Post-Award Administration: A Brief Overview of OMB Circular A133

1. Post-Award Administration: A Brief Overview of OMB Circular A133 Alicia Brossette Interim Director of Research Administration & Technology Management Southern Methodist University (Presentation was given at NCURA Spring 2007 Meeting with Jan Madole- OSU, Lee Boozer-UoH, and Ivy Guice-Houston Advance Research Center)

2. Post-Award Administration: A Brief Overview of OMB Circular A133 • OMB A-133 • General (purpose & definitions) • What the Audit Should Be • Auditees Responsibilities • Federal Agency & Pass-through Entities Responsibilities • Auditors’ Responsibilities • Appendix A – Data Collection Form • Appendix B – Compliance Supplement (updated yearly) ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ • http://www.whitehouse.gov/omb/circulars/a133/a133.html

3. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring • General (purpose & definitions): • Purpose: This Circular “sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of states, local governments, and non-profit organizations expending Federal awards.” • Application: It became effective July 1, 1992 and last revised June 27, 2003. The Circular’s audit requirements apply to all non-federal entities that expend $500,000 or more per year in Federal awards. • Definitions: Provides detailed listing of definitions.

4. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring Audit Requirements: • Basis for determining federal awards expended (exp. loans). • Guidance for differentiating between subrecipients & vendors. • Relation to other audits. • Frequency of audits (annual or occasionally biennial). • Lists sanctions that can be imposed if audits not performed (or performed incorrectly). • How to treat audit costs. • How to handle program specific audits (including report submission requirements).

5. Auditees’ Responsibilities Correctly identify all federal awards. Maintain reasonable internal controls. Comply with laws, regulations, and agreement provisions. Prepare financial statements, including schedule of expenditures. Ensure that audit is properly performed and reports submitted. Take appropriate corrective actions OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring

6. Auditees’ Responsibilities (Cont.): Guidance for auditees in selecting an auditor. What should be included in the financial statement and schedule of expenditures of federal awards. Audit findings and follow-ups. Auditee must prepare a report that includes current and prior audit findings and provide a plan of the corrective actions the auditee will undertake. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring

7. Auditees’ Responsibilities: Describes where and when the audit report should be submitted and what should be included in the report package. Unless restricted by law, must be available for public inspection and submitted to: Federal clearinghouse. Each federal agency whose funds are affected by any audit finding or questioned costs. Any pass-through entity whose funds are affected by any audit finding or questioned costs. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring

8. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring • Federal Agencies and Pass-Through Entities Responsibilities: • Describes how the cognizant federal agency for audit is determined and what their responsibilities are. • Describes the information that awarding agencies must provide to recipients and the requirement that agencies should ensure that audits are conducted, reports received, and corrective actions followed. • Describes the time frame and what should be included in management decisions issued by the cognizant agency, the program-specific agency, or the pass-through entity.

9. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring • Federal Agencies and Pass-Through Entities (PTE) Responsibilities: • Provide all identifying data for federal awards to subrecipients. • Advise subrecipients of the requirements imposed on them. • Monitor the activities of the subrecipients activities to ensure compliance (e.g. request organization’s financial statement, documentation of expenditures invoiced, &/or limited scope audits). • Ensure that subrecipients expending > $500,000 have met audit requirements (e.g. request audit report). • Issue management decision on any audit findings within 6 months.

10. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring • Federal Agencies and Pass-Through Entities Responsibilities: • Consider whether subrecipient audits necessitate adjustment of your own records. • Require that each subrecipient permit you and auditors to have access to their records as necessary for you to comply with these requirements. • Issue management decision on any audit findings within 6 months. • ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~To meet all of these pass-through requirements, it is critical to have a data system that will assist you in tracking and monitoring all of your subagreements

11. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring • Auditors’ Responsibilities • Describes the scope of the audit (financial statements, internal controls, and compliance). • Outlines what and how much detail the audit report should include. • Provides a step-by-step basis for the auditor to use a risk-based approach to determine Federal major programs and sets the percentage of Federal awards to be audited. • Details criteria for auditor’s determination of risk for Federal programs.

12. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring • A-133 Compliance Issues: Types of compliance requirements addressed by A-133: • Allowable costs / cost principles • Cash management • Davis-Bacon Act • Eligibility • Equipment & real property management • Matching, level of effort, & earmarking

13. OMB Circular A-133: Audit Guidelines & Subrecipient Monitoring • A-133 Compliance: Why do we care • An A-133 audit is required for all institutions receiving > $500,000/year. • All federal agencies, and increasingly more non-federal sponsors look at A-133 as a ‘report card’ of how we spend our money. • Findings are reported to federal government and become public record, distributed to all federal agencies through a clearing house.