VGFOA 2009 Sppgring Conference

VGFOA 2009 Spring Conferencep gJune 3-5, 2009

Preparing Governments for the Accountability Requirements Accountability Requirements of the America Recovery and

Reinvestment Act (ARRA) Reinvestment Act (ARRA)

The Firm of Choice. www.cbh.com

AgendaOverview of ARRAOverview of ARRA

Impact on State and Local Governments

Key Deadlines

Transparency, Oversight, and Accountability

Receiving, Disbursing and Reporting ARRA funds

Compliance with ARRA Requirements Compliance with ARRA Requirements

Future Guidance and Department of Education Illustration


Internal Control, External Audit and Single Audit Implications

The American Recovery and Reinvestment Act

C t i f T t l Sti l F di A t (Billi )Categories of Total Stimulus Funding Amount (Billions)*Tax Relief $288*State and Local Fiscal Relief 144*State and Local Fiscal Relief 144Infrastructure and Science 111Protecting the Vulnerable 81Protecting the Vulnerable 81Health Care 59Education and Training 53Education and Training 53Energy 43Other 8


Other 8TOTAL $787

Source: www.recovery.govSource: www.recovery.gov

Purposes of the Recovery Act (ARRA)P d t j b d t i Preserve and create jobs and promote economic recoveryAssist those impacted by the recessionProvide 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 benefitsStabilize state and local government budgets, in order to

minimize and avoid reductions in essential services and counterproductive state and local tax increases


counterproductive state and local tax increases

ARRA Targeted EffortsClean efficient American energyClean, 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 Lowering healthcare costs

Other


Jobs, Jobs, Jobs

Key Accountability ObjectivesProgram/economic outcomes achievedProgram/economic outcomes achievedCompetitive opportunities maximizedWaste, fraud, and abuse identified and minimizedFunds obligated/expended timely Improper payments minimizedTimely and accurate data reportingy p g***Increased accountability and transparency*** Recovery gov


Recovery.gov Recovery board, GAO, Inspector Generals, whistleblowers

Accountability and TransparencyG D i C it & E D l t- Governor or Designee - Community & Econ. Development

- Recovery Czar - Education

- State Auditor - Health

- State Budget Director - Highways & Transportationg g y p

- State Controller - Homeland Security

Chi f I f ti Offi H i- Chief Information Officer - Housing

- Chief Procurement Officer - Social Services


- State Treasurer - State Evaluation Entity

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

Addi i l i Additional reporting Federal government States


States Recipients

State ImpactEstimated $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

ill b f h lth t t ti d

80% of funds have “strings attached”

will be for health, transportation, and education programs.

80% of funds have strings attached20% of funds can be spent as seen fit

Estimated Job Effect (1,000)

AL FL GA NC SC VA

51 206 106 105 50 93


51 206 106 105 50 93

Source: www.recovery.govSource: www.recovery.gov

Virginia allocated $4,768 MillionAmount

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 ResourcesGrant, Foster Care, Adoption, Vocational Rehabilitation, Community Development Block Grant, Head Start Immunization, SNAP, Medicaid, Elderly Nutrition, Emergency Food Assistance Program Crime Victim Emergency Food Assistance Program, Crime Victim Assistance, Independent Living

Education $ 1 495 Title I Workforce Investment Act IDEA Dislocated 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


Transportation $ 811 Highways and Bridges, Transit Capital Grants, Rail Modernization

Source: www.stimulus.virginia.govSource: www.stimulus.virginia.gov

Virginia allocated $4,768 MillionAmount

Expenditure Type*Amount (Million) Types of Programs

Commerce and Trade

$ 309 Weatherization, State Energy Program, HOME, Public Housing, Homelessness Prevention, Unemployment TradeInsurance, 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 $ 4,768


2009 – 2011 ARRA Estimated Funding Amount by Locality2009 2011 ARRA Estimated Funding Amount by Locality

Virginia continues to receive information and guidelines on projects receiving ARRA funding. This map will beregularly updated as new information becomes available. For some programs all or a portion of the funding(e.g., FY 2011 allocation) has not yet been allocated by locality. Funds allocated regionally or for statewide


(e.g., FY 2011 allocation) has not yet been allocated by locality. Funds allocated regionally or for statewideBenefit are not included in individual locality allocation amounts.

Uses of Virginia’s $4.8 Billion ARRA Funds

Medicaid reimbursement from increased federal share is $300 Medicaid reimbursement from increased federal share is $300 million

Drinking Water State Revolving Fund - $20.1 mil State Clean Water Revolving Loan Fund - $77 mil Weatherization Program - $32.7 mil Transportation - CTB approved round of projects on 5/21 Transportation - CTB approved round of projects on 5/21 K-12 Education - $1.3 billion of the $4.8

$500 million to local school districts following federal formulas (Title I and S i l Ed ti )Special Education)

$984 million – State Fiscal Stabilization Fund• $365 million to K-12 each year


• $126.7 million to higher education each year

State Fiscal Stabilization Fund

One-time appropriation of $53.6 billionDOE will award $48.6 billion by formula to governors in

h f d i f iexchange for education reform commitmentsWill stabilize State and local budgets to minimize or avoid

d ti i d ti d th ti l bli ireductions in education and other essential public services Avert cuts and retain teachers and professors

S t d i ti ti d i f f iliti Support modernization, renovation, and repair of facilities Significant resources to support education, public safety and other

government services


government services

State Fiscal Stabilization FundStates must apply to US DOE for funds with key assurances 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 , , , pp

levels Commitment to advancing education reform in:

I i t h ff ti• Increasing teacher effectiveness• Establishing state-wide education longitudinal data systems• Improving the quality of state academic standards & • Improving the quality of state academic standards &

assessments Baseline data that demonstrates the state’s current status in each

d i f


education reform area Description of how state intends to use its stabilization allocation

State Fiscal Stabilization Fund

Within 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 useOnce SFSF awards, school districts may use for any allowable purpose under the Elementary and Secondary Education Act


(ESEA)

Timeline – Key Deadlines

PastPast

Feb 17 Obama signed ARRA

Feb 18 OMB releases Initial ARRA Guidance

Mar 6 Project Solicitation Deadline

April 3 OMB releases Updated ARRA Guidance

Upcoming

May 3 Federal Agency Performance Plans become available

May 20 Federal Agencies begin reporting competitive grants andMay 20 Federal Agencies begin reporting competitive grants and contracts

July 15 Begin reporting on use of Federal funds

O 10 1 t Q l i d S b l


Oct 10 1st Quarterly report is due. Subsequent quarterly reports are due 10 days after the close of each quarter.

Source: www.recovery.govSource: www.recovery.gov Source: www.stimulus.virginia.govSource: www.stimulus.virginia.gov

Requesting and Receiving ARRA Funds

Methods of Fund AllocationMethods of Fund Allocation

FormulaMedicaid, State Fiscal Stabilization Fund, Highway Infrastructure Investment, Workforce Investment Act.

CompetitionNational Institutes of Health, National Science Foundation, Broadband Program, Green Jobs Act.

DemandCOBRA, Unemployment, Pell Grants, Food Stamps, Small Business Loans, TradeAct.

One-Time Social Security, Veterans, Supplemental Security Income.One-Time Disbursement

Social Security, Veterans, Supplemental Security Income.

Agency PlanEnviromental Clean up, National Parks, Defense and Veteran P


Agency Plan Programs.

Future Guidance

Source Guidance

www.FederalReporting Reporting instructions and data .gov elements.

www.recovery.gov Agency specific:www.recovery.gov Agency specific

Objectives Guidance

Award terms Data metrics


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 reportsE ti t f j b d d t d•Estimates of jobs saved and created

•Estimates of tax increases averted


Prevent instances of fraud, waste, error, and abuse.Source: www.stimulus.virginia.govSource: www.stimulus.virginia.gov

Unprecedented levels of transparency, oversight and accountability

Project avoid unnecessary delays and cost overruns Programs meet specific goals and targets: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 and Recovery Act Accountability and T B dTransparency Board.

The Firm of Choice. www.cbh.comSource: www.stimulus.virginia.govSource: www.stimulus.virginia.gov

Disbursing and Reporting ARRA Funds

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 has subcontractors or awards sub-grants, must register with the Central Contractor Registration databasedatabase.

Capital projects must use American Iron, Steel and Manufactured G d


Goods.

Actions to ensure compliance with ARRA requirementsq

OMB Guidance

A S ifi G idAgency Specific Guidance

State Auditors and Independent Public Accountants pfor A-133

GAO reportsGAO reports

State Comptrollers for reporting


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 complex aspects of the Recovery Act funds will be key to helping management of the states and localities achieve the desired results.” -GAO-09-580

Enhancing Internal Controls

Element Suggestions

Control Environment

Appointment of “Recovery czars” or boards or working groups focused on the Recovery ActEnvironment on the Recovery Act.

Risk Assessments Results of recent audits and Single Audit reports.

Control Activities Effective implementation of documented policies, procedures and Control Activities guidance.Information and Communication

Developing guidance related to ARRA and submitting information to state agencies.


Monitoring Budget Director meeting with heads of programs, Surveys, Oversight boards or committees, sub-recipient monitoring.

Questions Has your government organized a program management office and Has your government organized a 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?

I t d t t k d l f d Is your government prepared to track and resolve performance and compliance issues?

Have year-end ARRA financial reporting requirements been Have year-end ARRA financial reporting requirements been identified ?

Has your government complied with requirements to report the


y g p q pstatus of projects or activities for which recovery funds were obligated and expended?

Illustration--Department of Education$44 Billion Available in April 2009 $49 Billion Available late in 2009$44 Billion Available in April 2009 $49 Billion Available late in 2009

Assurances Metrics

Math and Reading NAEP scores

College- and career-ready

Math and Reading NAEP scores

Action steps to improve assessments

Measures for ELLs and disabled test in math and ELAstandards and ELA

# and % students who graduate and complete one year of college

Pre-K-to higher education data systems meeting

Statewide data system includes America COMPETES Act


America COMPETES Act

All teachers receive timely data and estimates of impact on student achievement

Illustration--Department of Education, ContinuedAssurances MetricsAssurances

# and % teacher in highest/lowest-poverty schools who are highly qualified

Teacher effectiveness and distribution

qualified

# and % teachers rated at each level in each LEA’s teacher evaluation system

# and % LEA teacher e aluation# and % LEA teachers evaluation systems required student achievement outcomes

S h l d t ti i i

Intensive support and

Schools demonstrating gains in achievement, closed or consolidated

Schools initially in bottom 5% that d t t i i t d t


ppeffective interventions

demonstrate gain in student achievement

Schools that made progress in math and ELA

What to Look For!

Guidance from OMB and Federal Agencies continuing to be developed Still unanswered questions

GAO Study of the Recovery Act As Initial Implementation Unfolds In States and Localities,

Continued Attention to Accountability Issues Is EssentialSt t C States Concerns

Resources to use


Single Audit Implications

Single Audit Challenges associated with ARRASingle Audit Challenges associated with ARRA

New programs and recipientsLack of management controls and accounting systems to ensure compliance with regulations

d bj tiand objectives.

Sudden increase in funds

Funds may exceed previously effective management controls and accounting systems. M l t i d f Si l dit f titi Sudden increase in funds May also trigger need for Single audit for entities not previously meeting the threshold.Requires implementation of new controls and

Extensive accountability and transparency

procedures, but lacks funds to management and oversight entities for accountability and transparency.


Inject funds into Economy Pressure to spend funds quickly increases risk.

Source: GAO-09-580Source: GAO-09-580

Use of Single Audit

U f i k tUse for risk assessment

Use for monitoring programs

Assign separate ARRA CFDA

E l ti f “hi h i k” d t Evaluation of “high risk” programs and grantees

Separate reporting on SEFA (including subrecipient)

Federal audit clearinghouse to display all ARRA findings (will be all Single Audit findings including ARRA)


OMB Compliance Supplement Annual Update released May 26, 2009 Annual Update released May 26, 2009

Effective for fiscal years beginning after 6/30/08 Normal update for new programs, deleted programs, and modified

i tprogram requirements

New Appendix VII – Highlights and Addenda Look for future addenda including new reporting requirementsg p g q Be alert for Recovery Act Awards Impact on CFDA # New clusters of programs (to be updated monthly) Major program determination Multiple sources to determine compliance requirements


Multiple sources to determine compliance requirements SEFA and Data Collection Form

Updated Compliance Supplement

ARRA Guidance in Appendix VII First step, not all compliance requirements For 2009

• Review award documents• Check OMB website for addenda• Check OMB website for addenda• Use framework from parts 3, 4, 5, and 7

New CFDA # is optional, not mandatoryNew CFDA # is optional, not mandatory • If ARRA funds in current CFDA #, auditor must

document if ranked as low risk


Updated Compliance Supplement

Cluster guidance• Will be updated monthly

If CFDA i l d d i l t th l t• If new CFDA included in cluster, then cluster becomes major

SEFA and Data Collection Form – must separately p yidentify ARRA funds, regardless of whether a new CFDA # is created

R i i t t di l t b i i t Recipients must disclose to subrecipients any portion of funding that relates to ARRA funds


OMB Implementing Guidance

Latest round of guidance April 3 2009 (172 pages) Latest round of guidance April 3, 2009 (172 pages) Supplements, amends and clarifies the initial guidance issued by

OMB on February 18, 2009y , Section 1 – General Information Section 2 – Agency Plans and Public Reporting Section 3 – Governance, Risk Management and Program Integrity Section 4 – Budget Execution S i G d C i A Section 5 – Grants and Cooperative Agreements Section 6 – Contracts Section 7 Loans and Loan Guarantees


Section 7 – Loans and Loan Guarantees

OMB Implementing Guidance Appendices Appendices 1 – Detailed Instructions on Transmitting Materials 2 – Agency Recovery Related Web Pagesg y y g 3 – Agency and Program Data Elements 4 – Risk Considerations 5 – N/A 6 – Agency Risk Template

7 C il E i t l Q lit NEPA R ti G id 7 – Council on Environmental Quality NEPA Reporting Guidance 8 – Interim FAR Rules 9 – Interim Final Guidance for Federal Financial Assistance


9 – Interim Final Guidance for Federal Financial Assistance http://www.recovery.gov/sites/default/files/m09-15.pdf

Appendix 9 – Interim Final Guidance Section 1512(c) of ARRA requires quarterly reporting on the use of Section 1512(c) of ARRA requires quarterly reporting on the use of

funds Data elements published in Federal Register on 4/1/09 Total amount of Recovery funds received Amount expended or obligated to projects or activities Detailed list of projects or activities for which funds expended or obligatedDetailed list of projects or activities for which funds expended or obligated

• Name of project or activity• Description of project or activity

f• Evaluation of completion status• Estimate of jobs created or retained• For infrastructure – purpose, total costs and rationale, and contact


Detailed information on subcontracts or sub-grants

Appendix 9 – Interim Final Guidance

Section 1512 (h) of ARRA requires registration in the Central Section 1512 (h) of ARRA requires registration in the Central Contractor Registration database at www.ccr.gov

Section 1605 of ARRA requires use of American iron, steel and q ,manufactured goods for construction type projects

Section 1606 of ARRA requires payment of Davis-Bacon Act wage trates

To maximize transparency and accountability, OMB Circular A-102 (Common Rule), recipients agree to maintain records that identify (Co o u e), ec p e s ag ee o a a eco ds a de yadequately the source and application of ARRA funds

Guidance in part 176 on responsibilities to track, account, and report t ti d t dit d t ti d t i


transactions and to prepare audit documentation and reports in accordance with OMB Circular A-133

GAO Study of ARRA RECOVER ACT: As Initial Implementation Unfolds in States and RECOVER ACT: As Initial Implementation Unfolds in States and

Localities, Continued Attentions to Accountability Issues is Essential Recovery Act requires GOA to do bimonthly reviews of the use of funds y q y

by selected states and localities 16 states and D.C.

VA t i l d d b t th ill b i i t f t t t l t d 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 programsp p g 3 largest programs

• Federal Medical Assistance Percentage grant awards


• Highway Infrastructure Program• State Fiscal Stabilization Programs

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 M difi ti t ti t t t k ARRA f d Modifications to accounting systems to track ARRA funds Differences in software Outdated systems Outdated systems Lack of financial system grant module

Identifying and tracking ARRA funds to subrecipients, local y g g p ,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

Web Resources

www.recovery.gov Contains links to Federal Agencies’ Recovery.gov websites

www.stimulus.virginia.gov

http://blogs.cbh.com/govserv/ http://blogs.cbh.com/govserv/

Virginia State Comptroller’s Stimulus Webpage www doa virginia gov/Stimulus/Stimulus Information cfm www.doa.virginia.gov/Stimulus/Stimulus_Information.cfm


Virginia ARRA Accomplishments to Date

G t bli h d ARRA I l t ti T h i d b 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 ARRAmatter 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 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, 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


Virginia ARRA Accomplishments to Date

Web site has transitioned from a portal for data entry to a site that 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 g y y y y p gaddress 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 VACo and Virginia Municipal LeagueARRA I l t ti T b ki t ti ARRA Implementation Team members are making presentations

on stimulus to a variety of groups. Regular meetings with local governments businesses legislators and citizens


governments, businesses, legislators, and citizens.


CBH Government Service Blog

http://blogs.cbh.com/govserv/

f Provides ARRA information concerning:• Administrative regulations Administrative regulations

and guidance• Activities of Professional

organizationsorganizations• Stimulus related news

articles


The Firm of Choice. www.cbh.com44

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VGFOA 2009 Sppgring Conference

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