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Richmond Chapter of the AGA 2009 Spring Seminar

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Title: Firm Overview Author: Cherry Bekaert & Holland Created Date: 7/29/2004 7:47:36 PM Document presentation format: On-screen Show Company: Cherry Bekaert & Holland – PowerPoint PPT presentation

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Title: Richmond Chapter of the AGA 2009 Spring Seminar


1
Richmond Chapter of the AGA2009 Spring Seminar
  • Implementing the Requirements of the
  • American Recovery and Reinvestment Act
  • by State and Local Governments
  • Presented by Edward J. Mazur
  • Senior Advisor for Governmental Financial
    Management
  • Cherry, Bekaert Holland, L.L.P.
  • Wednesday, May 20, 2009

2
Agenda
  • Overview of ARRA
  • Impact on State and Local Governments
  • TimelinesKey Deadlines
  • Receiving, Disbursing and Reporting ARRA funds
  • Transparency, Oversight, and Accountability
  • Compliance with ARRA Requirements
  • Internal Control, External Audit and Single Audit
    Implications
  • Department of Education Illustration
  • GAOs First Oversight Study Results
  • Progress of ARRA in Virginia
  • Future Guidance
  • Web Resources

3
The American Recovery and Reinvestment Act
Categories of Total Stimulus Funding Amount (Billions) 
Tax Relief 288
State and Local Fiscal Relief 144
Infrastructure and Science 111
Protecting the Vulnerable 81
Health Care 59
Education and Training 53
Energy 43
Other 8
TOTAL 787
Source www.recovery.gov
4
Purposes of the Recovery Act (ARRA)
  • Preserve and create jobs and promote economic
    recovery
  • Assist those impacted by the recession
  • Provide investments needed to increase economic
    efficiency by spurring technological advances in
    science and health
  • Invest in transportation, environmental
    protection, and other infrastructure that will
    provide long-term economic benefits
  • Stabilize state and local government budgets, in
    order to minimize and avoid reductions in
    essential services and counterproductive state
    and local tax increases

5
ARRA Targeted Efforts
  • Clean, efficient American energy
  • Transforming our economy with science and
    technology
  • Modernizing roads, bridges, transit and waterway
  • Education for the 21st century
  • Tax cuts to make work pay an create jobs
  • Lowering healthcare costs
  • Other
  • Jobs, Jobs, Jobs

6
Accountability Objectives in Mitigating Risks
over ARRA Funds
  • To award and distribute funds in a prompt, fair
    and reasonable manner
  • To report recipients and uses of funds in a
    clear, accurate, and timely manner
  • To ensure that funds are used solely for
    authorized purposes, and that fraud, waste,
    abuse, errors are mitigated
  • To avoid project delays and cost overruns
  • To achieved Goals, including program outcomes and
    improved economic conditions

7
Intended Accountability Outcomes
  • Program/economic outcomes achieved
  • Competitive opportunities maximized
  • Waste, fraud, and abuse identified and minimized
  • Funds obligated/expended timely
  • Improper payments minimized
  • Timely and accurate data reporting
  • Increased accountability and transparency
  • Recovery.gov
  • Recovery Board, GAO, Inspectors General,
    whistleblowers

8
Accountability and Transparency Players
  • - Governor or Designee - Community Econ.
    Development
  • - Recovery Czar - Education
  • - State Auditor - Health
  • - State Budget Director - Highways
    Transportation
  • - State Comptroller - Homeland Security
  • - Chief Information Officer - Housing
  • - Chief Procurement Officer - Social Services
  • - State Treasurer - State Evaluation Entity

9
Overview of ARRA Accounting and Reporting
  • Accounting and reporting requirements for ARRA
    funds represent a significant fiscal process
  • Therefore, you need to ensure that ARRA
    requirements
  • Are well documented
  • Key controls identified, documented tested
  • Control weaknesses are identified and mitigated
  • Additional reporting is required
  • To Federal government (recovery.gov)
  • To States from local govt subrecipients
  • To Recipients from subrecipients

10
State Impact
Estimated 275 Billion (34.9) of ARRA Funds will be distributed to state and local governments via funding formulas. Estimated 90 of ARRA Funds provided to states will be for health, transportation, and education programs.
80 of funds will have strings attached 20 of funds can be spent as seen fit
Estimated Jobs Effect (1,000) Estimated Jobs Effect (1,000) Estimated Jobs Effect (1,000) Estimated Jobs Effect (1,000) Estimated Jobs Effect (1,000) Estimated Jobs Effect (1,000)
AL FL GA NC SC VA
51 206 106 105 50 93
Source www.recovery.gov
11
Virginia allocated 4,768 Million
Expenditure Type Amount (Million) Types of Programs
Health and Human Resources 1,833 Child Support Enforcement, CCDF Childcare, Drinking Water State Revolving Fund, Community Service Block Grant, Foster Care, Adoption, Vocational Rehabilitation, Community Development Block Grant, Head Start Immunization, SNAP, Medicaid, Elderly Nutrition, Emergency Food Assistance Program, Crime Victim Assistance, Independent Living
Education 1,495 Title I, Workforce Investment Act, IDEA, Dislocated Workers, Technology, Work Study, School Lunch, Education for Homeless
Transportation 811 Highways and Bridges, Transit Capital Grants, Rail Modernization
Source www.stimulus.virginia.gov
12
Virginia allocated 4,768 Million
Expenditure Type Amount (Million) Types of Programs
Commerce and Trade 309 Weatherization, State Energy Program, HOME, Public Housing, Homelessness Prevention, Unemployment Insurance, Employment Service
Finance 218 Capital Planning and Improvements, BRACC, Conservation, Rolls Royce Incentive, Tobacco Settlement, Regional Jail Reimbursement, SRI
Natural Resources 81 Clean Water State Revolving Fund
Public Safety 21 Byrne Justice Assistance Grants, Violence Against Women, Internet Crimes Against Children, Crime Victim Compensation.
TOTAL 4,768
Source www.stimulus.virginia.gov
13
Estimated Funding Amount for Richmond and Henrico
County
  • Function Program Amount
  • Education Education Technology 268,780
  • Education Fiscal Stability Higher Ed
    41,083,474
  • Education Fiscal StabilityK-12
    13,068,657
  • Education IDEA Part BPreschool 194,995
  • Education IDEA Part BSchool-age 7,053,320
  • Public Safety Byrne Justice Grant
    1,590,269
  • Richmond Total 63,259,495
  • Education Education Technology 139,378
  • Education Fiscal StabilityK-12
    28,149,208
  • Education IDEA Part BPreschool 301,973
  • Education IDEA Part BSchool-age 10,515,711
  • Public Safety Byrne Justice Grant
    458,132
  • Henrico Total 39,564,402

14
Timeline Key Deadlines
Past Past
Feb 17 Obama signed ARRA
Feb 18 OMB releases Initial ARRA Guidance
Mar 6 Project Solicitation Deadline
April 3 OMB releases Updated ARRA Agency Guidance Announced Proposed Recipient Guidance in Federal Register
Upcoming Upcoming
May 3 Federal Agency Performance Plans become available
May 20 Federal Agencies begin reporting competitive grants and contracts
July 15 Begin reporting on use of Federal funds
Oct 10 1st Quarterly report is due. Subsequent quarterly reports are due 10 days after the close of each quarter.
Source www.recovery.gov
Source www.stimulus.virginia.gov
15
Requesting and Receiving ARRA Funds
Methods of Fund Allocation Methods of Fund Allocation
Formula Medicaid, State Fiscal Stabilization Fund, Highway Infrastructure Investment, Workforce Investment Act.
Competition National Institutes of Health, National Science Foundation, Broadband Program, Green Jobs Act.
Demand COBRA, Unemployment, Pell Grants, Food Stamps, Small Business Loans, TradeAct.
One-Time Disbursement Social Security, Veterans, Supplemental Security Income.
Agency Plan Enviromental Clean up, National Parks, Defense and Veteran Programs.
16
Disbursing and Reporting ARRA Funds
Entities must separately account for funds received directly or indirectly. 
Entities must track how funds are spent. (Projects, subcontractors, services, jobs created, wage rates, etc.)
Entities receiving funds directly and have subcontractors or awards sub-grants, must register with the Central Contractor Registration database.
Capital projects must use American Iron, Steel and Manufactured Goods.
Source www.stimulus.virginia.gov
17
Unprecedented levels of transparency, oversight
and accountability
Recovery funds are awarded and distributed in a prompt, fair, and reasonable manner.
Public benefit of funds are reported clearly, accurately and timely
How funds are used. Descriptions and status reports Estimates of jobs saved and created Estimates of tax increases averted
Prevent instances of fraud, waste, error, and abuse.
Source www.stimulus.virginia.gov
18
Unprecedented levels of transparency, oversight
and accountability
Projects to avoid unnecessary delays and cost overruns
Programs meet specific goals and targets Certification by Governor or local officials. Pubic access to contract and grant information. Provisions for federal oversight, review, and audits. Access by Federal Inspectors General, OMB in selected states, and Recovery Act Accountability and Transparency Board.
Source www.stimulus.virginia.gov
19
ARRA Prohibited Expenditures
State, Local, Private Restrictions
Casinos Aquariums Zoos Golf Courses Swimming Pools
Education Restrictions
Maintenance Costs Stadiums Vehicles Religious Facilities
20
Actions to ensure compliance with ARRA
requirements
  • OMB Guidance
  • Agency Specific Guidance
  • State Comptrollers for ARRA Reporting
  • State External Auditors Under A-133
  • GAO Reports for Implementation Issues

21
Internal Controls
A robust system of internal control specifically designed to deal with the unique and complex aspects of the Recovery Act funds will be key to helping management of the states and localities achieve the desired results. -GAO-09-580
Enhancing Internal Controls Enhancing Internal Controls
Element Suggestions
Control Environment Appoint Recovery czars, boards, or working groups focused on the Recovery Act.
Risk Assessments Weigh results of recent audits and Single Audit reports.
Control Activities Effectively implement and document required policies, procedures and guidance.
Information and Communication Develop internal guidance related to ARRA and submit required information to state agencies or recovery.gov.
Monitoring Coordinate with Program Heads conduct surveys, create oversight boards, monitor sub-recipients
22
Questions
  • Has your government organized an ARRA program
    management office and established vision,
    strategy, and methodology?
  • Has your government assessed existing processes,
    systems, and controls for administering federal
    funding against ARRA expectations?
  • Is your government prepared to track and resolve
    performance and compliance issues?
  • Have year-end ARRA financial reporting
    requirements been identified ?
  • Has your government complied with requirements to
    report the status of projects or activities for
    which recovery funds were obligated and expended?

23
Single Audit Implications
Single Audit Challenges associated with ARRA Single Audit Challenges associated with ARRA
New programs and recipients Lack of management controls and accounting systems to ensure compliance with regulations and objectives.
Sudden increase in funds Funds may exceed previously effective management controls and accounting systems. May also trigger need for Single audit for entities not previously meeting the threshold.
Extensive accountability and transparency Requires implementation of new controls and procedures, but lacks funds to manage and oversee entities for accountability and transparency.
Inject funds into Economy Pressure to spend funds quickly increases risk.
Source GAO-09-580
24
Use of Single Audit Process
  • Past Audits inform risk assessment
  • ARRA structure to aid Audit process, e.g.
  • Assignment of separate CFDAs for ARRA
  • Evaluation of high risk programs and grantees
  • Separate reporting on SEFA (including
    subrecipient)
  • Federal audit clearinghouse to display all Single
    Audit findings--including ARRA

25
OMB A-133 Compliance Supplement
  • New Compliance Supplement Section on ARRA
  • Appendix VII (reserved for advisory
    announcements)
  • Include internal control discussion
  • VII highlights of new clusters and major
    program
  • June 30 New addenda including new reporting
    requirements
  • New Clusters of Programs
  • Major Program Determination
  • New program cannot be low risk
  • Award Terms and Conditionskey for subrecipients

26
Illustration--Department of Education
44 Billion Available in April 2009 49 Billion Available late in 2009
Assurances Metrics
College- and career-ready standards Math and Reading NAEP scores Action steps to improve assessments Measures for ELLs and disabled test in math and ELA and students who graduate and complete one year of college
Pre-K-to higher education data systems meeting America COMPETES Act Statewide data system includes America COMPETES Act All teachers receive timely data and estimates of impact on student achievement
27
Illustration--Department of Education, Continued
Assurances Metrics
Teacher effectiveness and distribution and teacher in highest/lowest-poverty schools who are highly qualified and teachers rated at each level in each LEAs teacher evaluation system and LEA teachers evaluation systems required student achievement outcomes
Intensive support and effective interventions Schools demonstrating gains in achievement, closed or consolidated Schools initially in bottom 5 that demonstrate gain in student achievement Schools that made progress in math and ELA
28
State Fiscal Stabilization Fund
  • One-time appropriation of 53.6 billion
  • DOE will award 48.6 billion by formula to
    governors in exchange for education reform
    commitments
  • Will stabilize State and local budgets to
    minimize or avoid reductions in education and
    other essential public services
  • Avert cuts and retain teachers and professors
  • Support modernization, renovation, and repair of
    facilities
  • Significant resources to support education,
    public safety and other government services

29
State Fiscal Stabilization Fund
  • States must apply to US DOE for funds with key
    assurances and information on the use of funds
  • For FY09, FY10, FY11, States will maintain state
    support at FY06 levels
  • Commitment to advancing education reform in
  • Increasing teacher effectiveness
  • Establishing state-wide education longitudinal
    data systems
  • Improving the quality of state academic standards
    assessments
  • Baseline data that demonstrates the states
    current status in each education reform area
  • Description of how state intends to use its
    stabilization allocation

30
State Fiscal Stabilization Fund
  • Within 2 weeks of approved application, DOE will
    provide 67 of SFSF allocation (in some cases
    90)
  • Full peer review of application before final
    allocations
  • Once SFSF awards, school districts may use for
    any allowable purpose under the Elementary and
    Secondary Education Act (ESEA)

31
GAO Study of ARRA
  • Recovery Act requires GOA to do bimonthly reviews
    of the use of funds by selected states and
    localities
  • 16 states and D.C. (Southeast FL, GA, NC,
  • VA not included, but they will be reviewing
    reports from states not selected
  • 90 of funds to states and localities in FY09
    will be through health, transportation and
    education programs
  • 3 largest programs
  • Federal Medical Assistance Percentage grant
    awards
  • Highway Infrastructure Program
  • State Fiscal Stabilization Programs

32
State Concerns with ARRA FundingIdentified by
GOA Study
  • Lack of Recovery Act funding provided for
    accountability and oversight
  • How to determine jobs created and retained under
    the Act
  • Modifications to accounting systems to track ARRA
    funds
  • Differences in software
  • Outdated systems
  • Lack of financial system grant module
  • Identifying and tracking ARRA funds to
    subrecipients, local governments, and other
    non-state entities
  • Ability of these entities to separately tag,
    monitor, track report
  • Concern over the States being held accountable
    for these entities

33
Virginia ARRA Accomplishments to Date
  • Governor established an ARRA Implementation Team,
    chaired by Wayne Turnage, Chief of Staff.
    Includes members with subject matter expertise in
    each functional area covered by ARRA
  • Governor provided required ARRA certification to
    begin receipt of funds on March 3, 2009. Other
    individual program certifications required on a
    more piecemeal basis
  • A Web site was hosted to solicit requests from
    the state agencies, localities, interest groups,
    and the public at-large. More than 9,000 projects
    were submitted to the website totaling close to
    466 billion

Source www.stimulus.virginia.gov
34
Virginia ARRA Accomplishments to Date
  • Web site has transitioned from a portal for data
    entry to a site that provides information to
    citizens and tracks the allocation of ARRA funds
    in Virginia by locality and eventually by
    program. Website address is http//www.stimulus.v
    irginia.gov
  • The website is updated at least weekly and
    includes information on Competitive Grants
    available under the ARRA.
  • Regular meetings with the Virginia Association of
    Counties and Virginia Municipal League
  • ARRA Implementation Team members are making
    presentations on stimulus to a variety of groups.
    Regular meetings with local governments,
    businesses, legislators, and citizens.

Source www.stimulus.virginia.gov
35
What to Look For!
  • Guidance from OMB and Federal Agencies continuing
    to be developed
  • Still unanswered questions (e.g. shaping Single
    Audit)
  • GAO Study of the Recovery Act
  • As Initial Implementation Unfolds In States and
    Localities, Continued Attention to Accountability
    Issues Is Essential
  • States Concerns (e.g. other non-state recipients)
  • Resources to use (e.g. who pays for state-level
    accountability measures)

36
Future Guidance
Source Guidance
www.FederalReporting.gov Reporting instructions and data elements.
www.recovery.gov Agency specific Objectives Guidance Award terms Data metrics
37
Web Resources
  • www.recovery.gov
  • Contains links to Federal Agencies Recovery.gov
    websites
  • www.stimulus.virginia.gov
  • http//www.gao.gov/new.items/d09580.pdf
  • http//blogs.cbh.com/govserv/
  • Virginia State Comptrollers Stimulus Webpage
  • www.doa.virginia.gov/Stimulus/Stimulus_Information
    .cfm

38
CBH Government Service Blog
  • http//blogs.cbh.com/govserv/
  • Provides ARRA information concerning
  • Administrative regulations and guidance
  • Activities of Professional organizations
  • Stimulus related news articles

39
39
40
Presenter Contact Information
  • Edward J. Mazur, CPA
  • Senior Advisor for Governmental Financial
    Management
  • Cherry, Bekaert, Holland, L.L.P.
  • 1700 Bayberry Court, Suite 300
  • Richmond, VA 23226
  • 804.673.5731 direct
  • 804.240.8672 cell
  • emazur_at_cbh.com
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