As reported in our last installment of the Special ED-ition blog, when the OSC notifies you that you are being audited, they will send you a questionnaire and a list of 23 items that they will want responses to within two weeks. This is all information that you should have, but it may still be time consuming to pull together. You should not ask for an extension of time. You need to complete this within the time parameter they give you. Audits are based upon perception. If you have everything prepared on time, everything is neat and orderly, and you have good controls in place, that shows that you are organized and have good systems.
In this and the next issue, we will walk you through the list …
- Complete general ledger, data dictionary, and a crosswalk (reconciliation) between the CFR and general ledger
The OSC will require a detailed general ledger for each year. This should be downloaded into an Excel file. The OSC will review this in detail to identify potential disallowed costs, related party transactions, and transactions that they would like to review in more detail. The RCM requires agencies to track expenses throughout the year by program. Your data dictionary should assist the OSC in linking your general ledger to the programs you run. Finally, you need to provide the OSC with a crosswalk that reconciles the general ledger to the CFR you filed. This crosswalk should show which general ledger accounts get grouped into the various lines on the CFR.
- Independent annual financial statements
You need to provide copies of your audited financial statements. Your financial statements should reflect all related party transactions.
- List of all bank accounts, credit cards
The OSC is looking for a listing of all of your bank accounts and credit cards. They will also inquire as to who has credit cards under their name/assigned to them.
- Copies of bank statements, credit card statements, and cancelled checks
The OSC will need copies of all of your bank accounts and related cancelled checks and also your credit card statements. Credit card statements will undergo a lot of scrutiny, as previous audits have uncovered personal and non-allowable costs among credit card charges.
- Methodology used for all allocated expenses
All providers should have a formal written allocation methodology. These methodologies should be reflective of how costs are allocated on your CFR and should be in conformity with the RCM and CFR instructions.
- Copies of disclosure information for related party transactions
You will need to provide a list of all related parties, copies of any agreements with such related parties, copies of calculations of actual costs to the related parties (as required by the CFR instructions), invoicing, etc.
- Copies of all audits or reviews completed
The OSC is looking for copies of any audits performed by any other funding sources. This includes County/OAG audits, SEQA audits, OMIG audits, etc.
- Lists of Board members
Provide a list of Board members. Every agency should have a Board of Directors, even a for profit entity.
- Minutes of Board of Directors meetings
Provide Board minutes. Every agency, for profit and nonprofit should have Board minutes. Agencies should look at their by-laws to determine how often their Board should be meeting.
- Organization chart
Your organizational chart should start with your Board of Directors and should be reflective of your staffing patterns as outlined on your CFR. Also include your compliance officer on your organizational chart.
- Mission Statement
Outline your mission statement. This can come right from your website.
- Addresses of other site locations where services are provided
Provide your approval letter and addresses of all locations you operate from. All addresses should be on your approval letter, both direct and administrative sites.
In our next issue, we will review the remaining 11 items on the OSC request list. If you have any questions or require assistance, please don’t hesitate to call Ken Cerini, Partner at 631-868-1103.