Audit Issues of Concern for Nonprofits

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Live Webinar:

Audit Issues of Concern for Nonprofits in 2014

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Today’s Presenter

Jeannie Huckstep, CPA, CITPNet@Work Nonprofit Solutions Practice Director


Webinar Details

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– please type them in your question box located at the bottom of your webinar panel


Solutions - Overview

ERP/Accounting System

Implementations

CRM System Implementations

HRMS/Employer System

Implementations

Web / MobileDevelopment & eCommerce

Nonprofit Solutions

Document Management/SharePoint

Business Intelligence, Analytics & Reporting

IT Infrastructure, Cloud & Managed Services


Today’s Conversation

The Changing Landscape for NonProfits and their Financial Systems –• With Concentration on Internal

Controls and need for enhanced attention o For their Audit o For their Form 990

o Will Intersperse with each in our Discussion today


Sweeping Changes…….

Out with the Old ---- In with the New

All Began with Federal efforts to promote:

• Efficiency

• Effectiveness

• Transparency


Sweeping Changes…….where??

In the following areas in Grant Funded Organizations

• Administrative Requirements• Cost Principles• Audit Requirements

• These are the areas the OMB Circulars target for Compliance with Federal Grant Requirements


The Old are now Out:

Administrative Requirements

• A-102 – Grants and Cooperative Agreements with State and Local Governments

• A-110 – Uniform Administrative Requirements for Grants and Other Agreements with Institutions of Higher Education, hospitals, and Other Non-Profit Organizations

• A-89 – Catalog of Federal Domestic Assistance



Cost Principles

• A-21 - Cost Principles for Educational Institutions

• A-87 - Cost Principles for State, Local, and Indian Tribal Governments

• A-122 – Cost Principles for NonProfit Organizations

The Accountants in any NFP who has Federal Grants has been married to OMB Circular A-122 for many years



Audit Requirements

• A-133 – Audits of States, Local Governments and NonProfit Organizations

• A-50 – Audit Follow-Up

• All of these are now Old News


And - In With the New….

The Replacement “Super Circular”……

“Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards”

• Work on this guidance took two years• OMB issued Final Guidance on December

26, 2013• Effective Date is December 26, 2013


Reasons for this Significant Change?

Larger Effort by Federal Government to Focus Federal Resources toward…….

• Improvement of Performance and Outcomes• Ensure Financial Integrity of Taxpayer

Dollars in Partnership with non-Federal stakeholders

• This Final guidance Supercedes and Streamlines the OMB Circulars we’ve all worked with for many Years


It’s Interesting – where do I find it?

Posted in Federal Register – Use Google Search using:

2 CFR, Chapter I, Chapter II, Part 200

OR

http://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf


Given the Common Interest of OMB and IRS…

This is Good Information whether or not you have Federal or State Grants – i.e. IRS is watching as well.

Check out your Form 990 for new questions over the last few years?• Do you have a Conflict of Interest Policy?• Do you have an Audit Committee?• What is the Composition of your Board and your Audit Committee?• All sorts of other questions you have to answer?


The Intent of the New Guidance…

• Creates one set of Regulations – as vs one for NFP’s, one for Governments, one for Educational Institutions, etc.

• Common rules for all• They’ve attempted to mesh the

various Acronyms and to Streamline all points


Good Points Within….

• FOCUS…..• Assess Risk Before Award• Tighter Oversight Afterwards

• Goes for both Feds, and Those who provide Federal Dollars to Sub-Recipients

• The New Mantra is:


New Thinking Areas in this guidance…..

• Focus is more on Performance than Compliance..

OMB wants to see New Strategies for Innovative Program Designs that Improve Cost-Effectiveness and Encourage collaboration In Niches – desire is for common

organizations to work together

And There’s More…..


Encouragement of Efficient User of New Technology…..

• Step-up in Information Technology systems to operate more effective and modern Operating Environments!!

• Cost Principles by way of Supplies now include technology devices ----

• Need to think of your Capitalization Policy due to this one!


Procurement Standards

• Use Procurement Standards to Avoid duplicative Purchases and encourage Inter-Agency Agreements for shared goods and services

• Consolidation appears to be the discussion of the Day


Notable Example of New Allowable Cost Limitations

Conferences –• Sponsors required to exercise judgment

to ensure that conference costs are :• Appropriate• Necessary• Costs are minimized

• Employee morale cannot be the driver for Conference Attendance


Standardized Business Processes and Data Definitions

The Following are addressed in this area of the new guidance

• RFP’s relative to Federal Awards will contain a standard set of data elements

• Effective both the Federal awards, and data collection –• i.e. data collection by the Feds (i.e.

Expenditure reports)


Note Areas Moved from Audit Requirements to Administrative Requirements…..

Internal Control Processes • A subject of significant review during the

audit process

• Now addressed more clearly in the Administrative requirements ---• Encourages better internal control

structure at the front-end – during the planning..


Clear Target of Audit Requirements on the following…..

Risk of Waste, Fraud and Abuse

• Intent is :• “right-size” the footprint of

oversight• Strengthen the oversight• Focus audits where greatest risk

• Improve Transparency and Accountability


In Summary – Some Very Nice Results of this Effort by OMB

• Federal Grant Applications more closely scrutinized

• More emphasis on due diligence up front relative to sub-contractors

• Audit issues more quickly resolved

• More efficient Utilization of information technology

• More focus on Shared Services – should save taxpayer dollars

• More emphasis on performance over compliance


Your Roadmap and Timeline……

• Need to review and gain understanding on an ASAP Basis

• Effective date was the date of publication in the Federal Register

• Best Advice:• Take a couple hours to read the first 10-15

pages or so• It’s both Readable and Interesting that far

• There are some areas where the comments that led to final guidance were discussed, and I found that the most interesting


Your Roadmap and Timeline…… Best Advice - continued

• Collaborate with your Peers – we all learn differently, and they may know something you don’t know, and vice versa

• Think…

• Take a Class – there are many being offered now

• Think more…

• Ask Questions of anyone who may know something you don’t know……


Thank You For Attending!

For additional information, please contact:

Jeannie Huckstep, CPA, CITPNet@Work - Nonprofit Applications Practice DirectorPhone: (417) 889-8991Email: [email protected]

Type your Question/Comment in the “Question” box

Q & A

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Audit Issues of Concern for Nonprofits

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