Welcome! Florida Single Audit Act Training Department of Financial Services Bureau of auditing Mark Merry, Bureau Chief Introductions 1. Florida Single Audit Act Summary 2. SFA Flowchart, Checklists, Forms 3. Exercise #1 State Project Determination 4. Exercise #2 Recipient/Vendor Determination 5. State Projects Compliance Supplement Overview 6. 10 Compliance Requirements 7. Exercise #3 Compliance Supplement Form Training 1
Section 215.97, F.S., Florida Single Audit Act Enacted in 1998; effective July 1, 2000 Mirrors Federal Single Audit Act Applies to local governments, non-profits, and for-profit organizations key terms State resources State program Vendor State awarding agency State financial assistance State project Recipient State single audit State Project Compliance Supplement Types of financial Assistance Grants Loans Tax Credits Insurance Property Loan Guarantees Tax Refunds Food Commodities Investments Direct Appropriations Cooperative Agreements Training 2
Requires recipients/subrecipients to have state single audit, if $500,000 or more in state financial assistance is expended during the non-state entity s fiscal year. Florida Single Audit Act District School Boards Charter Schools Community Colleges State Universities Exempt Organizations Contractors operating state-owned facilities Florida Single Audit Act Mirrors Federal Single Audit Act, some differences: FSAA 10 compliance requirements Includes For-Profits Tax Credits/Refunds = SFA Recipient/Vendor Checklist Federal Single Audit 14 Compliance Requirements For-Profits Exempted Tax Credits/Refunds: N/A Preponderance of Evidence Training 3
Purpose 1. Uniform state audit requirements 2. Sound financial management 3. Audit economy and efficiency 4. Adequate monitoring by state agencies 5. Identify state financial assistance in state and non-state entity s accounting records Knight Foundation for Kids, Inc. Agency DCF Health AWI State Grants Grant No. 06-ADOP EMS09 RWB-HC-3 Federal Single Audit Annual financial statements Federal programs CFDA #15.206, 93.556 Schedule of Expenditures of Federal Awards 1 audit 1 audit 1 audit 1 audit = 4 Audits!! Knight Foundation for Kids, Inc. A. Annual financial statements B. Federal financial assistance CFDA #93.556 CFDA #93.957 C. State financial assistance CSFA #60.017 Grant #EMS09 CSFA #64.006 Grant # 06-ADOP CSFA #75.012 Grant #RWB-HC-3 1 Single Audit! D. Schedule of Expenditures of Federal Awards and State Financial Assistance (Combined) Training 4
1. Financial statements 2. Auditor reports (internal controls, project compliance) 3. Management letter 4. Auditee's written responses or corrective action plan 5. Correspondence on follow-up of prior years' corrective actions taken 6. Schedule of Expenditures of State Financial Assistance SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE Federal / State Agency, Pass through entity, Federal Program / State Project FEDERAL AWARDS CFDA CSFA No. Contract/ Grant No. U.S. Department of Agriculture Passed through Florida Department of Education National School Lunch Program 10.555 08-A6D4 $ Expenditures 513,135 Total expenditures of federal awards 513,135 STATE FINANCIAL ASSISTANCE Florida Dept. of Children and Families Children s Mental Health Juvenile Restoration 60.049 LH638 5,106,184 Florida Dept. of Juvenile Justice Vocational Training Services 80.013 L8G02 1,806,361 Delinquency Prevention 80.011 DP544 3,997,639 Total expenditures of state financial assistance 10,910,184 Total expenditures of federal awards and state financial assistance $ 11,323,319 Training 5
Search by: State Agency Subject Applicant Type Keyword CSFA # DFS State Agencies Auditor General Coordinating Agency - ACCOUNTABILITY Recipients/ Subrecipients Independent (CPAs) Administers Florida Single Audit Act Responsible for establishing rules Maintains Catalog & Compliance Supplement Reviews/audits state financial assistance Training 6
Identify state projects Determine recipient and vendor relationships Provide recipient information on FSAA Review financial reporting packages Determine the state coordinating agency Identify SFA in state accounting records Annual Agency Certification Review information in Catalog and the Supplement for accuracy and completeness. Notify DFS of any additions, deletions, or revisions to state projects for the previous year. See Links/Forms on FSAA website for more info. State Project Updates Agencies are encouraged to submit updates for the new fiscal year as soon as possible. New projects Deleted projects Project title/other changes Training 7
Reviews recipient audit reports to identify findings which affect all state projects Determines whether appropriate corrective action has been taken Notifies affected state agencies of recipient actions Example: Internal control audit findings SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND FINANCIAL ASSISTANCE Federal / State Agency, Pass through entity, Federal Program / State Project FEDERAL AWARDS CFDA CSFA No. Contract/ Grant No. U.S. Department of Agriculture Passed through Florida Department of Education National School Lunch Program 10.555 08-A6D4 $ STATE Expenditures 513,135 Total expenditures of federal awards 513,135 STATE FINANCIAL ASSISTANCE $5,106,184 Florida Dept. of Children & Families Children s Mental Health Juvenile Restoration 60.049 LH638 5,106,184 Florida Dept. of Juvenile Justice Vocational Training Services 80.013 L8G02 1,806,361 $5,804,000 Delinquency Prevention 80.011 DP544 3,997,639 Total expenditures of state financial assistance 10,910,184 Total expenditures of federal awards and state financial assistance $ 11,323,319 Identify SFA in accounting records Arrange for state single audits Provide subrecipients FSAA information Review subrecipient financial reporting packages Training 8
Perform single audits pursuant to Auditor General rules, including an evaluation of internal controls Determine if each major state project complies with Compliance Supplement requirements Establishes audit standards and rules Provides technical assistance Performs audits and reviews Reviews financial reporting packages Research GAA, Statutes, Other Sources State Project Determination RECIPIENT State Project Agency Requests New CSFA for State Project Recipient vs. Vendor Determination X VENDOR X EXEMPT ORG. State Financial Assistance Process Training 9
Identifying State Projects General Appropriations Act (GAA) Line item appropriations Grant and aid categories Proviso language (special purpose) Supplemental Appropriations Analyze bills, clarify legislative intent Florida Statutes Administrative Code Agreements Research GAA, Florida Statutes, other sources State Project Determination State Financial Assistance Process Analyze the statute (pg. 2) and determine whether the state program is a state project by completing the checklist (pg. 3). Section 381.989, F.S. Health Education Centers NOTE: The first page of the checklist is already completed. For this exercise, the program is not being funded by federal, state matching, or MOE. Training 10
Research GAA, Florida Statutes, other sources State Project Determination STATE PROJECT Agency Requests New CSFA for State Project Recipient vs. Vendor Determination State Financial Assistance Process Recipients vs. Vendors Recipients Benefits citizens Accountability of funds Programmatic decisions May have match/moe Returns residual funds Audit required Vendors Benefits the State No accountability of funds No programmatic decisions No match or MOE Residual funds = Profit No state single audit Complete PART B of the checklist (pg. 8) for each contract. #LUHECR9 Lee University, Knight School of Medicine (pg. 5) #FHCCV9 South Florida Advertising, Inc. (pg. 6) NOTE: Both contracts are under the Health Education Centers program (s. 381.989, F.S.), which was determined to be a state project in Exercise #1. No federal, state matching, or MOE funds are involved. Training 11
Research GAA, Statutes, other sources State Project Determination RECIPIENT State Project Agency Requests New CSFA for State Project Recipient vs. Vendor Determination X VENDOR X EXEMPT ORG. State Financial Assistance Process State single audit (combined federal & state single audit, if both thresholds are met) Unobligated funds returned to the State, unless authorized to retain funds Comply with CFO Memo #3 (14-15) provisions Subrecipient agreements must have standard contract language, CFOM #4 provisions, etc. State Projects Compliance Supplement Training 12
Part One: Background, Applicability, & Overview Part Two: Matrix of Compliance Requirements Part Three: Compliance Requirements Part Four: State Project Compliance Requirements Part Five: Internal Controls Part Six: Guidance for Auditing Projects Not Included in the Compliance Supplement If a state project is selected for audit, use of the Supplement is mandatory. Adherence to the Supplement satisfies the audit requirements of s. 215.97, F.S. Training 13
10 compliance requirements auditors should consider in a single audit (s. 215.97, F.S.) Contains general audit procedures Auditor judgment is necessary Discusses project objectives, procedures, and compliance requirements specific to a project Auditors use specific compliance requirements in audits of state financial assistance An explanation needs to be provided to DFS if a Compliance Supplement is not prepared 536 State Projects Only 441 have State Project Compliance Supplements (82%) As of March 2015 20% of State Projects had Supplements in 2002 62% of State Projects had Supplements in 2009 74% of State Projects had Supplements in 2012 Training 14
A process designed to provide reasonable assurance regarding achievement of objectives Contains internal control characteristics for each compliance requirement Requires auditors to obtain an understanding of internal controls, assess control risk, and perform tests of controls Guidance for auditors to identify applicable compliance requirements for projects not included in Part Four. State Agency is in best position to determine what is important to success of state project. Preparing the compliance supplement form (part four) Training 15
State Agency CSFA Number Project Title Completed by Phone/E-mail IG/AD Review Program Objectives Explains what will be accomplished in the program Program Procedures Describes how state financial assistance is awarded Includes references Provides other relevant information about the operation or administration of the state project A. Activities Allowed or Unallowed B. Allowable Costs C. Cash Management D. Eligibility E. Equipment & Real Property Management F. Matching G. Period of Availability H. Reporting I. Subrecipient Monitoring J. Special Tests & Provisions Training 16
Requirements are unique to each state project and are found in laws, rules, and provisions of contract or grant agreements. DFS considers these apply to each project: A. Activities Allowed or Unallowed B. Allowable Costs G. Period of Availability of State Funds EXAMPLES Allowable activities include tutoring, job readiness skills training, and health education. Unallowable activities include field trips and staff professional development. B. Allowable Costs Requires expressed or necessarily implied authority to expend state funds (AG Opinion 078-101) At minimum, recipients/subrecipients must comply with the Reference Guide for State Expenditures, even if the agreement is awarded on a fixed-price basis or competitively procured under chapter 287, F.S. Training 17
Allowable Costs: 1) Travel expenditures EXAMPLE 2) Conference registration fees and lodging 3) Printing costs for flyers Unallowable Costs: 1) Promotional items, refreshments, greeting cards 2) Any travel costs unrelated to outreach activities Refers to cash advances, not method of payment Agreements with advances may contain clause permitting recipients to temporarily invest proceeds. Interest income returned to State or applied against agency s obligation to pay the contract amount. EXAMPLE Interest earned on cash advances provided by the State shall be returned to the department. Training 18
Specifies the criteria for determining eligibility of: 1. Beneficiaries (individuals/groups of individuals); 2. Subrecipients that can participate in the project and the amounts for which they qualify NOTE: Does not refer to recipient eligibility criteria (non-profits, for-profits, local governments) EXAMPLES Clients between the ages of 3 and 22 attending the Harris Educational Center are eligible for services. Eligible subrecipients are for-profit, privately held, investment-grade businesses that employ between 10 and 50 persons and generate between $1 million and $25 million in annual revenue. Specifies the use, management, and disposition of equipment and real property Training 19
E. Equipment & Real Property Management EXAMPLES Upon installation, the emergency power generators become the local government s property. Maintenance costs are the responsibility of the local government. Non-expendable equipment costing $1,000 or more is subject to agency property reporting requirements for the contract period. Upon project completion, such equipment shall return to the agency. Specifies Matching Requirements How match is computed How in-kind contributions are valued Types of expenditures or in-kind contributions that can be used to meet the match F. Matching EXAMPLE A 25% local match is required, except for local governments which qualify for the Green Initiative. Eligible match sources include: cash; in-kind service costs; and land value of applicant-owned project sites which do not contain recreational facilities. Land value acquired under other state or federal grant land acquisition programs is ineligible. (Rule 62D-5.055(4)(c), F.A.C.) Training 20
Specifies the time period during which non-state entity may obligate/expend state financial assistance State Fiscal Year Examples Contract/Grant Agreement Period Verification of data contained in reports required of recipients and subrecipients Types of Reports Financial Revenue/expenditure reports Performance Benchmarks Activity Number of clients served Special Reports Program-specific H. Reporting EXAMPLE Recipient shall maintain individual participant files and attendance rosters to support the data in the annual Fiscal and Participant Report, which shall include: a) actual number of enrollments; b) actual number of participants successfully completing each session; and c) total project expenditures (by expense category). Training 21
Verify that the recipient/subrecipient monitored subrecipients per project requirements On-site visits Limited-scope audits Expenditure review Review subrecipient audit reports I. Subrecipient Monitoring EXAMPLE Recipient shall conduct 1 on-site review of each subrecipient in the grant period, which includes: Programmatic review of all required contract deliverables and performance measures, and Expenditure review to ensure that grant funds were spent only for allowable costs. Types of Special Tests: Related-party transactions Professional qualifications State procurement guidelines Recipient vs. Vendor Checklist Training 22
EXAMPLE Compliance Requirement: Corporations represented on the Board cannot receive over 65% of the total dollar amount of all contracts issued. Audit Objective: Determine if recipient complied with laws for awarding contracts to corporations represented on the Board. Suggested Audit Procedures: Compare the amount of contracts awarded to relatedparty organizations with the total amount of contracts awarded. Identifying Compliance Requirements Updates to the Catalog & Compliance Supplement are welcome throughout the year! Training 23
Section 215.97, F.S. DFS Rule 69I-5, F.A.C. FSAA website: https://apps.fldfs.com/fsaa Auditor General Q&A: http://www.myflorida.com/audgen/pages/flsaa.htm FSAA Line: (850) 413-3060 The End Department of Financial Services Bureau of Auditing Mark Merry. Bureau Chief Teresa Weeks..... Financial Administrator Phillip Sley...Professional Accounting Specialist Training 24