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OMB New Uniform Guidance Session 9


>>WELCOME BACK, EVERYBODY. WE MADE IT. WE ARE AT THE END OF THE WEBCAST SERIES NO.
9, AND SO JUST TO REMIND EVERYBODY, THIS IS THE NINTH SESSION OF THE WEBCAST SERIES, AND
ALSO WANT TO REMIND EVERYBODY TO GET OUT AND SEE OR DOWNLOAD THE SUPPLEMENTAL WEBCAST RESOURCES
AND WE HAVE ABOUT 10 RESOURCES ONLINE THAT’S GOING TO BE REALLY HELPFUL FOR YOU IN IMPLEMENTING
PRACTICAL TOOLS. THE GUIDANCE AT THE END OF THE SESSION, I’M
GOING TO GO OVER ONE OF THE TOOLS WE HAVEN’T ADDRESSED YET. SELF ASSESSMENT TOOL AND QUESTIONNAIRE, AND
TO GIVE EVERYBODY ORIENTATION HOW YOU CAN USE THAT AND PRACTICALLY CHECK YOURSELF, AND
MAKE SURE THINGS ARE UP TO SNUFF IN TERMS OF COMPLIANCE SO WE WILL GET TO THAT AT THE
END, BUT FOR THAT PART FOR NOW, WE ARE FOCUSED ON SUBPAR F.
HOW MANY CAN TELL ME WHAT WAS THE CIRCULAR THAT THIS CAME FROM? A132. GREAT. YOU ARE PROBABLY ALL VERY FAMILIAR WITH I133
AND GONE THROUGH A FEW AUDITS, AND WHAT WE ARE REALLY DOING HERE IS FOCUSING ON THINGS
THAT HAVE CHANGED AND LET’S TAKE A LOOK AT THE PURPOSE OF AUDIT REQUIREMENTS IS TO SET
FORTH THE STANDARDS FOR OBTAINING CONSISTENCY, UNIFORMITY FOR FEDERAL AGENCIES ALONG WITH
NONFEDERAL AGENCIES, AND THAT’S THE GENERAL PURPOSE, AND THE EFFECTIVE ALLOWABILITY DATES
THAT BECAME EFFECTIVE DECEMBER 26th, 2013 AND APPLIES FOR ALL AUDITS, FISCAL YEAR BEGINNING
ON OR AFTER DECEMBER 26, 2014. ALL AUDITS YOU HAVE IN PLACE RIGHT NOW ARE
IN EFFECT AND THE FOCUS OF THE CHANGES OR THE NEW LANGUAGE IS REALLY TO KIND OF COVER
AND THE PURPOSE IS TO REDUCE RISK AND THING THAT GOT CHANGED, GREATER FOCUS ON HOW YOU
CAN REDUCE FRAUD AND CAYCE ABUSE. AND OTHER CHANGES WERE THE THRESHOLD OF 500,000
TO 750,000, AND THERE IS THE REQUIREMENTS, AND EXCEPTIONS THAT WE WILL COVER REGARDING
TRIBES, AND REQUIREMENT TO SUBMIT THE AUDIT TO THE FEDERAL AUDIT CLEARINGHOUSE, WHICH
ARE EXCEPTIONS, AND ALSO OF COURSE THE PURPOSE IS TO THERE’S ALSO MANDATES FOR THE FEDERAL
AGENCIES TO ENCOURAGE COOPERATION BETWEEN AGENCIES AND MANAGING AUDIT FINDINGS, AND
ALSO RELIANCE ON THE SINGLE AUDIT ONCE THE REPORT IS ISSUED. WE WILL TAKE A LOOK AT EACH ONE OF THOSE REQUIREMENTS,
AND IF YOU WANT TO FOLLOW ALONG, YOU CAN FALL ALONG EITHER IN THE TEXT, AND SEE 200 GUIDANCE
THAT WE HAVE FOR YOU, OR YOU CAN FOLLOW ALONG UNDER CROSSWALK, SIDE BY SIDE, AND IF YOU
PREFER, YOU WOULD LIKE TO SAY, I WANT TO SEE IT MYSELF, THAT’S WHAT I WANT TO LEARN, I
LIKE TO SEE WHAT’S GOING TO CHANGE, AND HOWEVER YOU WANT TO FOLLOW ALONG. WE ARE GOING TO COVER SPECIFICALLY THE THINGS
THAT CHANGE AND WHAT IMPACT IT MIGHT HAVE FOR US. 200 POINT 501 PARAGRAPH 8. WE HAVE ALREADY MENTIONED THIS, BUT THIS IS
THE PARAGRAPH WHERE THE THRESHOLD CHANGED TO $750,000. SO NO SUBPART F.
THERE ALSO ADDRESSES PROGRAMS SPECIFIC REQUIREMENTS FOR AUDITS. SO SORT OF A DUPLICATION, BUT AGAIN REINFORCES
THAT THE AUDITS ARE ELIGIBLE UNDER THE BLOCK GRANT PROGRAM AT 1,544. PARAGRAPH F SUBRECIPIENTS AND CONTRACTORS,
AND THIS MAKES THE POINT, AN AUDITOR MAY SIMULTANEOUSLY BE A RECIPIENT, SUBRECIPIENT AND A CONTRACTOR. HERE IS WHERE I133 WHERE THE TERM VENDOR WAS
USED, AND NOW HAS BEEN REPLACED CONSISTENTLY THROUGHOUT A133 WITH THE TERM CONTRACTOR SO
GO BACK TO YOUR PERSONNEL POLICY, NOT YOUR PERSONNEL POLICY, BUT YOUR FINANCE POLICIES,
AND MAKE SURE FOR THE CONTRACTOR TO BE CONSISTENT. THIS PARAGRAPH RECOGNIZES THAT YOU MAY TRY
OR A RECIPIENT MAY AT ONE TIME YOU COULD BE A SUBRECIPIENT FROM ANOTHER AGENCY FOR FEDERAL
FUNDS, AND YOU COULD ALSO BE A CONTRACTOR, BUT ALSO THE RECIPIENT. 503, RELATION TO OTHER AUDIT REQUIREMENTS,
AND SOME EXPANDED LANGUAGE AND EMPHASIS ADDED HERE IN THIS SECTION. THE POINT OF 503 IS REALLY TO SAY THAT THEY
WANT FEDERAL AGENCIES TO RELY ON THE SINGLE AUDIT ONCE IT’S ISSUED. EXPENDED FEDERAL FUNDS AND WANT THE FEDERAL
AGENCIES TO SAY WE ARE NOT GOING ANOTHER WHOLE AUDIT. WE ARE GOING TO RELY ON THAT AUDIT, BUT IT
DOESN’T RESTRAIN THE AGENCY. IF THEY FIND DEFICIENCIES OR THE AUDIT IS
NOT COVERING SPECIFIC NECESSARY ITEMS, THEY CAN ARRANGE FOR ADDITIONAL AUDITS. THE KEY IS THAT IT MUST BUILD ON MUST NOT
BE DUPLICATIVE OF THE WORK IN THE AUDIT AND MUST BUILD UPON PREVIOUS WORK PERFORMED. BOTTOM LINE IF THE AUDIT AS IT’S POSTED, IF
IT MEETS THE NEEDS OF THE AGENCY, WHAT IT’S SAYING IS IT MUST RELY ON IT.
504 FREQUENCY OF AUDIT. THIS IS A PROVISION, AND WE FOUND ALREADY
A COUPLE TRIBES THAT THIS APPLIED TO. IF STATE AND LOCAL GOVERNMENT OR INDIAN TRIBE
REQUIRED BY CONSTITUTION OR STATUTE IN EFFECT ON JANUARY 1st, 1987 TO UNDERGO ITS AUDITS
ON A BIANNUAL, RATHER THAN ANNUAL, THE REQUIREMENTS MUST STILL BE IN EFFECT FOR THE BIANNUAL PERIOD. WHAT IT’S SAYING, EVERY TWO YEARS IF YOUR
TRIBAL CONSTITUTION DOCUMENTS STATUTE REQUIRED AUDITS ON A TWO YEAR BASIS, THIS IS GIVING
YOU THAT SUPPORT FOR THAT. 506, NOW, INSTEAD OF REMEMBER YESTERDAY WE
WERE TALKING ABOUT ALLOWABLE COSTS FOR AUDITS AND SO THAT’S LOCATED AT 200, 425 AND SUBPART
E ON THE COST PRINCIPLES, AND NOW THAT CAME FROM THE FORMER A133, AND NOW WHEN YOU GET
TO THE SECTION IN SUBPART F ON ALLOWABLE COSTS OR AUDITS, IT REFERS YOU BACK TO SUBPART E
ON 425, AND WE ARE MAKING IT A POINT TO REMIND FOLKS FOR THE INDIAN HOUSING BLOCK GRANT PROGRAM,
IT ADDRESSES ALLOWABLE COSTS FOR AUDITS, ALSO IN 1,546, AND SPECIFICALLY THE LANGUAGE IS
PROGRAM SPECIFIC IS PERIODIC FINANCIAL REVIEW, AND IF YOU DON’T MEET THE THRESHOLD FOR A
REQUIRED SINGLE AUDIT, IT DOES ALLOW FOR YOU TO DO AN ALTERNATE PERIODIC FINANCIAL REVIEW,
AND IT IS AN ELIGIBLE COST. OKAY. SO 508, AND IN 508, THERE’S PARAGRAPH C AND
D ARE NEW, NEW TO THE SECTION FROM THE FORMER A133, AND AUDITING RESPONSIBILITIES, PROCURE
THE AUDIT, PREPARE THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS, AND THE NEW SESSION IS
PROMPT FOLLOW UP CORRECTIVE ACTIONS ON AUDIT FINDINGS AND PROVIDE THE AUDITOR WITH ACCESS
TO RECORDS. SO WE WILL TAKE A LOOK AT THESE INDIVIDUALLY. 509, AUDITOR SELECTION, AND LET’S TAKE A LOOK
AT WHAT’S CHANGED HERE. THE NEW LANGUAGE IN HERE IS THE OBJECTIVE
IS TO OBTAIN HIGH QUALITY AUDITS, AND IN THE SECTION, IN TALKING ABOUT SELECTING AN AUDITOR,
THE LANGUAGE THAT IS FOCUSING US TO LOOK AT THAT THE PURPOSE OF WHAT WE ARE TRYING TO
ACCOMPLISH IS OBTAINED HIGH QUALITY AUDITS, NOT JUST ANY OLD AUDIT WILL DO. BUT REALLY FOCUSING ON THE QUALIFICATIONS,
AND THAT LEADS TO THIS NEW SECTION HERE OR NEW LANGUAGE, THE OBJECTIVES AND SCOPE OF
THE AUDIT MUST BE MADE CLEAR IN THE NONFEDERAL ENTITY MUST REQUEST A COPY OF THE AUDIT ORGANIZATIONS
PEER REVIEW REPORT. WHICH THE AUDITOR IS REQUIRED UNDER GENERALLY
ACCEPTED GOVERNMENT ACCOUNTING STANDARDS. SO THIS IS KIND OF AN INTERESTING THING. IT DID USED TO REFER TO THE PEER REPORT, BUT
THIS IS THE FIRST TIME IT SAYS IT’S A REQUIREMENT, SO IT’S A PART OF YOUR PURCHASING, AND MUST
BE IN YOUR RSV, AND YOU WANT TO HAVE THEY ARE REQUIRED TO PROVIDE A PEER REVIEW REPORT. SO THE PEER REVIEW IS BASICALLY THE AUDITOR’S
REVIEW EACH OTHER, AND THEY LOOK AT A SAMPLING OF AUDITS THEY COMPLETED AND THEY MAKE A JUDGMENT
OR A REPORT ON THAT TO SAY YEAH, IT WAS DONE WELL, AND IT MET THE STANDARDS OF THE SINGLE
AUDIT PACKET, ET CETERA. SEEING HOW IT’S BEING VIEWED OR JUDGED BY
THE PEERS IN TERMS OF CARRYING OUT THE AUDITS. THE KICKER HERE IS YOU MUST REQUEST IT. IT DOESN’T SAY YOU MUST RELY ON IT. SO THAT’S GOING TO BE AGAIN GOING BACK TO
WE ALL HAVE TO MAKE OUR OWN JUDGMENTS ABOUT THE OBJECTIVE GOING BACK TO THE OBJECTIVE
IS TO OBTAIN HIGH QUALITY AUDITS. SO
ONE MORE POINT ON THAT. WE WILL COME TO A SECTION A LITTLE BIT LATER
OF SOME CHANGES, AND THERE’S ADDITIONS TO AUDITOR RESPONSIBILITIES, AND ONCE WE GO OVER
THAT, YOU MIGHT BE ABLE TO SEE WHY IT’S IMPORTANT FOR US TO REALLY TAKE THE TIME TO GET A GOOD
AUDITOR, AND IT’S TO OUR BENEFIT TO DO THAT. OKAY. 511, THE NEW SECTION THAT’S ADDED HERE UNDER
AUDITING RESPONSIBILITIES. CORRECTIVE ACTION PLAN AND SUMMARY SCHEDULE
OR PRIOR AUDIT FINDINGS MUST INCLUDE FINDINGS RELATED TO THE FINANCIAL STATEMENTS WHICH
ARE REQUIRED TO BE RECORDED IN ACCORDANCE WITH GENERALLY ACCEPTED GOVERNMENT AUDITING
STANDARDS. THAT’S A NEW, NEW LANGUAGE THAT’S ADDED UNDER
AUDITEE RESPONSIBILITIES. AND THIS IS IN REFERENCE TO WE ARE REQUIRED
TO PROVIDE, AND WHEN WE RECEIVE A FINDING, IT’S OUR RESPONSIBILITY AS AN AUDITEE TO PREPARE
CORRECTIVE ACTION PLAN, AND SO WHAT THIS IS SAYING IS OUR CORRECTIVE ACTION PLAN THAT
WE DEVELOP, IT MUST BE RELATED SPECIFICALLY TO THOSE CITED AUDITS, AUDIT FINDINGS. SO IT’S GOT TO BE THE SPECIFIC REQUIREMENTS. PARAGRAPH 2, CHANGES IN THERE WHEN AUDIT FINDINGS
WERE NOT CORRECTED OR ONLY PARTIALLY CORRECTED, IT’S FOR THE REASONS FINDING RECURRENCE AND
PLANNED CORRECTIVE ACTION, AND WE HAVE AN AUDIT AND GET FINDINGS AND PREPARE AN ACTION
PLAN. NEXT YEAR THE AUDITOR COMES BACK, AND THEY
LOOK AND SAY DID THIS GET FIXED? IS IT CORRECTED? AND AS PART OF OUR FOLLOW UP WE PREPARE THE
SUMMARY SCHEDULE, AND WE ADD DEPRESS THIS, AND IF THEY DIDN’T DIRECT IT, WE HAVE THE
SAME AND ANOTHER EXAMPLE OF THE ADDED EMPHASIS AND PARAGRAPH C, SOME CHANGE IN THE LANGUAGE
THERE, AND AT THE COMPLETION OF THE AUDIT, THEY MUST PREPARE A DOCUMENT SEPARATE FROM
THE AUDITOR’S FINDINGS IN 516, AND WE ARE REQUIRED TO DO THE SEPARATE DOCUMENT. A CORRECTIVE ACTION PLAN TO ADDRESS EACH AUDIT
FINDING, AND SO HERE IS THE THING, WE WANT THE NAME OF THE CONTACT PERSON, AND PERSON
RESPONSIBLE FOR THE CORRECTIVE ACTION PLAN, AND ANTICIPATED COMPLETION DATE. ALSO SAYS, AND THIS IS NOT NEW, BUT THIS IS
TO REITERATE THAT. IF YOU DON’T AGREE WITH THE AUDIT FINDING
OR YOU BELIEVE IT’S NOT REQUIRED, THEN YOU CAN PROVIDE THAT IN YOUR CORRECTIVE ACTION,
YOUR REASON FOR WHY IT’S NOT VALID. YOUR AUDITOR DIDN’T CITE THE LOCATION, AND
TOO BROAD, AND YOU ARGUE THAT HEY, WE BELIEVE WE WERE OR ARE IN COMPLIANCE WITH SECTION
WHATEVER 1,500 WHATEVER. YOU CAN ARGUE THAT OUT IN YOUR CORRECTIVE
ACTION PLAN. 512, SO NOW IT’S CLARIFIED, BECAUSE UNFORTUNATELY
WE DO WAIT UNTIL THE LAST MINUTE. SO I GUESS IT’S BEEN AN ISSUE IF IT FALLS
ON A SATURDAY OR SUNDAY, AND IT CLARIFIES IF IT FALLS SATURDAY, SUNDAY OR FEDERAL HOLIDAY,
THE REPORTING PACKET IS DUE THE NEXT BUSINESS DAY. YOU ARE WRITING THE CORRECTIVE ACTION PLAN,
WE HAVE ONE MORE DAY. WE HAVE THE WEEKEND, AND WE CAN GET IT ON
MONDAY. SO UNLESS RESTRICTED BY FEDERAL STATUTES OR
REGULATIONS, YOU MUST MAKE THE AUDIT COPIES AVAILABLE FOR PUBLIC INSPECTION. THE AUDITEE AND THE AUDITORS HAVE RESPONSIBILITY
IN ENSURING IT PROTECTED BY INFORMATION. IF SOMETHING IN THE DOCUMENTATION OR THE AUDIT
HAD ANYTHING RELATED TO ANY PROTECTIVE PERSONAL FEEBLE INFORMATION, BOTH THE AUDITEE AND AUDITOR
HAVE THE RESPONSIBILITY TO MAKE SURE THAT’S PURGED OUT. THIS IS THE EXCEPTION WE WERE TALKING ABOUT
EARLIER, AND IT’S IN 200.512, AND THE REQUIREMENT HERE IS WE ARE REQUIRED TO SUBMIT THAT AUDIT
TO THE AUDIT CLEARINGHOUSE, AND YOU CAN GO TO THAT WEBSITE ANY TIME, CLICK IN YOUR TRIBE,
AND YOU CAN SEE ALL THE AUDITS AND SUMMARY OF THE STATEMENTS OF THOSE AUDITS AND WHAT
FINDINGS YOU HAD, ET CETERA. THE TRIBE HAS EXCEPTION HERE, AND MAY CHOOSE
NOT TO AUTHORIZE THE AUDIT CLEARINGHOUSE TO MAKE THE REPORTING PACKAGE PUBLICLY AVAILABLE
ON A WEBSITE BY EXCLUDING THE AUTHORIZATION FOR THE PUBLICATION. HERE IS THE KICKER. IF YOU EXERCISE THAT OPTION, THEN YOU HAVE
TO YOU BECOME RESPONSIBLE FOR SUBMITTING THE REPORTING PACKAGE DIRECTLY, AND IF YOU HAVE
A PASS THROUGH ENTITY, YOU HAVE THE RESPONSIBILITY TO PASS OUT TO OR SUBMIT THAT PACKAGE THROUGH
A PASS THROUGH ENTITY, AND ALSO TO PROVIDE THE ENTITY, A STATUS ON THE FINDINGS THAT
YOU HAD, THE SUMMARY OF CORRECTIVE ACTIONS AND ANY UPDATES TO THOSE CORRECTIVE ACTIONS. SO THOSE ARE THE EXCEPTIONS FOR THAT, AND
AGAIN, B2 SAYS CONTINUING ON THE EXCEPTIONS AND THE CONDITIONS, IF YOU ELECT TO DO THAT
IS TO UNLESS RESTRICTED BY FEDERAL STATUTE OR REGULATION, IT MUST MAKE THE COPIES OF
THE REPORTING PACKAGE AVAILABLE FOR INSPECTION. IF SOMEONE WANTS TO COME AND SEE THAT, IT
HAS TO BE MADE AVAILABLE FOR PUBLIC INSPECTION. QUESTIONS ON THAT? SOUND GOOD? MOVING ON, 516, AUDIT FINDINGS. SO THIS IS WHERE WE ARE GOING TO KIND OF FOCUS
ON WHAT IS REQUIRED BY THE AUDITOR, AND HOW THEY RELATE THESE FINDINGS. SO THIS NEW LANGUAGE HERE IS HIGHLIGHTED IN
RED AND IS THE NEW LANGUAGE IN THIS SECTION, AND SIGNIFICANT DEFICIENCIES AND MATERIAL
WEAKNESSES, AND INTERNAL CONTROL OVER MAJOR PROGRAMS AND SIGNIFICANT INSTANCES OF ABUSE
RELATING TO MAJOR PROGRAMS. THAT’S THE NEW LANGUAGE IN THERE FOR A PARAGRAPH
1. THAT’S WHAT THE AUDITOR IS REQUIRED TO REPORT,
MATERIAL WEAKNESSES AND SIGNIFICANT INSTANCES OF ABUSE RELATING TO THE MAJOR PROGRAMS. A LITTLE MORE EMPHASIS IN RESPONSIBILITY FOR
THE AUDITOR TO MAKE SURE THAT THEY IDENTIFY AND SEE SIGNIFICANT ABUSES THAT THEY ARE REQUIRED
TO REPORT THAT IN THE FINDINGS. 516A, AND SO THE THRESHOLD FOR COLLECTION
COST HAS INCREASED FROM 10,000, FOR BOTH MAJOR AND NONMAJOR PROGRAMS, AND IT’S NOW 25,000
WHAT THEY ARE LOOKING AT IS WHAT’S GOING TO BE MATERIAL IN TERMS OF A FINDING IF THERE’S
A QUESTIONED COST ON A TRANSACTION, AND WHAT’S GOING TO MAKE IT MAJOR OR MATERIAL IS IF IT’S
OVER $25,000. PARAGRAPH 5 AGAIN CONTINUING ON, 516A, AND
REASONS FOR AUDIT FINDINGS, WHAT’S ADDED IS THE REASONS FOR OPINION THAT IS OTHER THAN
UNMODIFIED OPINION. AND THEN 6, NO OR LIKELY FRAUD AFFECTING THE
FEDERAL AWARD DOES NOT REQUIRE THE AUDITOR TO REPORT PUBLICLY INFORMATION THAT CAN COMPROMISE
AN INVESTIGATIVE OR LEGAL PROCEEDING, AND AUDITOR FINDS INSTANCES OR OCCURRENCES OF
FRAUD, AND THEY ARE NOT REQUIRED TO MAKE THAT INFORMATION THAT THERE’S POTENTIALLY GOING
TO BE AN INVESTIGATION WITH THE INSPECTOR GENERAL, AND THEY HAVE THE ABILITY TO NOT
MAKE THAT PUBLIC IN ORDER TO MAKE SURE IT’S NOT HINDER THE PROCEEDING. BUT JUST TO BACK UP, MAKE A POINT, IF AN AUDITOR
IS NOT GOING TO GIVE AN UNMODIFIED OPINION, WHICH IS THE BEST OPINION THAT YOU CAN GET,
IT’S CLEAR, YOU HAVE NO ISSUES, NO QUALIFICATIONS TO THAT, THAT’S WHAT THIS IS SAYING, THEY
HAVE TO GIVE THE REASONS, AND IF IT’S NOT OTHER THAN AN UNMODIFIED OPINION, THE AUDITOR
REPORT IS REQUIRED TO SAY WHY. WHY IS IT NOT AN UNMODIFIED OPINION. SOMETIMES YOU SEE AUDITS, AND THEY ARE NOT
ALL THAT CLEAR. THEY DON’T GIVE THAT UNMODIFIED OPINION, AND
YOU DON’T REALLY KNOW WHY. 516. SIMPLE WORD, BUT I LOVE IT, AND I’M GLAD IT
GOT ADDED IN THERE. WHEN YOU ARE ON THE OTHER SIDE OF GETTING
AUDITS OR HOW TO DO CORRECTIVE ACTIONS, YOU REALLY APPRECIATE THIS LANGUAGE IS IN HERE. THE ADDED WORD IS AUDIT FINDINGS, DETAIL AND
CLARITY. SO IT MUST BE PRESENTED INSUFFICIENT DETAIL
AND CLARITY FOR THE AUDITEE TO PREPARE CORRECTIVE ACTION PLAN AND TAKE THE CORRECTIVE ACTION
AND FOR FEDERAL AGENCIES TO ARRIVE AT A MANAGEMENT DECISION. SOMETIMES YOU GET AN AUDIT AND IT GOES BACK
TO WHY IT’S SO IMPORTANT TO GET A QUALITY AUDIT TAKE THE TIME TO DO THAT, BECAUSE IF
THEY DO MAKE A FINDING, IT NEEDS TO BE VERY CLEAR WHAT IS OUT OF COMPLIANCE, AND WHAT
IS THE OCCURRENCE, AND WHAT IS TAKING PLACE, AND WHAT YOU WILL NEED TO DO. IF IT’S WRITTEN REALLY WELL, IT LENDS ITSELF
TO EASILY DEVELOPING THE CORRECTIVE ACTION PLAN. BUT IF YOU HAVE TO SIT THERE AND DECIPHER,
I DON’T KNOW WHAT HE’S TALKING ABOUT, IT’S REAL VAGUE, AND YOU ARE OUT OF COMPLIANCE
WITH 887, IT’S TOO BROAD. ALL RIGHT. SO CONTINUING ON THAT, ON THAT SAME POINT,
PARAGRAPH 2 AND THIS IS THE NEW LANGUAGE THAT GOT ADDED IN THERE, AND THE CRITERIA OR SPECIFIC
REQUIREMENT, INCLUDING THE FEDERAL STATUTES, REGULATIONS AND TERMS AND CONDITIONS OF THE
FEDERAL AWARD, AND CRITERIA, GENERALLY IDENTIFIED THE REQUIRED OR DESIRED STATE OR EXPECTATION
WITH RESPECT TO THE PROGRAM OR OPERATION SO CRITERIA PROVIDES A CONTEXT FOR EVALUATING
EVIDENCE AND UNDERSTANDING FINDINGS AGAIN, WHAT WE ARE TALKING ABOUT HERE IS YOUR AUDITOR
REQUIRED TO DO THAT, RIGHT OF FINDING. PARAGRAPH 4 GOES ON AND COLLAR IDENTIFIES
AS PART OF THE AUDIT FINDING, AND THE STATEMENT OF CAUSE SHOULD BE WRITTEN THAT IDENTIFIES
THE REASON OR EXPLANATION FOR A CONDITION OR FACTOR RESPONSIBLE FOR THE DIFFERENCE BETWEEN
THE SITUATION AS IT EXISTS, CONDITION, AND THE REQUIRE OR DESIRE TO STAY THE CRITERIA,
THOSE TWO THINGS, WHAT’S THE CONDITION, WHAT’S THE STATE OF THINGS, WHAT’S THE CRITERIA,
AND WHERE SHOULD WE BE. WHEN YOU UNDERSTAND THOSE TWO GAPS, YOU CAN
EASILY PREPARE CORRECTIVE ACTION AND COULD BE WRITING THE POLICY, DEVELOPING A PROCEDURE,
AND IT COULD BE REDOING YOUR INTERNAL CONTROLS SO THAT CERTAIN INDIVIDUALS ARE ACCOUNTABLE
FOR CERTAIN STEPS IN THE MANAGEMENT SYSTEM OR PROCESS. PARAGRAPH 5 UNDER B, AGAIN, ALONG THE SAME
EMPHASIS FOR DETAIL AND CLARITY. A STATEMENT OF THE EFFECT OR POTENTIAL EFFECT
SHOULD PROVIDE A CLEAR LINK TO THE IMPACT AND HERE IS THE CONDITION, HERE IS THE CRITERIA,
AND WHAT IS THE POTENTIAL EFFECT OR IMPACT OF THAT GAP.
AND THEN 6, IT SHOULD ALSO HAVE THE IDENTIFICATION OF QUESTIONING COSTS AND HOW THEY WERE COMPUTED. A KNOWN QUESTION COST MUST BE IDENTIFIED BY
THE APPLICABLE C FDA NUMBER, AND EVER GRANT WAS ASSIGNED A PARTICULAR NUMBER, AND IF YOU
HAVE AN AUDIT FINDING, IT SHOULD IDENTIFY THAT PARTICULAR GRANT PROGRAM, AND ALSO THE
FEDERAL AWARD I.D. NUMBER. AND IMPORTANT, I HAVE HAD TO WORK ON A FEW
AUDIT FINDINGS, AND THIS IS IMPORTANT FOR THIS LAST SENTENCE IN PARAGRAPH 7 THAT WAS
ADDED REGARDING NUMBER OF CASES, AND SO THE AUDITOR IS REQUIRED TO STATE OR SHOULD REPORT
WHETHER THE SAMPLING WAS A STATISTICALLY VALUED SAMPLE. REALLY, YOU KNOW, MAKING SURE THEY ARE NOT
MAKING SOME BROAD JUMPS ABOUT WHAT THE QUESTION COSTS ARE, AND WHAT THE LEVEL OF INCOMPLIANCE,
AND SO IF WE DID, YOU KNOW, 20% OF THE FILES, AND WAS IT STATISTICALLY VALID TO ARRIVE AT
THE LOGICAL CONCLUSION FOR QUESTIONING COSTS. AND THEN I THINK THE LAST PARAGRAPH, PARAGRAPH
8, IDENTIFICATION OF WHETHER THE AUDIT FINDING WAS A REPEAT OF A FINDING, AND THE PRIOR AUDIT,
AND IF SO ANY APPLICABLE PRIOR AUDIT YEAR FINDING NUMBERS. AGAIN, THIS IS BACK TO THAT CORRECTIVE ACTION,
AND IF IT’S REOCCURRING, THE EMPHASIS IS GOING TO BE HEY, WHY IS IT REOCCURRING, AND THAT’S
THE EMPHASIS WE HAVE TO THE AUDITEE AND OUR UPDATE ON THE STATUS OF THOSE, AND SO HERE
IS THE LINK TO THAT FOR THE AUDITOR. REFERENCE NUMBERS, AND EACH AUDIT IN FINDING
OF QUESTION COSTS MUST INCLUDE A REFERENCE NUMBER IN THE FORMAT, MEETING THE REQUIREMENTS
OF THE DATA COLLECTION FORM. SO THE FORM, THE AUDIT THAT YOU THE FORM YOU
FILL OUT AS PART OF THE FEDERAL AUDIT CLEARINGHOUSE THAT YOU MUST SUBMIT, IT’S SAYING WHEN THE
AUDITOR ISSUES HIS REPORT, IT MUST BE LOGICALLY CONNECTED TO THE REFERENCE NUMBERS ON THE
FEDERAL AUDIT CLEARINGHOUSE FORM. MAJOR PROGRAM DETERMINATION, I WANT TO TAKE
A LOOK AT IN 518, AND WHAT CHANGED MAJOR PROGRAM DETERMINATION. THE CHANGES WE ARE GOING TO LOOK AT HERE,
REREFLECT EMPHASIS ON THE FOCUS ON OVERSIGHT AND LOOKING AT WHERE IS THE GREATEST RISK
OF WASTE, FRAUD AND ABUSE OF TAXPAYER DOLLARS. 518B1, JUST AS A REFRESHER FOR FOLKS YOUR
PROGRAMS, YOUR FEDERAL PROGRAMS, AND AUDITING FEDERAL FUNDS, THEY ARE LOOKING AT SO IDENTIFY
MAJOR PROGRAMS. THEY ARE ANALYZING THE AMOUNT OF FEDERAL FUNDS,
AND WHICH PROGRAMS HAVE THE HIGHEST RISK, AND THAT’S WHERE THEY ARE GOING TO FOCUS THEIR
AUDIT. YOU HAVE TYPE A, B PRAMENTS, AND YOU ARE EITHER
ABOVE OR BELOW THAT THRESHOLD, AND IF IT’S ABOVE OR BELOW THAT THRESHOLD WILL BE HOW
THEY CONDUCT THE AUDIT. A COUPLE OF CHANGES TO POINT OUT HERE, AND
THE AB THRESHOLD IS A SLIDING SCALE WITH A MINIMUM, AND THE INCREASE MINIMUM INCREASED
FROM 300,000 TO 750,000. ALSO WHAT THEY HAVE DONE IN THE UNIFORM GUIDANCE
AGENCY AND PRESENTED IT IN A TABLE, AND IT’S EASIER TO UNDERSTAND, AND THE AB AGAIN THRESHOLD
IS THE AUDIT TRIGGER AT 750,000, AND THE THRESHOLD IS 750,000 FOR BOTH A AND B.
PROGRAMS.>>HERE IS WHAT THE CHART IN YOUR GUIDANCE
LOOKS LIKE, AND SO WHAT THIS MEANS IS THAT WE ARE GOING TO, IF YOU HAVE $750,000, YOU
ARE GOING TO IT’S EQUAL TO 750,000, BUT LESS THAN OR EQUAL TO 25 MILLION. SO THOSE WOULD ALL BE PROGRAMS. IF IT EXCEEDS 25 MILLION BUT LESS THAN OR
EQUAL TO 100 MILLION, THEN YOU ARE GOING TO THE THRESHOLD IS GOING TO BE TOTAL OF FEDERAL
AWARD EXPANDED TIMES .03. AND THEN THAT SHOULD COVER ALL OF THIS. WE WOULD LIKE TO HAVE THAT PROBLEM, RIGHT? EXCEEDS 1 BILLION, OH, BOY, WOULDN’T THAT
BE SOMETHING. SO 518C GOES INTO SOME NEW LANGUAGE CRITERIA
LANGUAGE ADDED FOR HOW TYPE A PROGRAMS ARE DETERMINED TO BE LOW RISK. SO THIS IS THE BASIC CRITERIA RIGHT HERE IN
ORDER FOR A MAJOR PROGRAM TO BE DETERMINED LOW RISK, THAT SHOULD NOT HAVE ANY CONTROL
DEFICIENCIES, NO MATERIAL WEAKNESSES, AND MUST HAVE A MUST NOT HAVE MODIFIED OPINION,
AND SO IT HAS A MODIFIED OPINION, HIGH RISK PROGRAM. THEN ALSO THERE’S NO QUESTION COSTS THAT ARE
GREATER THAN 5% OF THE TOTAL FEDERAL AWARDS EXPENDED FOR THAT PROGRAM. CRITERIA FOR DETERMINING THE PROGRAM TO BE
LOW RISK. ANOTHER CHANGE IN THE PERCENTAGE OF COVERAGE
RULE UNDER PARAGRAPH 8. SO THIS IS WHERE AN AUDITOR DETERMINES THE
AMOUNT OF THE PROGRAM FUNDING THAT THEY ARE GOING TO LOOK AT. SO IT CHANGED FROM 25% TO 20% FOR LOW RISK
AUDITEES, AND IT’S CHANGED FROM 50% TO 40% FOR ALL OTHER AUDITEES, AND TOTAL FEDERAL
AWARD EXPENDED. I’M GOING TO LOOK AT THE AUDITOR, IF YOU ARE,
YOU KNOW, A LOW RISK AUDITEE, THEY ARE GOING TO LOOK AT 20% OF YOUR FEDERAL FUNDS EXPENDED,
OF THAT FEDERAL AWARD. THAT’S WHAT THEY ARE GOING TO FOCUS IN. THIS IS ALL ABOUT RISK MANAGEMENT, WHERE IS
THE GREATEST RISK, AND YOU CAN SEE THE DIFFERENCE BETWEEN, YOU KNOW, LOW RISK VERSUS HIGH RISK. IF YOU ARE LOW RISK, THEY ARE GOING TO LOOK
AT A GREATER VOLUME OF YOUR SPENDING. ADDED IN THE LIST OF CRITERIA FOR LOW RISK
AUDITEE, PARAGRAPH D. IS THAT THE AUDITOR DOES NOT IF THE AUDITOR
DID NOT REPORT A SUBSTANTIAL DOUBT ABOUT THE AUDITEE’S ABILITY TO CONTINUE AS A GOING CONCERN. THIS IS A NEW PARAGRAPH ADDED IN THE LISTING
OF THE CRITERIA FOR WHAT WOULD BE RRD A LOW RISK AUDITEE, AND KIND OF AN IMPORTANT THING
HERE IS THE IF YOU HAD ITER HAS SUBSTANTIAL DOUBT ABOUT YOUR ABILITY TO CONTINUE AS A
GROWING CONCERN, THEN THAT’S GOING TO PUT YOU IN THE LOW RISK OR HIGH RISK STATUS. 521, AND WE ARE NERO THIS IS THE LAST SECTION
IN THE CHANGES IN THE AUDIT. SO TIME REQUIREMENTS, AND THE FEDERAL AWARDING
AGENCY OR PASS THROUGH ENTITY IS RESPONSIBLE FOR DOING THE MANAGEMENT DECISIONS, AND MUST
DO SO WITHIN 6 MONTHS OF THE AUDIT REPORT IN THE FEDERAL AUDIT CLEARINGHOUSE. THE CHANGE, AGAIN, AND WE HAVE EMPHASIZED
THIS THE OTHER DAY IS THE AUDITEE MUST INITIATE AND PROCEED WITH CORRECTIVE ACTION AS RAPIDLY
AS POSSIBLE AND CORRECTIVE ACTION SHOULD BEGIN NO LATER THAN UPON RECEIPT OF THE AUDIT REPORT. PREVIOUSLY THE LANGUAGE STATED IT COULD BE
THAT WE HAD TO INITIATE OUR CORRECTIVE ACTION WITHIN 6 MONTHS. A LOT OF NONCOMPLIANCE CAN HAPPEN THEN. YOU KNOW, IT’S LIKE, BUT ANYWAY, THIS MAKES
THE POINT THAT AS SOON AS THE AUDITOR GIVES YOU THE EXIT INTERVIEW, GOES OVER THE FINDINGS
THAT YOU HAVE IT’S JUST SAYING TAKE IMMEDIATE ACTION TO CORRECT THAT. SO THAT’S THE EMPHASIS ON 521, AND THAT IS
A WRAP UP OF OUR TRAINING SESSION NO. 9. BEFORE WE COMPLETE THIS SESSION, I WANTED
TO JUST POINT OUT A TOOL THAT’S PART OF YOUR SUPPLEMENTAL TOOLS. IN A WAY THAT YOU CAN SORT OF MAYBE GET LIKE
A CHECKLIST TO MAKE SURE, BECAUSE WE HAVE COVERED A LOT OF THINGS THAT CHANGED AND WHAT’S
GOING TO BE REQUIRED, AND YOU MIGHT BE ASKING YOURSELF, WHAT DO I DO NOW? WHAT ARE THINGS I NEED TO DO TO IMPLEMENT
AND ACTUALLY MAKE CHANGES BACK HOME? AND THE FIRST THING IS AND I MENTIONED IT
IN OUR FIRST SESSION, IF YOU LOOK AT THE DOCUMENT ASSESSING THE OMB UNIFORM GUIDANCE, CHANGES,
IMPLICATIONS, RECOMMENDATIONS FOR HUD RECIPIENTS. WHAT WE TRIED TO DO IS LAY THIS OUT BY SYSTEMATICALLY. THERE’S A TOPIC CHANGES ENACTED IN THE UNIFORM
GUIDANCE IN THE SECOND COLUMN. THE FINAL COLUMN IS IMPLICATIONS OR RECOMMENDATIONS,
AND SO IT’S JUST A BRIEF COMMENT ABOUT HERE IS THE CHANGE. HEAR IS THE IMPLICATIONS OF THAT CHANGE. HERE IS THE RECOMMENDED ACTION. SO FOR EXAMPLE IN THIS SECTION IF YOU GO TOWARD
THE VERY END, THERE IS THE SECTION ON AUDITOR SELECTION, AND THE NEW LANGUAGE IN THERE IS
THE NONFEDERAL ENTITY MUST REQUEST A COPY OF THE AUDIT ORGANIZATION’S PEER REVIEW, AND
SO WE THINK THIS COULD BE AN IMPACT FOR TRIBES BECAUSE IN THE FIELD SOMETIMES WE REALIZE
FOLKS DON’T ALWAYS GET A GOOD QUALITY AUDITOR, EVEN THOUGH THEY ARE GETTING AUDITS AND NOT
GETTING FINDINGS, YOU WOULD THINK OKAY, I’M NOT GETTING ANY FINDINGS, THAT’S GREAT. THAT’S A GOOD AUDITOR, RIGHT? COULD BE, AND HOPEFULLY THAT’S THE CASE, BUT
EVENTUALLY IF AN AUDITOR IS NOT ACTUALLY DOING GOOD WORK FOR YOU, THAT’S GOING TO COME TO
LIGHT. YOU ARE GOING TO HAVE A MONITORING VISIT AND
YOU GO WE HAVE GOT 6 PAGES OF FINDINGS, BUT WE HAD ALL OF THESE YEARS OF ON CLEAN AUDIT. IT CAN BACKFIRE ON YOU. JUST FROM MY OWN PERSONAL EXPERIENCE, IT PAYS
TO GET A GOOD AUDITOR AND KEEP YOUR SYSTEMS CLEAN, AND RECOMMENDATION FOR THAT IS TO LOOK
AT YOUR RFP OR PROCUREMENT FOR AUDIT SERVICES AND MAKE SURE YOU DO INCLUDE THAT LANGUAGE
IN YOUR RFP TO REQUEST THEIR PEER REVIEW, AND PUT THAT IN YOUR POINT SYSTEM FOR HOW
YOU EVALUATE IT. IF THEY DON’T SUBMIT YOU A PEER REVIEW, I
WOULD RECOMMEND YOU DISMISS THEM AS A NONE RESPONSIVE PROPOSAL. SO THE OTHER EXAMPLE, MANAGEMENT DECISION
521, THE AUDIT TEAM MUST PROCEED WITH CORRECTIVE ACTION, AND OUR RECOMMENDATIONS IS REVISE
YOUR TIMELINES FOR COMPETING THE AUDIT PROCESS, ENSURING CORRECTIVE ACTION IS INITIATED AS
RAPIDLY AS POSSIBLE AND PROVIDE TRAINING TO NECESSARY STAFF ON THAT. EVERYONE FROM THE TONE AT THE TOP, EVERYONE
UNDERSTANDS AN AUDIT IS IDENTIFIED IN OUR ORGANIZATION OR HOUSING AUTHORITY, WE ARE
GOING TO WORK TOGETHER AND FIX THIS RIGHT AWAY SO EVERYONE IS OF THE SAME MIND AND OBJECTIVES. SO THE OTHER DOCUMENT TO POINT OUT TO YOU,
IT’S THE DOCUMENT THAT IS TITLED THE CORE ADMINISTRATIVE SYSTEMS SELF ASSESSMENT TOOL. THIS IS REALLY A COMBINATION OF IT’S REALLY
A METHOD, AN ASSESSMENT TOOL THAT YOU CAN USE. WHAT WE HAVE DONE IS JUST TAKEN ALL THE REQUIREMENTS
FOR INDIAN HOUSING BLOCK GRANT WITH THE TWO CFR CHANGES, REQUIREMENTS, STANDARDS, AND
WE HAVE MERGED THEM INTO THIS DOCUMENT IN WHAT WE CALL THE CORE ADMINISTRATIVE SYSTEM. FINANCIAL MANAGEMENT, AND IT’S CATEGORIZED
BY FINANCIAL MANAGEMENT, TERNL CONTROLS, PROPERTY MANAGEMENT, PERFORMANCE AND FINANCIAL MONITOR
REPORTING, RECORDS MANAGEMENT, COST PRINCIPLES AND AUDITS. SO WHERE THERE ARE PROGRAMS SPECIFIC REQUIREMENTS
FOR THE INDIAN HOUSING BLOCK GRANT, SAY, REGARDING PROPERTY, USEFUL LIFE, TOTAL DEVELOPMENT COST,
THEY ARE ALSO MERGED WITH THE TWO CFR200 REQUIREMENTS. THE WAY THIS TOOL WORKS IS IF YOU ARE THE
EXECUTIVE DIRECTOR AND YOU HAVE MANAGERS WORKING FOR YOU IN SPECIFIC AREAS OR FINANCE MANAGER,
THE FIRST COLUMN IS THE RESPONSIBLE MANAGER, AND HE WOULD LOOK AT THE STANDARDS, MAKE AN
ASSESSMENT OF WHETHER OR NOT YOU THINK YOU HAVE ADDRESSED THAT OR YOU HAVE AN INTERNAL
CONTROL SYSTEM IN PLACE, A POLICY, PROCEDURE THAT ADDRESSES THAT STANDARD. YOUR MANAGER, HE WILL MAKE IT HIS OWN PERSONAL
DETERMINATION OF EITHER FULL COMPLIANCE, PARTIAL COMPLIANCE OR NO COMPLIANCE OR NONCOMPLIANCE,
AND SO THEN NOW THE DIRECTOR HAS A CHANCE TO SIT DOWN WITH THE MANAGER AND SAY OKAY,
LET ME SEE HOW YOUR LET’S ARGUE THIS OUT. DO WE THINK WE REALLY DO HAVE THIS COVERED,
SO THE EXECUTIVE DIRECTOR OR SENIOR LEVEL MANAGER MIGHT SAY I THINK WE CAN IMPROVE ON
OUR COMPLIANCE WITH THAT AND ADD ADDITIONAL OPERATING PROCEDURE HERE TO ENSURE WE HAVE
THE PROPER INTERNAL CONTROLS ON ENVIRONMENTAL REVIEWS, YOU KNOW, BACKUP DOCUMENTATION FOR
OUR PROCUREMENT, WHO SIGNS OFF WHEN AND AT WHAT TIME, WHAT SEQUENCE. SO THIS IS JUST A TOOL THAT YOU COULD USE. IT’S US PUTTING TOGETHER REGULATIONS IN ONE
PLACE FOR YOU TO GO THROUGH AS A CHECKLIST, AND IT’S A WAY TO SELF CHECK, CHECK YOURSELF,
AND THE FOLLOWING DOCUMENT AFTER THAT IS THE INTERNAL CONTROL QUESTIONNAIRE AND ASSESSMENT,
AND THIS WAS A TOOL THAT HAS BEEN AROUND FOR A WHILE AND IT’S REFERENCED TO THE COSO FRAME
WORK, AND YOU CAN ACTUALLY GET A PRIMER ON THE COSO CRAIM WORK, AND THE BASICS OF INTERNAL
CONTROL AND THE FIRST COUPLE OF PAGES, AND SO THEN IT COVERS EACH OF THE FIVE COMPONENTS
OF THE FRAMEWORK, AND THEN ALSO THE PRINCIPLES, THE 17 PRINCIPLES, AND THIS IS A QUESTIONNAIRE
YOU CAN GO THROUGH WITH YOUR COUNCIL, YOUR BOARD. A LOT OF FOLKS NEED TO GET INVOLVED IN ASSESSING
THIS, AND FOR EXAMPLE NO. 1 THE TRIBE MANAGEMENT AND EXPECTATIONS TRANSLATE INTO AN ORGANIZATIONAL
OF BELIEVE, VALUES AND CONDUCT THAT THE STAFF EXHIBIT DAILY, AND YOU CAN MAKE AN ASSESSMENT,
A DISCUSSION ABOUT THAT 1:00 TO 5:00, AND WE DO SEE THAT IN OUR STAFF. ANYWAY, IT GOES THROUGH THAT TO COULD HAVE
BEEN ALL FIVE FRAMEWORKS OF THE COASTAL FRAMEWORK. AGAIN, ANOTHER WAY TO TAKE A DEEPER DIVE INTO
INTERNAL CONTROLS, CHECK YOURSELF, SEE WHERE YOU MUST HAVE WEAKNESSES AND DEFICIENCIES,
AND START WORKING ON THAT. AND ALSO A COUPLE MORE ANOTHER DOCUMENT THAT
WE HAVE THAT’S REALLY GOING TO BE IMPORTANT FOR FOLKS IS THE SAMPLE FINANCIAL MANAGEMENT
POLICY AND PROCEDURES. REMEMBER WE TALKED ABOUT WRITTEN PROCEDURES
THAT NEED TO BE PUT IN PLACE FOR HOW YOU DETERMINE ALLOWABLE COSTS. AND WE THINK THAT’S GOING TO BE A NEW THING
FOR FOLKS SO THERE’S A SAMPLE PROCEDURE IN HERE IN THE FINANCIAL MANAGEMENT POLICY THAT
ADDRESSES THAT, AND AGAIN, I WANT TO MAKE SURE EVERYONE EMPHASIZES THAT WHEN WE HAVE
SAMPLE POLICIES FOR YOU HERE THEY ARE THAT. THEY ARE SAMPLES. THEY ARE NOT LIKE PLUG IN YOUR NAME AND IT’S
GOOD TO GO. THEY NEED TO BE CUSTOMIZED TO YOUR ORGANIZATION,
YOUR STAFF, YOUR PEOPLE, AND SO I JUST WANT TO CAUTION EVERYBODY ON THAT. SO THAT’S WHAT WE HAVE, AND THEN I THINK THAT’S
GOING TO WRAP UP OUR SESSION HERE. THANK YOU FOR YOUR TIME, AND HAPPY COMPLIANCE. THAT’S ALL I HAVE GOT.

Reynold King

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