2017 A&E Update

Highlights from the AASHTO Subcommittee on Internal/External Audit Conference

Presented By:

Monica Miles

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Introduction>15 yrs experience in the Transportation IndustryPerformed work for: GDOT, VDOT, DDOT• Indirect Cost Audits• Accounting System Reviews• Interim and Final Cost Audits• CPA Workpaper Reviews (Cognizant Reviews)

WorkSmartNY…A Guide to Working with NYSDOT• Orientations for DBEs, MWBE, & SDVOB firms• Webinars• Project Related SessionsMonica Miles, CPA, CFE, MBA

MH Miles Company, CPA PC

• This Webinar is geared towards Architectural and Engineering firms who have or are interested in obtaining NYSDOT federal-aid contracts.– Summarize information from the July 2017 AASHTO

Conference- Subcommittee: Internal/External Audit

– Review updated NYSDOT-specific requirements for A&E firms

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Webinar Focus

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Polling Questions

Engineering and Design Related Services, such as:

Program Management

Construction Management

Feasibility Studies

Preliminary Engineering

Design engineering

Surveying

Mapping

Architectural Related Services5

Audience

Overview of A /E Contracts

Consultant services funded in whole, or in part, with Federal-Aid highway program funds shall be procured and administered in accordance with 2 CFR 200

Contracts for engineering and design-related services that are also directly related to a planned construction project must comply with 23 U.S.C. Sec. 112 and 23 CFR 172.

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Background

7This Photo by Unknown Author is licensed under CC BY-SA

The TWINS

• American Association of State Highway and Transportation Officials– AASHTO is a nonprofit, nonpartisan association

representing highway and transportation departments in the 50 states, DC, and PR.

– AASHTO serves as a liaison between state DOTs and the Federal government.

– AASHTO's policy development, standards setting, and technical activities are the product of volunteer state department of transportation personnel who work through the AASHTO committee structure.

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AASHTO

This Photo by Unknown Author is licensed under CC BY-SA8/5/2016 9

2017 AASHTO Subcommittee for Internal/External Audit Annual Meeting- Missoula, MT

Group Name: 2017 AASHTO Auditors Conference

Reservation Dates: July 8-July 13, 2017

Cutoff Date: Hotel full, please book overflow hotel.Booking Code: TRN

Hotel rate is $140.00 per night plus tax.

• 2 CFR 200 Impacts on State DOTs

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Conference Agenda- Key Items

• Best Practices for Cognizant Reviews

• Audit Standards

• USDOT IG- What’s New

• 2 CFR 200 Impacts on State DOTs

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– Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards

– Stewardship and Oversight Provisions (in Sub Part D)• Local governments and pass thru entities

• Risk assessment performed for monitoring of LPAs

• Enforcement action against noncompliant subrecipients

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Polling Questions

• Best Practices for Cognizant Reviews

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– Overview: Benefits of Cognizant Review to DOT

Reduces duplication of efforts

Provides assurance regarding CPA firm skills set

Results of 2016 surveys (still work to be done)

• Best Practices for Cognizant Reviews

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–Best practices for A/E firms to facilitate the review process

Communication bet. A/E firm, State DOT & CPA essential

• Pre-Audit Planning Phase

– Identify risk areas, concerns and “hot-buttons”

• Best Practices for Cognizant Reviews

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– Best practices for performing a State DOT CPA WP Review

Communication with A/E firm & CPA

Discuss deviations in recommended course of action noted in the AASHTO Guide

Obtain completed Appendix A prior to review

• Best Practices for Cognizant Reviews

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– Best practices for performing a State DOT CPA WP Review (continued)

Obtain the following in advance of review:ICQ

Cost certification

Audit report

Exec. Comp info

Determine whether PY findings & resolution

Perform analytics of PY rate & CY rate

• Indirect cost audits

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– Key areas:

Other Direct Cost testing

Overtime premium

Executive compensation

Adequate disclosures

• Audit Standards

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Exposure draft period just ended in July

Updates to the Yellow Book are coming. New Yellow Book implementation in 2018

• Audit Standards

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Key proposed changes:

• New format that differentiates requirements from application guidance

• Updated internal control requirements and guidance

• Revised CPE requirements for CPAs to ensure greater auditor proficiency in GAGAS

• Revised peer review requirements for audit firms

• New requirements for reporting waste that is detected during an audit

• USDOT- What’s New

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• Indirect cost rate of 110%• Set to expire July 31, 2017• Extended (AGAIN) till December 31, 2017

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AASHTO Guide

Purchase $13(Non-Member Price)

Google: 2016 AASHTO Audit Guide

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What’s happening in New York State?

Revised : December 30, 2016

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Required Financial Submission Prior To Selection For Engineering Services Work and Annually Thereafter

1. AASHTO Internal Control Questionnaire (ICQ) for Consulting Engineers, and supporting documentation, including:• Federal Acquisition Regulation (FAR) Audit Report

• Compliant with FAR 31 Cost Principles• Guidance available in AASHTO Audit Guide

• General Purpose Financial Statements• Balance Sheet• Statement of Income• Cash flow• Statement of Retained Earnings• Notes to Financial Statements

Revised : December 30, 2016

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Required Financial Submission Prior To Selection For Engineering Services Work and Annually Thereafter

2. Form CONR 385, NYSDOT Supplement to the AASHTO ICQ for Firms Required to File a FAR Audit Report (January 2017 version)

Revised : December 30, 2016

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Required Financial Submission Prior To Selection For Engineering Services Work and Annually Thereafter

3. Documentation of Reasonableness of Executive Compensation in accordance with Consultant Instruction 11-09

• Code: 11-04 (Revised)

• EXCEPTION:

Firms with gross income < $1M annually during 2 of last 3 yrs do not have to submit FAR audit every yr.

• Completed & Certified CONR-385N

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Required Financial Submission Prior To Selection For Engineering Services Work and Annually Thereafter

• Code: 11-04 (Revised)

AASHTO ICQ; CONR 385; CONR 385N

Can be downloaded at

https://www.dot.ny.gov/main/business-center/audit/conr-385-388

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Required Financial Submission Prior To Selection For Engineering Services Work and Annually Thereafter

WorkSmartNY Acknowledgements

Ms. Sondra LittleNYSDOT- Director OCR

Ms. Jackie Jones NYSDOT- D/M/WBE SS and OJT Program Manager

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Questions