts reserved
for specific activities such as a Districtwide
Parental Involvement or Districtwide
Professional Development Activities as
reported on Schedule PS-3101 of Consolidated
Federal Grant Application
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Common Findings – Non-payroll
6. Lack of Source Documentation
Third Party Documents such as an
invoice/billing statement to support
expenditure
Lack of Approval from Authorized Personnel
Lack of Purchase Order.
Gift Cards without additional support
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Common Findings – Non-payroll
6. Lack of Source Documentation continued…
 Incomplete Receipts/Invoices
 Credit Card Statements without Backup
Receipts
 Lack of Valid Contracts/Agreements for
Professional/contracted Services
 Proof of Attendance: Registration/Certificate of
Completion
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Common Findings – Non-payroll
7. Unallowable costs
Necessary and Reasonable
Non-Educational Fieldtrips
Not Aligned with Camus/District
Improvement Plan
Attend out of town training
available in city of domicile
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Common Findings – Non-payroll
7. Unallowable costs – continued…
Travel
Lack of Authorization for Travel
Full PER-DIEM Claimed without attestation
of actual funds expended
Use of grant funds to attend
training/conference unrelated to the
Program.
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Common Findings – Non-payroll
7. Unallowable costs continued…
Food Costs/Incentives
 Food for Staff Meetings/Development
 Full Meals for Parental Involvement
 Food as Incentives for Student
Participation
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Common Findings – Non-payroll
8. Allocable Costs
Goods / Services at the end of the grant
period
- Stockpiling of Supplies
Cost Allocation Plans for:
- Rent/Utilities
- Maintenance and Repair Agreements
- Other Shared Costs
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Common Findings - Other
9. Period of Availability
- Pre-Award Costs Charged to the Grant without
TEA Approval
- Annual Subscriptions/Software LicensesOutside of the Grant Period
10.Supplement / Supplant
a. Curriculum Management Systems / Software
b. State Mandated
– Required Trainings
– Books
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Common Findings - Other
11. Shared Service Agreements
Lack of shared service agreement with member
districts
Agreement not clear about roles and
responsibilities of fiscal agent and member
district
Lack of oversight by Fiscal Agent regarding
expenditures of grant funds.
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Common Findings - Other
Shoolwide Program: Consolidation of State, local & Federal
Funds
12. Schoolwide Program out of Compliance
Lack of Documentation to Demonstrate Needs
Assessments
School Improvement Plans Missing Key Elements
Methodology demonstrating the accounting for
expenditures from schoolwide pool at each
participating campus
Demonstration of supplement not supplant
requirements on schoolwide program
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Common Findings - Other
Shoolwide Program: Consolidation of State, local & Federal
Funds Continued…
12. School
Improvement Plan missing key elements
Ten Required Components
Goals, objectives, Targets based on Identified Needs
Assessment (Comprehensive Needs Assessment)
Listing of specific federal, State and local funds
consolidated and amount each fund source
contributed to the consolidated pool
Demonstration of Intent and purpose of each federal
program whose funds were consolidated.
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How to Avoid Findings
Strong Internal Controls
•Policies and Procedures (P & Ps)
•Tone at the Top – Adherence to P & Ps and
Compliance Requirements
•Organizational Structure - Identify
reporting/supervisory responsibilities as
well as assignment of authority and
responsibilities
•Provide Adequate Training
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How to Avoid Findings
Compliance with Statutory Requirements
Program Statutes
• Elementary and Secondary Education Act (NCLB)
Regulations
• Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments
(34 CFR 80 )
• OMB Circular A-87 (Cost Principles for State, Local, and
Indian Tribal Governments
Guidance
• Non-regulatory Guidance
• Application Guidance
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Useful Website Links
Texas Education Agency
• http://www.tea.state.tx.us/
United States Department of Education
• http://www.ed.gov/index.jhtml
Office of Management and Budget
• http://www.whitehouse.gov/omb/circulars/
Code of Federal Regulations
• http://www.gpoaccess.gov/cfr/index.html
Office of Executive Councils, Chief Financial Officers Council
• https://cfo.gov/COFAR/
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More Useful Links (TEA)
TEA: Substitute System of Time-and-Effort Reporting
http://www.tea.state.tx.us/index2.aspx?id=2147510385
TEA: Financial Accountability System Resource Guide
http://www.tea.state.tx.us/index2.aspx?id=25769817568&menu_id=645
TEA: Grants
http://www.tea.state.tx.us/index2.aspx?id=2147487920&menu_id=951
Grant Management Resources
http://www.tea.state.tx.us/index4.aspx?id=8339&menu_id=951
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Copyright © Notice
The materials are copyrighted © and trademarked ™ as the property of the Texas Education
Agency (TEA) and may not be reproduced without the express written permission of TEA,
except under the following conditions:
1. Texas public school districts, charter schools, and Education Service
Centers may reproduce and use copies of the Materials and Related
Materials for the districts’ and schools’ educational use without
obtaining permission from TEA.
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Materials and Related Materials for individual personal use only without
obtaining written permission of TEA.
3. Any portion reproduced must be reproduced in its entirety and remain
unedited, unaltered and unchanged in any way.
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Copyright © Notice
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containing them; however, a reasonable charge to cover only the cost of reproduction and
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