INFORMATION BULLETINS (PY 2003)

IB - 11 AUDIT RESOLUTION

IB - 11
Effective Date: Immediately


INFORMATION BULLETIN

TO: All WIA Program Operators

DATE: May 28, 2004

SUBJECT: AUDIT RESOLUTION

Purpose of Bulletin: This information bulletin provides guidance regarding policy and procedures for the resolution of audit findings.

Citation(s):

· Title 20 Code of Federal Regulations 9 (CFR) 667.200(b), 667.500(a)
· Title 29 CFR 95.26
· Title 29 CFR 96.53
· Title 29 CFR 97.26
· Office of Management and0 Budgets (OMB) Circular A-133, Subject: Audits of States, Local Governments and Non-Profit Organizations (June 24, 1997)
· State Directive WIAD01-3, “Audit Resolutions”

Policy:

The Alameda County Workforce Investment Board (ACWIB) and its lower-tier sub-recipients, who are identified as contractors in the following procedures, shall have written audit resolution policies and procedures. Audit resolution consists of a three-part process that includes the Initial Determination, Informal Resolution Period, and the Final Determination. Receipt of the Initial and Final Determinations by the auditee must be documented by the awarding agency.

The Alameda County WIB will ensure that audits of their contractors containing administrative findings or questioned costs are resolved in an appropriate and timely manner.

As a condition of receiving WIA funds, the independent auditor or monitor of the ACWIB, and the Employment Development Department (EDD) auditors, investigators, monitors, and their representatives, shall at all times during the period that the grant or contract is in force and for a period of four (4) years thereafter, have access to all related records and financial statements and to individuals with knowledge of the records and financial statements as may be necessary to ensure compliance with the WIA statute, regulations and directives.

Definitions:
Auditee, as defined in OMB Circular A-133, is a nonfederal entity that expends federal awards that must be audited under the circular.

Awarding agency means the party that awarded the sub-grant or contract. For these policies and procedures this is the Alameda County Workforce Investment Board (ACWIB), which also functions as the County liaison department on-behalf-of the Alameda County Board of Supervisors.

Costs recommended for disallowance are described as costs identified by auditors that are supported by accounting records but are a violation of law, regulation or contract, or are determined unreasonable by the auditor.

Federal financial assistance means assistance received directly by Federal awarding agencies or indirectly by recipients of Federally funded awards to carry out a program. It does not include procurement of contracts used to buy goods or services from vendors.

Final Determination is the awarding agency's final decision to disallow the cost and the status of non-monetary (administrative) findings.

Initial Determination is a preliminary decision on whether to allow or disallow questioned costs and resolve non-monetary findings.

Non-monetary finding is an audit conclusion concerning deficiencies in the auditee’s management or financial controls, procedures or systems.

Questioned Costs are costs questioned by auditors that are not properly supported by accounting records, are related to a violation of law, regulation, contract, or appear unreasonable.

Procedure:

A. The Alameda County WIB shall:

1. Collect and review the audit reports of their contractors to ensure compliance with the requirements of OMB Circular A-133 and government standards for audit.

2. Complete a control log, which must contain the name of contractor, date of the audit, the period covered by the audit, the date that the audit was received, the auditor, the questioned costs, the administrative findings, the date or dates of the initial and final determinations, and documentation of decisions regarding the disallowed costs and/or administrative findings.

3. If findings are identified, issue a letter of Initial Determination based on the audit review. The Initial Determination letter includes:

· A list of all questioned costs.
· Whether the costs are allowed or disallowed, including the reasons with appropriate citations for such actions.
· Acceptance or rejection of any corrective action taken to date, including corrective action on administrative findings.
· Possible sanctions.
· The opportunity for informal resolution of no more than 60 days from the date of Initial Determination.

4. During Informal Resolution, the auditee may provide documentation to support the allowable costs and the proposed corrective action of administrative findings. Informal Resolution discussions may be held by telephone, if necessary, but in person is preferable. Negotiations of repayments can be initiated at this time.

Informal resolution meetings, either telephonic or in person, must be documented. Meetings in person must be documented with a sign-in sheet that is to be retained as part of the audit file and either with a voice recording or written notes.

5. Issue a written Final Determination report. The Final Determination includes:

· Reference to the Initial Determination.
· Summation of the Informal Resolution meeting, if held.
· Decisions regarding the disallowed costs, listing each disallowed cost and noting the reasons for each disallowance.
· Questioned costs that have been allowed by the awarding agency and the basis for the allowance.
· Demand for repayment of the disallowed costs.
· Description of the debt collection process and other sanctions that may be imposed if payment is not received.
· Rights to a hearing.
· The status of each administrative finding.

B. The audit resolution process must be completed within six months after receipt of the contractor's audit report and must ensure that the contractor takes appropriate and timely corrective action.

C. The audit file must be assembled for ease of reference in the event of future action. The file must be tabulated with the most current documentation first. The file should include the following:

· Final Determination and proof of receipt by the contractor
· Additional documentation submitted as part of the informal resolution process
Ø Notes related to the Informal Resolution
Ø Sign-in sheet from any Informal Resolution meetings
· Initial Determination and proof of receipt by the contractor
· Response to the Final Audit report
· Final Audit report

D. Sub recipients must establish local-level hearing procedures for resolution of appeals related to audit and monitoring findings. The Alameda County WIB reserves the right to overturn a hearing officer’s decision when it determines that noncompliance with the applicable Act or its regulation still exists.

E. A hearing must be provided within 30 days of the filing date and the hearing officer must issue a decision within 60 days of the filing date.

The hearing allows both parties the right to present either written or oral testimony, call and question witnesses in support of their position, present oral and written arguments, examine records and documents relevant to the issues, and be represented. The hearing shall be recorded mechanically or by court reporter.

At least 10 calendar days before the hearing, written notice of the date and site of the hearing must be provided to the auditee. The 10-day notice may be shortened with written consent of both parties. The auditee may withdraw the hearing request; the withdrawal request must be submitted in writing.

An auditee has 10 days from receipt of an unsatisfactory decision to appeal to the Alameda County WIB. If a local hearing is not held or the decision is not rendered timely, the auditee has 15 days from the date on which the hearing should have been held, or the decision should have been issued, to file an appeal with the State Review Panel.

If the auditee appeals the decision of the awarding agency's hearing officer to the State, the awarding agency will send the EDD Compliance Review Division (CRD) the complete audit for review by the State Review Panel. Within 30 days of receipt by the CRD of the auditee's written appeal, the State Review Panel will be convened to review all evidence and issue a decision based on the evidence without consideration of any imposed sanctions.

There is no administrative appeal beyond this level.

F. The Alameda County WIB shall ensure correction of any unresolved administrative findings. The Alameda County WIB should determine the status of the unresolved administrative findings through its monitoring process and determine that appropriate corrective action has been taken. A copy of the monitoring report substantiating the implementation of the appropriate corrective action must be filed with the audit report.



ACTION:

The WIB and its sub-recipients shall follow this policy. This policy is effective immediately and will remain in effect from the date of issue until such time that a revision is required.


Information & Inquiries:

For further information and inquiries, please contact:

Cotrell Ward, Management Analyst
(510) 259-3814
Cward@acgov.org