1 Recent Audit and OMB Developments Michael Brustein, Esq. [email protected] Brustein &...
-
Upload
adele-sutton -
Category
Documents
-
view
219 -
download
2
Transcript of 1 Recent Audit and OMB Developments Michael Brustein, Esq. [email protected] Brustein &...
1
Recent Audit and OMB DevelopmentsMichael Brustein, Esq.
Brustein & Manasevit, PLLC
Spring 2012 Forum
2
Recent Audit Resolution Developments1. Shift of Focus from Compliance to Results
2. ED Monitoring – “Active Engagement”
3. Reshaping Policies without Congressional Approval
4. OMB Reform Idea Package (RIP)
5. Back Peddling on Linkage of Obligations
5
March 2, 2012 OSEP Announcement:Monitoring will shift from compliance focus to one driven by results change in mission?
*OSEP will not conduct verification visits in 2012-2013
8
Camden, NJ Audit March 2012(A02K0014)Designate Camden as High RiskImpose Special ConditionsAppoint 3rd Party ServicerRescind Camden “Flexibilities” on Schoolwide
10
ED MonitoringOIG Report # I13K0002http://www2.ed.gov/about/offices/list/oig/aireports/i13k0002.pdf
12
New ED Policy:Discontinue “At Risk’ Formula Grantees: “Active Engagement”Discretionary Grantees: “Evidence of Risk”
18
Risk Mitigation for Discretionary GrantsMore Frequent ReviewsOn-site VisitsSpecial ConditionsHigh Risk Designation
23
Query
If Congress is supposed to write the law, and ED is supposed to enforce that law, why are so many current policies undertaken without Congressional authority?
24
GEPA defines “regulation” to cover generally applicable rules prescribed by the Secretary.
Sec. 437(a)
26
1965 ESEA“Nothing in this Act shall authorize a federal official to mandate, direct, or control” a state’s, local educational agency’s or school’s curriculum
27
GEPANo provision of any applicable program shall be construed to authorize any federal agency or official to exercise any direction, supervision or control over the curriculum, program of instruction, or selection of instructional materials
31
NCLB Waivers contingent on adoption of Common Core Standards or endorsed by institutions of higher education
33“R.I.P”OMB Advance Notice of Proposed Rulemaking
Release of A
dvance N
otice 2/12
Public C
omm
ent
Notice of P
roposed C
hange
Com
ment
Final R
ule
Delayed E
ffective D
ate
7/1/13 Earliest
Effective D
ate
Potential R
escission by N
ew A
dministration
34
Council on Financial Assistance Reform (COFAR)10 members from largest grant making agencies: HHS, AG, ED, Energy, HS, HUD, DOL, DOT
35Expect Revisions to:
1) Cost PrinciplesA-21A-87A-122
2) Administrative PrinciplesA-110A-102
3) Federal Agency Audit ResolutionA-50
4) Single AuditA-133
36
Super CircularIncrease consistencyDecrease complexity
But allows for disparate treatment depending on type of entity
38
Single Audit Threshold
a) Under $1 million in total federal expenditures:No single auditAugmented pass-through role
b) Between $1 million and $3 millionMore “focused” single audit
c) Over $3 millionFull single audit
39
“Focused Single Audit” ($1 to $3 Million)Single auditors to review2 Compliance Requirements
1) Allowable/Unallowable
2) Federal agency determines – but priority on risk of improper payments, or fraud, waste, abuse
(look to Compliance Supplement)
41
“Full Single Audit” Over $3 Million
“Universal Compliance Requirements”1. Allowable Costs2. Eligibility3. Reporting4. Subrecipient Monitoring5. Period of Availability of Federal Funds6. Procurement Practices Comply with
Suspension/Debarment
42
Federal Agencies to identify “non-universal” elements, with focus on preventing fraud, waste, abuse
43
CAROICOFAR “encourages” federal agencies to engage in CAROI
Collaborative approach envisioned more as a mediation process between agency and recipient with informal assistance as needed
44
Pass-Through AgenciesAttempt to reduce burden on pass-through (SEA)
Federal Agencies to better coordinate review of subrecipient internal controls when 2 or more federal agencies funding
e.g. Philadelphia
45
If entity receives majority of Fed $ directly, not from pass-through, then Federal Agency to conduct follow-up on internal controls
48
If single audits are effective tool to obtain compliance, fewer audits would
put SEA at greater risk
???
49
OMB proposes that single audits be digitized into a searchable database to support analysis of audit results by pass-through entities
50
Indirect CostOMB proposing a mandatory flat indirect cost rate discounted from recipient’s already negotiated rate
51
Indirect CostsOMB – Reduce burden on time associated with indirect cost calculation and negotiation – reduce overall indirect costs, more $ for program
52
Indirect CostDiscounted Rates 4 years with minimal documentation, or raised through negotiation with full documentation
53
Time and EffortOMB seeking alternative mechanisms to PARs
Grantee and OIG communities to submit alternative mechanisms
54
Applicant’s Financial RiskOMB recommends Agencies to consider applicant’s financial risk prior to making the award (for non-formula grants)
Indicators of RiskPast financial performancePast programmatic performanceInternal controls
57
2 Separate Scenarios
A. The difficult one:
Liquidating obligations more than 90 days after the close of the obligation period
B. The easier one:
Linking transactions to a grant period after funds are no longer available for obligation “Roll Forward”
58
Late LiquidationsWithin 1st 18 months after the close of the obligation periodat discretion of program office
After 1st 18 months, OCFO decision
59
Roll ForwardNot up to program office or OCFOED Policy on valid obligation
1. A transaction giving rise to an obligation within period of availability
2. Linking of the transaction with funds available during period of availability
60
Linking can occur long after funds are no longer available for obligation as long as clear documentation that the transaction occurred during the 27-month Tydings period
61
Process of “deobligating” and “reobligating” is a valid method of linkage if obligations are timely and the adjustments are part of the normal accounting practice and not manipulative.
- Appeal of State of California
Doc. No. 12(122)83
62
“The legally relevant question is when the obligation arose, not in what account the obligation may have been initially recorded.”
- Appeal of State of California
63
Deobligate/ReobligateOn 7/1/11, obligations could be charged to FY 10 (3 months) FY 11 (15 months) or FY 12 (27 months)
If FY 09 obligations not yet liquidated, and incurred during FY 10 Tydings period, deobligate FY 12, then FY 11, then FY 10
64
Remember:Obligations must be during a period of availability
Must be for allowable costs (no supplanting)
Not manipulative to avoid repayment of lapsed funds
66
This presentation is intended solely to provide general information and does not constitute legal advice or a legal service. This presentation does not create a client-lawyer
relationship with Brustein & Manasevit, PLLC and, therefore, carries none of the protections under the D.C. Rules of
Professional Conduct. Attendance at this presentation, a later review of any printed or electronic materials, or any follow-up questions or communications arising out of this
presentation with any attorney at Brustein & Manasevit, PLLC does not create an attorney-client relationship with Brustein &
Manasevit, PLLC. You should not take any action based upon any information in this presentation without first consulting legal counsel familiar with your particular
circumstances.