For the AGA Winter Seminar 2013 Presented by Detective Heather Baltz.
Richmond Chapter of the AGA 2009 Spring Seminar
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Transcript of Richmond Chapter of the AGA 2009 Spring Seminar
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Richmond Chapter of the AGA2009 Spring Seminar
Implementing the Requirements of theAmerican Recovery and Reinvestment Act
by State and Local Governments
Presented by Edward J. MazurSenior Advisor for Governmental Financial Management
Cherry, Bekaert & Holland, L.L.P.
Wednesday, May 20, 2009
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Agenda Overview of ARRA Impact on State and Local Governments Timelines—Key Deadlines Receiving, Disbursing and Reporting ARRA funds Transparency, Oversight, and Accountability Compliance with ARRA Requirements Internal Control, External Audit and Single Audit Implications Department of Education Illustration GAO’s First Oversight Study Results Progress of ARRA in Virginia Future Guidance Web Resources
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The American Recovery and Reinvestment ActCategories of Total Stimulus Funding
Amount (Billions)
*Tax Relief $288*State and Local Fiscal Relief 144Infrastructure and Science 111Protecting the Vulnerable 81Health Care 59Education and Training 53Energy 43Other 8TOTAL $787
Source: www.recovery.gov
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Purposes of the Recovery Act (ARRA) Preserve and create jobs and promote economic recovery Assist those impacted by the recession Provide investments needed to increase economic
efficiency by spurring technological advances in science and health
Invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits
Stabilize state and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases
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ARRA Targeted Efforts Clean, efficient American energy Transforming our economy with science and
technology Modernizing roads, bridges, transit and waterway Education for the 21st century Tax cuts to make work pay an create jobs Lowering healthcare costs Other Jobs, Jobs, Jobs
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Accountability Objectives in Mitigating Risks over ARRA Funds
To award and distribute funds in a prompt, fair and reasonable manner
To report recipients and uses of funds in a clear, accurate, and timely manner
To ensure that funds are used solely for authorized purposes, and that fraud, waste, abuse, & errors are mitigated
To avoid project delays and cost overruns To achieved Goals, including program outcomes and
improved economic conditions
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Intended Accountability Outcomes Program/economic outcomes achieved Competitive opportunities maximized Waste, fraud, and abuse identified and minimized Funds obligated/expended timely Improper payments minimized Timely and accurate data reporting***Increased accountability and transparency***
Recovery.gov Recovery Board, GAO, Inspectors General, whistleblowers
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Accountability and Transparency Players- Governor or Designee - Community & Econ.
Development- Recovery Czar - Education - State Auditor - Health - State Budget Director - Highways &
Transportation- State Comptroller - Homeland Security- Chief Information Officer - Housing- Chief Procurement Officer - Social Services- State Treasurer - State Evaluation Entity
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Overview of ARRA Accounting and Reporting
Accounting and reporting requirements for ARRA funds represent a significant fiscal process
Therefore, you need to ensure that ARRA requirements : Are well documented; Key controls identified, documented & tested; Control weaknesses are identified and mitigated
Additional reporting is required To Federal government (recovery.gov) To States from local gov’t subrecipients To Recipients from subrecipients
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State Impact
Estimated Jobs Effect (1,000)AL FL GA NC SC VA51 206 106 105 50 93
80% of funds will have “strings attached”20% of funds can be spent as seen fit
Source: www.recovery.gov
Estimated $275 Billion (34.9%) of ARRA Funds will be distributed to state and local governments via funding formulas.Estimated 90% of ARRA Funds provided to states will be for health, transportation, and education programs.
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Virginia allocated $4,768 Million
Expenditure Type*
Amount (Million) Types of Programs
Health and Human
Resources
$ 1,833 Child Support Enforcement, CCDF Childcare, Drinking Water State Revolving Fund, Community Service Block Grant, Foster Care, Adoption, Vocational Rehabilitation, Community Development Block Grant, Head Start Immunization, SNAP, Medicaid, Elderly Nutrition, Emergency Food Assistance Program, Crime Victim Assistance, Independent Living
Education $ 1,495 Title I, Workforce Investment Act, IDEA, Dislocated Workers, Technology, Work Study, School Lunch, Education for Homeless
Transportation $ 811 Highways and Bridges, Transit Capital Grants, Rail ModernizationSource: www.stimulus.virginia.gov
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Virginia allocated $4,768 Million
Expenditure Type*
Amount (Million) Types of Programs
Commerce and Trade
$ 309 Weatherization, State Energy Program, HOME, Public Housing, Homelessness Prevention, Unemployment Insurance, Employment Service
Finance $ 218 Capital Planning and Improvements, BRACC, Conservation, Rolls Royce Incentive, Tobacco Settlement, Regional Jail Reimbursement, SRI
Natural Resources
$ 81 Clean Water State Revolving Fund
Public Safety $ 21 Byrne Justice Assistance Grants, Violence Against Women, Internet Crimes Against Children, Crime Victim Compensation.
TOTAL $ 4,768Source: www.stimulus.virginia.gov
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Estimated Funding Amount for Richmond and Henrico CountyFunction Program AmountEducation Education Technology $ 268,780Education Fiscal Stability— Higher Ed 41,083,474Education Fiscal Stability—K-12 13,068,657Education IDEA Part B—Preschool 194,995Education IDEA Part B—School-age 7,053,320Public Safety Byrne Justice Grant 1,590,269
Richmond Total: $ 63,259,495
Education Education Technology $ 139,378Education Fiscal Stability—K-12 28,149,208Education IDEA Part B—Preschool 301,973Education IDEA Part B—School-age 10,515,711Public Safety Byrne Justice Grant 458,132
Henrico Total: $ 39,564,402
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Timeline – Key DeadlinesPastFeb 17 Obama signed ARRAFeb 18 OMB releases Initial ARRA GuidanceMar 6 Project Solicitation DeadlineApril 3 OMB releases Updated ARRA Agency Guidance &
Announced Proposed Recipient Guidance in Federal Register
Upcoming May 3 Federal Agency Performance Plans become availableMay 20
Federal Agencies begin reporting competitive grants and contracts
July 15 Begin reporting on use of Federal fundsOct 10 1st Quarterly report is due. Subsequent quarterly
reports are due 10 days after the close of each quarter.
Source: www.recovery.gov Source: www.stimulus.virginia.gov
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Requesting and Receiving ARRA FundsMethods of Fund Allocation
FormulaMedicaid, State Fiscal Stabilization Fund, Highway Infrastructure Investment, Workforce Investment Act.
Competition National Institutes of Health, National Science Foundation, Broadband Program, Green Jobs Act.
Demand COBRA, Unemployment, Pell Grants, Food Stamps, Small Business Loans, TradeAct.
One-Time Disbursement
Social Security, Veterans, Supplemental Security Income.
Agency Plan Enviromental Clean up, National Parks, Defense and Veteran Programs.
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Disbursing and Reporting ARRA Funds
Source: www.stimulus.virginia.gov
Entities must separately account for funds received directly or indirectly. Entities must track how funds are spent. (Projects, subcontractors, services, jobs created, wage rates, etc.)Entities receiving funds directly and have subcontractors or awards sub-grants, must register with the Central Contractor Registration database.Capital projects must use American Iron, Steel and Manufactured Goods.
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Unprecedented levels of transparency, oversight and accountability
Recovery funds are awarded and distributed in a prompt, fair, and reasonable manner.Public benefit of funds are reported clearly, accurately and timely:•How funds are used.•Descriptions and status reports•Estimates of jobs saved and created•Estimates of tax increases averted
Prevent instances of fraud, waste, error, and abuse.
Source: www.stimulus.virginia.gov
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Unprecedented levels of transparency, oversight and accountability
Projects to avoid unnecessary delays and cost overruns Programs meet specific goals and targets:•Certification by Governor or local officials.•Pubic access to contract and grant information.•Provisions for federal oversight, review, and audits.•Access by Federal Inspectors General, OMB in selected states, and Recovery Act Accountability and Transparency Board.
Source: www.stimulus.virginia.gov
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ARRA Prohibited Expenditures
State, Local, Private RestrictionsCasinos Aquariums Zoos Golf Courses Swimming PoolsEducation RestrictionsMaintenance Costs Stadiums VehiclesReligious Facilities
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Actions to ensure compliance with ARRA requirements
OMB Guidance Agency Specific Guidance State Comptrollers for ARRA Reporting State & External Auditors Under A-133 GAO Reports for Implementation Issues
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Internal Controls“A robust system of internal control specifically designed to deal with the unique and complex aspects of the Recovery Act funds will be key to helping management of the states and localities achieve the desired results.” -GAO-09-580Enhancing Internal Controls
Element Suggestions Control Environment
Appoint “Recovery czars,” boards, or working groups focused on the Recovery Act.
Risk Assessments
Weigh results of recent audits and Single Audit reports.
Control Activities
Effectively implement and document required policies, procedures and guidance.
Information and Communication
Develop internal guidance related to ARRA and submit required information to state agencies or recovery.gov.
Monitoring Coordinate with Program Heads; conduct surveys, create oversight boards, monitor sub-recipients
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Questions Has your government organized an ARRA program
management office and established vision, strategy, and methodology?
Has your government assessed existing processes, systems, and controls for administering federal funding against ARRA expectations?
Is your government prepared to track and resolve performance and compliance issues?
Have year-end ARRA financial reporting requirements been identified ?
Has your government complied with requirements to report the status of projects or activities for which recovery funds were obligated and expended?
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Single Audit ImplicationsSingle Audit Challenges associated with ARRA
New programs and recipients
Lack of management controls and accounting systems to ensure compliance with regulations and objectives.
Sudden increase in funds
Funds may exceed previously effective management controls and accounting systems. May also trigger need for Single audit for entities not previously meeting the threshold.
Extensive accountability and transparency
Requires implementation of new controls and procedures, but lacks funds to manage and oversee entities for accountability and transparency.
Inject funds into Economy
Pressure to spend funds quickly increases risk.
Source: GAO-09-580
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Use of Single Audit ProcessPast Audits inform risk assessmentARRA structure to aid Audit process, e.g.
Assignment of separate CFDA’s for ARRA Evaluation of “high risk” programs and grantees Separate reporting on SEFA (including
subrecipient) Federal audit clearinghouse to display all Single
Audit findings--including ARRA
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OMB A-133 Compliance Supplement New Compliance Supplement Section on ARRA
Appendix VII – (reserved for advisory announcements)
• Include internal control discussion• VII – highlights of new clusters and major program• June 30 – New addenda including new reporting
requirements New Clusters of Programs Major Program Determination
• New program cannot be low risk Award Terms and Conditions—key for subrecipients
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Illustration--Department of Education$44 Billion Available in April 2009 $49 Billion Available late in 2009
Assurances Metrics
College- and career-ready standards
Math and Reading NAEP scoresAction steps to improve assessmentsMeasures for ELLs and disabled test in math and ELA# and % students who graduate and complete one year of college
Pre-K-to higher education data systems meeting America COMPETES Act
Statewide data system includes America COMPETES Act
All teachers receive timely data and estimates of impact on student achievement
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Illustration--Department of Education, ContinuedAssurances Metrics
Teacher effectiveness and distribution
# and % teacher in highest/lowest-poverty schools who are highly qualified # and % teachers rated at each level in each LEA’s teacher evaluation system# and % LEA teachers evaluation systems required student achievement outcomes
Intensive support and effective interventions
Schools demonstrating gains in achievement, closed or consolidatedSchools initially in bottom 5% that demonstrate gain in student achievementSchools that made progress in math and ELA
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State Fiscal Stabilization Fund One-time appropriation of $53.6 billion DOE will award $48.6 billion by formula to governors
in exchange for education reform commitments Will stabilize State and local budgets to minimize or
avoid reductions in education and other essential public services Avert cuts and retain teachers and professors Support modernization, renovation, and repair of
facilities Significant resources to support education, public
safety and other government services
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State Fiscal Stabilization Fund States must apply to US DOE for funds with key
assurances and information on the use of funds For FY09, FY10, FY11, States will maintain state support
at FY06 levels Commitment to advancing education reform in:
• Increasing teacher effectiveness• Establishing state-wide education longitudinal data
systems• Improving the quality of state academic standards &
assessments Baseline data that demonstrates the state’s current
status in each education reform area Description of how state intends to use its stabilization
allocation
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State Fiscal Stabilization FundWithin 2 weeks of approved application,
DOE will provide 67% of SFSF allocation (in some cases 90%)
Full peer review of application before final allocations
Once SFSF awards, school districts may use for any allowable purpose under the Elementary and Secondary Education Act (ESEA)
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GAO Study of ARRA Recovery Act requires GOA to do bimonthly reviews
of the use of funds by selected states and localities 16 states and D.C. (Southeast: FL, GA, NC, VA not included, but they will be reviewing reports from
states not selected 90% of funds to states and localities in FY09 will be
through health, transportation and education programs 3 largest programs
• Federal Medical Assistance Percentage grant awards• Highway Infrastructure Program• State Fiscal Stabilization Programs
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State Concerns with ARRA FundingIdentified by GOA Study
Lack of Recovery Act funding provided for accountability and oversight
How to determine jobs created and retained under the Act Modifications to accounting systems to track ARRA funds
Differences in software Outdated systems Lack of financial system grant module
Identifying and tracking ARRA funds to subrecipients, local governments, and other non-state entities Ability of these entities to separately tag, monitor, track & report Concern over the States being held accountable for these entities
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Virginia ARRA Accomplishments to Date
Governor established an ARRA Implementation Team, chaired by Wayne Turnage, Chief of Staff. Includes members with subject matter expertise in each functional area covered by ARRA
Governor provided required ARRA certification to begin receipt of funds on March 3, 2009. Other individual program certifications required on a more piecemeal basis
A Web site was hosted to solicit requests from the state agencies, localities, interest groups, and the public at-large. More than 9,000 projects were submitted to the website totaling close to $466 billion
Source: www.stimulus.virginia.gov
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Virginia ARRA Accomplishments to Date
Web site has transitioned from a portal for data entry to a site that provides information to citizens and tracks the allocation of ARRA funds in Virginia by locality and eventually by program. Website address is: http://www.stimulus.virginia.gov The website is updated at least weekly and includes information on
Competitive Grants available under the ARRA. Regular meetings with the Virginia Association of Counties
and Virginia Municipal League ARRA Implementation Team members are making
presentations on stimulus to a variety of groups. Regular meetings with local governments, businesses, legislators, and citizens.
Source: www.stimulus.virginia.gov
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What to Look For!Guidance from OMB and Federal Agencies
continuing to be developed Still unanswered questions (e.g. shaping Single
Audit)GAO Study of the Recovery Act
As Initial Implementation Unfolds In States and Localities, Continued Attention to Accountability Issues Is Essential
States Concerns (e.g. other non-state recipients)Resources to use (e.g. who pays for state-level
accountability measures)
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Future Guidance
Source Guidancewww.FederalReporting.gov
Reporting instructions and data elements.
www.recovery.gov Agency specific:Objectives Guidance Award terms Data metrics
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Web Resources www.recovery.gov
Contains links to Federal Agencies’ Recovery.gov websites
www.stimulus.virginia.gov http://www.gao.gov/new.items/d09580.pdf http://blogs.cbh.com/govserv/ Virginia State Comptroller’s Stimulus Webpage
www.doa.virginia.gov/Stimulus/Stimulus_Information.cfm
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CBH Government Service Blog
http://blogs.cbh.com/govserv/
Provides ARRA information concerning:
• Administrative regulations and guidance
• Activities of Professional organizations
• Stimulus related news articles
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Presenter Contact Information
Edward J. Mazur, CPASenior Advisor for Governmental Financial Management
Cherry, Bekaert, & Holland, L.L.P.1700 Bayberry Court, Suite 300
Richmond, VA 23226
804.673.5731 direct804.240.8672 cell