Accountability Audit Readiness Toolkit (AARP)

Training

Presentation to: District Administrators and Program Managers

Prepared by:

Robert Gauspohl, Deputy Inspector General/Director, Office of Audits

AARP ProgramPurpose:To maximize readiness for successful District audits.

State and Federal Guidance:Guidance and tools within the toolkit are adherent to:•Generally Accepted Accounting Principles (GAAP)•State Accounting Office (SAO)•Federal programmatic requirements.

Key Definitions

AuditThe Georgia Department of Public Health uses the term “Audit” to refer to an assessment of financial data, statements, records, operations and performances for compliance with GAAP, GAGAS and other federal guidelines conducted by the Office of Audits.

Program ReviewAssessments of compliance with required deliverables and standards of care conducted by State-level programs within the Georgia Department of Public of Health. These reviews may or may not be federally required and sometimes include a fiscal assessment.

NOTE: Other key definitions can be found in the glossary.

Key Definitions

Preliminary FindingA nonconformity or noncompliance with program guidelines requiring a written response (a corrective action plan) that is identified prior to the final report. Preliminary findings will be used in all draft reports and will only show up as Findings in the final report, if true. NOTE: A Findings should not be mentioned if already addressed in a corrective action plan that has been implemented as previously agreed.

Guiding PrinciplesAll individuals involved in the audit process must abide by the guiding principles regarding the following:

•Communication

•Accountability

•Readiness

•Adherence to local operating hours and protocol

•Focus on Established Standards

Preparation Guidelines for Conducting an AuditAuditors’ Preparation•Auditors should be familiar with the Program objectives and deliverables before coming to the District.

60 Days Prior•Notification Letter sent to district •Preliminary documents required before Audit are requested by e-mail and a follow-up phone call•District notifies appropriate district staff•Mutually agree upon date(s) is established

45 Days Prior•Forward documents to the Office of Audits by the agreed upon deadline•Pre-audit conference to include the applicable district staff, Office of Audits, and State Office program managers at district office, via videoconferencing or conference call

Preparation Guidelines for Conducting an Audit3 Days Prior•Lead Auditor contacts the primary liaison to confirm the audit arrangements•Lead auditor will provide a tentative 2-week audit itinerary

Entrance Conference•Staff introductions•Overview of audit process and scope

During the Audit•AARP Review Form•The auditor will provide opportunities for clarifying questions

Exit Conference•Reconfirm the audit scope•Review preliminary findings and points of excellence•List of items pending further review

Post Audit•Districts submit Audit Feedback Form•Districts are notified of any additional deficiencies discovered

AARP Review Form

AARP Review Form

•Allows the auditors to indicate observations and the need for additional information on an as-needed basis throughout the audit in writing.

•Allows district staff to add comments and express concerns in writing.

•Captures the following information:• What has been audited to date• Exemplary observations• Additional information/documentation needed by auditors• Clarification/interpretation needed by the district from the auditor(s)• Other concerns

Preparation Guidelines for Conducting an Audit

Preliminary Reports

•Audit working papers are reviewed by auditors and a draft report with preliminary findings is developed

•A separate report will be provided for each program audited

•Preliminary reports are provided to the auditee for internal review only

Preparation Guidelines for Conducting an Audit

Corrective Action Plan (CAP)

•Auditee is given 30 days to send in a CAP in response to any preliminary findings OR documentation as to why preliminary finding is incorrect

•Auditee must respond to unresolved issues within 60 from the time of response to CAP from the Office of Audits

•Programs will work with districts to address any unresolved preliminary findings issues

Preparation Guidelines for Conducting an Audit

Final Report

•Unsubstantiated findings will not be included in the final report

•The final report is released when queries have been resolved jointly

•A Formal Administrative Review can be requested by the auditee within 30 business days of receiving the final audit report if discrepancies are found

Follow-up

•The Office of audits will perform follow up visits to confirm implementation of corrective action plans

AARP Feedback Form

Feedback Form (Annex C)

Allows districts to provide feedback regarding their audit experience upon receipt of the final report by the District/County. The form should be mailed to:

Inspector General’s Office 2 Peachtree Street, NWAtlanta, Georgia 30303.

District and County Operations2 Peachtree Street, NWAtlanta, Georgia 30303

Internal Control Questionnaire

The questionnaire provides uniformed guidance for sub-recipient monitoring and assists with the following:

•Determining that the federal grant purposes are being met

•Identifying and remedying problems before an audit

•Ensuring that recipients and sub-recipients understand program requirements and have policies and procedures in place to meet them

Circular Cliff Notes

OMB Circular Cliff Notes

Internal Controls

In general, the principal incompatible duties to be segregated are:

•Custody of assets•Authorization or approval of related transactions affecting those assets•Recording or reporting of related transactions•Reconciliations

Example:An employee should not be allowed to initiate, approve, receive and record in the books purchases for their programs. These duties should segregated and be accompanied by the proper documentation.

OMB Circular Cliff NotesContracts

An agency should contract with other agencies, not itself. Deliverables, timelines, privacy laws, security policies, monitoring methods and termination clauses must be established.

Example:The district establishes a contract with a local training organization for training development. The contract includes the number and types of trainings, when it will be given, how the organization will be monitored in providing its training services, and clauses of termination in the event that the deliverables are not met.

OMB Circular Cliff NotesAccounting – Program Requirement (Fund Accounting)

Accounting records must be sufficient to provide accurate, current and complete disclosure on each program (fund) and must identify the source (i.e., Annex 1 GIA Allocation Sheet & Revisions) and use of funds.

Example:A district purchases supplies and supports 2 FTEs for its STD program using monies allocated to it from the state. The GIA funds from the state must identify the grant, the period of availability and liquidation date along with use restrictions (Annex). Original documentation such as cancelled checks, paid bills, contracts, payrolls, timesheets, invoices, and receipts must be available to substantiate accounting records and identify the use of funds. Actual expenditures must be compared to budgeted amounts on a regular basis.

OMB Circular Cliff NotesEncumbrances

We do not encumber at the sub-recipient level. The encumbered amounts are expensed in an expense account and accrued as an Accounts Payable.

Example:District A has several invoices coming in with no services yet delivered. In this case, though the invoice has been received, the district should not accrue for the expense.

District B has received services without having received an invoice. In this case, the district should accrue for the expense using an estimated amount.

OMB Circular Cliff NotesSub-recipient Monitoring

If you contract with a non-profit to perform services for clients, your contractor may be considered a sub-recipient of your agency, in which case you are responsible for monitoring them. This does not apply to vendors.

Example:A district contracts with a non-profit agency to deliver services for one of its programs. The district must monitor the non-profit in the same manner that the Office of Audits monitors the counties.

NOTE: A detailed description of the characteristics of sub-recipients and vendors is enclosed in the sub-monitoring section of the cliff notes within the AARP Toolkit.

OMB Circular Cliff Notes

• Equipment – Items classified as Capital expenditure if single item purchase price is over $5,000.00.

• Computers – If less than $5,000.00 classified as supplies.

Note: All electronic equipment or high theft items need to be controlled. Recommend you set up a separate inventory system. You may want IT to control. HIPAA requirements make this a requirement.

Other Tools

• Cliff Notes for Program Managers– Comprehensive, one-page overview of circular cliff notes specific to

Program Managers

• Guidelines for Developing Fiscal Policies and Procedures– Provides examples for how to develop policies and procedures

based on practices from districts across the state

• Audit Readiness Checklist– Designed to help the auditee better organize in preparation for an

audit

• Glossary– Includes common terms used by the Office of Audits and State

Office Programs with regard to audits and program reviews

Contact Information

Bob GauspohlRobert.Gauspohl@dph.ga.gov