# Presentation: 763323

## AUDITS

**Audits...Did you say audit?!!?  An Overview of Some of the Most Frequent Audit Findings**
**Patricia A. Rauch**
**Grants Management Specialist/Audits**
_**[Patricia.A.Rauch@noaa.gov](mailto:Patricia.A.Rauch@noaa.gov)**_
**301-713-0946 x151**

## Most Frequent Audit Findings:

- Policies and Procedures
- Internal Controls
- Documentation
- Cash Management
- Procurement Procedures
- Property, Plant and Equipment
- Unallowable Costs
- Financial
- Late and Inaccurate Reports
- Subrecipient Monitoring
- Matching and Cost Sharing

## Policies and Procedures

**	****Lack of procedures or policies for: personnel, purchasing, accounting manual, equipment capitalization, travel, consultants, procurement, safeguarding assets and information.**

## Internal Controls

**- Segregation of duties (making sure one person does not handle the entire process)**
**- Cash procedures (more than one person to sign checks)**
**- Purchasing**
**- Bank reconciliation should be according to general ledger and subsidiary ledger**
**- Security of ADP system**

## Documentation

**- Any costs without documentation could be disallowed**
**- Must be related to project and allowable**
**- Salary costs (failure to maintain adequate time distribution records)**
**- T&A system (inadequate system)**
**- Allocating costs across projects**
**- Travel**
**- Allocation of direct/indirect costs**

## Cash Management

**- Opening and closing accounts should be cleared    by Board Directors**
**- Limit draw down to ensure no excess dollars on hand**
**- Insured accounts at bank**
**- Credit card controls**

## Procurement Procedures

**- Debarment and suspension**
**- No competitive bids**
**- No documentation to justify**
**- Different dollar thresholds**
**- No formal procedures in place**

## Property, Plant and Equipment

**- Federal share not identified**
**- No inventory management**
**- No surplus equipment screening**
**- Physical inventory not performed and reconciled**

## Unallowable Costs

**- Cost Allocation Plans not followed**
**- Exceed Federal budget or terms and conditions of award**
**- Transfers from one grant to another**
**- Cost not applicable to grant or during time frame**
**- Wrong purpose**
**- Can’t charge costs to failing project**
**- Co-mingling funds under multiple concurrent awards**

## Financial 

**- Reconcile all costs**
**- Transactions posted to general ledger**
**- Cash disbursement/receivables timely**
**- Invoices marked paid**
**- Budget prepared and used as management control**
**- Accounting system (segregation of costs by project – include CFDA No.)**
**- Accounts payable (prepared on regular and timely basis)**

## Late and Inaccurate Reports

**- Reports don’t agree with accounting**
**- Not timely**
**- Progress/Performance reports not submitted as required by award**
**- Audits not performed or timely**
**- Unacceptable audits (A-133) – sometimes don’t discover until site visit or actual audit**

## Sub-recipient Monitoring

**- No follow up with sub-recipient**
**- Lack of financial or performance monitoring**
**- Aren’t informed of requirements or that required to have audit performed**

## Matching and Cost Sharing

**- Not tracked to ensure match met**
**- No documentation or inadequate support for amount and value of donated cash, third                party in-kind contributions**
**- Donations not recorded or, if recorded not specific purpose identified i.e., not project specific**
**- Property donated must have value and documentation to support**

## Unintentional Causes...Result in Findings

**- Inadequate Documentation**
**- Unfamiliar with:**
- Federal Cost Principles
- Federal Administrative Requirements
- Grant Terms and Conditions
- Audit Requirements

## Audit Regulations as Applicable to the Type of Organization

**OMB Circular A-133:**
- Institutions of Higher Education
- Non Profit Organizations
- Hospitals
- State and Local Governments
**Government Auditing Standards (Yellow Book):**
- For Profit Entities

## Helpful Sources and Websites

**OMB Circular A-133 - Audits of States, Local Governments, and Non-Profit Organizations**
**Department of Commerce Standard Terms and Conditions - Section D. Audits**
**15 CFR Part 14 – Uniform Administrative Requirements for Grants and Cooperative Agreements with Institutions of Higher Education, Hospitals, Other Non-Profit and Commercial Organizations – Section 14.26**
**15 CFR Part 24 – Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments – Section 24.26**
**Grants Online – **_**[https://grantsonline.rdc.noaa.gov](https://grantsonline.rdc.noaa.gov/)**_
**Federal Audit Clearinghouse - **_**[http://harvester.census.gov/](http://harvester.census.gov/)**_
**Grants Management Division, NOAA – **_**[http://www.ago.noaa.gov/grants/](http://www.ago.noaa.gov/grants/)**_
**U.S. Department of Commerce – **_**[http://www.commerce.gov/](http://www.commerce.gov/)**_

## Yes, I Said Audits...Audits

**Result in disallowances...**
**Disallowances result in dollars owed...**
**Dollars owed can affect future funding...**
**Future funding **_**not**_** received affects project completions...**
**Project completions questioned also question capability... **
**Capability to perform due to lack of financial, administrative, monitoring, and internal operations can result in the discontinuance of Federal funding, if not corrected.**
- 	*NOAA wants to allow the funds granted...not take them away.*