Audit Issues of Concern for Nonprofits
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Audit Issues of Concern for Nonprofits
- 1. ©2014 Net@Work Inc. Audit Issues of Concern for Nonprofits in 2014 Webinar Start Time: 1:00 pm CT (2:00 pm ET) For Telephone Audio: Dial: (646) 307-1706 Access Code: 685-596-639 Audio PIN: Shown on your Webinar Panel Technical Difficulties Call: (805) 617-7000 (Option 1) Webinar ID: 458813968
- 2. ©2014 Net@Work Inc. Today’s Presenter
- 3. ©2014 Net@Work Inc. Webinar Details
- 4. ©2014 Net@Work Inc. Solutions - Overview ERP/Accounting System Implementations CRM System Implementations HRMS/Employer System Implementations Web / Mobile Development & eCommerce Nonprofit Solutions Document Management /SharePoint Business Intelligence, Analytics & Reporting IT Infrastructure, Cloud & Managed Services
- 5. ©2014 Net@Work Inc. Today’s Conversation
- 6. ©2014 Net@Work Inc. Sweeping Changes…….
- 7. ©2014 Net@Work Inc. Sweeping Changes…….where??
- 8. ©2014 Net@Work Inc. The Old are now Out: Administrative Requirements • A-102 – Grants and Cooperative Agreements with State and Local Governments • A-110 – Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, hospitals, and Other Non-Profit Organizations • A-89 – Catalog of Federal Domestic Assistance
- 9. ©2014 Net@Work Inc. The Old are now Out: Cost Principles • A-21 - Cost Principles for Educational Institutions • A-87 - Cost Principles for State, Local, and Indian Tribal Governments • A-122 – Cost Principles for NonProfit Organizations
- 10. ©2014 Net@Work Inc. The Old are now Out: Audit Requirements • A-133 – Audits of States, Local Governments and NonProfit Organizations • A-50 – Audit Follow-Up • All of these are now Old News
- 11. ©2014 Net@Work Inc. And - In With the New….
- 12. ©2014 Net@Work Inc. Reasons for this Significant Change?
- 13. ©2014 Net@Work Inc. It’s Interesting – where do I find it? 2 CFR, Chapter I, Chapter II, Part 200 http://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013- 30465.pdf
- 14. ©2014 Net@Work Inc. Given the Common Interest of OMB and IRS…
- 15. ©2014 Net@Work Inc. The Intent of the New Guidance…
- 16. ©2014 Net@Work Inc. Good Points Within….
- 17. ©2014 Net@Work Inc. New Thinking Areas in this guidance…..
- 18. ©2014 Net@Work Inc. Encouragement of Efficient User of New Technology…..
- 19. ©2014 Net@Work Inc. Procurement Standards
- 20. ©2014 Net@Work Inc. Notable Example of New Allowable Cost Limitations
- 21. ©2014 Net@Work Inc. Standardized Business Processes and Data Definitions
- 22. ©2014 Net@Work Inc. Note Areas Moved from Audit Requirements toAdministrative Requirements…..
- 23. ©2014 Net@Work Inc. Clear Target of Audit Requirements on the following…..
- 24. ©2014 Net@Work Inc. In Summary – Some Very Nice Results of this Effort by OMB
- 25. ©2014 Net@Work Inc. Your Roadmap and Timeline……
- 26. ©2014 Net@Work Inc. Your Roadmap and Timeline…… Best Advice - continued
- 27. ©2014 Net@Work Inc. Thank You For Attending! Jeannie Huckstep, CPA, CITP Net@Work - Nonprofit Applications Practice Director Phone: (417) 889-8991 Email: jhuckstep@netatwork.com Q & A
Notes de l'éditeur
- Thank You for joining us today! I’m hoping you’ll enjoy this session. I spent many years managing a NonProfit Audit Practice along the while that I was following my passion of assisting organizations with moving their financial accounting systems to the next level – and I still enjoy assisting my clients with the complexities that Grant Compliance requires. So – Today I wear my Consultant Hat – and hope to help you to understand at least a high-level overview of these pretty radical changes that have finally came to Fruition!
- And – I want to introduce my firm – Net@Work...... We are a Knowledge Leader in the Nonprofit world, and a technology driven organization – and have provided various of the above Sage Software products for many years… NonProfit – ERP – MAS 90/200/500 – and AccPac Sage CRM Abra HR etc Web Stuff ECM – Wonderful new addition – full connectivity to MIP – with Dashboards as well! Also full Workflow on data entry and approvals Dashboards
- A Federal effort to more effectively focus Federal Resources on improving Performance and Outcomes While ensuring Financial Integrity of Taxpayer Dollars in Partnership with non-Federal stakeholders
- Administrative Requirements – all sorts of things – i.e. purchasing, requisitioning, etc Cost Principles – Allowable and Unallowable costs, and Cost Allocation Audit Requirements – OMB Circular A-133 – but also the Cost Principles
- CFDA isn’t being re-written at this point…..but is expected
- Super Circular – is a NonTechnical Term!! Uniform etc -- the New Term for the Circulars – as published in the Federal Register Can we really all assimilate same date the Guidance was issued? NO --- expect this will “waft” in over time
- You can get there with either – when you click the link that clearly is the first – based on the description on the slide a couple back – you will have a PDF… In each search I’ve made in preparation – it was the first link. The URL takes you directly to the PDF.
- Intent was to reduce unnecessary regulatory and admin burdens …redirect resources to services that are essential to achieve better outcomes at lower cost …reduce unnecessary, unduly burdensome, duplicative, and low-priority recordkeeping requirements Example I’ve seen is the requirement that orgs had to provide every piece of documentation on weatherization expenditures Same with Fema – but maybe years later? Effectively directs organizations and auditors to direct their attention to areas where the risk is the highest As stated within the Federal Register – the “….objective of this reform is to reduce both administrative burden and risk of waste, fraud and abuse” ….effectively eliminates duplicative and conflicting guidance These were all created at different times – guidance was overlapping – and with a single document we have consistence of instructions – and elimination of duplicative provisions.
- The Feds clearly have moved from simply dealing with issues that are uncovered in the audit – or reported to the Waste/Fraud/Abuse Hotline --- to making every attempt to make sure the dollars go to the most Accountable Organizations! Yes – that section affects both the Direct Recipients from the Feds, as well as to those who Administer those Federal Dollars – typically through Sub-Recipients!
- I’ve been hearing the collaboration requirement for well over a year – and many of my clients are moving in that direction This part seems to be happening niche by niche – I’ve seen it in Health Centers, and in Workforce organizations And in higher education The new circular indicates that they are willing to waive certain compliance requirements in exchange for the Concentration on New Strategies and Innovative Program Designs.
- Supplies can now include Technology Devices – i.e. Computers – if acquisition costs is less than: “ The Lesser of Capitalization Level of the Org – or $5,000” Anyone paid more than $5,000 lately for a computer? AND – I hear that the Feds are now going to Sanction Electronic Timesheets --- in place of Paper Timesheets with Signatures!!! We’re Hoping for that one!
- Use procurement standards to avoid duplicative purchases and encourage interagency agreements for shared goods and services Consolidation has been happening for some time – and continues A consolidation will always reduce administrative costs at some level
- Costs are Minimized --- i.e. Hotel costs must be Reasonable in the area of the Conference. Organizations can’t send everyone and charge costs to the Grant – i.e. Necessary staff to Attend No sending to Conference for a Moral Boost --- they gotta be there are a serious Reason!
- The Standard Set of Data elements is as yet Undefined – but we could Guess --- Can’t have HUD wanting one type of information and HHS Another – and then DOL something totally different! Suspect this means that the NGA’s (Notice of Grant Awards) will likely all look much the same, with very same terminology!
- Moved from Audit Requirements to Administrative Requirements –so that it will be encourage entities to better structure internal control processes earlier in the process Set your Internal Control Plan during the RFP application process – and Taunt it’s strengths in your RFP Response!!
- OMB believes the final guidance “right-sizes” the “footprint of oversight and Single Audit requirements – to strengthen oversight and focus audits where there is greatest risk of waste, fraud and abuse of taxpayer dollars” Improves transparency and accountability by making single audit reports available to the public online This one is COOL!!! Intent is to encourage federal agencies to take a more cooperative approach to audit resolution – in order to more conclusively and quickly resolve underlying internal control weakness And also to reduce repeated audit findings I once worked on an audit resolution team where it took like 2-3 years to get resolution of $2M of Questioned Costs….Believe the end result was like $500k
- Federal Grant Applications more closely scrutinized – Let’s get it right the first time! More emphasis on due diligence up front relative to sub-contractors – Same Comment Audit issues more quickly resolved (the intent) – That’s clear within the New Guidance – emphasis is on more collaboration with handling Questioned Costs – so as to resolve quickly, and get increased IC coverage more quickly More efficient Utilization of information technology - the goofiness of the comment that we need separate bank accounts by grant? What a Mess that makes! More focus on Shared Services – should save taxpayer dollars – but be careful More emphasis on performance over compliance – sounds like they want to STOP the nit-picking!
- Finally: (CAREFUL Not to Mention the Separate Bank Accounts TWICE! You should read at least the first part of the new guidance-- it’s readable, and its interesting. In one suggestion some commenters suggested that recipients should be required to maintain separate bank accounts…..THANKFULLY – that got shot down.
- It doesn’t appear this will be a huge new learning endeavor --- but I find that change is always hard… -- For Some more than Others! Be accepting – this combination of all the circulars will really help everyone, I believe! No more confusion – particularly if you move your employment from an NFP that is grant funded to a state government that has federal grants!! No differences in the rules and the guidance!
- Thanks for being here today --- I’ll look at the Questions……and try to answer those I can…. It’s All New – and in these new regulations – there is always some shifting of views – and it seems things are never accepted right out of the gate…… Hope to meet you again at another Net@Work NonProfit Webinar!