OMB A-133 Audits and Issues

1
OMB A-133 Audits and Issues

• NCURA Region VI VII Spring Meeting
• April 17-20, 2005
• Maureen Rhea, Internal Audit
• University of Washington

2
OMB Circular A-133 Audits Issues

• Agenda
• A-133/Single Audit
• Audit Process Overview
• Areas of Audit Scrutiny

3
What is A-133? A-21? A-110?

• OMB Circular A-133 (Single Audit)
• Federal Audit Regulations
• OMB Circular A-21
• Grantee Cost Principles
• OMB Circular A-110
• Administration of Grants

4
Purpose of Circular A-133

• Establish standards for obtaining consistent and
  uniform audits of organizations expending Federal
  awards
• Annual audit required if entity receives federal
  funds of 500,000 or more in a year

5
Audit Process

• Who Audits A-133?
• External Auditors
• Governmental Audit Agencies (e.g., State
  Auditors)
• Private Audit Firm (e.g., KPMG, PWC)

6
Audit Process

• Auditor
• Planning
• Fieldwork
• Summary Final Report
• Follow up

• Client
• Entrance Conference
• Interviews, provide documents, investigate
  exceptions
• Respond to findings (negotiation, corrective
  action plan)
• Demonstrate findings have been addressed

7
What Types of Issues are Reported?

• Inadequate internal controls
• Authorization, separation of duties,
  documentation
• Noncompliance with laws regulations
• OMB Circulars A-21, A-110, award terms
  conditions
• Questioned costs exceeding 10,000

8
Auditor Focus

• Allowability of expenses
• How does expense benefit the specific grant?
• Is there supporting documentation?
• Authorized by PI or person with specific
  knowledge of grant?

9
Auditor Focus

• Allowability of Expenses
• Salaries/Personnel
• Administrative Clerical Salaries
• Level of Effort - if paid on the grant, work on
  the grant
• Salary certification and effort reports not
  signed/filed
• Equipment
• Travel
• Office Supplies

10
Auditor Focus

• Allocation of Expenses
• What is the allocation plan?
• Is it documented?
• Is it reasonable?
• Is it reviewed occasionally?

11
Auditor Focus

• Allocation of Expenses
• Rent
• Lab supplies
• Gift Certificates

12
Auditor Focus

• Cost Sharing
• Has cost sharing promise been met?
• Mandatory required by statute or as a condition
  of award
• Committed not required by statute or as a
  condition of award
• cost sharing is quantified (often as a percentage
  of effort) in the proposal or budget
  justification without corresponding funding
  request

13
Auditor Focus

• Cost Sharing
• Market value vs. depreciation cost (GEAR UP)

14
Auditor Focus

• Program Income
• Gross income earned by the University that is
  directly generated by a sponsored activity or
  earned as a result of an award. (OMB Circular
  A-110)
• Program income identified in proposal?
• Plan in place to use program income?
• Use complies with sponsor regulations?