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©2014 Net@Work Inc.
Live Webinar:
Audit Issues of Concern for Nonprofits in 2014
Webinar Start Time: 1:00 pm CT (2:00 pm ET)
For Telephone Audio:Dial: (646) 307-1706Access Code: 685-596-639Audio PIN: Shown on your Webinar Panel
Technical DifficultiesCall: (805) 617-7000 (Option 1)Webinar ID: 458813968
©2014 Net@Work Inc.
Today’s Presenter
Jeannie Huckstep, CPA, CITPNet@Work Nonprofit Solutions Practice Director
©2014 Net@Work Inc.
Webinar Details
Presentation is roughly 1 hour All phone lines are muted If anyone has any questions during this webcast
– please type them in your question box located at the bottom of your webinar panel
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
Sweeping Changes…….
Out with the Old ---- In with the New
All Began with Federal efforts to promote:
• Efficiency
• Effectiveness
• Transparency
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
The Old are now Out:
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
©2014 Net@Work Inc.
The Old are now Out:
Audit Requirements
• A-133 – Audits of States, Local Governments and NonProfit Organizations
• A-50 – Audit Follow-Up
• All of these are now Old News
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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?
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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:
©2014 Net@Work Inc.
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…..
©2014 Net@Work Inc.
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!
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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)
©2014 Net@Work Inc.
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..
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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
©2014 Net@Work Inc.
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……
©2014 Net@Work Inc.
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