Single Entry Point Financial Compliance Reviews Fall 2016 Training - - PowerPoint PPT Presentation

Single Entry Point Financial Compliance Reviews

Fall 2016 Training Presentation Presented by John F. Olenberger, CPA

Colorado Independent Consultants Network, LLC

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Discussion Topics

• 1. Financial Compliance Review (FRC)

Process

• 2. Prevalent issues
• 3. Tips for a smooth FCR process

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Financial Compliance Review (FRC) Process

• 1. Oversight requirement
• 2. Desk Reviews
• 3. Risk Assessment
• 4. On-Site Reviews

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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
• vercharged (5)

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• 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

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• 1. Incorrectly reported SEFA

(con’t)

• CDHCPF award letter language adjusted for SFY

2013; some external auditors may be focusing

• n 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

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• 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

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• 2. Payroll costs were not based
• n 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

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• 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

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• 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

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• 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.

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• 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.

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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.

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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

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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.

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Questions/Comments

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Contact Information

John F. Olenberger, CPA

Colorado Independent Consultants Network, LLC

(303) 333-8989 jolenberger@cicn.biz www.cicn.biz

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