Local Nonprofit Agency Risk Assessments

Transcription

1 Local Nonprofit Agency s Howard Gesbeck Jr., CPA, JD, Wipfli LLP PO Box 8700 Madison WI gfpinfo@wipfli.com Presenter: Howard Gesbeck Jr., CPA, JD Howard Gesbeck is a partner with Wipfli LLP, a certified public accounting firm, with offices in Wisconsin and Minnesota. He has over 40 years of experience as an auditor, consultant and trainer. Since 1990, he has presented more than 300 seminars to over 30,000 participants throughout the United States. He is nationally recognized for his comprehensive work with grant-funded agencies, particularly his expertise regarding Federal regulations, OMB circulars and knowledge of federal programs. He knows how to help grant-funded organizations avoid the risks of misspent funds and strengthen the financial picture so they can meet their mission. Howard earned degrees from the University of Wisconsin in accounting and law and is licensed to practice as a CPA. Importance of Fiscal Management - from the WAP Conference Brochure Fiscal Management Making sure that Weatherization expenditures comply with federal and state financial regulations is more important than ever before. Without constant vigilance, procurement activities can stray off course. When the fiscal or procurement staff makes mistakes, the entire agency s Weatherization Program can be shut down. Keeping the funds flowing and expenditures organized results in uninterrupted, effective weatherization. Monitoring and financial audits also go much more smoothly.

2 Description By attending this session, participants will: Acquire management tools and assessment strategies that detect weaknesses in the organizations core systems; Learn how to adapt general risk assessment practices to Weatherization management systems; Understand requirements of federal funding, especially Recovery Act funding, that add risk factors; and Hear of strategies to correct risks before they turn into problems 1. What are the risks? a. Financial i. Overspending ii. Under spending iii. Misspending iv. Noncompliance v. Conflict of interest vi. Fraud & abuse vii. Other Action Items

3 2. Where could risk occur? a. Financial i. Cash receipts ii. Cash disbursements (including payroll) and accounts payable iii. Procurement iv. Inventory v. Financial reporting vi. Program reporting vii. Anywhere 3. What are the requirements? a. Energy Conservation in Existing Buildings Act of 1976, as amended (42 USC 6851) i. Federal law ii. Passed by Congress and signed by the President b. American Recovery and Reinvestment Act (ARRA) i. Weatherization Assistance Program-$5 Billion ii. Changes to WAP 1) Average cost per home-$6,500 2) Eligibility increased to 200% of Federal poverty guidelines 3) Increased funds for T&TA from 10% to 20% of appropriated sums 4) Davis-Bacon Prevailing Wages a) Applicable to labors and mechanics hired by contractors and subcontractors b) Applicable to employees of NPOs (weatherization crews) c) Requirements d) Contracts over $2,000 e) Prevailing labor rates and fringe benefits f) Weekly pay g) Weekly reporting h) Contract clauses 5) Whistleblower provisions

4 c. Weatherization Assistance for Low-Income Persons Regulations (10 CFR Part 440, revised March 12, 2009) i. Department of Energy ii. Federal regulatory process d. ARRA Regulations (2 CFR 176, effective April 23, 2009) i. Reporting and registration requirements ii. Buy American requirement iii. Wage rate requirements (Davis-Bacon) iv. Single Audit Information requirements for ARRA funds e. Administration of Grants (10 CFR Part 600) i. General 1) Office of Management and Budget 2) Applies to all Federal programs 3) Implemented by each Federal agency 4) Uniform policies and procedures for award and administration of grants ii. Administrative requirements 1) Background Action Items

5 2) Financial management a) Standards i) Accurate, current, complete ii) Records identify source and application of funds iii) Effective controls over and accountability for all funds, assets and property iv) Comparison of outlays with budget v) Written procedures to minimize time between receipt and disbursement of funds vi) Written procedures for determining reasonableness, allocability and allowability of costs vii) Accounting records, including source documentation 2) Financial management (cont d) b) Payment c) Cost sharing or matching d) Program income e) Revision of budget and program plans f) Non-federal audits (OMB Circular A-133) g) Allowable costs (OMB Circular A-87 for units of government or OMB Circular A-122 for nonprofit organizations) 3) Property a) Insurance b) Real property c) Equipment d) Intangible property 4) Procurement a) Responsibilities b) Code of conduct c) Competition

6 4) Procurement (cont d) d) Procurement procedures e) Most advantageous, price, quality and other factors considered f) Contract provisions 5) Paperwork a) Reports i) Financial ii) Performance b) Monitoring c) Record retention iii. Cost Principles (OMB Circular A-87 for units of government or OMB Circular A-122 for nonprofit organizations) 1) General criteria for all costs a) Reasonable and necessary b) Subject to limitations c) Consistent within the organization d) Not charged to another Federal grants e) Generally accepted accounting principles Action Items

7 2) Cost allocation a) Direct methodologies b) Indirect cost rates 3) Selected items of cost iv. Audit (OMB Circular A-133) f. Weatherization contract from the state i. Funding ii. Performance iii. Geographic area iv. Other terms and conditions v. Assurances and certifications 4. Reducing Risk a. Culture i. Do you trust the people, systems and information? ii. Is WAP treated as an important part of the agency? iii. We re all in this together b. Systems i. General 1) Written 2) Segregation of duties 3) Checks and balances i. General (cont d) 4) Early identification of problems 5) Self-monitoring, assessment and evaluation 6) External monitoring and financial audits a) Has WAP been monitored by state? i) Were there problems noted in monitoring? ii) Have problems been corrected? iii) Could problems recur?

8 6) External monitoring and financial audits (cont d) b) Was WAP a major program in most recent audit? (WAP probably will be a major program in the next single audit) i) Is audit available for review? ii) Were there any findings related to WAP? iii) Have audit findings been corrected? iv) Could findings reoccur 7) Updated for ARRA requirements and increased funding ii. Financial 1) Cash receipts a) Are cash advances adequate? b) Is there excess cash? c) Are advances of Federal funds earning interest? 2) Cash disbursements (including payroll) and accounts payable a) Procedures updated for increase in funding? b) Board involved in disbursement processes? Action Items

9 2) Cash disbursements (including payroll) and accounts payable (cont d) c) Payroll procedures adequate and updated? i) Hiring and pay authorizations ii) Davis-Bacon iii) Overtime iv) Documentation d) Are vendors paid timely? e) Are amounts paid to vendors analyzed? 3) Procurement a) Is there free and open competition, to the maximum extent practical in all procurement transactions? b) Is cost or price reviewed for all procurements? c) Contracting i) Conflict of interest ii) Evaluation iii) Reporting iv) Monitoring performance 4) Financial reports a) Do you receive and review reports? b) Are reports timely? c) Are reports reasonable? d) Are WAP expenditures separately accounted for and identified? e) Are WAP ARRA expenditures separately accounted for and identified?

10 4) Financial reports (cont d) f) Are expenditures within budget? g) Are variations between budget and actual expenses properly explained? h) Have you asked your questions, and were they adequately answered? i) Do internal reports and reports to funding sources agree? iii. Program 1) Clients 2) Eligibility 3) Performance c. Staffing i. Do staff have the knowledge and experience to do their job? ii. Are staff properly trained? iii. Have staff been trained on new requirements? Action Items

11 d. Governance i. Board knowledgeable and informed? 1) Finances 2) Agency operations 3) WAP ii. Board active and involved? iii. Board approve application and budget? iv. Monthly WAP reports to board? 5. Final Thoughts a. Governance b. Accountability and internal controls c. Transparency d. Fraud and abuse e. Procurement f. New requirements g. Systems 5. Final Thoughts h. Key controls i. Board involvement in disbursements ii. Credit cards iii. Reporting 1) Financial 2) Performance i. Insurance i. Bonding ii. Liability

12 j. There will be problems i. Identify them ii. Correct them k. We re all in it together i. Finance and admin ii. Program l. 6 o clock news Action Items Thank you for Attending!

13 Thursday, July 30, :00 to 4:00 pm, CDT Visit our website for more information: or call Registration Fee: $295 per computer connection The American Recovery and Reinvestment Act of 2009 (ARRA) requires that laborers and mechanics employed by contractors and subcontractors on projects funded by or directly assisted in whole or in part through the ARRA shall be paid prevailing wages. The prevailing wage rates were created in 1931, as part of the Davis-Bacon Act and apply to contracts for construction exceeding $2,000. Construction is broadly defined and includes renovations and repairs. Recipients and subrecipients that contract with contractors on such projects (such as the Weatherization Assistance Program) must now comply with Davis-Bacon. In addition, on June 1, 2009, the Department of Labor issued an advisory stating that employees of nonprofit Community Action Agencies performing Weatherization construction activities funded by ARRA are subject to the provisions of the Davis-Bacon Act. During the webinar, we will discuss the applicability of Davis-Bacon to weatherization employees. In this Webinar, we will discuss the requirements of the Davis-Bacon Act, including: Definitions Paperwork requirements Wage determinations Required Contract Clauses Fringe Benefits Situations when Davis-Bacon does not apply Audit Requirements States that administer programs funded or assisted as part of ARRA, operators of programs, monitors and auditors, and contractors themselves must be familiar with Davis-Bacon requirements. The Davis- Bacon Act, regulations, Form 347 and instructions, etc. will be included in the training materials. In addition, there will be time for questions from participants.

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