Single Entry Point Financial Compliance Reviews Fall 2016 Training Presentation Presented by John F. Olenberger, CPA Colorado Independent Consultants Network, LLC 1
Discussion Topics 1. Financial Compliance Review (FRC) Process 2. Prevalent issues 3. Tips for a smooth FCR process 2
Financial Compliance Review (FRC) Process 1. Oversight requirement 2. Desk Reviews 3. Risk Assessment 4. On-Site Reviews 3
Prevalent issues (≥5) 1. Incorrectly reported SEFA (12) 2. Payroll costs were not based on actual time worked (6) 3. Unsupported allocation methodology (6) 4. HCA split out (6) 5. Inappropriate expenditures/program overcharged (5 ) 4
1. Incorrectly reported SEFA #1 most common issue • Half of sites, including desk reviews • Many are repeat issues • No root cause on half of issues- unable • to support figure reported Other sources of problem • 5
1. Incorrectly reported SEFA (con’t) CDHCPF award letter language adjusted for SFY • 2013; some external auditors may be focusing on figures, rather than language Should report lesser of amount rec’d or amount • expended (Federal funds portion) Root cause is usually external auditor preparing • SEFA without input from SEP Agency 5 noted to date in FY ‘16- Getting better • 6
1. Incorrectly reported SEFA Examples of proper reporting Funding Expenditures Report on SEFA (1/2 of expenditures, up to Fed award) 1,000,000 1,200,000 500,000 1,000,000 900,000 450,000 7
2. Payroll costs were not based on actual time worked Present in 29% of site visits (up from • 13% in FY ’14 Hard-coding of allocation % in payroll • system; time sheets disregarded Charges based on budgetary estimates, • not trued up 8
3. Unsupported allocation methodology 29% of sites (down from 38% last year) • Vast majority could not provide support for • how a charge was derived Unsupported internal service rates • Expenses “pushed” by another department • are still SEP expenses 9
4. HCA split out 29% of sites (same as last year) • Relatively new issue (First brought up • during FY 2012 audits) SEP= state & federally funded • HCA= state funded only • Cannot use federal funds for a non • federally funded program 10
4. HCA split out (con’t) Problems with precise time tracking • New guidance allows allocation by client • counts All time incurred for initial assessments as • well as re-assessments can be charged to HCBS. Ongoing HCA case management must be charged to HCA. 11
5. Inappropriate expenditures/ program overcharged 24% of sites (down from 38% last year) • Erroneously coded to SEP • Monthly charges for IT equipment used by other • departments Reimbursement of provider charges for client medical care • Unemployment benefits charged to SEP program for non- • SEP employee with similar name. Personnel costs not based on actual time worked • Co-Mingling of HCA & HCBS expenditures • $140K in program overcharges identified, over half related • to co-mingling. 12
Tips for a smooth FCR process Detailed list of expenditures should tie to • totals per general ledger. If they do not, provide a reconciliation and explanation. “Self audit”- For the selected transactions, • ensure the supporting documentation makes sense to you. If it doesn’t, determine if alternate documentation exists to support transaction. 13
Tips for a smooth FCR process (cont.) Obtain support for County allocations. If you are • allocated $100/month for IT costs, how does the County arrive at this number? Is it reasonable? Support- We are looking for the minimum required to • support the transaction, allocation, and applicability to the program. We do not need a copy of the check, as we obtained • this info from the detailed transaction listing. Copies that are helpful to us: Receipt/invoice, • approval, allocation calculation 14
Tips for a smooth FCR process (cont.) Need support for basis of County • allocation. If the County is allocating a $20K insurance bill, we will want to see the actual $20K bill to the County. 15
Questions/Comments 16
Contact Information John F. Olenberger, CPA Colorado Independent Consultants Network, LLC (303) 333-8989 jolenberger@cicn.biz www.cicn.biz 17
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