AUDITS

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AUDITS

• AuditsDid you say audit?!!? An Overview of Some
  of the Most Frequent Audit Findings
• Patricia A. Rauch
• Grants Management Specialist/Audits
• Patricia.A.Rauch_at_noaa.gov
• 301-713-0946 x151

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Most Frequent Audit Findings

• Policies and Procedures
• Internal Controls
• Documentation
• Cash Management
• Procurement Procedures
• Property, Plant and Equipment
• Unallowable Costs
• Financial
• Late and Inaccurate Reports
• Subrecipient Monitoring
• Matching and Cost Sharing

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Policies and Procedures

• Lack of procedures or policies for personnel,
  purchasing, accounting manual, equipment
  capitalization, travel, consultants, procurement,
  safeguarding assets and information.

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Internal Controls

• - Segregation of duties (making sure one person
  does not handle the entire process)
• - Cash procedures (more than one person to sign
  checks)
• - Purchasing
• - Bank reconciliation should be according to
  general ledger and subsidiary ledger
• - Security of ADP system

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Documentation

• - Any costs without documentation could be
  disallowed
• - Must be related to project and allowable
• - Salary costs (failure to maintain adequate time
  distribution records)
• - TA system (inadequate system)
• - Allocating costs across projects
• - Travel
• - Allocation of direct/indirect costs

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Cash Management

• - Opening and closing accounts should be cleared
  by Board Directors
• - Limit draw down to ensure no excess dollars on
  hand
• - Insured accounts at bank
• - Credit card controls

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Procurement Procedures

• - Debarment and suspension
• - No competitive bids
• - No documentation to justify
• - Different dollar thresholds
• - No formal procedures in place

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Property, Plant and Equipment

• - Federal share not identified
• - No inventory management
• - No surplus equipment screening
• - Physical inventory not performed and reconciled

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Unallowable Costs

• - Cost Allocation Plans not followed
• - Exceed Federal budget or terms and conditions
  of award
• - Transfers from one grant to another
• - Cost not applicable to grant or during time
  frame
• - Wrong purpose
• - Cant charge costs to failing project
• - Co-mingling funds under multiple concurrent
  awards

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Financial

• - Reconcile all costs
• - Transactions posted to general ledger
• - Cash disbursement/receivables timely
• - Invoices marked paid
• - Budget prepared and used as management control
• - Accounting system (segregation of costs by
  project include CFDA No.)
• - Accounts payable (prepared on regular and
  timely basis)

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Late and Inaccurate Reports

• - Reports dont agree with accounting
• - Not timely
• - Progress/Performance reports not submitted as
  required by award
• - Audits not performed or timely
• - Unacceptable audits (A-133) sometimes dont
  discover until site visit or actual audit

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Sub-recipient Monitoring

• - No follow up with sub-recipient
• - Lack of financial or performance monitoring
• - Arent informed of requirements or that
  required to have audit performed

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Matching and Cost Sharing

• - Not tracked to ensure match met
• - No documentation or inadequate support for
  amount and value of donated cash, third
  party in-kind contributions
• - Donations not recorded or, if recorded not
  specific purpose identified i.e., not project
  specific
• - Property donated must have value and
  documentation to support

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Unintentional CausesResult in Findings

• - Inadequate Documentation
• - Unfamiliar with
• Federal Cost Principles
• Federal Administrative Requirements
• Grant Terms and Conditions
• Audit Requirements

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Audit Regulations as Applicable to the Type of
Organization

• OMB Circular A-133
• Institutions of Higher Education
• Non Profit Organizations
• Hospitals
• State and Local Governments
• Government Auditing Standards (Yellow Book)
• For Profit Entities

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Helpful Sources and Websites

• OMB Circular A-133 - Audits of States, Local
  Governments, and Non-Profit Organizations
• Department of Commerce Standard Terms and
  Conditions - Section D. Audits
• 15 CFR Part 14 Uniform Administrative
  Requirements for Grants and Cooperative
  Agreements with Institutions of Higher Education,
  Hospitals, Other Non-Profit and Commercial
  Organizations Section 14.26
• 15 CFR Part 24 Uniform Administrative
  Requirements for Grants and Cooperative
  Agreements to State and Local Governments
  Section 24.26
• Grants Online https//grantsonline.rdc.noaa.gov
• Federal Audit Clearinghouse - http//harvester.cen
  sus.gov/
• Grants Management Division, NOAA
  http//www.ago.noaa.gov/grants/
• U.S. Department of Commerce http//www.commerce.
  gov/

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Yes, I Said AuditsAudits

• Result in disallowances
• Disallowances result in dollars owed
• Dollars owed can affect future funding
• Future funding not received affects project
  completions
• Project completions questioned also question
  capability
• Capability to perform due to lack of financial,
  administrative, monitoring, and internal
  operations can result in the discontinuance of
  Federal funding, if not corrected.
• NOAA wants to allow the funds grantednot take
  them away.