Quality Assurance
Guide
November 2005
Office of the Chief Financial Officer
Office of Financial Management
-------
QUALITY ASSURANCE GUIDE
CONTENTS
1. INTRODUCTION 1-1
What's New in This Guide 1-1
Purpose of the Guide 1-1
Content and Organization of the Guide 1-2
2. LEGISLATIVE BACKGROUND 2-1
3. EPA'S QUALITY ASSURANCE PROGRAM 3-1
Standard Operating Procedures 3-1
Quality Assurance Program Guidelines 3-2
Work Plans and Testing 3-5
Quality Standards 3-10
OMB's Circular A-123-Revised Internal Control Standards 3-12
4. ACCOUNTING EVENT TEST PLANS 4-1
Test Plan A: Analysis of General Control Environment 4-1
Test Plan B: Transaction Testing for Accounting Entries 4-18
Test Plan C: Quality Assurance Review for Systems that Interface with the
Integrated Financial Management System (IFMS) 4-75
Test Plan D: Superfund Cost Recovery Review 4-122
5. APPENDICES 5-1
Appendix A: Working Paper Preparation 5-1
Appendix B: Annual Assurance Letter Reporting Requirements 5-8
Appendix C: Terminology 5-16
Appendix D: Federal Mandates and EPA Requirements Guiding QA Program 5-20
Appendix E: Acronyms 5-23
-------
EXHIBITS
Exhibit 2-1 Overview of Integrity Act Certification Process 2-3
Exhibit 2-2 Annual Integrity Assurance Letter Flow 2-4
Exhibit 3-1 Phases for Annual Assurance Letter 3-2
Exhibit 3-2 Key Personnel Quality Assurance Roles and Responsibilities 3-3
Exhibit 3-3 Quality Assurance Review Tracking System 3-7
Exhibit 3-4 QA Work Plan - Phases & Identified Deficiencies Schedule 3-8
Exhibit 3-5 Financial Components of EPA Quality Assurance Program 3-9
Exhibit 3-6 EPA's Six Quality Standards 3-11
Exhibit 4-1 Analysis of General Control Environment Summary of Results 4-4
Exhibit 4-2 Analysis of Accounting Event Transaction Testing Summary of Results 4-21
Exhibit 4-3 Summary of Results for Analysis of Functional Systems Requirements 4-78
November 2005
Otiice oi the Chiet Financial Officer
-------
Chapter 1
Introduction
WHAT'S NEW IN THIS GUIDE
The 2005 edition of the U.S. Environmental Protection Agency's (EPA's) Quality Assurance (QA) Guide
reflects the following changes:
New federal laws and mandates.
New requirements from the Office of Management and Budget (OMB), the Government Accountability
Office (GAO), Department of Treasury, OMB Office of Federal Financial Management, the Chief
Financial Officers Council (CFOC), and the Federal Accounting Standards Advisory Board (FASAB).
Revised EPA guidance, policies, procedures, and directives.
Modernization of EPA's accounting systems.
Termination of certain accounting functions (such as the imprest fund).
PURPOSE OF THE GUIDE
The purpose of the QA Guide is to:
Provide a resource to assist managers and staff in the oversight and control of financial operations.
Provide a structure for conducting QA reviews of each servicing finance office's and program office's
(with financial functions) compliance with internal control standards and relevant accounting
principles/standards.
Serve as a reference document and review tool for managers and reviewers to identify problems in their
areas of responsibility.
Provide suggested tools to: (1) test and evaluate the adequacy of financial management internal controls
and (2) test the reliability and accuracy of general ledger accounts.
Provide a methodology for conducting and managing EPA's Financial Management Quality Assurance
Program (QA Program).
It is important to note that the review procedures in this Guide should not be applied rigidly or arbitrarily. In
addition to exercising professional judgment and assessing the relevance appropriateness of test procedures to
specific situations, the reviewer must also add, modify, or delete steps, as necessary. The materials included in the
Guide are designed to serve as working tools and illustrations for efficiency purposes; they are not intended as a
substitute for professional judgment that must be applied by the users. Further, the concept of reasonable assurance
is particularly applicable. This concept recognizes that the cost of a quality assurance system should not exceed the
expected benefits and that the evaluation of costs and benefits requires estimates and judgments made by reviewers
as well as Agency management.
November 2005
Otiice oi the Chiet Financial Officer
-------
CONTENT AND ORGANIZATION OF THE GUIDE
This Guide provides information on the basic elements of the QA Program and the tools and techniques
necessary to conduct quality assurance reviews. As indicated below, the first three chapters of the Guide
provide broad guidance and background information; the fourth chapter is the "meat" of the document and
provides more concrete details concerning QA Reviews.
CHAPTER 1 INTRODUCTION
This chapter discusses new features of this Guide and describes its purpose, content, and
organization.
CHAPTER 2 LEGISLATIVE BACKGROUND
This chapter provides a description of the legislative basis for the QA Program.
CHAPTER 3 EPA's QUALITY ASSURANCE PROGRAM
This chapter describes the QA Program, including standard operating procedures,
timelines, roles and responsibilities, work plans, quality standards, and EPA's
management integrity process, or code of ethics.
CHAPTER 4 ACCOUNTING EVENT TEST PLANS
This chapter provides the tools and techniques to implement the operational review
methodology. Detailed information captured in the test plans explains how to perform
reviews. Test procedures and other review methodologies are organized into four major
parts in this chapter:
Test Plan A: Analysis of General Control Environment
This test plan concentrates on areas that might be susceptible or vulnerable to risk. These
areas may require closer review and more thorough testing in Test Plans B and C.
Test Plan B: Transaction Testing for Accounting Events
Fifteen sub-test plans (one test plan for each of the 15 basic accounting events) consist of
control objectives and test procedures. The test plans represent a consolidation of relevant
accounting standards prescribed by FASAB; related internal control considerations; and
EPA procedures designed to enable EPA to meet prescribed requirements. Superfund
transactions are processed in the same manner as non-Superfund transactions.
Test Plan C: Quality Assurance Review for Systems that Interface with the
Integrated Financial Management System (IFMS)
EPA's financial management systems are reviewed for conformance with the financial
management requirements established in OMB Circular A-127-Revised. Financial
Systems Staff (FSS) conducts the A-127 reviews with input from various offices.
November 2005 1-1 Office of the Chief Financial Officer
-------
Quality Assurance Guide
1. Introduction
Test Plan D: Superfund Cost Recovery Review
This test plan helps reviewers determine whether the necessary financial information for a
comprehensive Superfund cost recovery package may be located, compiled, and organized
in an accurate and timely manner.
CHAPTERS APPENDICES
The appendices provide supplementary and complementary information to previous
chapters. A synopsis of each appendix follows.
Appendix A: Working Paper Preparation
This Appendix provides the purpose and function of working papers, work programs, and
finding sheets. General consideration on the nature, extent, and content of documentation
is emphasized.
Appendix B: Integrity Act Letter
This Appendix provides the quality assurance program reporting instructions. Also
included is a sample Annual Assurance Letter (with supporting attachments) to the
Director of the Office of Financial Management (OFM).
Appendix C: Terminology
This Appendix contains key terms in this Guide.
Appendix D: Federal Mandates and EPA Requirements Guiding QA Program
This Appendix provides a list of various laws, requirements and procedures with
corresponding Web sites.
Appendix E: Acronyms
This Appendix provides a list of acronyms used in this Guide.
November 2005
Otiice oi the Chiet Financial Officer
-------
Chapter 2
Legislative Background
To achieve its mission and fulfill its commitments to the public,
EPA must develop and maintain effective internal controlthat
is, the Agency must institute processes, policies, and procedures
for planning, organization, direction, control, and reporting.
The three objectives of internal control are:
Effectiveness and efficiency of operations
Reliability of financial reporting
Compliance with applicable laws and regulations
Internal Control is Everyday Control
Instead of considering internal control as
an isolated management tool, agencies
should integrate their efforts to meet the
requirements of the Integrity Act with other
efforts to improve effectiveness and
accountability.
Internal control should be an integral part
of the entire planning, budgeting,
management, accounting, and auditing
cycle.
Internal control is therefore the basis of the Agency's QA Program and QA Guide. The importance of
internal control is addressed in many statutes and executive documents. Foremost of these is the Federal
Managers' Financial Integrity Act of 1982 (FMFIA, or Integrity Act, available at
http://www.whitehouse.gov/omb/financial/fmfia 1982.html), which establishes overall requirements with
regard to internal control. OMB Circular A-123-Revised, Management's Responsibility for Internal Control,
provides guidance on how to achieve desired program results and meet the requirements of the Integrity Act.
The Government Accountability Office (GAO), GAO/AEVID-0021.3.1, Standards for Internal Control in the
Federal Government, November 1999, provides agencies with the standards for internal control in the
federal government.
The Integrity Act requires agencies to establish internal accounting and administrative controls in accordance
with standards established by the Comptroller General and provide reasonable assurance that:
Obligations and costs are in compliance with applicable laws and regulations.
Funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or
misappropriation.
Revenues and expenditures applicable to Agency operations are properly recorded and accounted for to
allow the preparation of accounts and reliable financial and statistical reports.
Accountability over assets is maintained.
To ensure compliance, the Integrity Act requires that each agency prepare two reports as part of the annual
Assurance Letter for review by OMB and the Congress. The two reports are described as:
A report (commonly known as the "Section 2" report) that determines whether there is reasonable
assurance that the agency's controls will achieve the intended objectives. Material weaknesses must be
identified.
A report (commonly known as the "Section 4" report) that determines whether the agency's accounting
system conforms with the government-wide requirements presented in OMB Circular A-127-Revised,
November 2005
-------
Quality Assurance Guide
2. Legislative Background
Financial Management Systems, Section 7. If the agency does not conform to the financial system
requirements, the statement should discuss the agency's plans to bring its systems into compliance.
These reports should be based on evaluations conducted in accordance with:
Office of Management and Budget (OMB) Circular A-123-Revised (Effective FY 2006), Management's
Responsibility for Internal Control, available at http://www.whitehouse.gOv/omb/circulars/a 123 .html.
OMB Circular A-127-Revised, Financial Management Systems, available at
http: //www. whitehouse. gov/omb/circulars/a 127/a 127 .htm.
OMB Circular A-130-Revised, Management of Federal Information Resources, available at
http: //www .whitehouse. gov/omb/circulars/a 13 0/a 13 Otrans4 .pdf.
OMB Circular A-13 6, Financial Reporting Requirements, available at
http: //www .whitehouse. gov/omb/circulars/a 13 6/a 13 6 .pdf.
Federal Financial Management Improvement Act (FFMIA), available at
http://whitehouse.gov/omb/fmancial/ffs ffrnia.html.
For a more detailed summary of all the federal mandates and EPA requirements incorporated into the QA
Program and the QA Guide, see Appendix D.
Exhibit 2-1 provides an overview of the Integrity Act certification process, and Exhibit 2-2 identifies key
personnel and offices involved in the Integrity Act assurance letter flow.
September 2005
Otiice oi the Chiet Financial Officer
-------
EXHIBIT 2-1
OVERVIEW OF INTEGRITY ACT PROCESS
Integrity Act
(FMFIA)
Section 2
Internal Accounting &
Administrative Controls
FASAB
GAO
TFM
OMB Circular
A-123 Revised
(Effective FY
2006)
- Assurance Letter
for Financial
Renortinn
Section 4
Accounting
System
Certification
Perform
Accounting System
Certification
Review
OMB Circular
A-127 Revised
OMB Circular
A-130 Revised
FFMIA
Annual Assurance
Letter
Report A
Material Weakness,
Corrective Action Plan
Report B
Accounting
System Compliance
Legend:
FASAB
FFMIA
FMFIA
GAO
TFM
Federal Accounting Standards Advisory Board
Federal Financial Management Improvement Act
Federal Managers' Financial Integrity Act
Government Accountability Office
Treasury Financial Manual
November 2005
-------
EXHIBIT 2-2
ANNUAL INTEGRITY ACT ASSURANCE LETTER FLOW
Office of Financial
Management (OFM)
Staff Directors
Finance Centers
(FCs)TFinancial
Management Officers
(FMOs)
Provides reasonable assurance
Regional
FMOs
based on working knowledge.
Coordinates and manages
Integrity Act effort
Submits Assurance Letter to
Office of Program Management
Coordinates Assurance Letter
Recommends Chief Financial
Officer's signature
Recommends Administrator's
signature.
Submits Annual Assurance Letter
to OMB and Congress
Financial Policy and
Planning Staff (FPPS)
OFM Director
Office of Program
Management (OPM)
I
Office of Chief Financial
Officer (OCFO)
November 2005
-------
Chapter 3
EPA's Quality
Assurance Program
EPA's QA Program is a comprehensive Agency-wide program
that follows a set of standard operating procedures, including
preparing work plans (a list of phases and accounting events to
test), testing accounting events, and conducting site visits to
improve operations and identify weaknesses.
STANDARD OPERATING PROCEDURES
The following standard operating procedures form the basis of the
QA Program:
Benefits of Quality Assurance
Helps achieve optimum operating
efficiency.
Controls resources.
Ensures accounting system
conformance.
Assists PCs with evaluation of internal
control objectives, techniques, and
related accounting principles and
standards.
nai
From March through November, EPA's Office of Inspector
General (OIG) conducts a financial management audit of the entire Agency, including headquarters,
regions, and finance centers (PCs) to evaluate EPA's internal controls. This audit consists of determining
whether internal controls were in operation, assessing control risks, and performing tests of controls.
Improper Agency processes or procedures are identified and reported to the Chief Financial Officer (CFO).
In December, the Financial Policy and Planning Staff (FPPS) sends a memorandum to Regional
Comptrollers, Financial Management Officers (FMOs), and Office of the Chief Financial Officer (OCFO)
offices requesting their work plans for the current fiscal year.
By the end of February, regional finance offices, finance centers, and OCFO offices submit work plans to
FPPS.
During February and March, FPPS reviews the work plans.
By the end of March, OFM provides the regional finance offices, finance centers, and OCFO with its
approval of their work plans.
From March through the end of May, regional finance offices, finance centers, and certain OCFO offices
evaluate their control environment and conduct their tests of applicable accounting events.
At the end of June, regional finance offices and finance centers submit their annual reporting and
certification to FPPS. These reports and certifications detail the accounting events they did and did not test,
the results of the tests (whether there are deficiencies or no deficiencies), and their certification of whether
their internal controls provided the assurances required under the FMFIA.
In July, OFM submits the Annual Assurance Letter to the CFO.
Annually, between February and August, OFM conducts its own QA site visits to regions and finance
centers to determine the level of compliance with the QA Program guidelines and EPA policies and
procedures; performs additional testing, if necessary; and determines what problems still exist. OFM
notifies the FMO at the site of any deficiencies found during the site visits and makes recommendations to
resolve the problems. For those problems that cannot be resolved during the site visits, OFM asks for
corrective action plans. The review team plans for follow-up communication with the FMO to ensure that
appropriate resolutions are implemented.
In August, the CFO provides the Annual Assurance Letter to the Administrator.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
In September, the Administrator submits the Annual Assurance Letter to OMB and Congress.
Timing and Coordination
Proper coordination within each office, among offices, and between each office and headquarters is necessary
for the smooth execution of the QA Program.
Schedules must be coordinated to avoid quality assurance reviews during peak operating periods (e.g., year-end
closing).
Also, review dates should not conflict with audits or reviews by the EPA's Office of Inspector General (OIG) or
other agencies (e.g., Government Accountability Office).
The phases for preparing the Annual Assurance Letter are shown in Exhibit 3-1.
EXHIBIT 3-1
PHASES FOR ANNUAL ASSURANCE LETTER
March-November
December
February
February-March
March-May
June
July
February-Aug ust
August
September
OIG conducts financial management audit.
FPPS sends memorandum requesting work plans.
Regions and finance centers send work plans to FPPS.
FPPS approves work plans.
Regions and finance centers conduct QA Testing.
Regions and finance centers submit certifications to FPPS.
OFM submits OFM's Annual Assurance Letter to CFO.
OFM conducts site visits to determine the level of compliance with the QA
Program guidelines.
CFO provides OCFO Assurance Letter to Administrator.
Administrator submits Annual Assurance Letter to OMB and Congress.
QUALITY ASSURANCE PROGRAM GUIDELINES
The QA Guide does not require all financial management areas to be covered annually. For example, if
previous testing and reviews of an area consistently found only insignificant non-compliance, offices may
elect to forgo the review or perform a minor review of the area. However, if it is decided not to test a
particular area, the rationale for not testing that area should be documented. This selective approach should
provide more time for expanded reviews of more critical areas.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
Be sure to document any actions taken to correct problems found during reviews. Sufficient work should be
performed to identify the cause and magnitude of any problems that arise while using statistical sampling,
where appropriate, and projecting error rates for this population. This analysis will determine the materiality
to the financial statements so that effective corrective action plans can be designed and implemented.
Transactions used in the sampling process to determine compliance with procedures must be adequately
documented. The OIG may ask to see work papers in order to support the FMFIA certifications made to the
Director, Office of Financial Management (OFM). When preparing the current fiscal year Quality
Assurance Work Plan, please schedule the completion of all transaction testing by the May 31 st certification
date.
The roles and responsibilities for key personnel are provided in Exhibit 3-2.
EXHIBIT 3-2
KEY PERSONNEL QA ROLES AND RESPONSIBILITIES
Administrator
Reports annually to OMB and the Congress whether EPA's internal control systems comply with the Integrity Act.
Reports on whether EPA's accounting system conforms to the Comptroller General's standards.
Identifies material weaknesses or system non-conformance and offers corrective action plans.
Chief Financial Officer (CFO)
Coordinates EPA's efforts for evaluation and compliance with the Integrity Act.
Provides guidance and training on the performance of the Agency Management Integrity process, internal control reviews,
and other internal control activities.
Ensures that appropriate internal control responsibilities are included in the performance agreements of EPA managers.
Ensures that internal control reviews and annual status reports for internal control systems are completed according to
appropriate guidance.
Reports to the Administrator whether EPA's internal control evaluation indicated compliance with the Integrity Act and OMB
Circular A-123-Revised.
Reports to the Administrator whether EPA's financial systems review indicated compliance with the Integrity Act and OMB
Circular A-127-Revised.
Assistant Regional Administrator/Senior Resource Official (ARA/SRO)
Provides leadership in establishing procedures and management control systems throughout EPA for national programs
under his or her purview.
Establishes procedures and systems for internal controls as required by the Integrity Act.
Ensures that personnel are qualified and properly trained to make decisions for using and accounting for financial
resources, and that funds are used in accordance with applicable laws.
Ensures that audit tracking systems and quality assurance procedures are in place to validate the appropriate completion
and reporting of corrective action in EPA's Management Audit Tracking System (MATS).
Identifies management control weaknesses that need reporting to the Administrator and OMB and develops corrective
action plans to address identified deficiencies.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
Director, Office of Financial Management (OFM)
Develops, issues, and implements policies and procedures for evaluating, improving, and reporting on financial
management and accounting systems.
Maintains liaison with OMB, GAO, and others on evaluating, improving, and reporting processes.
Monitors actions on reported material weaknesses and non-conformance to ensure prompt and effective actions.
Prepares and submits OFM's annual Assurance Letter to the CFO.
Acts as the National Program Officer to implement the Integrity Act requirements for EPA financial management systems.
Implements the QA Program throughout EPA financial management organizations.
Develops, issues, and implements QA Program guidance for evaluating, improving, and reporting on financial management
and accounting systems.
Schedules periodic Quality Assurance Reviews (QARs) throughout the EPA SFOs.
Ensures follow-up and resolution of QAR team recommendations.
Regional Comptroller (RC)/ Financial Management Officer (FMO)/Finance Center (FC) Din
Develops and implements plans for management control and quality assurance within their regions.
Oversees internal control evaluations and other QA initiatives.
Implements the QA Program in their respective office.
Participates in QARs conducted in their respective office.
Designates a QA liaison to conduct and coordinate QARs in their office.
Prepares annual QA Work Plan.
Provides annual Integrity Act certification on internal control systems.
Ensures that corrective action is taken on recommendations resulting from QAR reports.
Notifies the Director of OFM on corrective action taken to implement recommendations of QAR team reports.
.nee Review (QAR) Team
Assists financial managers in implementing QA initiatives.
Schedules and conducts the QARs.
Develops QAR findings and recommendations for corrective actions.
Prepares and submits QAR reports.
Ensures follow-up and resolution of QAR team recommendations.
Provides QA Program support to Agency financial managers.
lancial Policy and Planning Staff (FPPS)
Develops guidance and procedures for evaluating internal control systems.
Coordinates EPA Integrity Act process for financial management activities.
Establishes QA processes in the financial management offices throughout EPA.
Develops training materials necessary for financial managers to implement the QA Program in their organizations.
Nominates employees to serve on QAR teams.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
F
ancial Policy and Planning Staff (FPP*
Oversees internal control evaluations and other QA initiatives.
Schedules and conducts QARs in financial management offices throughout EPA.
Ensures follow-up and resolution of QAR recommendations.
WORK PLANS AND TESTING
The development of a work plan is one of the critical steps in the overall quality assurance process. A work
plan describes the activities to be used to evaluate the finance office or finance center's (FC) control
environment and to perform applicable accounting events.
A sample work plan template is provided as Exhibit 3-3. This sheet will help finance offices and centers
indicate the frequency of testing performed for the control environment and each basic accounting event and
the fiscal years they are to be performed. This template is optional and provides basic information
recommended for inclusion in your work plan. A work plan to record dates and identify deficiencies is
provided in Exhibit 3-4. This form will allow finance offices and finance centers to track deficiencies and
the planned dates for starting and completing the correction of the deficiencies. Exhibit 3-5 shows the
financial components of Test Plans A, B, and C and their relationship to a work plan.
Test plans, which are discussed in detail in Chapter 4, should be an integral part of the work plan. To
operate efficiently, testing should be planned in advance and occur periodically throughout the year. The
tests should be conducted with the goal of identifying areas that require corrective action. In addition, the
tests should be structured to support the annual certification report sent to the Director of OFM. Testing
should be scheduled and completed prior to the fourth quarter of each fiscal year.
The test plan is the starting point in the documentation of any review or audit. A test plan, or work program,
can take a variety of forms and styles. This QA Guide includes two basic types of test plans: questionnaires
(Test Plans A and C) and test procedures (Test Plan B).
Sampling may be used during the testing phase. Sampling involves examining a portion of the data to reach
a conclusion about the entire body of data. All sampling involves judgment in planning and performing the
sampling procedure, as well as in evaluating the results of the sample.
Once the decision has been made to use sampling, the reviewer may choose between statistical and non-
statistical sampling. This choice is primarily a cost benefit consideration. Additional information on cost
benefit is available in the Government Accountability Office/President's Council on Integrity and Efficiency
(GAO/PCIE) Financial Audit Manual (including July 2004 updates) under Testing Phase, Section 450 -
Sampling Control Test at http://www.gao.gov/special.pubs/gaopcie/vol I_section400.pdf If sampling is used,
some sampling risk is always present.
Non-statistical sampling is judgmental sampling. Judgmental sampling allows the reviewer to examine
specific transactions. Non-statistical sampling does not permit the reviewer to make a judgment for the total
population of transactions. Non-statistical sampling only identifies specific errors or exceptions for the
limited amount of transactions that are examined. The reviewer must limit his comments to the transactions
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
that have been analyzed. Non-statistical sampling is any sampling procedure that does not measure the
sampling risk.
Statistical sampling uses the laws of probability to measure sampling risk. Statistical sampling helps the
re viewer to:
1. Design an efficient sample
2. Measure the sufficiency of evidential matter obtained
3. Evaluate the sample results
By using statistical theory, the reviewer can quantify sampling risk to facilitate limiting it to an acceptable
level. The reviewer should select the sample in such a way that the sample can be expected to be
representative of the population or the stratum from which it is selected.
The choice of statistical or non-statistical sampling does not directly affect the evidential matter a reviewer
obtains with respect to individual items in the sample, or the actions that might be taken in light of the nature
and cause of particular mis statements.
Keep Papers on Site
mrl
Work plans are an integral part of "working papers" (any papers that serve as tools to aid the performance of review work and
as written evidence of the work performed) and should be maintained at the local site where the reviews are actually conducted.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
EXHIBIT 3-3
QUALITY ASSURANCE REVIEW TRACKING SYSTEM
Types of Quality Assurance Review
Risk Level Reviewer
FY FY FY FY
2002 2003 2004 2005
Accounts Payable
Accounts Receivable
Payroll Processing
Fund Balance with Treasury
Disbursements
Government-wide Credit Card
Property, Plant, and Equipment
Interagency Agreements
Grants and Cooperative Agreements
Collections and Deposits
Advances and Prepayments
Financial Reporting
Funds Control
Travel Expenses and Reimbursements
Claims Against the Government
Other Types of Reviews Performed
Total Reviews
Notes:
C= Completed
P= Planned
I = In Process
November 2005
Office of the Chief Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
EXHIBIT 3-4
QA WORK PLAN - PHASES & IDENTIFIED DEFICIENCIES SCHEDULE
TEST PLAN A -
Analysis of General Control
Environment
TEST PLAN B -
Transaction Testing for Accounting
Events
Accounts Payable
Accounts Receivable
Payroll Processing
Fund Balance with Treasury
Disbursements
Government-wide Credit Card
Property, Plant, and Equipment
Interagency Agreements
Grants and Cooperative Agreements
Collections and Deposits
Advances and Prepayments
Financial Reporting
Funds Control
Travel Expenses and Reimbursements
Claims Against the Government
TEST PLAN C -
Quality Assurance Review for Systems
that Interface with the Integrated
Financial Management System (IFMS)
(Financial Systems Staff coordinates
review)
Identified Deficiencies
Working Paper References
Start
Date Completion Date
Actual Planned Actual
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
EXHIBIT 3-5
FINANCIAL COMPONENTS OF EPA QA PROGRAM
QA WORK PLAN
Analysis of General
Control Environment
Test Plan A
Accounting Event
Transaction Testing
Test Plan B
Financial Systems
Functional Review
Test Plan C
Control Environment
Reasonable Assurance and Safeguards
Integrity, Competence, and Attitude
Delegation of Authority and
Organization
Separation of Duties and Supervision
Access to and Accountability for
Resources
Recording and Documentation
Resolution of Audit Findings and Other
Deficiencies
Identify Accounting Event
Review Applicable Accounting
Standards
Review Control Objectives
Determine Frequency to Perform
Transaction Testing
Perform Transaction Testing to
Determine Compliance with
Standards
Document Test Results
Prepare Corrective Action Plan
Follow-Up on Corrective Action
Plan
Annual Integrity
Act Certification
Internal Accounting and
Administrative Controls
Accounting Systems Compliance
General Financial Management
System Functional
Requirements
Accounting Functional
Requirements
Payroll System Functional
Requirements
Travel System Functional
Requirements
Grants System Functional
Requirements
Fixed Assets System
Functional Requirements
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
QUALITY STANDARDS
In addition to following the standard operating procedures
outlined as part of the QA Program, government officials
entrusted with handling public resources must establish
and implement quality standards in all financial
management activities. As part of their everyday work,
officials and staff are responsible for establishing and
maintaining effective controls to ensure that the resources
are safeguarded; laws and regulations are followed; and
reliable data are obtained, maintained, and fairly
disclosed.
Benefits of Quality Standards
Adherence to quality standards offers EPA the
following benefits:
Reasonable assurance for financial results
Advance warning of potential problems
Increased proficiency
Greater objectivity
An effective training tool
Increased morale and better motivated personnel
EPA's quality standards listed in Exhibit 3-6 are intentionally general to allow financial managers the
flexibility to tailor specific control procedures to unique aspects of their organizations. In addition, the
standards are interdependent, which means following them requires planning and coordination. The
standards can assist managers as they establish the framework for implementing the QA Program and
meeting applicable requirements.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
EXHIBIT 3-6
EPA's Six QUALITY STANDARDS
Managers will maintain a planning system that will highlight goals and objectives, including
specific tasks aimed at meeting these goals and objectives. Each manager is responsible for
ensuring that financial services are performed as efficiently and effectively as possible.
Execution of this responsibility requires a planning process designed to promote accuracy,
efficiency, and effectiveness while at the same time providing for the integrity of the
management of public funds with minimal commitment of resources.
Managers will organize office activities and functions to assure that the resources are efficiently
and effectively used and duties and responsibilities are clearly assigned and appropriately
segregated within their offices. The organizational structure should foster coordination,
balance, and integration of activities. For example, position descriptions should be consistent
with EPA policies and procedures. Also, the organizational structure should be constructed to
ensure that proper segregation of duties is maintained.
3. Supervise
Managers will direct and monitor finance office activities to ensure that all activities are
adequately supervised and performance is consistent with professional standards. Proper
supervision is required on an ongoing basis. This supervision includes making certain that
personnel understand the nature, scope, content, and timing of the work assignments as well
as the expected end products. It also includes sufficient interim checks to determine whether
jobs are on schedule and are being executed in accordance with plans. The actual amount of
supervision may vary based on resources available, complexity and sensitivity of the work, and
staff experience.
4. Coordinate
Managers will ensure that activities are sufficiently coordinated among their staff and with the
appropriate field and Headquarters offices. Adequate coordination of the work planned and in
process is necessary so that effective and efficient use is made of the limited resources
available and to avoid duplication of effort within the organization.
5. Document
Managers will develop files to support the program reviews conducted and the annual
submission of the Integrity Act letter. Policies and procedures for maintaining working paper
files should be established to provide management with reasonable assurance that the work
performed meets EPA's quality standards. Working papers should contain sufficient
information to enable an independent reviewer with no prior knowledge of the organization's
operations to ascertain from them the evidence that supports the manager's conclusions and
findings. Appendix A of this Guide contains more detailed information regarding the preparation
of working papers.
jraj
Agency managers will ensure that their staffs possess the knowledge, skills, and abilities
needed to accomplish EPA's financial mission. Minimum qualifications or standards for each
government series are specified by the Office of Personnel Management (OPM). In addition to
these minimum qualifications, staff should possess the required and desired skills that are
unique to specific jobs and functions.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 3. Quality Assurance Program
To ensure that EPA's QA Program is effective and in compliance with federal laws, a summary of the new
standards stated in OMB's Circular A-123-Revised, Management's Responsibility for Internal Control
(Effective FY 2006) is provided below as guidance and to emphasize to managers the importance for internal
control in all financial activities.
OMB's CIRCULAR A-123-REVISED INTERNAL CONTROL STANDARDS
Internal control is an integral component of an organization's management that provides reasonable
assurance that the following objectives are being achieved: effective and efficient operations, reliable
financial reporting, and compliance with applicable laws and regulations.
Internal control includes the organizational plan, methods, and procedures adopted by management to meet
its goals. Internal control includes processes for planning, organizing, directing, controlling, and reporting
on agency operations.
The three objectives of internal control are:
Effective and efficient operations
Reliable financial reporting
Compliance with applicable laws and regulations
All of these objectives help to ensure the safeguarding of assets. Internal control should be designed to
provide reasonable assurance regarding prevention of or prompt detection of unauthorized acquisition, use,
or disposition of assets. To meet the objectives, management is responsible for developing and maintaining
internal control activities that comply with the following standards:
Control environment
Risk assessment
Control activities
Information and communication
Monitoring
A. CONTROL ENVIRONMENT
The control environment is the organizational structure and culture created by management and employees to
sustain organizational support for effective internal control. When designing, evaluating, or modifying the
organizational structure, management must clearly demonstrate its commitment to competence in the
workplace. Within the organizational structure, management must: clearly define areas of authority and
responsibility; appropriately delegate the authority and responsibility throughout the agency; establish a
suitable hierarchy for reporting; support appropriate human capital policies for hiring, training, evaluating,
counseling, advancing, compensating, and disciplining personnel; and uphold the need for personnel to
possess and maintain the proper knowledge and skills to perform their assigned duties and understand the
importance of maintaining effective internal control within the organization.
November 2005 3-12 Office of the Chief Financial Officer
-------
Quality Assurance Guide 3. Quality Assurance Program
The organizational culture is also crucial within this standard. The culture should be defined by
management's leadership in setting values of integrity and ethical behavior, but is also affected by the
relationship between the organization, central oversight agencies, and Congress. Management's philosophy
and operational style will set the tone within the organization. Management's commitment to establishing
and maintaining effective internal control should cascade down and permeate the organization's control
environment to aid in the successful implementation of internal control systems.
B. RISK ASSESSMENT
Management should identify internal and external risks that may prevent the organization from meeting its
objectives. When identifying risks, management should take into account relevant interactions within the
organization as well as with outside organizations. Management should also consider previous findings
(e.g., auditor identified, internal management reviews, or noncompliance with laws and regulations when
identifying risks). Identified risks should then be analyzed for their potential effect or impact on the agency.
C. CONTROL ACTIVITIES
Control activities include the policies, procedures, and mechanisms in place to help ensure that agency
objectives are met. Several examples include: proper segregation of duties (separate personnel with
authority to authorize, process, and review a transaction); physical controls over assets (limited access to
inventories or equipment); proper authorization; appropriate documentation; and access to that
documentation.
Internal control also needs to be in place over information systemsgeneral and application control.
General control applies to all information systems such as the mainframe, network, and end-user
environments, and includes agency-wide security program planning, management, control over data center
operations, system software acquisition and maintenance. Application control should be designed to ensure
that transactions are properly authorized and accurately processed and that the data is valid and complete.
Controls such as edit checks should be established at an application's interfaces to verify inputs and outputs.
General and application controls over information systems are interrelatedboth are needed to ensure
complete and accurate information processing. Due to the rapid changes in information technology, controls
must be adjusted to remain effective.
D. INFORMATION AND COMMUNICATIONS
Information should be communicated to relevant personnel at all levels within an organization. The
information should be relevant, reliable, and timely. It is also crucial that an agency communicate with
outside organizations, whether providing information or receiving it. Examples include receiving updated
guidance from central oversight agencies; management communicating requirements to the operational staff;
and operational staff communicating with the information systems staff to modify application software to
extract data requested in the guidance.
E. MONITORING
Monitoring the effectiveness of internal control should occur in the normal course of business. In addition,
periodic reviews, reconciliations or comparisons of data should be included as part of regular assigned
November 2005 3-13 Office of the Chief Financial Officer
-------
Quality Assurance Guide
3. Quality Assurance Program
personnel duties. Periodic assessments should be integrated as part of management's continuous monitoring
of internal control, which should be ingrained in the agency's operations. If an effective continuous
monitoring program is in place, it can level the resources needed to maintain effective internal controls
throughout the year.
Deficiencies found in internal control should be reported to the appropriate personnel and management
responsible for that area. Deficiencies identified, whether through internal review or by an external audit,
should be evaluated and corrected. A systematic process should be in place for addressing deficiencies.
November 2005
Otiice oi the Chiet Financial Officer
-------
Chapter 4
Accounting Event Test Plans
Accounting Events (Basic)
Accounts Payable
Accounts Receivable
Payroll Processing
Fund Balance with Treasury
Disbursements
Government-wide Credit Card
Property, Plant, and Equipment
Interagency Agreements
Grants and Cooperative Agreements
Collections and Deposits
Advances and Prepayments
Financial Reporting
Funds Control
Travel Expenses and Reimbursements
Claims Against the Government
This chapter contains information about each of the
following accounting event test plans:
A. Analysis of General Control Environment
B. Transaction Testing for Accounting Events
C. Quality Assurance Review for Systems that
Interface with the Integrated Financial
Management System (IFMS)
D. Superfund Cost Recovery Review
For each of these test plans, background information
such as purpose, basis, content, execution, and results is
presented, followed by specific questions to be
answered, in questionnaire or test procedure format.
TEST PLAN A: ANALYSIS OF GENERAL
CONTROL ENVIRONMENT
PURPOSE
The eight questionnaires in Test Plan A should determine whether adequate management controls exist and
have been implemented to achieve cost-effective compliance with requirements. The questionnaires will
provide a general analysis of the financial control environment.
BASIS
Office of Management and Budget (OMB) Circular A-123-Revised (Effective FY 2006), Management's
Responsibility for Internal Control, provides the basis for the questionnaires in this test plan.
OMB Circular A-123 - Revised defines management controls as the organization, policies, and procedures
used by agencies to reasonably ensure that the following occurs:
Programs achieve their intended results
Resources are used in a manner consistent with agency missions
Programs and resources are protected from waste, fraud, and mismanagement
Laws and regulations are followed
Reliable information is obtained, maintained, reported, and used for decision making
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Agency managers should incorporate basic management controls in the strategies, plans, guidelines, and
procedures that govern their programs and operations.
CONTENT
Each questionnaire contains fundamental questions related to its respective circular control standard. The
majority of questions are constructed in a "Yes" or "No" answer format. Some questions require a narrative
answer or description of a process or procedure. For all questions, space is provided for comments or other
explanation.
The test plan for the analysis of general control environment consists of two sets of questionnaires, as
follows:
General Management Control Standards
V A-l Control Environment
V A-2 Reasonable Assurance and Safeguards
V A-3 Integrity, Competence, and Attitude
Specific Management Control Standards
V A-4 Delegation of Authority and Organization
V A-5 Separation of Duties and Supervision
V A-6 Access to and Accountability for Resources
V A-7 Recording and Documentation
V A-8 Resolution of Audit Findings and Other Deficiencies
EXECUTION
To adequately address the questions in the questionnaires, several steps must be taken to evaluate
information from various sources:
STEP ACTION
1.
2.
3.
4.
5.
Conduct interviews with personnel.
Observe operational procedures actually being performed.
Review relevant documentation, including policies and procedures, review reports, desk procedures,
organizational charts, management directives, and position descriptions.
Perform transaction testing to assess the system's ability to process accurate, valid data and reject
consistently invalid data. Testing should incorporate the full cycle of transactions, including
transaction initiation, its processing through the system, and its ultimate posting to the accounts or
inclusion in output reports.
Coordinate test plans to achieve maximum efficiency and effectiveness of testing.
Most of the questions in this test plan are provided in a "Yes" or "No" format. Professional judgment must
be exercised in determining the appropriate answer. One reviewer might conclude that the most appropriate
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
answer is "Yes." Another reviewer, under the same circumstances, might conclude that the appropriate
answer is "No." Further, cost benefit considerations come into play when determining the adequacy and
sufficiency of testing procedures conducted. The cost of testing should not exceed the benefits derived from
testing. A standard of reasonableness dictates that adequate testing has been performed to allow a reviewer
to reach an opinion.
An analysis of the general control environment will highlight areas that might be susceptible or vulnerable to
risk, which could require closer review and more thorough testing. Accordingly, review of other test plans is
important for the overall effectiveness and efficiency of the quality assurance review. The results of
conducting the general control questionnaires might impact the execution of the other test plans and vice
versa.
RESULTS
Agency managers are responsible for taking timely and effective action to correct deficiencies identified
during the course of reviews. Correcting deficiencies is an integral part of management accountability and
must be considered a priority by EPA. Depending on the severity of the deficiency, reporting and tracking
will vary.
The EPA Administrator determines a deficiency in financial management operations to be "material" when
weighed against other Agency deficiencies. The issue should be included in the annual Integrity Act report
in the same manner as material weaknesses. The deficiencies that are deemed material must be reported and
tracked as part of the annual Assurance Letter submission. For deficiencies that are not included in the
Integrity Act report, a corrective active plan should be developed and tracked internally at the appropriate
level of managerial responsibility.
A determination that a deficiency has been corrected should be made only when sufficient corrective action
has been taken and the desired results achieved. This determination should be in writing and, along with
other appropriate documentation, should be available for review by appropriate officials. In order to
facilitate analysis and identification of control deficiencies, test results from the eight questionnaires should
be summarized.
A suggested collection and analysis tool is presented in Exhibit 4-1. The purpose of the schedule in this
exhibit is to highlight questions with "No" answers and, where merited, develop and track corrective actions.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
EXHIBIT 4-1
ANALYSIS OF GENERAL CONTROL ENVIRONMENT SUMMARY OF RESULTS
Fiscal Year
Section / Question
with "No" Answer
Section
Question #
Yes
No
^g -VMiyjiM m
SECTIONS
A. Control Environment E. Separation of Duties and Supervision
B. Reasonable Assurance and Safeguards F. Access to and Accountab lity for Resources
C. Integrity, Competence, and Attitude G. Recording and Documentation
D. Delegation of Authority and Organization H. Resolution of Audit Findings and Other
Deficiencies
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
QUESTIONNAIRE A-1: CONTROL ENVIRONMENT
The control environment is the organizational structure and culture created by management and employees to
sustain organizational support for effective internal control. When designing, evaluating, or modifying the
organizational structure, management must clearly demonstrate its commitment to competence in the
workplace. Within the organizational structure, management must: clearly define areas of authority and
responsibility; appropriately delegate the authority and responsibility throughout the agency; establish a
suitable hierarchy for reporting; support appropriate human capital policies for hiring, training, evaluating,
counseling, advancing, compensating, and disciplining personnel; and uphold the need for personnel to
possess and maintain the proper knowledge and skills to perform their assigned duties as well as understand
the importance of maintaining effective internal control within the organization.
1a. Does the internal control system ensure compliance with applicable laws and
regulations?
YES
NO
1b. How is the non-compliance with applicable laws and regulations prevented?
Does the organizational structure accommodate compliance with federal
regulations and EPA policies?
YES
NO
Are accounting policies and procedures consistent with applicable laws and
regulations?
YES
NO
Do operational accounting policies and procedures adhere to the following EPA
guidelines:
a. Office of Chief Financial Officer policy announcements?
b. Resource management directives?
YES
YES
NO
NO
Are the delegations of authority consistent with the applicable laws?
YES
NO
Is the information pertaining to applicable guidelines and requirements, e.g., OMB
Circular A-123-Revised (Effective FY 2006), communicated to applicable
employees?
YES
NO
7a.
Are
accounting
operations
in compliance
with the Anti-Deficiency
Act?
YES
NO
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
7b. Describe steps taken to comply with the Anti-Deficiency Act.
Do accounting operations adhere to the Comptroller General's Standards?
YES
NO
Are
accounting
operations
compliance
with
the
FASAB
standards?
YES
NO
10a. Are performance measures developed for accounting functions and activities
carried out by the organizational unit (in accordance with the GPRA)?
YES
10b. If performance measures are not available, how is the performance of accounting operations
measured?
QUESTIONNAIRE A-2: REASONABLE ASSURANCE AND SAFEGUARDS
This general internal control standard requires that management controls provide reasonable assurance that
assets are safeguarded against waste, loss, unauthorized use, and misappropriation. Management controls
developed for EPA programs should be logical, applicable, reasonably complete, and effective and efficient
in accomplishing management objectives. Written strategies, policies, guidelines, procedures, and
performance measures should be developed to achieve EPA's mission.
The standard of reasonable assurance recognizes that the cost of internal control should not exceed the
benefits derived. Reasonable assurance equates to a satisfactory level of confidence under given
considerations of costs, benefits, and risks. The required determinations call for judgment to be exercised.
In exercising that judgment, EPA managers should:
Identify risks inherent in Agency operations
Identify criteria for determining low, medium, and high risks
Identify acceptable levels of risk under varying circumstances
Assess risks both quantitatively and qualitatively
Cost refers to the financial measure of resources consumed in accomplishing a specified purpose. Cost can
also represent a lost opportunitya delay in operations, a decline in service levels or productivity, or low
employee morale. A benefit is measured by the degree to which the risk of failing to achieve a stated
objective is reduced.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does
the
internal
control
system
detect waste,
fraud,
abuse,
or errors?
YES
NO
Does
the
internal
control
system
aid in
preventing
improper
activity?
YES
NO
the controls
place aid
complying
with the
applicable
regulations?
YES
NO
Does the internal control system encourage adherence to EPA policies and
procedures?
YES
NO
Does the internal control system assist in identifying the inherent risk in the
organizational unit's financial operations?
YES
NO
Does the internal control system provide reasonable assurance that persons
performing key functions are executing their responsibilities properly?
YES
NO
7.
Do the benefits exceed the costs to implement the internal control system?
YES
QUESTIONNAIRE A-3: INTEGRITY, COMPETENCE, AND ATTITUDE
Managers and employees must have personal integrity and are obligated to support ethics programs. The
spirit of the Standards of Ethical Conduct requires that EPA personnel develop and implement effective
internal controls and maintain a level of competency that allows them to accomplish their assigned duties.
Effective communication within and between offices should be encouraged.
Managers who possess a good understanding of internal controls are vital to effective control systems.
Hiring and staffing decisions should include pertinent verification of education and experience and, once on
the job, the individual should be given the necessary formal and on-the-job training. Counseling and
performance appraisals are also important. Overall performance appraisals should be based on an
assessment of many critical factors, including the implementation and maintenance of effective internal
controls.
Attitude is not reflected in any one particular aspect of actions by managers, but is fostered by the
commitment of managers to achieving strong controls through (1) actions concerning EPA organization, (2)
personnel practices, (3) communication, and (4) protection and use of resources. Systematic accountability,
monitoring, and general leadership serve as facilitators.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
1a. Is internal control implementation a high priority at all management
levels?
YES
1b. How is the management priority for internal control implementation conveyed and enforced?
2a.
2b.
Has management's commitment to strong internal control been YES NO
communicated to the employees?
When was the last communication made to employees?
3a. Are there written communications to implement the internal control YES NO
system?
3b. How often are these written communications made available to employees responsible for
maintaining the system of internal control and when was the last update?
4. How are the procedures prescribed by the internal control system implemented?
5a. What is the frequency of the internal control system evaluation and the resulting improvement?
5b. What areas are covered by the internal control evaluations?
November 2005 4-8 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
6a. Are all levels of management fully participating in the internal control process to
ensure that prescribed procedures are actually followed (e.g., employees do not
use shortcuts to by-pass internal controls)?
6b. How is non-compliance with internal controls prevented?
YES
NO
7. How often are audit findings/recommendations and other reported deficiencies monitored and
corrected?
8a.
8b.
8c.
8d.
Does management encourage
internal controls?
employees to make suggestions to improve
Are employee suggestions implemented?
Is there a list of employee suggestions and implementations?
How often do employees offer
YES
YES
YES
NO
NO
NO
their suggestions?
Do personnel exhibit high standards of integrity?
YES
NO
10.
Do employees understand the importance of internal control in executing their
responsibilities?
YES
NO
11a. Does documentation exist for the knowledge, skills, and abilities (KSAs)
required for financial management positions?
11 b. Do the financial management personnel meet EPA's KSAs criteria to perform
their functions?
YES
YES
NO
NO
12a.
12b.
Is there a training program in effect to improve and maintain employee
competence and skills?
Is the training program effective in meeting the required KSAs?
YES
YES
NO
NO
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
13a. Will core training requirements for financial management personnel improve
competence and keep personnel knowledge and skill levels current?
YES
13b. If no, how can it be improved?
14.
Is there an Individual Development Plan (IDP) for financial management
personnel?
YES
NO
15a. Are position descriptions and performance agreements kept current?
YES
15b. If yes, when was the last update?
16. Provide the staff turnover rate (number of personnel who left EPA/authorized full-time equivalents
(FTE)) and vacancy rate (number of open FTE/authorized FTE).
QUESTIONNAIRE A-4: DELEGATION OF AUTHORITY AND ORGANIZATION
Managers should ensure that appropriate authority, responsibility, and accountability are delegated to
accomplish the mission of the organization. Also, managers must ensure that an appropriate organizational
structure is established to effectively implement program responsibilities. To the extent possible, controls
and related decision making authority should be granted to line managers and staff.
The organization of an agency provides its management with the overall framework for planning, directing,
and controlling its operations. Good management control requires clear lines of authority and responsibility
as well as appropriate reporting relationships.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
1a. Does the organizational unit have the authority and responsibility to achieve its
goals and objectives?
1b. Does the organizational unit have the resources to achieve its goals and
objectives?
YES
YES
NO
NO
Explanation
2. Does the servicing finance office (SFO) organization chart identify functions to
be performed by each organizational unit?
YES
NO
3. Are reporting and responsibility relationships well defined, documented, and
operationally effective?
YES
NO
4. Is the organizational unit held accountable for the results of its operations?
YES
NO
5. Does
a.
b.
c.
d.
the office have a manual that includes:
A mission statement at the SFO level?
A mission statement for each section within the office?
A list of each employee who has spending authority?
A list of employee authorities and responsibilities (functions)?
YES
YES
YES
YES
NO
NO
NO
NO
Is the organizational structure flexible to accommodate federal regulations and
EPA policies?
YES
NO
7.
Are employee duties and responsibilities clearly delineated?
YES
NO
Do delegations of authority exist in writing?
YES
NO
Are all personnel fully aware of and do they clearly understand the delegations
of authority and responsibilities that apply to them?
YES
NO
10.
Do delegations of authority include sufficient authority to effectively carry out
responsibilities?
YES
NO
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
11.
Are the delegations of authority flexible enough to accommodate regulatory
changes?
YES
NO
12a.
12b.
12c.
Do delegations of authority avoid overlap or duplication of responsibilities?
YES
NO
How are conflicts resulting from duplicate delegations of authority avoided?
Are employees kept informed of any rescissions of delegations of authority and
responsibilities?
YES
NO
QUESTIONNAIRE A-5: SEPARATION OF DUTIES AND SUPERVISION
Key duties and responsibilities in authorizing, processing, recording, and reviewing transactions should be
separated among individuals. Managers should exercise appropriate oversight to ensure individuals do not
exceed or abuse their assigned authorities.
To reduce the risk of error, waste, or wrongful acts or to reduce the risk of undetected problems, no one
individual should control all key aspects of a transaction or an event. Rather, duties and responsibilities
should be assigned systematically to a number of individuals to ensure that effective checks and balances
exist.
Key duties include:
Authorizing, approving, and recording transactions
Issuing and receiving assets
Making payments
Reviewing or auditing transactions
Supervisors should continuously review and approve the assigned work of their staffs. Supervisors should
also provide their staffs with the necessary guidance and training to help ensure that errors, waste, or
wrongful acts are minimized and that specific management directives are achieved.
Assignment, review, and approval of staff work should result in the proper processing of transactions and
events to (1) follow approved procedures and requirements, (2) detect and eliminate errors,
misunderstandings, and improper practices, and (3) discourage occurrence and reoccurrence of wrongful
acts.
Are duties and responsibilities assigned systematically to a number of
individuals to ensure that effective checks and balances exist?
YES
NO
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
2. Are responsibilities assigned so that no one single individual can control a
transaction from beginning to end?
YES
NO
Have the following key duties been separated:
a. Authorizing, approving, and recording transactions?
Receiving goods and services, and making payments?
Receiving cash and making deposits?
YES
YES
YES
NO
NO
NO
Are files
and
supporting
documentation
periodically
reviewed
and
kept current?
YES
NO
5a.
5b.
Have the program activities (e.g., accounts receivable) been audited in the last YES NO
three years?
Please identify the program activities and their date of last audit.
6a. Are reviews conducted to ensure that policies and procedures are efficient and
effective in accomplishing the organizational unit's mission?
YES
What is the frequency of such reviews? When was the last review conducted?
7a.
Does the
organizational
unit have
quality
assurance
review
procedures
place?
YES
NO
7b. How often are quality assurance reviews performed? Provide the date of the last quality
assurance review.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
QUESTIONNAIRE A-6: ACCESS TO AND ACCOUNTABILITY FOR RESOURCES
Access to resources and records should be limited to authorized individuals, and accountability for the
custody and use of resources should be assigned and maintained. Periodic comparison should be made of the
resources with the recorded accountability to determine discrepancies. The frequency of the comparison
depends on the vulnerability of the asset.
Restricting access to resources helps to reduce the risk of unauthorized use or loss to the government. The
restriction depends upon the vulnerability of the resource and the perceived risk of loss, both of which should
be periodically assessed.
Other factors affecting access include the cost, portability, exchangeability, and the perceived improper use
of the resource. In addition, it is important to assign and maintain accountability for resources. Managers
must direct and communicate responsibility to specific individuals within an agency for the custody and use
of resources.
Is access to all resources (assets) and records, automated and manual, limited to
authorized individuals?
YES
NO
Is accountability for the custody and use of resources maintained by different
individuals?
YES
NO
3a.
3b.
3c.
Is the inventory compared to the records to ascertain accuracy?
Is frequency of these periodic comparisons based on the nature of assets?
YES
YES
NO
NO
How often is property inventory taken? When was the last review?
Do written communications exist for the following functions:
a. Accessing assets?
b. Assigning accountability for resources?
c. Maintaining custody of assets?
YES
YES
YES
NO
NO
NO
QUESTIONNAIRE A-7: RECORDING AND DOCUMENTATION
Transactions should be promptly recorded, properly classified, and accounted for in order to prepare timely
accounts and reliable financial and other reports. The documentation for transactions, internal controls, and
other significant events must be clear and readily available for examination.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Transactions must be promptly recorded if pertinent information is to maintain its relevance and value to
management in controlling operations and making decisions. This standard applies to (1) the entire process
or life cycle of a transaction or event, including the initiation and authorization, (2) all aspects of the
transaction while in process, and (3) its final classification in summary records. Proper classification of
transactions and events is the organization and format of information on summary records from which
reports and statements are prepared.
Complying with this standard requires that the documentation of internal control systems and transactions
and other significant events be purposeful and useful to (1) managers controlling their operations, and (2)
auditors or others involved in analyzing operations.
Are policies and procedures consistent with applicable laws and regulations?
YES
NO
Are policies and procedures communicated through the organization?
YES
2b. When were the latest policies received from the Financial Policy and Planning Staff (FPPS)?
How are policies and procedures made available to all staff within the various organizations?
Are current policies and operating procedures clearly stated in writing?
YES
3b. If yes, when was the last update?
Please list the functions for which desk procedures exist and the date of the last update.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
5a.
5b.
5c.
Are transactions properly classified and recorded promptly?
Are transactions that are recorded in the accounting system supported by
documentation?
Does the supporting documentation provide an adequate audit trail?
YES
YES
YES
NO
NO
NO
QUESTIONNAIRE A-8: RESOLUTION OF AUDIT FINDINGS AND OTHER DEFICIENCIES
Managers should promptly evaluate and determine proper actions in response to:
Known deficiencies
Reported audit and other findings
Related recommendations
Managers should complete all actions that correct or otherwise resolve the appropriate matters brought to
management's attention within established timeframes.
The audit resolution process begins when the results of an audit are reported to management and is
completed only after action has been taken that (1) corrects identified deficiencies, (2) produces
improvements, or (3) demonstrates the audit findings and recommendations are either invalid or do not
warrant management action.
Auditors are responsible for conducting follow-up on audit findings and recommendations to determine if
resolution has been completed. Top management should be kept informed through periodic reports to assure
the quality and timeliness of individual deficiency resolution.
1a. Has there been an audit of any financial management function in the
organizational unit?
YES
Identify the functions audited and the date of last audit.
Have there been any audit findings?
YES
2b. Identify repeat findings for the last three years.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
3. Is the Director of OFM or the Regional Comptroller kept informed of the status of
audit recommendations?
YES
NO
4a. Is there an audit tracking system in place?
4b. Are records of all financial management audit recommendations maintained?
4c. Is there a corrective action plan to implement the audit recommendations?
YES
YES
YES
NO
NO
NO
4d. How frequently is the audit tracking system monitored?
4e. Describe the status of the audit recommendations.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
TEST PLAN B. TRANSACTION TESTING FOR ACCOUNTING ENTRIES
PURPOSE
The purpose of Test Plan B is to evaluate the integrity of financial data produced by EPA's financial
operations. Transaction testing is the selection of a sample of similar transactions/activities to verify that
they were executed in accordance with EPA policies and procedures and applicable accounting principles
and standards.
BASIS
Similar to a financial statement audit, the intent of this test is to evaluate whether financial statements are in
conformance with prescribed accounting principles for federal agencies. This test plan provides guidance for
testing accounting transactions.
Review tests are performed to determine if material dollar or disclosure misstatements exist in the annual
financial statements. Reviewers must obtain evidence that provides reasonable assurance that the financial
statements and their related assertions are free of material misstatement.
CONTENT
This test plan is a consolidation of relevant accounting standards prescribed by FASAB, related internal
controls considerations, and EPA procedures designed to enable EPA to meet prescribed requirements.
Fifteen sub-test plansone test plan for each of the 15 basic accounting eventscontain control objectives
and test procedures, as follows:
1. Accounts Payable Accounting Standards
2. Accounts Receivable Accounting Standards
3. Payroll Processing Accounting Standards
4. Fund Balance with Department of Treasury Accounting Standards
5. Disbursements Accounting Standards
6. Government-wide Credit Card Accounting Standards
7. Property, Plant, and Equipment Accounting Standards
8. Interagency Agreements Accounting Standards
9. Grants and Cooperative Agreements Accounting Standards
10. Collections and Deposits Accounting Standards
11. Advances and Prepayments Accounting Standards
12. Financial Reporting Accounting Standards
13. Funds Control Accounting Standards
14. Travel Expenses and Reimbursements Accounting Standards
15. Claims Against the Government Accounting Standards
The goal of transaction/activity testing is to determine whether the control objectives have been met.
Identifying the specific control procedures for each objective involves:
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Assessing the adequacy of the design of the procedures relative to the control objective
Determining whether the procedures are functioning to:
V Provide some assurance for the integrity of the financial operations
V Produce valid financial statement numbers
EXECUTION
This test plan contains a systematic eight-step sequential approach to transaction testing.
STEP
1.
2.
3.
4.
5.
6.
7.
8.
APPROACH
Identify accounting event cycle.
Review applicable accounting standards.
Review control objectives.
Determine frequency to perform transaction/activity testing.
(Note: The reviewer determines the testing method that will best
Perform transaction/activity testing to determine compliance with
achieve the objectives.)
standards and objectives.
Document test results.
Prepare corrective action plan, where necessary.
Follow up on corrective action plan.
The reviewer determines the sampling methods that will best achieve the review objectives. Sampling
methods may be classified as either test of details, test of balances, or non-sampling (e.g., observation,
inquiry, or analytical). The reviewer determines the sampling method based on the objectives of the test, the
nature of the population, the results of other test plans (A and C), and previous testing experiences.
Statistical sampling and non-statistical sampling are discussed in Chapter 3, Work Plans and Testing.
Additional information on sampling methods may be found in the GAO/PCIE Financial Audit Manual
(including July 2004 updates) at http://www.gao.gov/special.pubs/gaopcie/voll section400.pdf
In determining the timing for the tests, the reviewer should consider the relationships between line
items/accounts that are affected by the same transactions. For each type of test, the reviewer must determine
the extent of testing to be performed, which is a matter of the reviewer's judgment. Generally, the extent of
testing is a function of the reviewer's preliminary assessment of the effectiveness of controls and the number
of deviations expected.
Suggested procedures for transaction testing are presented in this test plan. The test procedures for the 15
basic events are intended to serve as a guide and do not relieve the reviewer from responsibility for
exercising appropriate judgment. While the test procedures do aid the reviewer in determining certain
general and specific review procedures, the reviewer is responsible for:
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Assessing the specific requirements in each particular review situation
Determining the appropriate procedures to perform and evidence to obtain
Determining the procedures that should be added to or deleted from the test plan
RESULTS
EPA managers are responsible for taking timely and effective action to correct deficiencies identified during
the course of reviews. Correcting deficiencies is an integral part of management accountability and must be
considered a priority. Depending on the severity of the deficiency, reporting and tracking will vary.
If the Administrator judges a deficiency in financial management operations to be "material" when weighed
against other deficiencies, the issue should be included in the annual Integrity Act report in the same manner
as other material weaknesses. (See Chapter 3, Exhibit 3-2 on roles and responsibilities). Those deficiencies
deemed material must be reported and tracked as part of the Annual Assurance Letter submission. For
deficiencies not included in the Integrity Act report, corrective action plans should be developed and tracked
internally at the appropriate level of managerial responsibility.
A determination that a deficiency has been corrected should be made when sufficient corrective action has
been taken and the desired results have been achieved. This determination should be (1) in writing, with all
appropriate documentation, and (2) available for review by appropriate officials.
To facilitate analysis and identification of control deficiencies, test results from transaction testing may be
summarized in a format similar to the one in Exhibit 4-2. The essence of the schedule is to highlight
questions with "No" answers and, where merited, develop and track corrective actions.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
EXHIBIT 4-2
ANALYSIS OF ACCOUNTING EVENT TRANSACTION TESTING SUMMARY OF RESULTS
DATE OF REPORT:
FISCAL YEAR:
PERIOD COVERED:
ACCOUNTING
CURRENT YEAR
$ VALUE OF
DISCREPANCIES
Corrective Action
CURRENT YEAR REPORT DATE
OUTSTANDING OF
DISCREPANCIES DISCREPANCY
YES
NO
PLAN
DATE
ACTUAL
DATE
DESCRIPTION
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
TEST PROCEDURE 1.
ACCOUNTS PAYABLE ACCOUNTING STANDARDS
Recognition of Liability
Accounts payable are liabilitiesamounts owed to others for goods and services, progress in contract
performance, amounts received but not yet earned, and rents due to other entities. When the title to goods is
accepted, whether the goods are delivered or in transit, a liability for the unpaid amount of the goods should
be recognized. If invoices for those goods are not available when financial statements are prepared, the
amounts owed should be estimated. Accounts payable are not intended to include liabilities related to
ongoing continuous expenses such as employees' salary and benefits, which are covered by other current
liabilities.
Reporting
Amounts owed for goods or services received from federal entities represent intragovernmental transactions
and should be reported separately from amounts owed to the public. Disclosure should be made for accounts
payable not covered by budgetary resources.
EPA Policies and Procedures
Policy Announcement 95-11, Amendment 1, Policy and Procedures for Reporting Accounts Payable and Related
Accruals, dated September 30, 2003.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
r
CONTROL OBJECTIVES
1. All payables and other claims against the federal
government are fully documented and recorded
promptly and accurately.
TEST PROCEDURES
a. Verify that accrual techniques used conform to
EPA-provided guidance.
b. Determine timing differences between creation of
the payable, billing, and entry in accounting
records. Note any delays.
c. Search for unrecorded liabilities by performing the
following steps:
- Select a sample of disbursements for the first
three weeks following the fiscal year closing
date.
- Determine by reviewing source documents if
any items in the sample represent unrecorded
liabilities at the fiscal year closing date.
- Select a sample of unpaid invoices onhand at
the fiscal year closing date. Determine if any
invoices represent unrecorded liabilities.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
2. Financial statements properly present the federal
government's liability at the end of the reporting
period.
TEST PROCEDURES
Headquarters
Review the financial statement presentation of accounts
payable and determine whether EPA's presentation is in
compliance with OMB Bulletin 01-09, Form and Content
of Agency Financial Statements for the current fiscal
year.
TEST PROCEDURE 2.
Recognition of Receivables
ACCOUNTS RECEIVABLE ACCOUNTING STANDARDS
A receivable should be recognized when a federal entity establishes a claim to cash or other assets against
other entities, either based on legal provision, such as payment due date, or goods/services provided. If the
exact amount is unknown, a reasonable estimate should be made. Receivables from federal entities are
intragovernmental receivables and should be reported separately from the receivables for non-federal
entities.
Entity and Non-Entity Receivables
Entity receivables are amounts that a federal entity claims for payment from other federal or non-federal
entities and that the federal entity is authorized by law to include in its obligational authority or to offset its
expenditures and liabilities upon collection. Non-entity receivables are amounts that the entity collects on
behalf of the U.S. government or other entities and the entity is not authorized to spend. Non-entity
receivables should be reported separately from receivables available to the entity.
Recognition of Losses Due to Uncollectible Amounts
Losses on receivables should be recognized when it is more likely that the receivables will not be totally
collected. An allowance for estimated uncollectible amounts should be recognized to reduce the gross
amount of receivables to its net realizable value. The allowance for uncollectible amounts should be re-
estimated on each annual financial reporting date and when information indicates that the latest estimate is
no longer correct. The major categories of receivables by amount and type, the method used to estimate the
allowance for uncollectible amounts, and the total allowance should be disclosed.
EPA Policies and Procedures
Resources Management Directive 2540-09, Receivables and Billings, dated June 20, 2000.
Policy Announcement 03-08, Policies and Procedures for Monthly Reconciliations of Accounts Receivables, dated
September 8, 2003.
Transmittal 05-02, EPA Accounts Receivable "Write-Off" and "Currently Not Collectible" Reclassification Requirements, dated
September 28, 2005.
Transmittal 04-02, Change to the Aging Categories of Outstanding Accounts Receivable, dated March 10, 2004.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
CONTROL OBJECTIVES
1. All receivables are recorded timely and accurately
and are fully documented and supported.
TEST PROCEDURES
Obtain a detailed list of open accounts receivable
at any time during the fiscal year. Compare the
total of the list to the general ledger control account
balance. If the two totals do not match, identify and
investigate the discrepancies.
Determine timing differences between creation of
the receivable, billing, and entry in accounting
records. Note any delays.
Verify accuracy of receivable amount by reviewing
supporting documentation.
- Verify that supporting documentation,
subsidiary records, and the general ledger are
reconcilable.
- Review reasonableness of estimated
receivables.
Review supporting documents to verify that EPA
has documents to support the Accounts
Receivable claim.
2. All receivables are valid and currently exist. Title to
property used as collateral is properly recorded,
filed, and secured.
Verify the documentation to ensure proper
accounting and use of the correct appropriation.
Verify the documentation to ensure the funds are
received on time.
Review the individual receivable balances to
ensure each exceeds zero.
3. Debtors are notified when payment is due and
notified of subsequent charges. Continuous and
timely attempts are made to collect receivables
due.
Review written procedures to record receivables,
notify debtors, handle uncollectible accounts, and
write-off uncollectible accounts. Identify and
report any inconsistency or non-compliance with
the accounting standards or EPA policy.
For past-due receivables, verify that the amount
includes interest, penalty, and handling charges.
Determine if proper follow-up for collection is
documented.
Review copies of bills to verify that the bills were
prepared in a timely and accurate manner.
4. Receivables are properly classified by source and
age.
Verify that the accounts receivable are classified
properly.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
5. Receivables that may not be collectible are
identified and reported.
6. Write-off, conversions, settlement, or forgiveness of
receivables are properly recorded.
7. Financial statements properly present the federal
government's assets at the end of the reporting
period.
TEST PROCEDURES
a. For past-due accounts, determine collectibles of
the receivables; discuss with appropriate EPA
officials who are knowledgeable of the specific
accounts.
b. Determine disposition of amounts uncollectible for
transactions due over 180 days and disposition of
all transactions written off.
b.
Determine adequacy of allowance account based
on the current age of receivables; discuss with
appropriate EPA officials who are knowledgeable
of the specific accounts.
Determine disposition of amounts uncollectible for
transactions due over 180 days and disposition of
all transactions written-off.
Servicing Finance Offices (SFOs)
a. Verify the accuracy of the general ledger accounts
receivable account balance by reviewing
subsidiary ledgers and associated supporting
documentation.
Headquarters
b. Review the financial statement presentation of
accounts receivable and determine whether EPA's
presentation is in compliance with OMB Bulletin
01-09, Form and Content of Agency Financial
Statements for the current fiscal year.
TEST PROCEDURE 3.
Pay Processing
PAYROLL PROCESSING ACCOUNTING STANDARDS
The payroll computation should be based on time actually worked and leave actually taken. Where separate
payroll and personnel systems are maintained, the pay rates and other common data elements related to pay,
leave, and allowances for each employee/service member in the payroll system must be reconciled to those
in the personnel system. System documentation should provide for controls over quantity, timeliness,
reliability, and accuracy of inputs, processing, and outputs of all documents. Corrections and other
adjustments to data in official records must be approved in writing or through electronic signature by an
authorized official. Errors should be corrected as soon as practical after discovery. Manual corrections on
documents that have already been approved or certified must be made in a way that does not destroy the
original entries.
Separation of duties among those in the following list must exist to the extent that the size of the organization
permits (first item must always be separated from the other duties):
Authorization of pay and entitlements
Certification of payments
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
Payroll computation
Recording of payroll data in the accounts
Distribution of pay
Review of payroll transactions
Automated system development
System testing
System implementation
System maintenance
Pay Deductions
Written authorization to make deductions from pay should be obtained from the employee in all cases,
except when deductions are required by specific provisions of law or by court order. Statutory deductions
for income taxes must be supported by a certification by each employee of the number of exemptions
claimed or extra withholdings authorized. All bonds should be issued in accordance with written
authorization from employees.
Supplemental Pay
The payroll system will incorporate procedures to ensure that all supplemental pay data are considered in the
processing, that results of the processing are accurate, and that no unauthorized alterations are made to
supplemental pay transactions and records.
Payroll Input to Accounting System
The payroll system should be an integral part of the accounting system, with detailed payroll system
accounts and records kept as subsidiary to or support for summary accounts in the accounting system's
general ledger. The payroll system should produce obligation and accrual data needed by the accounting
system.
Employee Benefits Expense and Related Accruals
Unpaid personnel compensation and benefits that have been earned by the employee as of the end of each
year (and interim period where interim reports are prepared) should be accrued in full or in part, in
accordance with the standards issued by FASAB.
Payroll Reports
All required internal and external reports must be accurately and promptly prepared and distributed to
appropriate recipients to ensure receipt when information will be of maximum benefit. Reports on payroll
transactions processed must be sent promptly to officials who authorized or were responsible for the
transactions and reviewed by them for completeness and accuracy. Any discrepancies noted must be
resolved promptly. Reports must be based on, supported by, and periodically validated against appropriate
detailed information in the payroll system. Reports must be retained and disposed of in accordance with the
November 2005 4-26 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
General Records Schedule with sensitive data as defined by the Privacy Act of 1974 (5 U.S.C. 552a) handled
in accordance with provisions of that Act.
Certification of Time Documents
All supervisors must sign and maintain timesheet certification reports. They must also sign default time approval reports.
Currently, these reports can be run by all supervisors, timekeepers, and coordinators from the PeoplePlus System. All reports
must be filed and kept for 6 years.
EPA Policies and Procedures
Resources Management Directive 2550A1D1 - Financial Management of Personnel, dated October 3, 2003.
Policy Announcement Number 05-05, Responsibility of Supervisors to Approve Time and Attendance, dated May 5, 2005.
Policy Announcement Number 04-01, Policies and Procedures for On-Line Access to EPA's Integrated Human Resources,
Benefits, Payroll, Time and Labor Management System (PeoplePlus), dated September 1, 2004.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
CONTROL OBJECTIVES
1. Payroll policy and procedures are in accordance
with the applicable standards and requirements.
TEST PROCEDURES
Washington-Finance Center (WFC)
a. Review Timekeeping Manual to ensure
compliance with the accounting standards.
b. Verify that responsibility for assigned duties and
functions are in actual practice appropriately
separated between:
- Recording and reporting of attendance,
absences, and other circumstances affecting
the computation of pay and earnings.
- Supervising of performance and granting,
approving, and advancing leave.
c. Review payroll error correction procedures to
ensure compliance with the accounting standards
and control objectives.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
2. Compensation and benefit payments are in
accordance with current statutory or regulatory
limitations. Gross and net payroll amounts and
payroll deductions are correct.
TEST PROCEDURES
Headquarters
a. Review local electronic Time and Attendance for:
- Proper approval (by timekeeper and
supervisor) for leave and overtime.
- Completeness and accuracy.
b. Review sample employee forms from Employee
Express for EFT applications, savings bonds,
federal tax, state tax, FERS, and other deductions
for proper authorization.
c. Review Request for and Authorization of
Overtime Work (EPA Form 2560-7) for proper
overtime authorization.
d. Verify that amounts on the appropriate People
Plus entries reflect accurate salary data.
e. Compare personnel files/records against People
Plus output for accuracy and completeness.
f. Review payroll system documentation regarding
supplemental pay actions (payroll actions outside
the normal payment for 80 hours worked in a pay
period). Verify the situations where supplemental
pay actions are allowable and the specific
documentation that is required.
g. Examine supplemental pay actions.
Servicing Finance Offices (SFOs)
h. Determine that deductions from gross pay have
been calculated correctly.
3. Payroll charges, including benefits, are promptly
distributed, recorded, and properly reported to the
appropriate account.
WFC
Perform the following test procedures on the
individual wage and salary payments from the
payroll records:
- Verify base pay for each item selected by
reference to the appropriate SF 50 and
applicable salary schedule.
- Verify hours in pay status to PeoplePlus
Electronic T&A System.
- Verify computations for final pay including
unused annual leave payments.
Identify awards or other unusual compensation
and inspect evidence of approval and
authorization.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
4. Payroll charges, including benefits, are promptly
distributed, recorded, and properly reported to the
appropriate account.
TEST PROCEDURES
a. Review payroll distribution timesheet
documentation (EPA Form 2560-28) for accuracy
and completeness.
WFC
b.
Examine OPM SF 2812 report. Verify that
preparation is in accordance with TFM - Vol. 1,
Part 3 - Section 3000.
5. Access to payroll records and accounts is limited to
authorized personnel.
a. Review the PeoplePlus System Access Request
Forms submitted by users to the PeoplePlus
Security Administrators.
6. Payroll subsidiary records are in agreement with
general ledger balances.
WFC
a. Verify that withholding accounts have been
properly liquidated and that withheld amounts and
employer share of benefits have been deposited
with the responsible agency.
b. Examine IFMS reports used to reconcile the
systems. Trace obligation, cost, and
disbursement balances to the general ledger for a
pay period. Review reconciliation documents.
c. Test EPA payroll reports by performing the
following actions:
- Verify totals and cross-totals on selected
payroll listings.
- Trace postings to appropriate general ledger
accounts. This should include verifying that
payroll expense and related employer share of
benefits are charged to the correct
appropriation and program allowance.
7. Financial statements properly present personnel
compensation, employee-benefit expense, and
other payroll-related information.
Headquarters
a. Review the financial statement presentation to
ensure that personnel compensation and
employee-benefit expenses have been disclosed
separately.
b. Consider the financial statement presentation of
other payroll related information and determine
whether EPA's presentation is in compliance with
OMB Bulletin 01-09, Form and Content of Agency
Financial Statements, for the current fiscal year.
TEST PROCEDURE 4.
FUND BALANCE WITH DEPARTMENT OF TREASURY
ACCOUNTING STANDARDS
Fund balance with Department of Treasury is an asset account that reflects the available spending authority
by federal agencies. Collections and disbursements will, correspondingly, increase or decrease the balance
in the account. Agencies report changes to this account to the Financial Management Services (FMS),
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
Department of Treasury through monthly reporting on Statements of Transaction (FMS 224). To ensure the
integrity of the receipts and disbursement data submitted by agencies, FMS compares agencies with
comparable data submitted by financial institutions and Department of Treasury Regional Finance Centers.
Agencies are notified of any discrepancies on a monthly Statement of Difference report (FMS 6652).
Agencies are responsible for investigating and resolving these differences and reporting any required
adjustment on their monthly Statement of Transaction report (FMS 224).
Fund balance with Department of Treasury is increased by:
Receiving appropriations, re-appropriations, continuing resolutions, appropriation restorations, and
allocations.
Receiving transfers and reimbursements from other agencies.
Amounts borrowed from the Department of Treasury, Federal Financing Bank, or other entities.
Amounts collected and credited to appropriation or fund accounts that EPA is authorized to spend or use to
offset its expenditures.
Fund balance with Department of Treasury is decreased by:
Disbursements made to pay liabilities or to purchase assets, goods, and services.
Investments in U.S. government securities.
Cancellation of expired appropriations.
Transfers and reimbursements to other entities or to the Department of Treasury.
Sequestration or rescission of appropriations.
Fund balance with Department of Treasury must be reported as an asset on the Statement of Financial
Position. Disclosure should be made to distinguish two categories of funds within the entity's fund balance
with Department of Treasury: (1) obligated balances not yet disbursed and (2) unobligated balances. The
obligated balance not yet disbursed'is the amount of funds against which budgetary obligations have been
incurred, but disbursements have not been made. The unobligated balance is the amount of funds available
only for approved adjustments to prior obligations. Certain unobligated balances may be restricted to future
use and are not apportioned for current use.
EPA Policies and Procedures
Policy Announcement 03-04, Accelerated Monthly Standard Form 224 (SF224), "Statement of Transactions," Process - Revised
Policies and Procedures, dated April 28, 2003.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
November 2005 4-30 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
1. Transactions with Department of Treasury are
appropriately recorded in the accounting system.
TEST PROCEDURES
Headquarters
a. Review written procedures to record Fund Balance
with Department of Treasury. Identify and report any
inconsistency or non-compliance with the
accounting standards.
b. Reconcile the IFMS general ledger to the FBWT.
Servicing Finance Offices (SFOs)
c. Trace receipt amounts reported on the SF 224s to
appropriate supporting documentation (e.g., SF
215s and SF 5515s) and to the general ledger.
Based on the date submitted for deposit, determine
that the deposit is recorded in the proper accounting
period and reported to Department of Treasury in
the proper period. Coordinate this step with
accounts receivable (for reduction of accounts
receivable).
d. Trace disbursement amounts reported on the SF
224s to appropriate supporting documentation (e.g.,
SF 1081s, GOALS II RFC-Agency Link and IPAC)
and to the general ledger. Based on the date that
disbursements were actually made, determine that
the payment is recorded and reported to
Department of Treasury in the proper accounting
period.
e. Verify accuracy of the fund balance by reviewing
supporting documentation. Verify that
documentation, subsidiary records, and the general
ledger are reconcilable. Verify accuracy of
calculations.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
2. Fund Balance with Department of Treasury in the
general ledger (accounting system) is reconciled in
a timely manner with the balance confirmed by
Department of Treasury. Any discrepancies
between the two records should be promptly
resolved. Discrepancies due to time lag should be
reconciled and discrepancies due to error should be
corrected before financial reports are prepared.
TEST PROCEDURES
Headquarters
a. For each appropriation and fund, obtain the TFS
Form 6653, Undisbursed Appropriation Account
Ledger, for the last month of the period under
review. The TFS Form 6653 shows the opening
balances, classified transactions for the month, and
the resultant closing balance.
b. Compare the closing balance on the TFS Form
6653 with the general ledger.
Servicing Finance Offices (SFOs)
c. SFOs reconcile monthly using system- generated
Report FMO-18E. The current month activity
reported on SF224s is manually posted to the FMO-
18E report to reconcile to the system-generated
general ledger balances by Accounting Point,
Disbursing Office Symbol, Department of Treasury
Symbol, and General Ledger Account.
d. Review cause(s) for the discrepancies and steps
taken to resolve them. Identify any unresolved
discrepancies that are not reconciled within two
months.
3. Fund Balance with Department of Treasury is
properly presented in the financial statements. The
cause of any discrepancies between the general
ledger account balance and the Fund Balance with
Department of Treasury should be explained in the
notes to the financial statements.
Servicing Finance Offices (SFOs)
a. Verify the accuracy of the general ledger Fund
Balance with Department of Treasury by reviewing
general ledger balances and monthly SF 224
reporting.
Headquarters
b. Review the Balance Sheet presentation of FBWT
and determine whether EPA's presentation is in
compliance with OMB Bulletin 01-09, Form and
Content of Agency Financial Statements for the
current fiscal year.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
TEST PROCEDURE 5. DISBURSEMENTS ACCOUNTING STANDARDS
General
All disbursements, whether in cash or electronic deposits, for authorized and lawful payments and/or refunds
of amounts collected should be supported by standard disbursement documents in either hard copy or
machine-readable source records. Documents should link all supporting records and enable audit of the
transaction. Controls should ensure that amounts paid by the disbursing offices were in accordance with the
payment information certified to them.
Use of Invoices in Place of Vouchers
Disbursement transactions, except those involving charges for transportation services, are not required to be
processed on prescribed vouchers if the vendors' invoices, bills, or statements of account show all the
required information. Such invoices, bills, or statements of account may be used as basic vouchers in
support of the Agency's accounts and accountability statements.
Recurrent Payments - Fixed Amounts
Payments for services of a continuing nature, such as rent or janitorial services, which are performed under
agency-vendor agreements providing for payments of definite amounts at fixed periodic intervals, may be
made without submission of vouchers, invoices, or bills by the vendor. The basic voucher prepared by EPA
to support payments of this nature should show at a minimum the contract number, the period covered by the
payment, the vendor name, the payment amount, and the account to be charged.
Monthly Bills from Vendors under Blanket Purchase Agreement
Purchases made under Blanket Purchase Agreements (BPAs) must be verified in the same manner as any
other invoice.
Consolidation of Payments for Multiple Invoices
To minimize the number of vouchers prepared and payments made by disbursing offices, multiple invoices
may be consolidated into a single payment, provided that payment is to a single office or vendor place of
business, payment is for a single government establishment, consolidated payment is agreeable to the vendor,
and payment is made in accordance with Prompt Payment requirements.
Payments to Public Utilities
Payments may be made to public utilities in the absence of a contract when the charges are based on rates
that are fixed or adjusted by federal, state, or other regulatory bodies. However, contracts are not precluded
where either the company or the agency required agreements or contracts for the furnishing of services.
Lost or Destroyed Original Invoices
If an original invoice has been lost or destroyed, a duplicate should be obtained from the claimant to support
the voucher. The voucher may then be processed through regular disbursement channels provided there is
November 2005 4-33 Office of the Chief Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
placed or attached to the duplicate invoice (1) a full explanation as to the circumstances of the loss or
destruction of the original invoice, and (2) a statement that steps have been taken to prevent duplicate
payment.
Prompt Payment and Interest Penalties
5 CFR 1315: Prompt Payment (formerly OMB Circular A-125)
Prompt Payment, Final Rule 5 CFR 1315 requires agencies to make payment on time, to pay interest
penalties when payments are late, and to take discounts only when payments are made on or before the
discount date. Payment must be based on receipt of proper invoices or progress payment requests and
satisfactory performance of contract terms. Each invoice will be reviewed as soon as practical after receipt
to determine whether the invoice is a proper invoice as defined in Section 2 of 5 CFR 1315. Any invoice
determined not to be a proper invoice should be returned as soon as practical, but not later than seven days
after receipt, identifying the defects that prevent payment. Agencies will ensure that receipt and acceptance
are executed as promptly as possible. Receiving reports will be forwarded in time to be received by the
payment office by the fifth working day after acceptance, unless other arrangements are made.
The period available to EPA to make a timely payment of an invoice without incurring an interest penalty
must begin on the later of: (1) the date of receipt of a proper invoice by the designated billing office or (2)
the date that the property is actually delivered or performance of the services is actually completed. Unless
otherwise specified in the contract, the payment is due 30 days after the start of the payment period.
Discounts will be taken whenever economically justified, but only after acceptance has occurred. Vendors
must receive payment no later than the discount date. If agencies take discounts after the discount date, or if
they fail to make timely payment, interest penalties must be paid. Agencies must pay interest penalties
automatically, without contractors requesting them, and must absorb the cost of interest penalty payments
into funds available for the administration of the program for which the penalty was incurred. Agency
implementation must be consistent with sound cash management practices, related Department of Treasury
regulations (TFM - Vol. I, Part 6 - Section 8040) and the Federal Acquisition Regulations (48 CFR 32.9 and
52.232).
Certification and Approval of Vouchers
All original basic vouchers (invoices or bills) must be signed by the proper EPA administrative approving
officerone who is aware of the facts stated on the voucher. Electronic certification is performed by the
Authorized Certifying Officer through IFMS and data is submitted to the Department of Treasury in tape
form. The Las Vegas Finance Center certifies the tape for the agency.
Internal Controls Over Disbursements
Each agency's system of internal control over disbursements should be based on operating needs and should
conform to related principles and standards for accounting and administrative internal controls prescribed in
the Standards for Internal Control in the Federal Government, GAO/AEVID-00-21.3.1, November 1999. To
the extent practical, operations should be separated to reduce risk of error, waste, and wrongful acts. In
automated systems, a separation of duties should be achieved by the assignment of different responsibilities
by function. Different responsibilities (separation of duties) should be assigned to computer operations
November 2005 4-34 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
personnel, software maintenance specialists, and users. User responsibilities include ensuring that disbursing
operations are separated from such operations as purchasing, receiving, and disbursing, internal controls and
procedures are properly implemented, and errors are promptly resolved.
Whenever possible, agencies should seek to enter into agreements with contractors for transmission of
payments by electronic funds transfer (EFT) (TFM - Vol. I, Part 4 - Section 2000). Agencies should make
maximum use of the Automated Clearing House (ACH) for the disbursement of U.S. government funds. The
ACH mechanism for vendor payments is Vendor Express and the ACH mechanism for salary payment is
EFT. Fedwire may be used for high-dollar, low-volume payments only when same-day settlement is
required. In all other cases, ACH should be used for payments of any dollar amount.
EPA Policies and Procedures
Policy Announcement No. 00-10, Implementation of 5 CFR Part 1315 - Prompt Payment, dated September 10, 2000.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
lONTROL OBJECTIVES
1. Recorded disbursements are for allowable goods
and services that were authorized, received, and
accepted.
TEST PROCEDURES
Review contracts, purchase orders, approving/receiving
reports, invoices, and any other pertinent supporting
documentation associated with the sample disbursement
transactions. Determine the following:
a. The invoice was date stamped into the office.
b. The payment is supported by the obligating
document.
c. The goods received or the services performed were
accepted. Where required, a receiving report is on
file.
d. The correct vendor was paid (vendor name on the
report is the same name as on the invoice).
e. The payment was made for the correct amount.
f. All appropriated discounts were taken. If not, the
reason is recorded on the appropriate document and
reflected in IFMS.
g. If a penalty was taken for any late payment, the
reason is recorded on the appropriate document and
reflected in IFMS.
h. The payment was processed within 30 days of being
stamped into the office.
i. The payment shows the date paid and a certifying
officer's approval.
Expenses for goods and services have been
recorded in the proper amount in the proper general
ledger account, against the proper appropriation,
and in the correct time period.
Review contracts, purchase orders, approving/receiving
reports, invoices, and any other pertinent supporting
documentation associated with the sample disbursement
transactions. Determine the following:
a. All cash, trade, quantity, or other discounts are taken
and, if not, that the reason is shown on the
appropriate document.
b. All applicable deductions are made and credited to
the proper account in the correct amount.
c. Prompt payment requirements are followed.
d. Clerical accuracy of the calculations.
e. Correct appropriation was used to effect payment.
f. The appropriation or fund is available at the time, for
the purpose intended, and that sufficient funds exist
for the transaction and in the amount of the proposed
payment.
g. Expense is properly classified in the general ledger
and the financial statements.
h. Conduct additional testing of transactions charged to
repair and maintenance accounts for proper
classification. Search for items that should be
capitalized. Coordinate with test procedures
performed related to property, plant, and equipment.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
lONTROL OBJECTIVES
3. Expenses for goods and services are properly
presented in the financial statements.
TEST PROCEDURES
Headquarters
a. Review the financial statement presentation of
expenses to ensure that it complies with the
accounting standards.
b. Review the financial statement presentation of
expenditure-related information and determine
whether EPA's presentation is in compliance with
OMB Bulletin 01-09, Form and Content of Agency
Financial Statements, for the current fiscal year.
TEST PROCEDURE 6.
General
GOVERNMENT-WIDE CREDIT CARD ACCOUNTING STANDARDS
When a government credit card is used, the vendor is paid by the commercial financial institution that
provides the credit card service to the federal government. The government then reimburses the financial
institution in accordance with the terms and conditions of the Federal Supply Schedule for commercial credit
card services.
Agencies must designate personnel authorized to use the credit card. Agencies must also establish approved
uses and limitations on the types of purchases and the dollar amounts for credit card transactions in
conformance with the Federal Acquisition Regulations (FAR). The guidelines should prescribe limitations
for single purchases, overall office purchases, and total monthly purchases. The credit cards may not be used
to obtain cash from a financial institution or other point-of-sale arrangement.
Purchase Card Training
Training for government purchase card holders must provide general information on how to use a charge
card. It must familiarize the cardholders with federal procurement laws and regulations, agency policies, and
proper card use. Training requirements must be consistent with the level of responsibility or spending
authority the cardholders will have.
Review and Approval of Billing Statements
EPA will not make payment for credit card transactions prior to receipt of the billing invoice by the finance
office and the subsequent review and verification of the payment by the cardholder and the approving
official. Verification by the cardholder and approving official is based on the review, validation, and
approval of the transactions listed on the cardholder's statements and the approving official's statements.
Payment
When billed, EPA should use "Vendor Express" as the preferred method of payment for credit card services.
Vendor Express is a government-wide program to process vendor and miscellaneous payments electronically
through the Automated Clearing House (ACH) network. The payments are deposited directly into the
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
vendor's financial institution account on the payment date. If payment is made by this electronic funds
transfer mechanism, payment must be received by the vendor's financial institution on the due date.
Safeguarding Credit Cards
EPA should establish guidelines for appropriately safeguarding the credit cards when not in use. Credit
cards should be safeguarded in the same manner as cash. Authorization should be given to designated
personnel to use the credit card. Procedures should be established for replacement of lost or stolen cards.
Also, agencies should establish a process for the contractor to void cards due to loss, termination, or
retirement of cardholder.
EPA Policies and Procedures
Resource Management Directive 2520, Chapter 4B, Bankcards
Test Procedures
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the Office of Acquisition Management (OAM) Purchase Card
guidelines, Purchase Card Training for Cardholders and Approving Officials.
ROL OBJECTIVE
T PROCEDURE
1. Verify the purchase card holder's credentials.
a. Verify that the purchase card holder has taken the
OAM Purchase Card Training and that the training is
current.
b. The purchase card holder must be able to advise
customers on proper procedures, propose options,
resist inappropriate pressures from customers, and
deny requests that are unreasonable or
inappropriate.
c. The purchase card holder must have excellent record
keeping and problem solving skills. The purchase
card holder must be able to follow up on issues that
relate to order, quality, and timeliness.
d. It is strongly recommended that the supervisor of the
purchase card holder includes in the card holder's
annual performance plan a job element that assists in
evaluating performance and monitoring of fiduciary
responsibilities.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
lONTROL OBJECTIVES
2. Procedures are established for replacement of lost
or stolen cards and for the contractor to void cards
due to card loss, termination, or retirement of a
cardholder.
TEST PROCEDURES
a. Review EPA guidelines for appropriate safeguarding
of credit cards when not in use and compare policy to
actual practice.
b. Review the list of personnel authorized to use credit
cards for appropriateness.
c. Review procedures for replacement of lost or stolen
cards.
d. Review EPA procedures for contractors to void cards
due to card loss, termination, or retirement of a
cardholder.
e. Compare list of cardholders with authorized
personnel list.
f. Compare list of cardholders to list of current
employees.
3. Credit card transactions are for approved purchases
and within the approved dollar amounts.
Verify that:
a. Transactions are permitted by law.
b. Individual transactions are within the permissible
dollar limit and purchases are for items approved by
procurement officials.
c. Acceptance of goods or services is verified by the
cardholders.
d. Required approval(s) from the person authorizing the
purchase are obtained.
e. Payments are supported by basic authorizing
payment documents.
f. Prompt payment requirements are followed.
4. Procedures exist for reviewing and validating
individual statements of account, or a duplicate in
the case of missing statements.
a. Review the basic payment documents and their
associated statements of account to determine that
payments for credit card transactions are made only
after receipt of the billing invoice by the finance office.
b. Verify that the purchase card holder maintains a
monthly log of all purchases with necessary
information.
c. Verify that the supporting documentation has the
appropriate signatures of the Administrative Officer
and management official(s).
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
TEST PROCEDURE 7. PROPERTY, PLANT, AND EQUIPMENT ACCOUNTING STANDARDS
General
Property, plants, and equipment includes land, structures, facilities, equipment, and related improvements
that have a service life or two or more years. It also includes assets acquired by capital leases as well as
leasehold improvements. All property, plants, and equipment with an initial acquisition cost of $25,000 or
more and an estimated service life of two or more years must be capitalized and reported as fixed assets in
the EPA's financial statements. Agencies should establish appropriate internal controls over all assets,
particularly sensitive items that are subject to theft.
Cost of Acquisition
Purchased or constructed property, plants, and equipment should be accounted for at cost, which includes all
amounts paid to acquire and install the assets in their current form and place. Donated fixed assets received
from non-federal entities must be accounted for at estimated fair value at the date of acquisition plus any
costs incurred to place the property in use. Statues and monuments must be reported at their historical cost
or other rational basis, with depreciation not applied.
IT software (programs, routines, or subroutines) valued at $25,000 or more, with a useful life of two or more
years should be capitalized as property, plants, and equipment. IT software used in research and
development activities of a particular project that has no alternative future use, whether purchased or
developed by EPA personnel, should be amortized or depreciated over the life of the specific project.
Property, plants, and equipment acquired for research and development activities that have alternative future
uses (in research and development activities of others) should be capitalized over the estimated useful life of
the property with the associated costs and depreciation reported as research and development expenses.
When initially recording property, plants, and equipment that were previously acquired, the cost should be
recorded or, if cost cannot be estimated, the fair value of the fixed asset at the date acquired should be
estimated from available records or evidence.
Capitalization of Fixed Assets
Costs of additions, alterations, betterments, rehabilitations, or replacements that extend the useful life of the
asset or its service capacity should be capitalized as property, plants, and equipment. Costs of assets
installed in or added to another asset must be capitalized either individually or as part of the other asset.
Costs of assets or components removed, superseded, or destroyed in the improvement process should be
expended, net of accumulated depreciation, if any. Expenses incurred to maintain property, plant, and
equipment in satisfactory operating condition (repair and maintenance expenses) should be accounted for as
operating expenses.
Lease Purchases
Property, including assets acquired through installment contracts and lease purchases, should be capitalized
when placed in service. All costs associated with preparing property, plants, and equipment for service
should be recorded in the Construction in Progress Account and reported in the financial statements. When
assets are placed in service, the accumulated costs should be transferred to the appropriate asset account.
November 2005 4-40 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Foreclosure Property
Property acquired by foreclosure should be recognized at the appraisal (or fair market) value. The difference
between amounts due and costs incurred and assets recorded at the appraised or fair market value should be
recognized as a current period loss or gain when the foreclosure occurs.
Property Records
EPA property records must capture all acquisitions, whether by purchase, transfer from other agencies,
donation, or other means. The property records must also capture all disposals or retirements when property
leaves EPA custody. EPA property records should enable periodic independent verifications of the accuracy
of the accounting records through periodic physical counts. Agency property records must be integrated
with or reconciled with the accounting system.
Retirement of Property, Plant, and Equipment
When non-depreciated fixed assets are retired, EPA must remove the assets from the property account and an
equal amount from the Invested Capital account. Unless otherwise specified by law, any proceeds received
must be accounted for as Cash and Miscellaneous Receipts Due Treasury (a liability) or used to replace
similar assets when permitted by law. When depreciated fixed assets are retired, EPA must recognize gains
or losses on retirement if the disposal of the assets was external to the federal government. EPA must
remove the net book value (difference between the amount at which the asset is recorded and its related
accumulated depreciation) from the Invested Capital account, the related depreciation from the Accumulated
Depreciation account, and the amount of the assets from the Property account upon retirement. The gains or
losses should be recognized in the accounts as a financing source or an expense, as applicable, and as a
charge to the Cumulative Results of Operations account. In addition, the gains or losses should be shown on
EPA's financial statements as an adjustment to the accumulated results of operations at the beginning of the
year.
Disclosure in Financial Statements
Property, plants, and equipment are to be reported and classified according to OMB Bulletin 01-09, Form
and Content of Agency Financial Statements, for the current fiscal year.
EPA Policies and Procedures
Policy Announcement 01-03, Accounting for Working Capital Fund Property, dated May 23, 2001.
Policy Announcement 01-06, Property Reconciliation Requirements, dated September 4, 2001.
Policy Announcement 01-06: Amendment 1, Property Reconciliation Requirements-Certification, dated April 28, 2003.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
Obtain a schedule(s) of property, plant, and equipment detailing the beginning-of-period balances, current
additions, current retirements, and ending balances.
1.
CONTROL OBJECTIVES
Adequate documentation is maintained to account
for the total value of all property, plant, and
equipment acquired by EPA.
TEST PROCEDURES
a.
b.
Review accounting instructions for property acquired
by trade-in, donation, seizure and/or forfeiture, to
ensure that the acquired property was correctly
recorded.
Review accounting instructions for property
disposed by write-off, retirement, and destruction to
ensure that the disposed property was correctly
recorded.
2. Receipt of property is recorded timely and
accurately in the accounting records.
a. Review source documents with the accounting
entries to verify timely and accurate recording.
b. Test the accounting records by systematically
reviewing major equipment items. Review the
source documentation, including invoices and
receiving reports, to ensure timely and accurate
recording of property.
3. The distinction between a capital and operating
expenditure is clearly identified for accounting
purposes.
a. Review property acquisition transactions for
compliance with capitalization guidelines.
b. Review entries to the repairs and maintenance
account to ascertain if property-related expenditures
have been recorded in accordance with accounting
standards.
c. Test current-year additions by reference to source
documents verifying the nature of costs and
ensuring that the costs are of a capital nature
according to the accounting standards.
d. Verify that procedures exist for the proper handling
of leased and rented property.
4. All costs associated with the acquisition (or
purchase) of fixed assets are capitalized.
Review two months of property acquisition source
documents and determine if all the expenditures to
place fixed assets in service have been capitalized
according to the accounting standards, including
transportation and installation charges.
5. Acquired assets are charged to the proper
appropriations.
a. Review the accounting transactions for the
appropriate treatment of assets acquired.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
lONTROL OBJECTIVES
6. Detailed subsidiary records are maintained for
individual capital assets and are periodically
reconciled to control accounts.
TEST PROCEDURES
a. Test the property records by systematically
observing major equipment items.
b. Trace property acquisition transactions from initial
obligation to entry into IFMS.
c. Verify that depreciation and write-offs (disposals)
are accurately recorded in the subsidiary records
and are reflected in the control account totals.
7. Periodic physical verification is made of the
existence of property and inventories. Physical
security measures are commensurate with the size,
type, and value of property.
a. Select a sample of property transactions. Compare
the transactions to the accounting records and
conduct a physical inventory of the items in the
sample.
Headquarters
b. Review IFMS Fixed Assets module systems
documentation for compliance with accounting
standards.
Issues, transfers, retirements, and losses are
reported in a timely manner.
a. Trace property disposal transactions and their entry
into IFMS.
b. Verify the completeness of the schedule for assets
written-off through transfer, retirement, or loss.
c. Review the list of write-offs (disposal) of non-
depreciated property, plant, and equipment.
d. Test current-year disposals by verifying book value
at disposition, computing gain or loss on disposal,
and verifying proper removal from the asset and
accumulated depreciation accounts.
9. Depreciation and amortization amounts have been
accurately recorded.
a. Verify depreciation and amortization beginning
balances by referencing prior- year annual financial
statements.
b. Test current-year depreciation o amortization
expense computations. Compare the totals to the
general ledger depreciation or amortization expense
accounts.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
lONTROL OBJECTIVES
10. Financial statements properly present property,
plant, and equipment.
TEST PROCEDURES
Servicing Finance Offices (SFOs)
a. Verify the accuracy of the general ledger property,
Plant, and Equipment account balance by reviewing
subsidiary ledgers and associated supporting
documentation.
Headquarters
b. Review the financial statement presentation to
ensure that property, plant, and equipment are
disclosed appropriately in accordance with the
accounting standards.
c. Review the financial statement presentation to
ensure that accumulated depreciation/amortization
and depreciation/amortization expense are reported
in accordance with accounting standards.
d. Review the financial statement disclosure for
adequacy. Verify that the financial statements
contain the following disclosures:
- Basis for determining asset values (i.e.,
historical cost, fair market value).
- Method of depreciation/amortization.
- Current year additions and retirements of
property, plant, and equipment.
- Fully depreciated/amortized assets still in use.
e. Review the financial statement presentation of
Property, Plant, and Equipment and determine
whether EPA's presentation is in accordance with
OMB Bulletin, 01-09, Form and Content of Agency
Financial Statements, for the current fiscal year.
TEST PROCEDURE 8.
General
INTERAGENCY AGREEMENTS ACCOUNTING STANDARDS
An Interagency Agreement (IAG) is a written agreement between federal agencies under which goods or
services are provided in exchange for monetary reimbursement, or where the parties have a mutual need for
the goods or services and share in the cost of the work performed under the agreement by an outside
contractor or grantee.
Method of Payment
There are three ways in which a federal agency pays for goods or services under lAGs:
Reimbursement Seller agency performs the work specified in the agreement and on a periodic basis
submits a request for payment to the buyer agency. The buyer agency pays the seller agency if the request
is in order (i.e., in compliance with the agreement and other applicable requirements). The federal agency
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
uses the Intragovernmental Payment and Collections (IPAC) for processing the following types of
interagency transactions.
Advance paymentEPA receives reimbursable authority from OMB. OMB does not require advances to
perform work under an agreement.
Allocation transferObligation authority is transferred from a buyer agency to a seller agency. This
method of payment is often used with agreements of large dollar amount or where a transfer of function is
involved. The EPA OCFO must approve this method of payment.
Interagency Agreement Funds
TAG funds must be obligated within their period of availability. The period of availability depends on the
appropriation that provides the funds. Funds transferred under an IAG retain the same limitations applied to
their use by the buyer agency or by the seller agency. Detailed policy and procedures for initiation,
management, and closeout of lAGs are available at the Grants Intranet Web site: intranet/ogd/iag/htm.
Intragovernmental Payment and Collections
The objective of the IPAC system is to accomplish interagency purchases, sales, and payment in a more
efficient manner by: (1) eliminating checks issued and deposit procedures normally associated with the
payment of invoice and (2) eliminating the regular SF 1081 voucher procedure by virtue of a simultaneous
billing and collection feature. The IPAC system, which is a component of the Government Online
Accounting Link System (GOALS), establishes a standardized interagency billing and adjustment procedure
through a telecommunications network.
Under the IPAC system, the buyer-seller relationship between federal government agencies requires only the
transfer of funds from one agency to another agency. Upon fulfilling the customer agency's order or
requisition for services purchased or supplies shipped, immediate payment is accomplished by the billing
agency crediting its own Agency Location (ALC) and charging the customer agency's ALC. The
electronically transmitted bill will include a complete description of the purchase, thereby eliminating the
need for mailing a paper payment document.
Recording
The customer agency will verify the accuracy of each bill in the IPAC system. The customer agency will
then record the payments applicable to its appropriation or fund symbols as of the payment date reflected in
the system.
Reporting
At the end of each month, both the customer agency and the billing agency must include the net total amount
of all bills and adjustments for its ALC on its SF 224 for the current payment month. Department of
Treasury will compare the customer and billing agencies' SF 224s with the IPAC data. Also, Department of
Treasury will compare the disbursing activity from Department of Treasury disbursing offices. If a
difference occurs, a Statement of Differences, Disbursing Office Transaction (TFS Form 6652) will be
generated. Agencies will investigate the differences and make the necessary corrections on the next SF 224.
November 2005 4-45 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
End of fiscal year reporting by IP AC customer agencies:
IPAC charges to the customer agency's ALC will be reported to the applicable appropriation or fund
symbol.
If at the end of the fiscal year, a customer agency does not have sufficient time to determine the amount of
an adjustment for its regular monthly reporting on the SF 224, the agency should include the erroneous
charge to the regular appropriation or fund symbol.
When the amount of adjustment is determined, a refund receivable account should be established in the
regular appropriation or fund symbol for year-end reporting on the Year-End Closing Statement (TFS Form
2108).
Such receivables should be cleared in the subsequent fiscal year by adjusting the amount to the IPAC
billing agency and crediting the appropriation or fund symbol charged on its regular monthly SF224.
End of fiscal year reporting by IPAC billing agencies:
On the TFS Form 2108, the IPAC billing agency will establish and report an accounts payable for an amount
equal to the amount of adjustments against the related appropriation or fund account of the IPAC billing
agency.
EPA Policies and Procedures
IAG Policy Documents/OCFO (See intranet.epa.gov/ocfo/finservices.iag.htm).
IAG Policy Documents/GAD (See intranet.epa.gov/ogd/policy/8-O-IAGTopics/htm)
Resources Management Directive 2550C, Chapter 4, Interagency Agreements.
Test Procedure
The following test procedures are examples and apply only to the Cincinnati Finance Center.
CONTROL OBJECTIVES
1. Obligations are recorded in compliance with
funding legislation and obligated within their period
of availability.
TEST PROCEDURES
Generate a list of Interagency Agreements (IAG)
transactions from the IPAC system and perform the
following test procedures:
a. Review lAGs to ensure that they comply with EPA
requirements.
b. Review lAGs to verify the validity of the obligations.
c. Verify that the correct ALC is charged.
2. As a billing agency, payment is accomplished in a
timely manner upon fulfilling the customer agency's
order or requisition for services.
a. Review the sample IAG files with the payment list
generated from the IPAC system. Verify the IAG
documentation and the customer agency's order or
requisition to ensure that the services were provided
according to the specifics of the IAG.
b. Compare the date the service was provided and the
billing date in the IPAC system.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
3. As a customer, accuracy of each bill in the IPAC
systems is verified promptly and recorded to the
applicable appropriation or fund symbol as of the
payment date reflected in the system.
TEST PROCEDURES
a. Compare IPAC data with the net total amount on the
current month SF 224.
b. Compare IFMS reports listing IAG payments with
the appropriate IAG for the validity of the ALC
charged.
4. IAG payments and collection are reported monthly
according to requirements.
a. Review the monthly SF 224 and the IPAC system
data for conformance to billing and payment
procedures.
5. Reconciliation is performed between the data in the
IPAC system, IFMS, and data reported to the
Department of Treasury (SF224).
a. Review IPAC data with the net total amount on the
current month SF 224.
b. Review the transactions entered in the IPAC system
between the first of the month and the end of the
month.
c. Review adjustments entered in the IPAC system
between the first of the month and the end of the
month.
d. Review the TFS Form 6652, Statement of
Differences, Disbursing Office Transaction.
e. Review the reconciliation performed between SF
224, IPAC data, IFMS data, and TFS Form 6652.
6. Year-end reports are prepared in a timely manner.
a. Review the SF 224 for the month of September and
analyze the adjustments included in the net total.
Verify that the adjustments are charged to the
proper appropriation or fund symbol and determine
outstanding billings or collections for the fiscal year.
b. Review TFS Form 2108, Year-End Closing
Statement to verify that the refund receivable
account (in the case of the customer agency) or the
accounts payable account (in the case of the billing
agency) is established for the appropriation or fund
symbol.
c. Review the SF 224 for the first month of the
succeeding fiscal year to verify that the receivable
or payable account is cleared.
TEST PROCEDURE 9.
GRANTS AND COOPERATIVE AGREEMENTS ACCOUNTING
STANDARDS
General
Grants and cooperative agreements are federal assistance agreements under which payments in cash or in-
kind are made to provide assistance for specified purposes. The acceptance of an assistance award from the
federal government creates a legal duty on the part of the recipient to use the available funds or property in
accordance with the terms and conditions of the assistance agreement.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
Assistance payments may be made in advance or as a reimbursement either for work performed or for costs
incurred by recipients. Upon performance of work under the award, the assisting agency must record as
expenses an amount equal to the cost of the service performed or cost incurred, and reduce the advance
account by a like amount. Payments to award recipients as reimbursement for work performed or costs
incurred must be accounted for as expenses incurred or as reductions of liabilities if the expenses were
recorded previously.
Limitations and Timing of Cash Advances
Advances to a recipient organization will be limited to the minimum amounts necessary for immediate
disbursement needs and will be timed only in accordance with the actual immediate cash requirements of the
recipient organization in carrying out the purpose of an approved program or project.
The timing and amount of cash advances will be as close as is administratively feasible to the actual
disbursements by the recipient organization for direct program costs and the proportionate share of any
allowable indirect costs.
Automated Standard Application for Payments (ASAP)
ASAP is a system through which organizations receiving federal dollars can draw funds preauthorized by
federal agencies for payment through the Department of Treasury. ASAP is an all-electronic payment and
information system developed jointly by the Financial Management Service (FMS) of the Department of
Treasury and the Federal Reserve Bank of Richmond (Virginia).
EPA grantees use ASAP to draw funds pre-authorized to them. The Las Vegas Finance Center (LV-FC)
enters the authorizations for these grants into the ASAP System. The cumulative amounts entered into
ASAP for individual grant awards should equal the amounts in the EPA's Integrated Financial Management
System (IFMS).
Electronic Funds Transfer (EFT)
Payments to all grantees not using ASAP are made through EFT. Federal agencies enroll recipients for
Direct Deposit by obtaining their bank account information.
Direct Deposit is an electronic payment alternative that uses the Automated Clearing House (ACH) system.
EPA sends a payment file to one of FMS's Regional Financial Centers. The file is sent to the Federal
Reserve Bank for processing in the ACH system. Payments are posted to the recipients' accounts, and the
funds are available at the start of business on the payment date.
Reconciliation
Federal program agencies will be responsible for reconciliation of differences shown on the TFS Form 6652.
The EPA servicing finance centers that use ASAP must reconcile the amounts recorded in ASAP with the
amounts in the Integrated Financial Management System (IFMS). Differences between the systems must be
researched and corrected.
November 2005 4-48 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Any interest income earned by the recipient organization on federal funds will be promptly refunded to the
federal program agency unless specifically prohibited by law (CMIA of 1990). Federal program agencies
should deposit that portion of the amount refunded that represents the initial advance to the appropriation or
fund account initially charged with the advance.
The portion that represents interest income should be deposited to the 53 IP, Interest Revenue Public account.
These transactions otherwise will be reported on the federal program agency's regular statement of
transactions. At the termination of the grant or cooperative agreement, funds unused and/or improperly
applied by the recipient must be established as a receivable by the assisting agency.
Federal program agencies making advances should:
Identify the programs advancing federal funds and specify the method of advance financing that will be
used.
Assign responsibility to a designated official to ensure agency-wide implementation and provide a focal
point for liaison with the Development and Implementation Branch, Financial Management Service.
Title to assets acquired by award recipients is vested in the federal government. Appropriate property
records must be established, and the capital assets should be included in the financial statements of the
federal agency that has title to the property. Agencies should disclose in the notes to their financial
statements the amounts of assistance awards to be made in future periods.
EPA Policies and Procedures
EPA Order 5730.1A1, Policy and Procedures for Funding Assistance Agreements, dated July 18, 2000.
EPA Order 5700.6, Policy on Compliance, Review, and Monitoring, dated December 31, 2002.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
Obtain a schedule(s) of grants, contracts, agreements, and similar programs including original award amount,
amendments, costs reported to date, payments/advances made to date, accrued costs/expenses at end of
period.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
1. Accounting for grants and cooperative agreements
is in accordance with the applicable accounting
standards and requirements.
TEST PROCEDURES
Verify that:
a. The recorded grant obligation corresponds to the
commitment (REQL) for the amount and accounting
information.
b. The grantee name in IFMS (OBLH) agrees with the
name on the grant agreement.
c. The grant obligation was recorded in IFMS within
three work days of receipt in the office.
d. The grant recipient signed the agreement prior to
any draw-downs being made.
e. If multiple PRCs were used, the payments were pro-
rated.
f. The payment was recorded against the correct grant
and for the correct amount.
g. A grant payment by a GP document (ACH/EFT or
Reimbursement) was recorded in IFMS within two
business days of receipt.
1a. Explain any discrepancies found in the reconciliation process for grants and cooperative agreements.
2. A system must exist that records all the elements
within and monitors the status of each grant action,
from the receipt of the grant application, through the
issuance of the award and the release of funds to
pay for the approved grant activities, to the close-
out of the grant award.
a. Determine the timeliness of entering commitments
and obligations in the Integrated Financial
Management System (IFMS).
b. Compare the data recorded in IFMS for individual
grants to the data on the award document for
accuracy, completeness, and timeliness of entry.
c. Determine completeness and accuracy of IGMS
data for tracking application status. Determine if
procedures exist for reconciliation of IFMS, IGMS,
and actual awards documents data.
d. Review grantee reports (SF 269, Financial Status
Report and SF 272, Federal Cash Transactions
Report) for agreement with IFMS.
e. Compare award date to the date the obligation was
posted into IFMS. Determine the significance of
awards not posted by month-end.
f. Verify that obligated amounts are deobligated or
carried forward to fund subsequent year work in
accordance with the terms of the appropriation.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
3. Advances are accurately adjusted to reflect grantee
performance.
TEST PROCEDURES
a. Verify that advances are properly and timely
liquidated upon acceptance of grantee reports of
performance.
b. Verify that the advance account is properly adjusted
and that the performance is recorded to the proper
accounts.
c. Verify that disbursements recorded in IFMS reflect
grantee performance and reimbursement requests.
4. At the termination of the grant or cooperative
agreement, funds unused and/or improperly applied
by the recipient must be established as a receivable
by the assisting agency.
a. Review IGMS list to identify those grants that have
close-out actions and procedures. Determine the
timeliness of actions upon receipt of close-out
documents.
b. Verify that expenditures recorded on the accounting
records reflect the amount of grantee performance
and that unobligated amounts are deobligated.
c. Determine the time spans between end of award
period, grantee submission of EPA ACH Payment
Request, review by Grants Office, determination on
unexpended balance, and recording in IGMS and
IFMS. Ensure that the time spans are in compliance
with the Grants Administration Manual.
d. Verify that receivables are recorded promptly in the
accounting records.
5. Ensure accurate and timely financial management
reporting and reconciliation of accounts.
a. Review timeliness of posting draw-downs in IFMS
per current EPA policy.
b. Verify if payments to award recipients are properly
reported in IFMS. If accounts payable are recorded
for invoices received, verify that the payable
amounts are reduced when payment is made.
c. Verify that subsidiary accounts are reconciled to
general ledger control accounts every month.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
6. Instructions developed by EPA covering advance
financing procedures should include internal
operating procedures.
TEST PROCEDURES
a. Review the recipient organization's use of funds
advanced as reflected on SF 269 and determine the
difference, if any, between the total amount of funds
drawn on the ACH and disbursements related to the
federal programs.
b. Verify payments made after receipt of the SF 270,
Request for Advance or Reimbursement, from the
recipient to ensure compliance with EPA policy.
c. Verify that the requests show completion of review
and authorization. Confirm payments are made
after receipt of an approved SF 269 from a grants
specialist.
d. Determine that payments to recipients as
reimbursement for work performed or as costs
incurred are accounted for as expenditures and as
expenses incurred or reductions of liabilities, if the
expenses were recorded previously.
e. Obtain consecutive grantee reports and determine
how many days lapsed between request for
advance and payment.
f. Review procedures for monitoring recipient reports
for excess cash balances.
7. Grants and cooperative agreements are properly
presented and reported in the financial statements.
Headquarters
a. Review the general ledger account structure and
ensure that grants and cooperative agreements are
properly classified according to the requirements of
the U.S. Standard General Ledger (SQL).
b. Review the financial statement presentation of
grants and cooperative agreements. Determine
whether EPA's presentation is in compliance with
the OMB Bulletin 01-09, Form and Content of
Agency Financial Statements, for the current fiscal
year.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
Authorized personnel establish and maintain
accounts in the Automated Standard Application for
Payments (ASAP) system to control the flow of
funds to Recipient Organizations.
TEST PROCEDURES
a. Determine whether the Agency Location Code (ALC)
in ASAP is valid.
b. Verify that the ASAP account information is a
combination of the ALC/Region identifier, the
Recipient identification number, and the account
identification number.
c. Verify that the appropriate spending authorization is
entered.
d. Verify that online certification of the spending
authorization is valid. (Note: Ensure separation of
duty for entering spending authorizations and
certifying spending authorizations.)
e. Review and reconcile the following daily activity
ASAP reports with IFMS data: - Agency Payment
Report - Debit Voucher (SF 5515)/Deposit Ticket
(SF 215) Reports - Agency Payment Warehouse
Report - Agency Authorization Cancellation Report -
Agency Authorization Transaction-Warehoused
Authorizations Processed Report - Agency Account
Transaction Report - Agency Book Entry Adjustment
Report
f. Review ASAP system-generated messages in a
timely manner.
g. Report ASAP transactions on the SF224.
TEST PROCEDURE 10. COLLECTIONS AND DEPOSITS ACCOUNTING STANDARDS
Control Over Collections
All officers and employees of the U.S. government who, by virtue of their official capacity, receive money
for the custody of the United States, including donated, quasi-public, and unearned money, must maintain
proper records and provide adequate physical control for the funds. Persons designated as accountable
officers must account for all receipts and deposits.
Agencies are responsible for placing collections under appropriate accounting control promptly upon receipt.
Records will be maintained in sufficient detail to readily identify all collections including bid deposits and
collections for other agencies. Control records must disclose collections that have not been deposited,
deposits in transit, and deposits that have been confirmed by the depository. Also, agencies must ensure that
contractors collecting funds on behalf of the government maintain proper records and provide adequate
physical control over the funds.
In accordance with the internal control standard for separation of duties, persons responsible for handling
cash receipts should not participate in the accounting or operating functions relating to any of the following:
Shipping of goods and billing of goods and services.
Controlling accounts receivable and subsidiary ledgers.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
Preparing and mailing statements of balances due.
Authorizing and approving credits for returns and allowances or for adjustments of amounts due.
Preparing cash reconciliations.
Officials who are responsible for cash collections must not co-mingle such receipts with personal funds or
use official receipts for cashing checks or money orders. EPA personnel must never instruct remitters to
make checks, money orders, or other instruments payable to individual officials or employees by name.
Deposit and Documentation of Collections
As a general rule, all monies received for use by the United States should be turned in to the Department of
Treasury as general fund miscellaneous receipts. The frequency of deposits depends on the amount of funds
received by the depositing office. Receipts of $5,000 or more should be deposited daily.
The Department of Treasury's cash management regulations (TFM-Vol. I, Part 6 - Section 8000) require that
deposits be made by Thursday of each week regardless of the amount accumulated. If checks or money
orders are held uncashed, they must be under appropriate physical safeguard and accounting control.
Collections should be deposited according to the procedures prescribed by the Department of Treasury
(TFM-Vol. I, Part 5 - Section 2000). If the proper account that should be credited is not identified when
collections are received, the credit should be to the agencies' deposit fund suspense accounts until the
disposition of the collections can be identified.
For checks or other negotiable instruments that cannot be deposited because they were lost, destroyed, or
mutilated during government processing, agencies should seek replacement in accordance with Department
of Treasury regulations (TFM-Vol. I, Part 5, Section 5000). If such an item cannot be replaced, the loss is an
irregularity that should be processed in accordance with the guidance in GAO Title 7, Chapter 8.
Collections reported to the Department of Treasury in the agency's monthly report should be supported by
confirmed copies of the deposit tickets covering the collections or by appropriate schedules of collections
referring to the related deposit tickets.
Collections Credited to Appropriation and Fund Accounts
Collections permitted to be credited to appropriation and fund accounts are refunds and reimbursements.
Refunds are: (1) returns of advances, (2) collections for overpayments made, (3) adjustments for previous
amounts disbursed, or (4) recovery of erroneous disbursements from appropriation or fund accounts that are
directly related to, and are reductions of, previously recorded payments from the accounts.
Reimbursements are sums received by the federal government in payment for commodities sold or services
furnished, either to the public or to another government account.
Refunds are not required to be deposited to the credit of miscellaneous receipts. They must be deposited to
the credit of the appropriation or fund charged with the original expenditure unless other deposit procedures
are expressly prescribed by statute.
November 2005 4-54 Office of the Chief Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
Reimbursements may be deposited to the credit of an appropriation or fund account only when authorized by
law and in accordance with the requirements of the law. For example, the law may authorize the credit of
deposits to current appropriations or it may direct that the credit is made to the appropriation initially charged
with the cost of reimbursable work.
The collection of refunds or reimbursements authorized to be deposited to the credit of the appropriation
initially charged with the expenditure should be deposited to the expired account if collected after the
expiration of the appropriation. However, if such appropriation account is closed, the collections must be
deposited as miscellaneous receipts with the Department of Treasury.
Other Collections
Various types of collections are made by voucher deductions under procedures prescribed by Department of
Treasury. These collections include federal and state income taxes, travel advances, claim settlements, and
contractor refunds of advances.
Collections of any type received by one agency should not be forwarded to another agency for deposit. Such
collections should be deposited by the collecting office for credit to its suspense or budget clearing account
as described in TFM - Vol. I, Part 5 - Section 3000. The transfer of funds to the designated agency should be
accomplished by following the procedures for interagency (lAGs) transactions described in TFM - Vol. I,
Part 6 - Section 4000.
Exchange or Sale of Personal Property
In acquiring personal property, an executive agency may exchange or sell similar items and apply the
exchange allowance or proceeds of sale in whole or partial payment for similar item replacement property.
All such transactions should be properly documented.
Except as otherwise directed by law, all proceeds from the sale of personal property will be available during
the fiscal year in which the property was sold and for one fiscal year thereafter for obligation for the
purchase of replacement property.
If the sale proceeds are received after an obligation for replacement property has been incurred and within
the prescribed time limit, the proceeds may be credited as a directed reimbursement to the appropriation
account charged or chargeable for the replacement property.
If the sales proceeds are received before an obligation for replacement property has been incurred, but an
administrative determination has been made and documented that such proceeds will be used as an
appropriation reimbursement to apply against an obligation that will be incurred within the prescribed time
limit, the proceeds should be credited to the appropriate budget clearing account. A suspense budget
clearing account should not be used for this purpose since it must be cleared by the end of the current fiscal
year.
At least quarterly, agencies should review the accounts used for deposit of sale proceeds and clear them of
any amounts that should be applied to other accounts or transferred to miscellaneous receipts in the general
fund of the Department of Treasury. If the sale proceeds are not available for obligation or are not to be
applied to replacement purchases, the proceeds will be deposited in the Department of Treasury's general
November 2005 4-55 Office of the Chief Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
fund as miscellaneous receipts. The transaction descriptions for replacement purchases are presented in the
U. S. Standard General Ledger (SGL).
Recoveries of Damages
The amount of excess costs or liquidated damages recovered because of default or breach of contract may be
used to fund a replacement contract and need not be deposited to miscellaneous receipts.
Funds recovered from third parties for damage to government property must be deposited to miscellaneous
receipts and may not be credited to an appropriation available to repair such property or to any other
appropriation of the agency.
Collections from Government Employees
As a general rule, federal employees are obligated to account for any significant gift, gratuity, or benefit
received from private sources incident to the performance of official duty. Examples include fees and
payments received by employees that represent juror or witness fees, airline travel discounts, or penalty
payments by airlines for not providing confirmed seats.
Except for nominal promotional materials, items and money received by employees from private sources
must be remitted to their agencies. Any money received by agencies representing discounts or rebates will
be deposited to the credit of the appropriation initially charged with the payment since these constitute
refunds. Payments received as penalties must be deposited to the Department of Treasury as miscellaneous
receipts.
Unidentified Remittances
Unidentified remittances that will ultimately be applied to a receipt, appropriation, or fund account within the
budget will be credited to a receipt clearing account, Unclaimed Monies. If a receipt clearing account is not
appropriate, the remittances will be credited to a deposit fund suspense account outside the budget.
Remittances that are subsequently identified to accounts within the budget must be transferred to the proper
accounts. Transfer documentation must show the purpose for which the remittances are received.
Lockbox Deposits
A lockbox arrangement is a collection and processing service provided by financial institutions that
accelerates the flow of funds to Department of Treasury's General Account. Agencies instruct remitters to
mail payments directly to a Department of Treasury designated lockbox bank. The bank transfers deposits to
the Federal Reserve on a daily basis for credit to the agency accounts and processes remittance advices
according to Department of Treasury and agency instructions.
EPA is responsible for the accounting requirements of all transactions and funds transferred. EPA is
required to monitor lockbox performance on a daily basis to ensure quality service, reconciliation of detail
remittance data, and the timely transferring of funds. EPA must prepare the necessary financial statements
and reports to Department of Treasury (TFM - Vol. I, Part 2).
November 2005 4-56 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Disclosure in Financial Statements
Collections are to be reported and classified according to OMB Bulletin 01-09, Form and Content of Agency
Financial Statements, for the current fiscal year.
EPA Policies and Procedures
Resources Management Directive 2540, Cash Management.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
Obtain a detailed list of deposits for a period (e.g., for a month or a quarter).
CONTROL OBJECTIVES
1. Collections are deposited promptly upon receipt and
properly recorded in the accounting system.
2. Finance office receipts and collections have been
recorded in the correct amount and in the proper
general ledger account, credited in the proper
appropriations, and in the correct time period.
3. Internal control standards for separation of duties
are adhered to and adequate physical control over
collection is maintained.
TEST PROCEDURES
a. From a sample, trace cash collection transactions
from initial receipt to deposit. Determine the timing
of receipt to deposit and recording in the accounting
system. Note any delays. Examine all checks and
drafts to determine that they appear proper and are
currently dated.
a. Obtain IFMS SF-224 Data by Disbursing Office and
Schedule Number (RS 224 1&2) and obtain
associated deposit tickets (SF 215s), and compare
for any discrepancies in amount, date, and number.
b. Review accounting data for consistency including
deposits to correct appropriations.
c. Based on the date submitted for deposit, determine
that the deposit was recorded in the proper
accounting period and reported to Department of
Treasury in the proper period. Consider
coordinating this step with the test of accounts
receivable.
d. Trace receipt amounts reported on the SF 224s to
appropriate supporting documentation (SF 215s and
SF 5515s) and to the general ledger.
a. Compare procedures for collection and deposit to
GAO Title 7, Chapter 5 (Accounting Standards) and
note any discrepancies.
b. Compare procedures and controls for undeposited
collections to GAO Title 7 and note any
discrepancies.
c. Compare procedures to the description of
responsibilities for accountable officers with regard
to collection, custody, and deposit of government
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
EST PROCEDURES
funds and note any discrepancies.
4. Lockbox deposit transactions are adequately
monitored and properly recorded.
a. Obtain a detailed list and identify lockbox deposits
from Department of Treasury's CASHLINK.
Compare Department of Treasury's lists with
lockbox schedules.
b. Obtain appropriate supporting documentation of
lockbox deposits and verify with IFMS for proper
accounting.
TEST PROCEDURE 11,
General
ADVANCES AND PREPAYMENTS (OTHER THAN GRANTS AND
COOPERATIVE AGREEMENTS) ACCOUNTING STANDARDS
Advances are cash outlays made by a federal entity to its employees, contractors, grantees, or others to cover
a part or all of the recipients' anticipated expenses or as advance payments for the cost of goods and services
the entity acquires.
Cash outlays include: (1) travel advances to employees, and (2) cash paid under a contract, grant, or
cooperative agreement before services or goods are provided by the contractor or grantee. Prepayments are
payments made by a federal entity to cover certain periodic expenses before those expenses are incurred.
Examples include rents paid at the beginning of a rental period.
Progress payments made to a contractor based on a percentage of completion of the contract are not advances
or prepayments. Advances and prepayments should be recorded as assets.
Advances and prepayments are reduced when goods or services are received. Amounts of advances and
prepayments that are subject to refund should be transferred to accounts receivable.
Advances and Prepayments As Made
Agencies making advances or prepayments must record them as assets until receipt of the goods or services
involved or until contract terms are met. When goods or services have been received or contract terms met,
the expense or acquired asset must be recognized and the advances or prepayments reduced. (For advance
payments to award recipients, see Grants and Cooperative Agreements test procedure).
Advances and Prepayments Received
An agency receiving an advance or prepayment should record the amount received as a liability until
payment is earned (goods or services have been delivered or contract terms met).
After the payment is earned (performance has occurred), the agency should record the appropriate amount as
revenue or as a financing source and reduce the liability accordingly.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Travel Advance
Travel advances are amounts made available to employees prior to the beginning of a trip for costs to be
incurred in accordance with the Travel Expense Act of 1949 and in accordance with standardized Federal
Travel Regulations (FTR). A travel advance is initially recorded as an asset and is subsequently reduced
when travel expenses are actually incurred. Advance amounts that are subject to refund, a settled travel
claim indicating the traveler owes part of the advance to the federal government, are transferred to accounts
receivable.
Reporting
Advances and prepayments paid out by an agency are assets of the agency. Advances and prepayments
received by an agency are liabilities of the agency. In financial reports of an agency, advances and
prepayments the agency paid out (assets) should not be netted against advances and prepayments that the
agency received (liabilities).
Advances and prepayments both made and received should be aggregated, but not netted against each other.
If the amounts are material, they should be shown as a separate line item on the financial statements instead
of being included in accounts receivable or accounts payable account balances. Agencies should report or
disclose separately the amount of advances and prepayments associated with non-federal entities and federal
agencies.
EPA Policies and Procedures
Resource Management Directive 2540, Cash Management.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
Obtain a detailed schedule of advances indicating the obligation amount, cumulative payments, cumulative
cost incurred/reported, accrual for unreported cost, and resultant advance balance.
CONTROL OBJECTIVES
1.
Balances represent payments for services that will
be performed or costs that will be incurred in the
future.
TEST PROCEDURES
a.
b.
Examine documents supporting the advance
payment and determine if advance payment was
authorized.
Review supporting documents showing anticipated
expenses for goods or services to be received.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
2. Travel advances are authorized for the proper
amount and are properly recorded and liquidated.
TEST PROCEDURES
a. Examine documents supporting travel advances and
determine if the travel amounts were computed
properly within EPA policy limits.
b. Review the travel advances for appropriate
authorization.
c. Verify the timely liquidation of the advances, within
five days after trip cancellation or five days after
concluding the travel.
d. Compare travel vouchers and accompanying
general ledger entries for accuracy and
completeness.
e. Verify the timely recording of the advances.
3. Prepayments are properly and promptly recorded
and liquidated.
a. Compare sample documents and associated
general ledger entries for accuracy and
completeness of data entry.
b. For each selected sample advance document:
- Trace debit entries to cash disbursements.
- Trace credit entries to documented evidence
that services or goods were received or if
prepayment was canceled and an account
receivable was created.
c. Verify the timely recording and liquidation of
prepayment transactions to the general ledger
account.
4. Advances are properly presented in the financial
statements.
Servicing Finance Offices (SFOs)
a. Verify the accuracy of the general ledger Advances
& Prepayments account balance by reviewing
subsidiary ledgers and associated supporting
documentation.
Headquarters
b. Review the general ledger account structure and
ensure that advances and prepayments are properly
classified according to the requirements of the U.S.
Standard General Ledger (SQL).
c. Review the financial statements' presentation of
advances and prepayments and determine whether
EPA's presentation is in compliance with OMB
Bulletin 01-09, Form and Content of Agency
Financial Statements, for the current fiscal year.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
TEST PROCEDURE 12. FINANCIAL REPORTING ACCOUNTING STANDARDS
(Note: this section will be further revised to comply with OMB Circular A-123-Revised,
Amendment A.)
Federal Financial Reporting Objectives
Federal financial reporting should enable the reader or report users to:
Determine how budgetary resources have been obtained and used and whether the acquisition and use were
in accordance with the legal authorization.
Evaluate the service efforts, costs, and accomplishments of the reporting agency; the manner in which these
efforts and accomplishments have been financed; and the management of the agency's assets and liabilities.
Determine whether future budgetary resources will be sufficient to sustain public services and meet
obligations as they come due.
Understand whether adequate financial management systems and internal controls are in place.
Financial Reporting
Federal agencies are required to prepare specific quarterly and annual financial statements in accordance
with provisions in OMB's Bulletin 01-09, Form and Content of Agency Financial Statements. The bulletin
is issued under the authority of 35 USC 3515(d), pursuant to the CFO Act as amended by the Reports
Consolidation Act of 2000 (P.L. 106-531). The provisions of this bulletin are based upon Federal
Accounting Standards Advisory Board (FASAB) standards and concepts, technical bulletins, and
implementation guides, along with specific AICPA and Financial Accounting Standards Board (FASB)
pronouncements.
Note Disclosures
A description of all significant accounting policies, identifying and describing the accounting policies
followed by the reporting entity and the methods of applying these principles should be included in the notes
to the financial statements as the Summary of Significant Accounting Policies (e.g., recognition of revenue,
depreciation methods, and related-party transactions).
The financial statements provide information that is useful to the Congress, managers, and the public.
Agencies should conform to the prescribed form and content unless the particular operations or organization
of the agency or the program requires reporting due to a variance. Since fiscal year 1995, agencies have
prepared consolidated agency-wide annual financial statements. Agencies must continue to prepare reports,
which are used to monitor and control obligations and expenditures of budgetary resources.
Agency-audited annual financial statements are required to be submitted to the Office of Management and
Budget by November 15 and include:
Management discussion and analysis - Provides a clear and concise narrative description of the reporting
entity and its missions, activities, accomplishments, and overall financial results and condition.
November 2005 4-61 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Principal statements and related notes: (1) Balance Sheet; (2) Statement of Net Cost; (3) Statement of
Changes in Net Position; (4) Statement of Budgetary Resources; (5) Statement of Financing; and (6)
Statement of Custodial Activity, when applicable.
Required supplementary stewardship information (RSSI). Statement of Federal Financial Accounting
Standards (SFFAS) 8 establishes standards for reporting on the federal government's stewardship over (1)
certain resources entrusted to it, identified as stewardship property, plant and equipment and (2) certain
responsibilities assumed by it, identified as the current service assessment.
Required supplementary information - This section should contain other financial and management
information that supports information presented in the overview of the reporting entity and information that
would otherwise enhance an understanding of the financial condition and operation of the reporting agency.
In addition, agencies are required to prepare and submit quarterly unaudited financial statements without
footnotes to OMB 21 days after the end of the quarter.
FACTS I Reporting
Department of Treasury requires agencies to transmit electronically in the Government Financial Report
System (GFRS) a pre-closing adjusted trial balance (ATB) at the Department of Treasury appropriation/fund
group level, using the US SGL accounts and supporting notes.
EPA Policies and Procedures
Policy Announcement 03-11, Preparing EPA's Interim and Annual Audited Financial Statements, dated September 30, 2003.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
1. Financial reports are presented in compliance with
the requirements of Department of Treasury, Office
of Management and Budget (OMB) and FASAB.
TEST PROCEDURES
Headquarters
a. Review the presentation of the principal financial
statements and related notes and verify that EPA's
presentation is in compliance with OMB Bulletin 01-
09, Form and Content of Agency Financial
Statements.
b. Verify that the financial statements are compiled in
accordance with Department of Treasury's
published SQL crosswalks.
c. Verify that the financial statements and related
footnotes include comparative information from the
current year and prior year.
d. Verify that the FACTS I Closing package is in
compliance with Department of Treasury's TFM 2-
4700.
e. Verify that required reports are submitted on
established due dates and have management
approval.
2. Underlying records fully support the information
presented on the financial statements and related
notes.
a. Verify that the financial statements and related
notes are compiled using data recorded in the
agency accounting system.
b. Verify that adjustments ("on top") to the financial
statements and related notes not recorded in the
agency accounting system are adequately
documented.
3. Financial statements and related notes include all
necessary accruals and adjustments to properly
report on the financial position of EPA.
a. Verify that the payable, grant, and payroll accruals
have been recorded in IFMS.
b. Verify that the financial statements and related
notes include necessary "on top" adjustments for
imputed costs.
c. Verify that the "on top" reclassification adjustment
for payroll benefit expenses has been included in
the financial statements.
d. Verify that BPD consolidation balances have been
recorded as "on top" adjustments to the financial
statements.
e. Verify that necessary PP&E "on top" adjustments
have been recorded in the financial statements.
f. Verify that intra-entity account balances have been
eliminated from the consolidated financial
statements.
g. Verify that any other necessary correcting "on top"
adjustments have been included in the financial
statements.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
4. Edit checks are performed on the financial
statements.
TEST PROCEDURES
a. Verify that the beginning balances on the current
year financial statements match ending balances
from the prior year. Ensure that "on top" adjustments
from the prior fiscal year have been brought forward
as post-closing balances.
b. Verify that the "on top" adjustments from the prior
year have been reversed at the beginning of the
current fiscal year.
c. Verify that all of the financial statements balance
(i.e., total budgetary resource equals the total status
of budgetary resource on the Statement of
Budgetary Resources).
d. Verify that the relationships between the various
financial statements are correct (i.e., the net cost of
operations line on the Statement of Net Cost equals
the net cost of operations line on the Statement of
Financing).
e. Verify that the amounts presented in the notes
agree with the amounts presented in the applicable
financial statement.
5. Reconciliations and analyses are performed on a
routine basis.
a. Verify that reconciliations of designated SQL
accounts have been performed.
b. Verify that reconciliations of budgetary and
proprietary accounts are performed on a quarterly
basis.
c. Verify that the budgetary appropriations and
rescissions recorded in IFMS are reconciled to the
corresponding warrants and SF 1151s, as well as
the Letter of Apportionment.
d. Verify that the "open" accounts receivable billings
report is reconciled to the general ledger.
e. Verify that regional property reports are reconciled
to the general ledger.
f. Ensure that quarterly analyses are performed on
comparative financial statement line items greater
than the established material threshold.
TEST PROCEDURE 13. FUNDS CONTROL ACCOUNTING STANDARDS
General
Funds control refers to control over the use and management of fund appropriations to ensure that: (1) funds
are used only for authorized purposes, (2) funds are economically and efficiently used, (3) obligations and
expenditures do not exceed the amounts authorized and available, and (4) the obligation or disbursement of
funds is not reserved or otherwise withheld without Congressional knowledge and approval.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
Limitation Control Requirements
Agencies are precluded by the Antideficiency Act (31 U.S.C. 1341) from (1) incurring obligations or
expenditures in excess of the amounts available in appropriations, fund accounts, or apportionments, or (2)
from obligating or expending amounts required to be sequestered. Agencies are also precluded from
exceeding allotments, sub-allotments, or other subdivisions of funds. In addition, the Anti deficiency Act
requires agency heads to establish fund control systems that can be used to identify agency staff responsible
for causing obligations or expenditures to exceed limitations.
Agencies administering appropriation and fund accounts are responsible for ensuring that the amount
obligated does not exceed the legally imposed limitations. Agencies are also responsible for establishing and
preparing reports for ensuring compliance with the limitations.
Transactions Among Appropriations and Fund Accounts
Transfers of funds among appropriations and fund accounts are prohibited, except as authorized by law. The
prohibition applies equally to transfers among separate appropriations and fund accounts available to an
agency or among agencies.
Control Over Funds
Each agency is required by 31 USC 1514 to have a system of administrative control of funds, approved by
the President, that restricts obligations or expenditures to the amounts appropriated to applicable fund
balances and to the amounts of apportionments or reapportionments made for the current fiscal period.
Reserves established by the Director of OMB or other authorized officials are also to be controlled.
Reporting
In accordance with laws and regulations, the status of funds and related transactions must be reported to
Department of Treasury and OMB. In addition, any violations of appropriations or other fund limitations
must be disclosed in the notes to the financial statements. Any major restrictions or limitations on the use of
funds (such as limitations on amounts that can be spent for certain types of expenditures, e.g., travel)
contained in the appropriation acts may also be disclosed, as well as violations of such restrictions.
Reporting on Appropriation, Receipt, and Fund Accounts
Agencies are required to report charges and credits to appropriation, receipt, or fund accounts consistent with
the fund account symbols and titles and the U.S. Standard General Ledger (SGL) uniform chart of accounts.
Reporting Appropriations
Available appropriations must be reported in EPA's financial statements (in the Statement of Changes in Net
Position) for the fiscal year for which the appropriations are made. Appropriations withdrawn must be
reported as reductions to available appropriations in the financial statements for the period in which the
appropriations are withdrawn. Restorations must be reported in the financial statements in the period in
which the restoration is made.
November 2005 4-65 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Unexpended appropriations must be reported in the equity section of the Statement of Financial Position.
Obligated but unexpended appropriations must be reported separately from unobligated appropriations.
Expended appropriations (other than appropriations expended for property, plant, and equipment) for a given
period must be reported for that period as an item of financing of operations and be differentiated from
reimbursements, transfers-in, donations, revenues, and gains. Appropriations expended for property, plant,
and equipment initially must be recorded as assets and an increase in Invested Capital. If the asset is
depreciated, a portion of the Invested Capital account equal to depreciation expense must be removed from
the Invested Capital account and reported as a financing source. Outlays representing checks issued or cash
disbursed to liquidate obligations must be reported as (1) costs of operations in the period in which the
disbursement was made, unless a liability was established at the prior period end, or (2) the cost or part of the
cost of assets acquired that will be used in future periods, such property, plant, and equipment.
EPA Policies and Procedures
Resources Management Directive 2510, Annual Budget Guidance.
Resources Management Directive 2520 - Rel 2.0, Administrative Controls.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
CONTROL OBJECTIVES
1. The financial management system records, controls,
and reports EPA's obligations in a manner that
supports execution of the budget.
TEST PROCEDURES
Headquarters
a. Trace the recording of an appropriation and
approved apportionment into the general ledger
accounts.
b. Verify whether the allowance issued matches the
amount authorized in the allotment.
c. Review the structure of the subsidiary records to
ensure that they balance to the general ledger
accounts.
d. Review posting of allowances into the accounting
system for adequacy of controls and timeliness of
entry.
2. EPA must establish general ledger accounts for
each appropriation and fund account for selected
assets, liabilities, and equities.
Headquarters
a. Verify whether general ledger accounts are
maintained for each appropriation and fund.
b. Review the monthly trial balance list of accounts and
fund control statement.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
3. Data on proposed expenditures must be
systematically accumulated in accounting records in
advance of becoming valid obligations.
ST PROCEDURES
Headquarters/SFOs
a. Review the process for the recording of
commitments for timeliness, completeness, and
accuracy of entries.
b. Review the general ledger accounts for the
recording of apportionment amounts.
c. Ensure open commitment amounts and obligations
do not exceed limitations (e.g., travel and
Superfund).
To control funds adequately, there must be an
effective verification of available funds before
creating an obligation, and obligation information
must be promptly and accurately accumulated and
reported.
Headquarters/SFOs
a. Review compliance with procedures for maintaining
the funds control records and the process for
recording transactions.
b. Verify that funds authorized for a given purpose
were actually spent for that purpose.
c. Verify for appropriations and fund accounts that the
amount obligated does not exceed the legally
imposed limitations.
d. Examine for compliance the procedures for
notification and correction of errors.
e. Examine the timing of obligations and their
recording in IFMS.
5. The status of funds and related transactions are
reported to Department of Treasury and OMB
according to the accounting standards.
Headquarters
a. Review the funds control records and reports to
Department of Treasury and OMB.
b. Reconcile the reports with the funds control records.
c. Review funds control records for any limitations or
restrictions. Verify the financial statements for
appropriate disclosure of such limitations or
restrictions.
6. Review budget execution for compliance with
operating plans.
Headquarters
a. Obtain sample SF 133 reports (Report on Budget
Execution) and compare with relevant operating
plans.
7. Appropriations are properly presented in the
financial statements and disclosures are adequate.
Headquarters
a. Consider the financial statement presentation of
appropriation information and determine whether
EPA's presentation is in compliance with OMB
Bulletin 01-09, Form and Content of Agency
Financial Statements, for the current fiscal year.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
TEST PROCEDURE 14.
Authorization of Travel
TRAVEL EXPENSE AND REIMBURSEMENTS ACCOUNTING
STANDARDS
Travel expenses can be claimed by all employees authorized to travel on business for the federal
government. Except when provided by law, all travel should be either authorized or approved by the EPA
Administrator or by an official to whom such authority has been delegated.
Ordinarily, a travel authorization must be issued before expenses are incurred. A travel-authorizing official
should authorize or approve only that travel necessary to accomplish the Agency mission in the most
effective and economical manner. General or blanket travel authorizations may be used for individual
travelers but may not be used for groups of employees. All travelers must have specific travel authorizations
for each trip.
Sources of Funds
Agencies and travelers should take all reasonable steps to minimize the cash burden on both EPA and the
traveler. These steps include, but are not limited to, using government contractor-issued charge cards,
travelers' checks, or contractor-provided automated-teller-machine (ATM) services. To manage federal
financial resources more effectively for travel expense purposes:
Agencies should limit the advance of travel funds to those estimated expenses that a traveler is expected to
incur in connection with authorized travel and that normally would be paid using cash. Cash transaction
expenses are those travel expenses that as a general rule cannot be charged and must, therefore be paid
using cash, personal checks, or traveler checks. Agencies should follow up with travelers to assure that
vouchers are submitted within established timeframes.
Agencies should process travel vouchers promptly to recover any excess travel advances or to provide
payment to employees. Agencies must establish internal policies and procedures to ensure that travel
vouchers are paid within 10 working days after the end of each trip or travel period for which a voucher is
filed.
Government Contractor-Issued Charge Cards
Agencies should offer government contractor-issued charge cards to all employees who are expected to
travel at least twice a year. Travelers who are issued charge cards are encouraged to use them to pay for
official travel expenses to the maximum extent possible. When authorized, the charge card may be used to
obtain cash travel advances at ATMs worldwide.
ATM withdrawals are limited to the amounts stated in the ATM cardmember agreement and the employee's
travel authorization. The use of cash withdrawn from an ATM is subject to all applicable EPA regulations
with respect to travel advances. The employee should be reimbursed by EPA for all authorized and allowable
travel and transportation expenses. Charges in excess of authorized and allowable travel and transportation
expenses are the financial responsibility of the employee and are not reimbursable.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Travel Card Training
Training for holders of the travel card must provide general information on traveling for the government and
include information on how to use a travel card. It must familiarize the card holders with federal travel
regulations, agency travel card policies and procedures, and proper card use.
Reimbursements
Reimbursements are payments made by a federal agency to cover certain expenses incurred by the
employees and which have not yet been paid for the agency, e.g, reimbursements for travel, transportation,
and conveyance expenses.
All persons authorized to travel on business for the federal government should keep a record of expenditures
properly chargeable to the government, and note each item at the time and date the expense is incurred. All
claims for the reimbursement of traveling expenses should be submitted on authorized reimbursement forms
and must be itemized and stated in accordance with the FTR. The travel voucher must be supported by a
copy of the travel authorization. Receipts are required for allowable cash expenditures in amounts in excess
of $75 plus any applicable tax.
EPA Policies and Procedures
Resources Management Directive 2550B, EPA Travel Policies and Procedures.
Policy Announcement 05-04, Implementation of e-Travel Services-Travel Management Center, dated April 19, 2005.
Policy Announcement 05-03, Update Guidelines for the Government Travel and Transportation Charge Card, dated
February 18, 2005.
Policy Announcement 04-03, Income Tax Reimbursement Allowances for Extended TOY Assignments, dated July
28, 2004.
Policy Announcement 02-03, Implementation of Travel Manager, dated November 28, 2001.
Policy Announcement 02-03, Amendment 1, Revisions to Travel Manager Policy and Procedures, dated February 4,
2003.
Policy Announcement 02-03, Amendment 2, Revisions to Travel Manager Policy and Procedures, dated October 21,
2003.
Policy Announcement 02-03, Amendment 3, Revisions to Travel Manager Policy and Procedures, dated September
17, 2004.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
1. Ensure that travel vouchers are properly prepared
according to pertinent EPA regulations and
procedures.
TEST PROCEDURES
Review travel vouchers to:
a. Ascertain accuracy of the amounts claimed.
b. Ensure that claims for reimbursement of travel
expenses are submitted on authorized
reimbursement forms and itemized and stated in
accordance with the travel regulations.
2. Claims for reimbursement are supported per the
Federal Travel Regulations (FTR).
Review travel vouchers to ensure that:
a. Travel vouchers are supported by a copy of the
travel authorization.
b. Expenditures in amounts in excess of $75 plus any
applicable tax are supported by receipts.
3. Transactions are for authorized travel and for
allowable expenditures.
Review travel vouchers to determine that:
a. Travel conducted was completed according to the
travel authorization.
b. Expenditures charged are permitted by the FTR,
Comptroller General decisions, and EPA policy.
c. Expenditures are within the allowable limits.
d. ATM withdrawals are for authorized travel
advances.
4. Travel advance payments, refunds of excess travel
advances, and travel voucher payments must be
completed within a reasonable timeframe.
Review travel claims to verify that:
a. Travel advances (non-ATM) are made no earlier
than three days prior to travel begin date.
b. Travel expense is substantiated (by filing a properly
completed travel voucher) within five days of the
completion of travel or 30 days if the employee is in
continuous travel status. Determine whether the
Finance Office notified the traveler if a voucher was
not submitted within the established timeframe.
c. The Finance Office checked for excess funds. Any
excess amount should be returned within five days
of completion of travel.
5. Subsidiary and control accounts are in agreement.
a. Verify that expense and reimbursement accounts
are properly liquidated when travel has occurred
and the payment is charged to the operating
expense account.
b. Examine subsidiary and control account data
generated from IFMS for reconciliation.
c. Review travel vouchers and accompanying general
ledger entries for appropriate and accurate
accounting data as well as correct calculations.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
6. Travel expenses and reimbursements are properly
presented in the financial statements.
TEST PROCEDURES
Headquarters
a. Review the financial statement presentation of
advances and reimbursements and determine
whether EPA's presentation is in compliance with
OMB Bulletin 01-09, Form and Content of Agency
Financial Statements for the current fiscal year.
TEST PROCEDURE 15. CLAIMS AGAINST THE GOVERNMENT ACCOUNTING STANDARDS
General
Claims against the U.S. government are filed with the agency where the claim began. The agency assembles
and maintains information relevant to settling the claim. The claim is then settled based on governing
statutes or regulations. These regulations provide for the agency to resolve the claim or to refer it for
settlement to the General Accounting Office (GAO), Department of Justice (DOJ), or other responsible body
as specified by statute or regulation.
Discharge of Statutory Settlement Authority
GAO discharges its responsibility for the settlement of claims against the U.S. government in three ways: (1)
through the audit of transactions after payment and settlement of the accounts of accountable officers, (2) by
adjudication before payment is made or denied, or (3) by adjudication upon appeal following denial of a
claim by an agency.
Claims Required to Be Submitted to Claims Division
Claims that involve doubtful questions of law or fact, except those under $25, and claims that have been the
subject of an advance decision of the Comptroller General. In either case a reference to the decision must
appear on the voucher supporting the document.
A claim that contains items that involve doubt or items that the agency can settle administratively. Only
the doubtful portions that are equal or greater than $25 should be referred to GAO for settlement.
Claims regardless of doubt that are required by statue, regulation, or by decision of the Comptroller
General to be settled at GAO before payment is made or denied, must be submitted to GAO.
Reclaims of items previously denied by the administrative agency, unless it is determined administratively
that the action taken was clearly in error and can be corrected by the agency.
Claims that appear to be barred by an applicable statue of limitation at the time of receipt by the agency
should be submitted to GAO.
Submission by Administrative Agency
Claims submitted to the claims division by administrative agencies should be accompanied by an
administrative report containing:
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Identification (claimant's agency, social security number, employer identification number).
A statement of facts regarding the origin of the claim.
A statement of the doubt or other reason for forwarding the claim.
A recommendation for the proper disposition.
A citation of pertinent supporting documents such as contracts and vouchers.
A statement that the claim has not been paid and will not be paid except pursuant to certification in the
name of the Comptroller General.
A complete symbol citation for the applicable appropriation or fund.
Reporting
Claims against the government should be disclosed in compliance with OMB Bulletin 01-09, Form and
Content of Agency Financial Statements, for the current fiscal year.
Test Procedure
The following test procedures are examples. Each office may develop and perform additional test
procedures to ensure compliance with the accounting standards and control objectives for the event cycle.
It is anticipated that the number of claims will be small, and therefore, all Agency claims should be
reviewed.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
1. Claims against the government are processed in
accordance with applicable laws and regulations.
TEST PROCEDURES
Headquarters
a. Verify whether the claim documents are submitted
to the GAO Claims Division in accordance with
requirements.
b. Verify whether the claim forms have been signed by
the claimant or an authorized agent or attorney.
c. Verify whether a claim filed by an agent or attorney
is supported by a duly executed power of attorney or
other documentary evidence of the agent's or
attorney's right to act for the claimant.
d. For claims equal to or greater than $25, verify that
only the doubtful claims are sent to GAO.
e. Verify that claims that are required by statute,
regulation, or by decision of the Comptroller General
to be settled at GAO before payment, is made or
denied are submitted to GAO.
f. For claims previously denied, verify that they are
sent to the GAO unless there was an apparent error.
g. Verify that claims barred by a statute of limitation
are sent to the GAO.
2. Claims submitted to the GAO Claims Division are
accompanied by administrative reports.
Headquarters/SFOs
a. Verify that the administrative report accompanying
claim forms submitted to the GAO Claims Division
contains the claimant agency's serial/branch and
social security number for purposes of identification.
b. Verify the statement of facts.
c. Verify the statement of doubt or other reason for
forwarding the claim.
d. Verify whether a recommendation for proper
disposition is attached.
e. Verify that there is a citation of pertinent supporting
documents such as contracts and vouchers.
f. Verify that a symbol citation for the applicable
appropriation or fund exists.
g. Verify that there is a statement that the claim has
not been paid and will not be paid except pursuant
to certification in the name of the Comptroller
General.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
CONTROL OBJECTIVES
3. Claims against the government are properly
disclosed in EPA's financial statements.
TEST PROCEDURES
Headquarters
a. Verify that the contingent liability, claims against the
government, disclosed in the financial statements
has been reasonably estimated.
b. Review the financial statement presentation of
claims against the government and determine
whether EPA's presentation is in compliance with
OMB Bulletin 01-09, Form and Content of Agency
Financial Statements, for the current fiscal year.
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
TEST PLAN C: QUALITY ASSURANCE REVIEW FOR SYSTEMS THAT INTERFACE
WITH THE INTEGRATED FINANCIAL MANAGEMENT SYSTEM (IFMS)
(Office of Financial Management, Financial Systems Staff coordinates review with appropriate offices.)
PURPOSE
The purpose of the questionnaires in the test plan is to determine whether EPA's financial management
systems conform to functional requirements. The results of the questionnaires will determine transaction
testing for accounting events (Test Plan B) and might affect the analysis of the general control environment
(Test Plan A).
BASIS
The Office of Management and Budget (OMB) Circular A-
127-Revised, Financial Management Systems, prescribes
policies and standards for executive departments and agencies
to follow in developing, operating, evaluating, and reporting
on financial management systems. The Circular requires the
establishment of a single, integrated financial management
system in each executive branch agency to provide complete,
reliable, consistent, and timely financial information
supporting federal government operations.
Section 7(g) of the Circular, Functional Requirements,
requires agency financial management systems to conform to
existing applicable functional requirements for the design,
development, operation, and maintenance of financial
management systems. Additional functional requirements
may be established through OMB circulars and bulletins and
the Treasury Financial Manual.
CONTENT
EPA Policy and Procedures
em
H
Policy Announcement 05-06, System
Interfaces with Integrated Financial
Management System, dated May 11, 2005.
Policy Announcement 05-01, Accounting
for Information Technology, dated
December 15, 2004.
Policy Announcement 01-04, Policies and
Procedures for Confirming and Reconciling
EPA's Intragovernmental Transactions with
Trading Partners, dated May 29, 2001.
Policy Announcement 00-06, Policies and
Procedures for Verifying and Correcting
Trading Partner Information in EPA's
Integrated Financial Management System,
dated June 6, 2000.
Transmittal 00-07, Recording
Intragovernmental Transactions in the
Integrated Financial Management System
(IFMS), dated March 31, 2000.
The test plan for the functional review of financial systems consists of six sets of questionnaires, as
follows:
C-l. General Financial Management System Requirements
V Cl-1 Accounting Classification Structure
V Cl-2 Application of the U.S. Government Standard General Ledger (SGL) at the Transaction Level
V Cl-3 Federal Accounting Standards
V C1-4 Financial Reporting
V C1 -5 Internal Controls
November 2005
-------
Quality Assurance Guide 4. Accounting Event Test Plans
C-2. Accounting Functional Requirements
V C2-1 Standard General Ledger
V C2-2 Budget Execution and Funds Control
V C2-3 Accounts Payable
V C2-4 Accounts Receivable
C-3. Payroll System Functional Requirements
V C3-1 Pay Processing
V C3-2 Report Processing/Reconciliation
C-4. Travel System Functional Requirements
V C4-1 Travel Authorization
V C4-2 Travel Advances
V C4-3 Travel Vouchers
V C4-4 Local Travel
V C4-5 Sponsored Travel
V C4-6 Interface Requirements
V C4-7 Reports
C-5. Grants System Functional Requirements
C-6. Fixed Assets System Functional Requirements
The majority of questions are constructed in a "Yes" or "No" answer format. Some questions require a
narrative answer or description of a process or procedures. For all questions, space is provided for
comments or other explanation.
EXECUTION
To adequately address the questions in the questionnaires, several steps must be taken to evaluate
information from various sources:
First, at a minimum, conduct interviews with personnel.
Then, make observations, if possible, of operational procedures actually being performed.
Review relevant documentation, including policies and procedures, review reports, desk procedures,
organization charts, management directives, and position descriptions.
Perform transaction testing to assess the system's ability to process accurate, valid data and reject
consistently invalid data. Testing should incorporate the full cycle of transactions, including transaction
initiation, processing through the system, and ultimate posting to the accounts or inclusion in output
reports.
Review other test plansin particular Test Plan Bto achieve maximum efficiency and effectiveness of
testing.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Despite the fact that most of the questions in this test plan are provided in a "Yes" or "No" format, the
questions are often quite subjective. Professional judgment must be exercised in determining the
appropriate selection. One reviewer may conclude that the most appropriate answer is "Yes." Another
reviewer, under the same circumstances, may conclude that the appropriate answer is "No." Further, cost
benefit considerations come into play when determining the adequacy and sufficiency of testing procedures
conducted. The cost of testing should not exceed the benefits derived from testing. A standard of
reasonableness dictates that adequate testing has been performed to allow a reviewer to reach an opinion.
RESULTS
The Integrity Act requires a statement (Annual Assurance Letter) on whether the EPA's financial
management systems conform to government-wide requirements. If the systems do not conform to
financial systems requirements, the Annual Assurance Letter should discuss EPA's plans to bring its
system into compliance. If the Administrator judges a deficiency in financial management systems to be
material when weighed against other Agency deficiencies, the issue should be included in the Annual
Assurance Letter as a non-conformance. The deficiencies deemed material must be reported and tracked as
part of the Annual Assurance Letter submission. For deficiencies not included in the Integrity Act report,
corrective action plans should be developed and tracked internally at the appropriate level of managerial
responsibility.
A determination that a deficiency has been corrected should be made only when sufficient corrective action
has been taken and the desired results achieved. The determination should be in writing and along with
other appropriate documentation, should be available for review by the appropriate officials. In order to
facilitate analysis and identification of control deficiencies, test results from the questionnaires should be
summarized. A suggested collection tool is presented in Exhibit 4-3. The purpose of the schedule in this
exhibit is to highlight questions with "No" answers, and where merited, develop and track corrective
action.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
EXHIBIT 4-3
SUMMARY OF RESULTS FOR ANALYSIS OF FUNCTIONAL SYSTEMS REQUIREMENTS
SECTIONS
1. General Functional Requirements
2. Accounting Functional Requirements
3. Payroll System Functional Requirements
4. Travel System Functional Requirements
5. Grants System Functional Requirements
6. Fixed Assets System Functional Requirements
November 2005
-------
Quality Assurance Guide 4. Accounting Event Test Plans
QUESTIONNAIRE C-1: GENERAL FINANCIAL MANAGEMENT SYSTEMS REQUIREMENTS
The financial management system policy of the federal government requires the establishment of
government-wide data financial systems and compatible agency systems. The systems must include
standardized information and electronic data exchange between central management agencies and
individual operating agency systems to meet the requirements of good financial management. The systems
must provide complete, reliable, consistent, timely, and useful financial management information on
federal government operations to:
Enable central management agencies, individual operating agencies, divisions, bureaus, and other
subunits to carry out their fiduciary responsibilities.
Deter fraud, waste, and abuse of federal government resources.
Facilitate efficient and effective delivery of programs by relating financial transactions to program
performance.
In support of this objective, each agency must establish and maintain a single, integrated financial
management system that complies with the characteristics outlined in Section 7 of OMB Circular A-127-
Revised, Financial Management Systems. There are 12 broad requirements areas included in Section 7.
The five that apply to EPA are listed below, and a separate questionnaire for each of these five
requirements areas is provided.
V Cl-1 Accounting Classification Structure
V Cl-2 Standard General Ledger at the Transaction Level
V Cl-3 Federal Accounting Standards
V Cl-4 Financial Reporting
V Cl-5 Internal Controls
Questionnaire Cl-1: Accounting Classification Structure
The accounting classification structure is a subset of EPA's financial information classification structure,
which also includes financially related personnel information, performance measurement information, and
other financial information needed by the Agency. The classification structure provides the means for
categorizing financial information along several dimensions as needed to support financial management
and reporting functions. The data elements included in the classification structure depend, in part, on the
implementation strategy of the U.S. Standard General Ledger (SGL) (e.g., use of sub-accounts versus data
elements), aggregation requirements for preparation of financial statements under the CFO Act,
appropriation structure, and internal reporting and management needs of EPA. The basic objectives of the
accounting classification structure will:
Minimize data redundancy.
Ensure consistent collection of information for similar transactions throughout EPA.
Encourage consistent formats for entering data directly into the financial management systems.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Ensure consistent information is readily available and provided to internal managers at all levels within
the organization.
Track specific program expenditures.
1a. Is the chart of accounts in the financial system consistent with the basic four-digit
structure provided in the SGL?
YES NO
1b. Describe any inconsistency with the SGL in the accounting classification structure.
2a.
2b.
Are the account titles in the financial system consistent with the basic account titles
provided in the SGL?
YES NO
Describe any inconsistency with the SGL in the account titles.
Is the fund structure capable of handling the Federal Account Symbols and Titles
(FAST) structures established by Department of Treasury?
YES NO
Is the system capable of handling all Department of Treasury symbols for all
accounts?
YES NO
5a.
5b.
Does the budget program classification structure allow reporting of results for all
categories in which budgetary decisions are made (decision unit, program element,
subprogram, activity, and sub-activity)?
YES NO
Identify any inconsistencies in the budget program classification structure.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
6a. Does the organization classification structure provide for:
(1) Agency, Bureau, Office, Division, Branch, Unit (to assign responsibility)?
(2) Budget Center, Cost Center (to identify benefiting responsibility centers)?
(3) Accounting Office, Agency Location Code (to identify financial responsibility)?
YES
YES
YES
Identify any inconsistency in the organization classification structure.
7a. Does the project classification structure provide for project, subproject, task/work order,
work unit/job order, and function?
YES
7b. Identify any inconsistencies in the project classification structure.
8a. Does the object class code provide for object and sub-object (to identify goods and
services, and revenues where applicable)?
YES
Identify any inconsistencies in the object classification structure.
9a. Does the accounting classification code structure support organizational budget,
accounting, and financial management reporting?
YES
Identify areas not supported by the accounting classification code structure.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
10a. Identify instances where posting is performed to a summary account and not to an individual account.
10b. Identify instances where posting is performed to a summary account and not to an individual account.
Questionnaire Cl-2: Application of the U.S. Government Standard General Ledger at the
Transaction Level
Financial events must be recorded by EPA throughout the financial management system by applying the
requirements of the SGL at the transaction level. Application of the SGL at the transaction level means that
the financial management systems will process transactions following the definitions and defined uses of
the general ledger accounts described in the SGL. Compliance with the standard requires:
Data in Financial Report Consistent with the SGL. Reports produced by the systems that provide
financial information, whether used internally or externally, must provide financial data that can be traced
directly to the SGL accounts.
Transactions Recorded Consistent with SGL Rules. The criteria (e.g., timing, processing rules and
conditions) for recording financial events in all financial management systems must be consistent with
accounting transaction definitions and processing rules defined in the SGL.
Supporting Transaction Detail for SGL Accounts Readily Available. Transaction detail supporting SGL
accounts must be available in the financial management systems and directly traceable to specific SGL
account codes.
Application of the SGL may be supplemented to meet EPA-specific information requirements. EPA must
follow guidelines provided in the SGL supplement to the Treasury Financial Manual.
1a. Are the transactions recorded consistently with the SGL?
YES
1 b. Identify the transaction types that are not consistent with the SGL.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
2a. Are the details to support transactions readily available for SGL accounts?
YES
2b. Describe the transaction types for which supporting detail is not available.
3a.
3b.
Are transactions categorized by fund, program, organization, project, and object class
code?
Is the system capable of providing reports at any level within the structure?
YES
YES
NO
NO
4a. Are the financial reports consistent with the SGL requirements?
YES
4b. Identify the reports that are not consistent with the SGL.
5a. Does the system ensure consistent format for entering similar data?
YES
Describe instances where similar data are entered in different formats.
Does the system minimize data redundancy?
YES
Describe instances of duplicate transaction entry in the system.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Questionnaire Cl-3: Federal Accounting Standards
EPA's financial management systems must maintain accounting data to permit reporting in accordance
with accounting standards recommended by the Federal Accounting Standards Advisory Board (FASAB)
and issued by the Director of the Office of Management and Budget (OMB) and/or the Secretary of
Department of Treasury. Where no accounting standards have been recommended and issued by FASAB,
systems must maintain data in accordance with the applicable accounting standards used by EPA for
preparation of its financial statements. EPA financial management systems must have the flexibility to
adapt to changes in accounting standards.
Does the system maintain financial data in compliance with the FASAB standards?
YES
1b. Identify the financial data that are not in compliance with the FASAB standards.
Does the system maintain financial data in compliance with GAO standards?
YES
2b. Identify the financial data that are not in compliance with GAO standards.
3a. Does the system provide financial reports consistent with the requirements of the OMB
Bulletin 01-09, Form and Content Bulletin for Agency Financial Statements?
YES
3b. Identify the financial statements that are provided by the system that are not in compliance with the OMB
Bulletin.
4a.
Does the system provide financial reports that are consistent with the Department of
Treasury requirements for financial reporting?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
4b. Identify the financial reports that are provided by the system that are not in compliance with the Department of
Treasury reporting requirements.
5a. Are the transactions reported consistent with the Treasury Federal Account Symbols
and Titles (FAST)?
YES
5b. Identify the transactions that are not consistent with the Treasury FAST requirements.
Questionnaire Cl-4: Financial Reporting
EPA's financial management systems must provide complete, reliable, consistent, timely, and useful
financial management information on operations to:
Support the fiduciary role of management.
Support the legal, regulatory, and other special management requirements for EPA.
Support budget formulation and execution functions.
Support fiscal management of program delivery and program decision making.
Comply with internal and external reporting requirements, which include preparation of financial
statements in accordance with the form and content prescribed by OMB, and the reporting requirements
prescribed by Department of Treasury.
Monitor the financial management system to ensure the integrity of the financial data.
EPA's financial management systems must capture and produce financial information required to measure
program performance, financial performance, and financial management performance that will support
budgeting, program management, and financial statement presentation. As new performance measures are
established, EPA must incorporate the necessary information and reporting requirements into its financial
management systems.
EPA's financial management systems must also provide the necessary data to prepare, execute, and report
on the Agency's budget in accordance with the requirements of OMB Circular A-l 1, Part 4, Instructions on
Budget Execution, and other circulars and bulletins issued by OMB.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
1. Does the system support management's fiduciary role and EPA's legal, regulatory,
and other special management requirements?
YES
NO
Does the system provide support for the preparation of accrual-based financial
reports at user-specified intervals?
YES
Does the
basis?
system
provide
budgetary
information
on an obligation
basis
and
a cost
YES
NO
4a.
4b.
4c.
Does the system provide for external reports required by Department of Treasury at
the prescribed intervals?
Does the system prepare external reports?
YES
YES
NO
NO
Identify the Department of Treasury reports that are not provided by the system.
5a.
5b.
Does the system provide financial information on prior year actual and current year-
to-date?
Does the financial system provide the following OMB reports (as part of EPA's annual
budget request) for the:
(1) Program and financing schedule?
(2) Schedule of object classification and personnel summary?
(3) Schedule on status of unfunded contract authority?
(4) Schedule of amounts available for appropriation?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
6a. Does the system produce pre-defined internal reports, including exception reports,
on a recurring or periodic basis?
YES
6b. Identify internal reports that are required by management but not provided by the system.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
7a.
7b.
Does the system accommodate additions, deletions, or changes to report content or
format without major interruptions to normal processing?
Does the system provide an ad hoc reporting capability for both current and
historical data?
YES
YES
NO
NO
8a.
8b.
Does the system capture and produce program information required to measure YES
program performance to support budgeting and program management?
Identify the financial information required to measure program performance but not captured
NO
by the system.
9a.
9b.
Does the system capture and produce financial information required to measure YES
financial performance to support budgeting, program management, and financial
statement presentation?
Identify the financial information required to measure financial performance but not captured
NO
by the system.
Questionnaire Cl-5: Internal Controls
EPA's financial management systems must include a system of internal controls that ensure the following:
Resource data are consistent with laws, regulations, and policies
Resources are safeguarded against waste, loss, and misuse
Reliable data are obtained, maintained, and disclosed in reports
Appropriate internal controls must be applied to all system inputs, processing, and outputs. Such system-
related controls form a portion of the management control structure required by OMB Circular A-123-
Revised, Management's Responsibility for Internal Control.
Do the system controls provide a reasonable level of confidence that waste, fraud,
abuse, or error will be prevented?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Do the system controls ensure that the information used to produce financial
statements and reports accurately reflects account balances and the results of
operations?
YES NO
3a.
3b.
Does the system provide document and transaction-level controls to ensure that an
entire document is processed as coded and correctly recorded?
YES NO
Identify additional document and transaction-level controls needed to ensure the accuracy of data entry.
Does the system provide audit trails to trace transactions from source documents,
original input, system-generated transactions, and internal allocation transactions
through the system?
YES NO
Does the system provide audit trails to trace source documents through successive
levels of summarization to the financial statements and vice versa?
YES NO
6a.
6b.
Does the system provide transaction details to support account balances?
YES NO
Identify transaction types where adequate details are not provided.
7a.
7b.
Does the system provide audit trails to identify changes made to system parameters
and tables that would affect the processing of any financial transactions?
Does the system maintain and report a history of all changes to tables?
YES
YES
NO
NO
8a.
Does
data?
the
system
provide overall
system
controls
to ensure the
integrity of financial
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
8b. Identify additional system controls needed to ensure the integrity of financial data.
9a. Does the system provide controls to ensure that only authorized personnel have
access to data for the purpose of viewing, recording, changing, or reporting
information?
YES
Identify additional controls needed to ensure system access to only authorized personnel.
QUESTIONNAIRE C-2: ACCOUNTING FUNCTIONAL REQUIREMENTS
The following section contains questionnaires for basic functions within a core financial management
system. The core financial management system forms the foundation for EPA's Integrated Financial
Management System (IFMS), which:
Provides common processing routines.
Supports common data for critical financial management functions affecting the entire EPA.
Maintains the required general ledger control over financial transactions, resource balances, and other
financial systems.
The core financial system also provides data for performance measurement, analysis, and preparation of the
financial statement. Following are the four functions within the core financial system.
V C2-1 General Ledger
V C2-2 Budget Execution and Funds Control
V C2-3 Accounts Payable
V C2-4 Accounts Receivable
Questionnaire C2-1: General Ledger
The general ledger, the highest level of summarization, must maintain account balances by the fund
structure and individual general ledger accounts established in the core financial system. Depending on
reporting requirements, some or all general ledger accounts may have balances broken out by additional
elements of the accounting classification structure.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
All transactions (regardless of origin) that record financial events must post as individual or summary
transactions to the general ledger. Transactions that originated in the core financial system must post
individually to the general ledger. Transactions from other systems may post as individual or summarized
transactions, but with the appropriate audit trail. The core financial system will not maintain duplicates of
every transaction occurring in other systems. Rather than posting every payroll transaction for every
employee, summary transactions by organization should be passed to the core financial system for posting.
The core financial system facilitates general ledger analysis and reconciliation. The system must provide
the amounts to general ledger control accounts for reconciliation to ensure that detailed subsidiary accounts
and system balances can be reconciled with reports from Department of Treasury and other agencies. As
internal controls improve and system integration increases, out-of-balance conditions will decrease. The
possibility for out-of-balance conditions will exist due to system failures, incorrect transaction definitions,
or other conditions.
1a. Does the system allow each transaction to update at least four pairs of debits and
credits to general ledger accounts to ensure that debits equal credits?
1b. Does the system provide control accounts in the general ledger to maintain a balance
between the general ledger and ancillary systems, e.g., property and travel?
YES
YES
NO
NO
2a.
2b.
Is each SGL account supported by subsidiary accounts?
Do the subsidiary accounts provide detailed information appropriate for asset
protection, management information, and fund accounting?
YES
YES
NO
NO
Does the system support an account structure for multiple appropriations or funds and
multiple fiscal years within the appropriations, including multi-year and no-year
appropriations?
YES
NO
Are
budgetary
accounts
maintained
obligation
and cash
basis?
YES
NO
Are proprietary accounts maintained on an accrual basis?
YES
NO
Does the system have the capability to provide for current accounting period
processing, with automated month-end and year-end closing procedures, including
consolidation and rollover of the general ledger account balances?
YES
NO
7a.
Does the system generate all required year-end closing transactions?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
7b. Identify the year-end closing transactions not generated by the system.
Does the system provide for multiple preliminary closings before final closing, while
maintaining the capability to post current period data?
YES
NO
9. Does the system maintain historical and comparative data to produce comparative
financial statements, and retain the data for as long as EPA needs the data?
YES
10. Does the system provide for electronic transfer of account balances to Department of
Treasury?
YES
11.
Does the system provide for automatic generation of recurring accrual entries and
reversals in the next fiscal period?
YES
NO
12.
Does the system provide for capturing, classifying, summarizing and reporting
current year and cumulative data on capital acquisitions, disposals, and assets on
hand?
YES
NO
13a.
13b.
Does the
balances
to satisfy
system provide the capability to accomplish the rollover of general ledger YES NO
in a detailed manner that maintains the SGL attribute information required
FACTS I and FACTS II reporting requirement?
Explain, if the response is NO.
14a. Does the system provide flexibility so that the system can adapt to changes in
reporting requirements for FACTS I and FACTS II?
YES
14b. Explain, if the response is NO.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Questionnaire C2-2: Budget Execution and Funds Control
Each agency of the federal government is responsible for establishing a system to ensure that it does not
obligate or disburse funds in excess of those appropriated and/or authorized. The budget execution and
funds control within the core financial management system are EPA's primary tool for carrying out this
responsibility.
Office of Management and Budget (OMB) Circular A-l 1, Part 4, Instruction on Budget Execution, set
government-wide policy for funds management that the core financial system must meet. In addition to
complying with the government-wide policies, budget execution and funds control must support EPA's
policies on internal funds allocation methods and controls.
The funds control process records transactions affecting the resource usage accounts in the budgetary
section of the SGL (e.g., commitments, undelivered orders, expenditures, reimbursements earned). Funds
control provides appropriate warnings and controls to ensure that budgetary limitations are not exceeded.
Does the system provide budget execution capability by recording the funding and
related budget execution documents?
YES
NO
Does the system provide complete, accurate, and timely data on the status of each
account, showing:
a. Total budgetary resources available for obligation within each legal limitation?
b. Total valid obligations incurred to date for each legal and Agency limitation?
c. Estimated reimbursements and actual reimbursements available within each
limitation?
YES
YES
YES
NO
NO
NO
3a.
3b.
3c.
Does the system provide for maintaining operating plans at any level of the
classification structure?
Does the system track the use of funds through operating plans?
Does the system summarize, compare, and report the operating plans to the
appropriate level of funds control?
YES
YES
YES
NO
NO
NO
4a.
4b.
Does the system maintain current information on commitments and obligations
according to the classification structure on a fund-by-fund basis?
Does the system provide the capabilities and controls for authorized users to override
fund certification tests?
YES
YES
NO
NO
5a.
Does the system record the effect of all transactions that impact the availability of
funds, such as commitments, liquidations, obligations, and expenditures?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
5b.
Does the system update all appropriate accounts to ensure that the system always
maintains the current status of funds?
YES
NO
Does the system establish and track the use of funds against limitations assigned by
Department of Treasury?
YES
NO
7. Does the system reject transactions failing the availability of funds test or any other
critical edit and place them in an error file for corrective action?
YES
Does the system handle funds control for those funds that receive
other budgetary authority in addition to appropriations?
reimbursements or
YES
NO
9a.
9b.
Does the system record revolving fund balances net of claims against budgetary
resources?
Does the system apportion revolving funds on an obligation basis?
YES
YES
NO
NO
10.
Does the system provide control features that ensure that amounts reflected in the
funds control structure agree with the general ledger account balances at the end of
each update cycle?
YES
NO
11.
Does the system generate required transactions as needed by the year-end closing
procedures?
YES
NO
12.
Does the system provide support for budget submission and reports in accordance
with OMB Circular A-11, Part 4?
YES
NO
13a.
13b.
13c.
Does the system provide support for budget requests submitted in accordance with
OMB Circular A-11, Part 4?
Does the system provide for timely preparation of SF-132 (Apportionment and
Reapportionment Schedule)?
Does the system provide for timely preparation of SF-133 (Monthly Report on Budget
Execution)?
YES
YES
YES
NO
NO
NO
Questionnaire C2-3: Accounts Payable
The payment management function should provide appropriate control over all payments made by or on
behalf of EPA. Payments are made for a variety of reasons to:
Vendors in accordance with contracts
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
State governments under a number of programs
Employees for salaries and expense reimbursements
Other federal agencies for reimbursable work
Individual citizens receiving federal benefits
Recipients of federal loans
Office of Management and Budget, Prompt Payment, Final Rule 5 CFR 1315, specifies government policy
for payments made to vendors against contracts. To comply with 5 CFR 1315, EPA must make timely
payments, pay appropriate interest and penalty fees for late payments, and ensure that discounts are taken
for timely payments or when it is advantageous to the government. The Cash Management Improvement
Act (CMIA) provides the requirements for grant payments made to states. Other regulations affect
payments made for other purposes, including travel, payroll, and benefits.
Specific activities related to payments may be supported by other systems that provide summary data to the
core financial system for control and management purposes. The other systems must meet the
requirements for payment management. Other systems may also support activities that lead to the payment
stage (e.g., recording obligations and expenditures and establishing payables), but depend on the core
financial system to manage the actual payment process. For example, a travel system: (1) calculates the
amount to be paid on a travel voucher, and (2) sends transactions to the core financial system to record the
expenses and a payable to a traveler. The core financial system schedules the payment for disbursement
and confirms that the payment occurred.
A.
Vendor File
Does the system maintain a vendor file that includes data to support the accounts payable
process?
YES
NO
Does the system maintain data related to employee payments made through other systems?
YES
NO
Does the system provide the capability to report IRS 1099 data to vendors?
YES
NO
Does the system allow more than one vendor address?
YES
NO
Does the system allow new vendors to be added to the vendor file given proper
authorization?
YES
NO
Does the system permit users to define criteria for deleting vendors from the vendor file?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
7.
Does the system reject ancillary system transactions that do not have a valid vendor
identified? (Exception - overrides that are properly authorized)
YES
NO
8. To support the payee information maintenance process, does the core financial system
provide the capability to maintain payee (vendor) information to support obligation,
accounts payable, and disbursement processes, including the following:
a. Vendor name (legal name and "doing business as" (DBA)), as appropriate?
b. Tax identification number (TIN)?
c. Vendor ID number (agency assigned)?
d. Data universal numbering system (DUNS) number, including the maintenance of
the ability to associate multiple DUNS numbers to a TIN?
e. Organization type that can accommodate Central Contractor Registration (CCR)
published business rules for organization types, such as sole
proprietorship/individual, partnership, or employee?
f. Business type that can accommodate CCR published business rules for
business type, such as federal agency or local government?
g. Federal versus non-federal indicator for FACTS reporting?
h. ALC number (for federal vendors)?
i. Six-digit trading partner code (for federal vendors)?
j. Multiple payment methods, such as electronic funds transfer (EFT)?
k. Three or more "remit to" addresses (to facilitate payments to vendors not
required to register in CCR)?
1. Three or more separate instances of banking information required to execute an
EFT transaction, such as account and routing transit numbers?
m. For CCR vendors (i.e., organizations that are required to register in the CCR),
DUNS + Four for each instance of banking information?
n. Bank account type (checking or savings)?
o. Three or more contact names and telephone numbers (i.e., accommodate
contact types defined as "mandatory" in CCR business rules)?
p. Third-party information, such as payee TIN for notice of assignment, as
appropriate?
q. Subject to prompt-pay indicator?
r. Internal Revenue Service (IRS) Form 1099 indicator?
s. W-2 indicator?
t. CCR indicator (required or exempt)?
u. CCR status (i.e., active, inactive, or unregistered)?
v. Comment field?
w. Date of last update?
x. User ID of last update?
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does the system provide the capability to capture, store, and process information needed to
create EFT payments in accordance with Department of Treasury standards?
YES
NO
B. Commitments
Does the system provide the capability to enter commitment documents online and from
multiple locations?
YES
NO
Does the system check the commitment document against funds control and generate the
commitment transaction?
YES
NO
3a.
3b.
Does the system capture at a minimum: requisition number, line item, classification,
structure, estimated amount, and desired delivery date?
YES
NO
Identify the data that are not captured by the system.
4. Are commitment documents allowed to be future dated, archived, and posted at the
appropriate date?
YES
Are commitment documents closed:
By the system upon issuance of an obligating document?
By the user with appropriate authorization?
As part of year-end closing?
YES
YES
YES
NO
NO
NO
C. Obligations
Does the system provide the capability to enter obligating documents online and from
multiple locations?
YES NO
Does the system check funding limits for obligating documents, including amendments to
obligating documents that result in a change to dollar amounts or to the classification
structure?
YES
NO
Does the system generate obligation transactions and the liquidation of related
commitments?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
4a.
4b.
Does the system capture and maintain the following information related to each
obligation document, including amendments:
a. Obligating document number?
b. Line item (e.g., description, quantity, unit price, total price, classification
structure)?
c. Expiration date?
d. Expected receipt date?
e. Vendor number?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
Identify the information that is not maintained by the system.
Does the system provide for properly authorized cancellations of posted obligating
documents?
YES
NO
Does the system track the status of obligating documents throughout the acquisition
process?
YES
NO
7.
Are the original machine-readable documents, along with all Amendments, retained for
audit trail purpose?
YES
NO
Are obligating documents closed either by the system automatically, upon complete
performance/delivery, or by the user with appropriate authorization?
YES
NO
Does the system record and maintain contracts and grants so that fiscal year-to-date
and inception-to-date information can be presented?
YES
NO
10a.
10b.
Does the system record Blanket Purchase Agreements?
Does the system record delivery orders on contracts?
YES
YES
NO
NO
11.
Does the system generate status and procurement history for documents such as
multi-task contracts, grants, and Blanket Purchase Agreements?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
D. Receipt, Inspection, and Acceptance
Does the system record receipt, inspection, and acceptance of goods and services?
YES
NO
Does the system generate an accrual transaction and liquidate the appropriate
undelivered order once the goods or services are received, inspected, and accepted?
YES
NO
3. Does the system meet the requirements of Prompt Payment, 5 CFR 1315, relating
to:
a. Receipt and acceptance processes?
b. Determination of payment due dates?
YES
YES
NO
NO
Does the system provide for defining tolerances, rejections, and overrides for quantity
variance between receiving reports and the obligating documents?
YES
NO
Is the system capable of tracking quantity variances between the receiving report and
the obligating document?
YES
NO
Does the system match the obligating document, receiving report, and invoices?
YES
NO
7.
Does the system identify those instances where:
a. A receiving report or acceptance is missing?
b. Goods or services have been received and accepted, but an invoice has not
been entered?
YES
YES
NO
NO
Does the system provide for interfacing of receiving data from other systems, such as
inventory or property systems?
YES
NO
Does the system process purchase returns, including rejection of part of a shipment?
YES
NO
10a.
Does the system allow transactions to be entered directly for those events that will
result in payment but are not part of the commitment, obligation, and matching
process?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
10b. Identify the events that are not handled by the system (without commitment, obligation, and matching
processes).
11a. Is the system capable of processing disbursements related to advances, grants, loans, YES
and Automated Clearing House drawdowns?
11b. Identify the disbursement functions that are not handled bylFMS.
NO
12a.
12b.
12c.
Does the system perform funds control checks for all authorized payment transactions?
Does the system subject all transactions to edits, validations, and error-correction
procedures?
Does the system perform funds control checks for the invoices that exceed the
obligated amount?
YES
YES
YES
NO
NO
NO
E.
Disbursements
1a. Does the system schedule payments in accordance with Prompt Payment, 5 CFR 1315?
1b. Does the system compute:
a. Discount amounts?
b. Withholdings?
c. Interest or penalties?
1c. Does the system collect information on discounts taken and lost and interest penalties?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
Does
the system
provide
automated
approval
payment
schedules?
YES
NO
3a.
3b.
Does the system generate all relevant identification information for each payment, such
as order number, invoice number, and interest penalty?
Does the system automatically compute totals by appropriation symbol for inclusion
on the payment schedule?
YES
YES
NO
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does
the system
allow
changes to
payment
schedules
authorized
personnel?
YES
NO
5a.
5b.
Does the system allow a payment to be removed from automated scheduling and be
manually scheduled?
Does the system perform all the necessary functions related to manual schedules (e.g.,
updating the payment history, the general ledger, and funds control)?
YES
YES
NO
NO
Does the system verify transactions by comparing invoice number, amount, and dates
to avoid payment of duplicate invoices?
YES
NO
7.
Does the system provide for handling voided payments by reversing the accounting
transactions leading to the disbursement and reestablishing the obligation, if
appropriate?
YES
NO
8a.
8b.
Does the system provide for the automated comparison of EPA's payment schedule
and Department of Treasury's accomplished payment schedule?
Does the system update EPA's records with the following when payment information is
received from Department of Treasury:
a. Paid schedule number?
b. Check or Input Message Acknowledgment (IMA) numbers?
c. Date and amount of payment?
YES
YES
YES
YES
NO
NO
NO
NO
9. Does the system provide the capability to generate ACH payment in the following
formats?
a. Corporate trade exchange (CTX) (820 or Flat File)
b. Cash concentration or disbursement (CCD)
c. Cash concentration or disbursement plus addendum (CCD+)
d. Prearranged payment and deposit (PPD)
e. Prearranged payment and deposit plus addendum (PPD+)
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
10. Does the system provide the capability to ensure that employee ACH payments are
generated only as PPD or PPD+ payments?
YES
NO
11. Does the system provide the capability to consolidate multiple payments to a single
payee in accordance with the Treasury Financial Manual?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
F. Reporting
Does the system produce detailed listings by level of funds control for the commitment
documents, obligation documents, and expenditure of funds documents?
YES
NO
2. Does
a.
b.
c.
d.
e.
f.
the system generate the following reports:
Requisitions aged reports?
Receiving aged reports without acceptance reports?
Aged outstanding obligating documents reports?
Unmatched aged vendor invoice reports?
Vendor listing reports?
IRS 1099 reports?
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
3. Does the system generate the following reports in accordance with Prompt Payment, 5
CFR1315:
a. Number of interest penalties paid?
b. Dollar amount of interest penalties paid?
c. Relative frequency (on a percentage basis) of interest penalty payments made
to the total number of payments made?
d. Number, total amount, and relative frequency (on a percentage basis) of
payments made 5 days or more before the due date, except where cash
discounts were taken?
YES
YES
YES
YES
NO
NO
NO
NO
G. Other Capabilities
Does the system maintain historical data on all commitment, obligation, receipt, and
payment transactions?
YES
NO
Does the system maintain open documents to show status of commitments,
obligations, accruals, and disbursements by document line item?
YES
NO
Does the system maintain payment history of every payment by authorizing document
number, payment schedule number, payment date, invoice number, vendor number,
and appropriation charged?
YES
NO
4a.
4b.
Does the system provide online access to vendor activity by vendor name and
number?
Does the system provide a search capability for vendor information?
YES
YES
NO
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
5. Does the system identify and store information related to reimbursements made to
employees or others when the payment is considered miscellaneous income subject to
federal tax and reportable to the IRS?
YES
Questionnaire C2-4: Accounts Receivable
The core financial management system receipt management function supports activities associated with
recording EPA's cash receipts, including servicing and collecting receivables. Receivables are established
to account for amounts due from others as the result of performance of services by EPA; delivery of goods
sold; passage of time (e.g., interest earned); loans made to others that must be repaid; or other actions.
Some receipts may be collected without the prior establishment of a receivable, as in the case of program
fees and Freedom of Information Act (FOIA) requests.
A receivable is recognized when EPA establishes a claim to cash or other assets against other entities,
either based on goods or services provided or on legal provisions, such as payment due date (e.g., penalties
not received by the date they are due). Receivables are accounted for as assets until funds are collected,
converted to other resources, or determined to be uncollectible in whole or in part.
Servicing and collection activities for some receivables may be supported by other systems that provide
data to the core financial system. This is particularly appropriate for receivables resulting from programs
with complex supporting data requirements, such as Superfund, loan programs, and grant programs.
Servicing and collection for receivables with simpler requirements for supporting data, such as those
resulting from erroneous payments, may be supported directly by the core financial system with no support
by other systems.
The accounts receivable function includes recording, billing, monitoring, and collecting amounts due the
government whether previously established as a receivable or not. These activities must be supported by
aging schedules, exception reports, and reports used to monitor due diligence efforts.
A.
Account File
Does the system maintain data for each account, such as identification, address,
balances, billing cycles, aging information, and account history data?
YES
NO
Does the system maintain accounts for reimbursable orders and identify government and
non-government accounts?
YES
NO
Is each account updated when billing documents are generated and collections are
received?
YES
NO
Does the system maintain individual accounts receivable and access existing EPA files
required to support accounts receivable processing?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
B. Processing
Does the system control and identify all collections (including credit card collections and
electronic funds transfer) and update accounts receivable?
YES
NO
Does the system accept transactions from external agency systems in a standard format
for entry into the financial system?
YES
NO
Does the system process data from various sources and produce IPAC billings for
receivables from other government agencies?
YES
NO
Does the system match receipts to account number and apply the receipts to the proper
billing documents?
YES
NO
Does the system record complete and partial receipts?
YES
NO
Does the system update accounts receivable balances on a document-by-document
basis?
YES
NO
7a.
7b.
Does the system calculate and assess interest, administrative charges, and penalty
charges on overdue receivables?
Does the system allow for the waiver of these charges with appropriate authority?
YES
YES
NO
NO
Does the system provide for automatic reversal for non-sufficient funds (NSF) checks?
YES
NO
Does the system provide for automated reporting of delinquent accounts to commercial
credit bureaus and collections?
YES
NO
10a.
10b.
Does the system provide for administrative offset of funds due to delinquent
indebtedness?
Does the system for provide the generation of repayment schedules for delinquent
indebtedness?
YES
YES
NO
NO
11a. Does the system apply collections to inspection, handling, and processing charges before
applying collections to the principal balance?
11 b. Does the system have the capability to charge different interest rates to different
receivable accounts?
YES
YES
NO
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
11c. Does the system compute both simple and compound interest?
YES NO
12a.
12b.
Does the system generate information for compliance with the Debt Collection Act and
other applicable reporting requirements?
YES NO
Identify the information required but not generated by the system.
13.
Is the write-off of delinquent or uncollectible receivables recorded and data maintained to
monitor closed accounts?
YES NO
C. Bill Generation
Does the system support the calculation and generation of customer bills based upon
billing source and type of claim?
YES
NO
2a.
2b.
Does the system accept billing data from other systems, such as IPAC?
Does the system print bills using SF 1080s and/or SF 1081s?
YES
YES
NO
NO
Can transactions related to manually prepared bills be entered directly into the systems?
YES
NO
Are adjustments
to the bills
recorded
in the
system
and
posted to
customer
accounts?
YES
NO
5a.
5b.
Are the bills dated using:
(1) A system generated date?
(2) The date supplied by an authorized user?
Does the system update and print statements as well as bills?
YES
YES
YES
NO
NO
NO
6a.
6b.
Does the system produce and have the ability to customize the dunning (collection) letters
for overdue receivables?
Does the system have the capability to generate installment payments?
YES
YES
NO
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
D. Aging
1. Does the system track and age receivables?
YES
NO
2. Does the system identify and report selected accounts that meet predetermined criteria for
bad debt provisions or write-off?
YES
NO
3. Does the system maintain data for those accounts referred to the Department of Justice
(DOJ), the Government Accountability Office (GAO), and/or collection agencies?
YES
NO
E. Reporting
1. Does the system generate reports and information for multiple levels of EPA
management and at various intervals (e.g., daily, weekly, quarterly, annually)?
YES
NO
2. Does the system generate reports on a recurring or one-time basis to allow management
to monitor the process and status of receivables?
YES
NO
3. Does the system generate reports and information to meet external reporting (e.g., GAO,
Department of Treasury, and OMB) requirements?
YES
NO
4. Does the system maintain and record information on collections, receivables, and write-
offs necessary to meet the needs of management?
YES
NO
5. Does the system produce aging reports of all accounts receivable?
YES
NO
6. Does the system track vouchers related to deposits and reconcile them to confirmation
reports provided by Department of Treasury (including monthly deposit ticket/debit
voucher support list, deposit statement of differences)?
YES
NO
7. Does the system produce transaction listings and error listings for transactions entered
directly into the system?
YES
NO
8. Does the system produce audit trail reports to support data transferred from external
systems to the financial system, including error listings?
YES
NO
9. Does the system generate IRS 1099 forms for debts, both written-off and waived?
YES
NO
1 November2005 4-105 Office of the Chief Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
QUESTIONNAIRE C-3: PAYROLL SYSTEM FUNCTIONAL REQUIREMENTS
The operational functions of the personnel/payroll systems for the federal government can be segregated
into two general categories. The first category includes those mandatory functions based on federal laws
and regulations. The second category includes those optional functions based on special EPA management
requirements. Mandatory functions based on law or regulations are standard across agencies and are
documented in federal manuals such as:
Federal Personnel Manual (FPM), The Guide to Processing Personnel Actions.
FPM, The Central Personnel Data File.
GAO Policy and Procedures Manual for Guidance of Federal Agencies.
Treasury Financial Manual.
Optional functions are established by EPA management based on (1) the mission of EPA, (2) the size of
EPA, and (3) the geographic distribution of personnel. These functions are documented in EPA's
regulations and directives.
All personnel/payroll systems that are designed and implemented, or are in use, must:
Operate in accordance with laws, regulations, and judicial decisions.
Provide complete, accurate, and prompt payment of pay and deductions.
Provide complete, accurate, and prompt generation and maintenance of personnel/payroll records and
transactions.
Ensure timely access to complete, correct, accurate information for internal and external use.
Provide timely and proper interaction of the personnel/payroll system with the core financial systems.
Have adequate internal controls to ensure that the personnel/payroll system operates effectively.
The payroll functional requirements for a personnel-payroll system are: 1) pay processing, and 2) report
processing/reconciliation. In addition to the two main functions, a standard personnel-payroll system
usually performs the following:
Human resource data collection and maintenance activities
Personnel processing
Time and attendance processing
Leave processing
Questionnaire C3-1: Pay Processing
The pay processing function calculates earnings, gross pay deductions, net pay, and employer contributions
for each employee on an effective pay period basis. Each pay line is identified by the pay period in which
it was calculated and by the pay period to which it applies (the "effective" pay period). The pay processing
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
function provides for the computation and disbursement of net pay, deductions, and employer
contributions, and must have the capability to:
Compute gross pay as the sum of each rate of pay times the number of units related to it plus all
appropriate allowances and/or other gross pay components.
Classify and total deductions.
Subtract the sum of deductions from gross pay.
Apply formulas or use tables to determine employer contributions required for certain payroll taxes and
benefits.
Pay calculations must be performed at the end of each pay period after properly authorized inputs have
been received. Statutory limit and reasonableness tests are performed on gross pay. Net pay is tested to
ensure that deductions do not exceed gross pay. At the end of each processing cycle, detailed audit and
control data are generated.
Prior-period hour adjustments, changes to an employee's entitlement (for earnings or deductions), or mass
table changes require retroactive calculations. The retroactive calculation of prior-period earnings is
similar to current-period processing. The time and attendance data for prior periods are obtained from
adjusted hours of retroactive pay transactions rather than from the weekly time transaction. When
necessary, supplemental pay actions (e.g., pay actions not processed in the normal pay cycle) must be
entered into the system. These pay actions serve as the basis for the computation of gross pay, deductions,
net pay, and employer contributions.
Does the system initiate the pay calculation cycle only after time and attendance data
have been certified and leave has been processed?
YES
NO
Does the system process both current period and prior period adjustments as an
integral part of the payroll cycle?
YES
NO
Does the system compute pay according to the time worked and/or leave taken based
on approved data?
YES
NO
Does the system compute pay of various types (e.g., merit pay and cash awards)?
YES
NO
Does the system compute earnings amounts for partial pay periods?
YES
NO
Does the system support adjustments and regular calculations that cross fiscal years?
YES
NO
7.
Does the system calculate overtime based on the Fair Labor Standards Act (FLSA) and
TitleSoftheU.S.C.?
YES
NO
November 2005 4-107 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does the system accommodate processing of supplemental pay actions?
YES
NO
Does the system record gross pay, deductions, and net pay, and update other
functions and systems as appropriate?
YES
NO
10.
Does the system calculate the gross pay to net pay based on OPM precedence for
payment?
YES
NO
11.
Does the system calculate mandatory deductions?
YES
NO
12.
Does the system calculate voluntary deductions?
YES
NO
13.
Does the system calculate involuntary deductions?
YES
NO
14.
Does the system adjust taxable gross pay by deducting untaxed items (e.g., thrift
saving deductions) and civil service retirement annuity offsets?
YES
NO
15.
Does the system support mass rate changes and individual entitlement changes for
current and retroactive processing?
YES
NO
16.
Does the system compute deductions, employer contributions, and net pay based on
manually calculated earnings amounts?
YES
NO
17.
Does the system calculate deductions that provide:
a. Limitations on the maximum amount of salary subject to certain deductions?
b. Limitations on the maximum amount allowed for certain other deductions?
c. Adjustments of taxable gross pay for certain purposes by deduction of
untaxed items?
YES
YES
YES
NO
NO
NO
18.
Does the system generate payment for severance pay?
YES
NO
19. Does the system accommodate various methods of payroll payment?
YES NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Questionnaire C3-2: Report Processing/Reconciliation
The payroll report processing/reconciliation function serves related purposes. The report processing aspect
accesses, manipulates, and formats data to satisfy regulatory, managerial, and accounting information
requirements. User outputs produced include all vouchers and reports necessary to recognize payroll
expense and authorize related disbursements. External reports include those required by Department of
Treasury, the Department of Labor, the Federal Retirement Thrift Investment Board, and others.
Managerial reports include control reports used by personnel/payroll office staff members and others such
as work location supervisors.
The purpose of the reconciliation aspect is to provide payroll system data for comparison and reconciliation
with that of disbursing, accounting, and personnel systems to ensure accuracy and completeness.
Disbursing data are reconciled to provide assurance that all disbursements authorized for payment by the
payroll certifying officer were disbursed completely and accurately. Personnel data are reconciled to
provide assurance that all employees on the payroll are bona fide and that all earnings, entitlements, and
benefits are being computed as authorized in the personnel system.
Does the system provide information on gross pay and deductions by type and net pay
by pay period?
YES
NO
2a. Does the system generate employee statements detailing the composition of gross
pay, deductions, and net pay for the pay period and year-to-date?
YES
2b. Describe any discrepancies in the system.
3a. Does the system provide information (not created directly in the pay processing
function) to other functions to generate internal and external payroll reports?
YES
List functions for which information is not provided by the system.
4a.
4b.
Does the system provide information to IFMS?
Does this information update fund balances with Department of Treasury and other
asset, expense, and liability accounts, appropriations, and other cost centers for
payroll, including employer contributions?
YES
YES
NO
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does the system produce the following payroll reports:
a. SF 1150, Record of Leave Data?
b. SF 2806, Individual Retirement Record?
c. SF 113A, Monthly Employee Report?
d. SF 113G, Monthly Full-Time Equivalent (FTE) Report?
YES
YES
YES
YES
NO
NO
NO
NO
Does the system produce reports required by:
a. Department of Treasury?
b. Internal Revenue Service?
c. Social Secu rity Ad m i n istration?
d. Department of Labor?
e. Office of Personnel Management?
f. Office of Management and Budget?
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
7.
Does the system provide for tax deduction reporting, reconciling, and correcting
processes for federal, state, and local government?
YES
NO
Does the system provide summary totals of earnings, deductions, contributions, and
paid hours for analysis and reporting?
YES
NO
Does the system generate reports of pay and benefit transactions required by IFMS?
YES
NO
10.
Does the system generate detail registers supporting all vouchers, accounting entries,
and disbursements made by the payroll office?
YES
NO
11.
Does the system produce transaction listings and error listings for validation
purposes?
YES
NO
QUESTIONNAIRE C-4: TRAVEL SYSTEM FUNCTIONAL REQUIREMENTS
The travel system must have the capability to track the status of a travel order and a travel voucher as they
go through the various stages of preparation and approval. The system must incorporate the preparation
and approval of travel and transportation authorizing documents, including funds certification; preparation
and authorization of travel advances; and computation, preparation, and approval of travel vouchers.
Additionally, the system should provide for interfacing with the travel office for arranging tickets and
transportation and processing of claims from vendors related to the travel and transportation documents.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
As travel transactions take place, they must be recorded in chronological and systematic order. To be
processed, all documents must be placed under document control, tracked, and approved for payment. The
system must document travel information so it is easily and readily available for analysis, decision support,
operational control management, and external, regulatory reports. The travel system should also provide
the traveler or support clerical staff with the capability to produce travel information and control the
processing of travel and financial data. The requirements for a travel system must be evaluated on the basis
of how the system performs its control function within a mixture of centralized and distributed functions.
Below are the seven travel system functional areas for which questionnaires were developed:
V C4-1 Travel Authorization
V C4-2 Travel Advances
V C4-3 Travel Vouchers
V C4-4 Local Travel
V C4-5 Sponsored Travel
V C4-6 Interface Requirements
V C4-7 Reports
Questionnaire C4-1: Travel Authorization
All official travel for the federal government must be specifically authorized. The travel authorization is
the foundation upon which all other travel documents are processed. No travel advance or voucher
payment can be made until the corresponding authorization has been established. The travel authorization
function should provide the capability to create travel orders and provide funds certification for domestic,
in-cash or in-kind, or unlimited and limited travel authorization.
1a. Does the system provide verification that travel authorization exists?
1b. Does the system provide verification that travel ceilings have not been exceeded?
YES
YES
NO
NO
Does the system calculate authorized per diem and meals and incidental expenses
(M&IE) based on the itinerary and actual travel performed?
YES
NO
3a. Does the system have the ability to cite multiple funding sources for each trip planned
and authorized?
YES
If this capability does not exist, how are multiple funding sources cited?
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does the system have the capability to process travel orders with:
a. Split fiscal year funding?
b. Multiple funding and object classification codes?
YES
YES
NO
NO
Does the system have the capability to identify valid travelers?
YES
NO
6a.
6b.
Does the system allow corrections, amendments, and cancellation of travel orders?
Are reports concerning amendments generated to the traveler, approving official, and
accounting office?
YES
YES
NO
NO
7.
Does the system retain personal information, such as social security number, staff
identification, payment address, permanent duty station, organization, position title,
and office phone for travelers for future use?
YES
NO
Does the system provide for recording travel authorizations for official travel which is
performed at no expense to the government?
YES
NO
Questionnaire C4-2: Travel Advances
The travel advance function must provide for entry, processing, approval, payment, and liquidation of
government funds to defray travel expenses of employees or non-employees. This function should provide
for the tracking, aging, and controlling of advances.
Does the system have the capability to set, change, and apply established limits on
travel advances in any selected mode of payment?
YES
NO
2a.
2b.
Does the system provide for aging outstanding travel advances based on the end of
trip date?
Are follow-up letters and memoranda generated concerning delinquent advances
affecting payroll offsets or other means of collection?
YES
YES
NO
NO
Does the system provide authorized and approved travel advance transactions for
direct deposit?
YES
NO
Does the system provide the capability to (a) reflect cash disbursements against the
appropriate authorizing and payment documents to preclude duplicate payments, and
(b) update the travel advances aging and collection process?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
5a.
5b.
Does the system establish a receivable for overdue travel advances and ensure that
these receivables are collected through normal EPA collection procedures?
Does the system report travel advances such as employee income on the employee W-
2 forms?
YES
YES
NO
NO
6. Does the system provide for limiting the allowed advance based upon possession of a
charge card?
YES
Questionnaire C4-3: Travel Vouchers
Once a travel assignment has been completed, the government traveler files a travel voucher for
reimbursement for travel expenses. All claims must be in accordance with travel policies. The system
should provide for input by both travelers and support clerical staff at central and remote locations. This
system should provide for automated point-of-entry input and be easy to use with adequate direction and
prompts to lead the user through the program and collect the necessary information to prepare the voucher.
Information reflected on the travel authorization and advance should be transferred to the travel voucher
preparation process. The user then enters information regarding actual times, lodging costs, and other
actual travel expenses, parking fees, and local transportation costs.
Does the system provide messages to the user regarding supporting documentation
requirements (e.g., receipts, unused tickets, refunds, and certificates)?
YES
NO
2. Does the system process partial claims against travel orders to expedite liquidation of
an outstanding advance?
YES
Does the system allow entering subsistence rates, mileage allowance, and other data
when they are not available from IFMS tables?
YES
NO
4a.
4b.
Does the system have a database of per diem, mileage allowances, and other
information that will provide data to the authorization and voucher preparation
processes?
Does the system calculate authorized amounts based on itinerary and other related
information?
YES
YES
NO
NO
5a.
5b.
Does the system provide the capability to calculate entitlements after entry of required
information?
Does the system have override capability to handle special travel that falls outside the
standard parameters?
YES
YES
NO
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does the system provide for certification statements and other standard clauses
required on the travel vouchers?
YES
NO
7.
Does the system provide the capability to cite multiple funding sources?
YES
NO
Does the system provide for partial vouchering and amended vouchers?
YES
NO
Does the system provide the capability to create and modify the travel vouchers before
final approval?
YES
NO
10.
Does the system provide for a tracking system to determine the status of a voucher for
claim?
YES
NO
11.
Does the system generate notices to the traveler when the required information is not
available?
YES
NO
12.
Does the system allow special routing and approval levels for certain classes of travel?
YES
NO
13a.
13b.
Is there a capability to match travel vouchers with travel authorizations?
Does the system provide for the audit of a claim in accordance with Federal Travel
Regulations?
YES
YES
NO
NO
14a. Does the system integrate the issuance and control of travel advances with the travel
voucher payment process?
YES
14b. Identify any discrepancies between the travel advance and travel voucher payment processes.
Questionnaire C4-4: Local Travel
The travel system should provide the capability for users to produce a local travel voucher by entering
selected data into the system to obligate and pay local travel. In addition to travel expenses incurred while
on official business within the employee's designated post of duty, the local travel voucher is also used to
reimburse employees who have expended funds in the transaction of official business while in non-travel
status at or near the designated post of duty (official duty station).
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does the
system
produce local travel vouchers?
YES
NO
Does the
system
provide for
funds certification?
YES
NO
Does the
data?
system
allow the user to assign the appropriate accounting classification
YES
NO
Does the system provide for recording obligations and disbursements for registration
fees for attendance at non-government sponsored meetings?
YES
NO
5a.
5b.
Does the system provide for recording the type of disbursement and appropriate
schedule number?
Does the system update appropriate subsidiary ledgers and the SGL?
YES
YES
NO
NO
Questionnaire C4-5: Sponsored Travel
The travel system must track the approval process for the acceptance of payment in-cash or in-kind for
acceptance of services from non-federal sources to defray in whole or in part the travel or related expenses
of civilian employees.
Does the system assure that sponsored travel is administratively approved prior to
final approval of the travel order?
YES
NO
Does the system provide notification to the accounting office of required information to
establish accounts receivable for deposit or collection?
YES
NO
Does the system provide the capability to indicate the amounts and entitlements to be
paid by the government and those to be paid by the sponsoring organization?
YES
NO
Does the system provide the capability to record from the voucher the certified
amounts of cash to be deposited to the appropriation or the income to the employee in
the form of services in-kind?
YES
Does the system provide the capability to generate:
a. The appropriate obligation records to reflect the cost of the trip to be funded
by the government?
b. Transactions to record the receipt of income from non-federal sources?
YES
YES
NO
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Questionnaire C4-6: Interface Requirements
The travel system must provide travel activity transactions to the core financial system by:
Generating obligation records, including deobligations (cancellations) and adjustments (amendments).
Updating funds control.
Updating the SGL.
Generating disbursement actions by electronic funds transfer or other payment processes with
corresponding accounting transactions. To the extent possible and consistent with current GAO, General
Services Administration, and Department of Treasury requirements, the system should provide for
electronic transfer of funds.
Recording travel advance issuance and liquidation actions against corresponding obligation and
expenditure records.
The travel system must interface with the accounts payable function to provide automated scheduling of
travel and transportation voucher payments. The system should also provide for recording sufficient airline
ticket information essential to the airline ticket payment process to allow the accounting office to (1)
review the information, (2) verify the amount cited on the airline bill, (3) determine whether a refund is
due, or (4) reconcile other ticketing differences to ensure that correct payment is made.
Does the system generate obligation records, including deobligations (cancellations)
and adjustments (amendments)?
YES
NO
Does the system update funds control?
YES
NO
Does the system update the SGL?
YES
NO
Does the system generate disbursement actions by electronic funds transfer and post
the corresponding accounting transactions to the SGL?
YES
NO
Does the system record travel advance issuance and liquidation actions against
corresponding obligation and expenditure records?
YES
NO
Does the system provide an interface with the accounts payable function to generate
an automated scheduling of travel voucher payments?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Questionnaire C4-7: Reports
The travel system should provide the capability to generate the required standard reports for control
purposes. It should provide for the generation of prospective and retrospective managerial reports to be
utilized for budgeting purposes, trip planning, and travel management, as well as provide reports for
accounting and payment history purposes, adapted to meet Agency needs.
Does the system provide for the retrieval of balances and costs by traveler name and
social security number, including fund source(s), organization, and purpose of travel?
YES
NO
Does the system provide reports for follow-up on travel advances with balances
outstanding?
YES
NO
Does the system provide for:
a. Automatic aging of travel advances?
b. Regular reporting on the status of travel advances?
c. Reports accomplishing collections?
YES
YES
YES
NO
NO
NO
Does the system have the capability to perform online queries and to generate
standard and ad hoc reports?
YES
NO
Does the system provide for an outstanding travel voucher report?
YES
NO
Does the system provide for:
a. Automatic aging of travel advances?
b. Regular reporting on the status of travel advances?
YES
YES
NO
NO
7.
Does the system provide reports required by the General Services Administration for
oversight?
YES
NO
Does the system generate W-2 forms for advances outstanding more than 120 days?
YES
NO
QUESTIONNAIRE C-5: GRANTS SYSTEM FUNCTIONAL REQUIREMENTS
The grants system should achieve four basic objectives: (1) record all the elements within each grant action,
(2) monitor the status of each grant action, (3) determine funds availability, and (4) report cash
disbursements. Grants tracking should facilitate monitoring of grants throughout their life cyclefrom the
receipt of the grant application, through the issuance of the award and release of funds to pay for approved
grant activities, to the closeout of the grant award.
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does the system record the elements within each grant action (e.g., receipt of grant
application, release of funds, and closeout of funds)?
YES
NO
Does the system monitor the status of each grant action?
YES
NO
Does the system delineate the federal and grantee's share of program costs in each
grant action?
YES
NO
Does the system establish records for each grant action to identify:
a. Funds availability by program?
b. Whether federal funds are requested in lieu of the grantee share?
c. Whether the grantee has an excess cash balance from prior payments?
d. Interest accrued and receivable on excess cash balances?
YES
YES
YES
YES
NO
NO
NO
NO
Does the system provide for determining funds availability prior to making an award?
YES
NO
Does the system provide for:
a. Recording and reporting cash disbursements for advances and
reimbursements?
b. Comparing disbursements with the amounts obligated?
YES
YES
NO
NO
Does the system maintain records of property acquired by the grantee for which title
rests with the federal government?
YES
Does the system have capability to provide cash projections identifying the times,
amounts, and purposes for which cash will be needed?
YES
NO
Does the system contain the necessary controls to ensure that cash disbursements are
in compliance with pertinent requirements (e.g., the Cash Management Improvement
Act (CMI A) of 1990)?
YES
NO
10.
Does the system have the capability to record amounts due the federal government as
a receivable?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
11. Does the system have the capability to:
a. Record amounts due the grantee as a payable (in cases where the costs have
already been incurred by the grantee)?
b. Reduce liabilities upon reimbursement?
YES
YES
NO
NO
12.
Does the system provide for appropriate recording of refunds (as a refund of the
advance to the fund account initially charged and interest income to the General Fund
account)?
YES
NO
QUESTIONNAIRE C-6: FIXED ASSETS SYSTEM FUNCTIONAL REQUIREMENTS
The fixed assets system should be primarily concerned with the financial accountability of EPA's assets.
Transactions with the fixed assets system will have an effect on both the fixed assets records and the
financial records of the SGL. For instance, the system should compute gain or loss on the sale/disposition
of assets and post the appropriate entries to the SGL and fixed assets records.
The recording of property items to the fixed assets records does not depend on the recording of the item to
the SGL and vice versa. To ease the data entry burden, the fixed asset system allows users to define
standard information in a table and associate the information with a code. This code can then be used in the
system to automatically provide the information in the proper fields.
The system should have the capability to calculate depreciation on assets using one of four automatic
methods: straight-line, sum-of-the-year' s digits, declining balance, or double declining balance. The
depreciation routine is usually run in an off-line program, which computes depreciation on each depreciable
asset type and adjusts the fixed asset records. The program is run at the request of the user, with the user
supplying the date up to which depreciation is to be applied. The depreciation program also generates a
standard voucher document and places it in the document suspense file.
1 . Does
a.
b.
c.
d.
e.
f.
the system provide the capability to record the property acquired by:
Purchase?
Transfer from other agencies?
Donation?
Installment contracts?
Lease purchase?
Foreclosure?
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does the system capture, at a minimum, the following information:
a. Descriptive information (identification number)?
b. Quantity?
c. Location?
d. Accounting code structure?
e. All acquisition costs (purchase price, shipping, installation costs)?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
Does the system provide for writing-off (disposal) of property valued at $25,000 or
less?
YES
NO
Does the system provide the capability to record additions to already capitalized
property that extends the useful life of the property or its service capacity?
YES
NO
Does the system account for repair and maintenance expenses as operating expenses?
YES
NO
Does the system maintain historical data of every property acquired and capitalized?
YES
NO
7.
Does the system provide the capability to remove the property from the property
account (as a result of zero or negligible book value)?
YES
NO
Does the system provide the capability to specify a depreciation/amortization schedule
for capitalized properties?
YES
NO
9a.
9b.
Does the system recognize gains or losses when depreciated properties are disposed
of outside of the federal government?
Does the system recognize the gain or loss in the accounts as a financing source or an
expense, as applicable, and as a charge to the Cumulative Results of Operations
account?
YES
YES
NO
NO
10a.
10b.
10c.
Does the system provide the capability to maintain control records for property held in
custody by the federal government?
Do the control records reflect the federal government's custodial responsibilities and
liabilities, if any, to the transferor?
Do the system records reflect the capitalization of property when title is vested in the
federal government or the government obtains unrestricted use of the property?
YES
YES
YES
NO
NO
NO
11.
Does the system provide for an interfacing capability with the core financial system?
YES
NO
November 2005
-------
Quality Assurance Guide
4. Accounting Event Test Plans
12. Does the system classify different classes of property in conformance with the SGL
requirements?
YES
NO
13.
Does the system produce internal reports for management to conduct physical
verification of federal government-owned properties?
YES
NO
14.
Does the system provide the required information (such as capitalized property,
depreciation, disposals) for preparation of the annual financial statements?
YES
NO
November 2005
-------
Quality Assurance Guide 4. Accounting Event Test Plans
TEST PLAN D. SUPERFUND COST RECOVERY REVIEW
INTRODUCTION
As a trust fund, the Superfund program is subject to greater and stricter oversight than most other federal
government programs. Because Superfund operates toward the twin financial cornerstone objectives of
cost-recovery and cost-share, the program is exposed to additional risk. Unique risks associated with the
Superfund program have prompted EPA to develop detailed Superfund financial management requirements
and guidelines, which distinguish Superfund financial management from other EPA programs.
Superfund transactions risk higher levels of public and political scrutiny, thus requiring stricter application
of EPA's established bona fide need criteria for Superfund financial payments. Some increased risks
associated with Superfund transactions are listed below:
1. Potential incentive to weaken the integrity of Superfund accounting and documentation systems in
order to prevent cost-recovery actions.
2. Potential for underestimating EPA's share of the total cost of a removal or remedial action.
3. Potential for Superfund financial systems to improperly record the EPA costs and level of effort
because of the actions or omissions of an external responsible party.
4. Potential for accounts receivable reporting and tracking that are not coordinated with the Office of
Regional Counsel and Enforcement management offices.
5. Potential for non-compliance with formal statute.
6. Potential for Superfund carrying too much of the financial burden in a cost-share agreement.
Financial management differences in the Superfund program include additional labor reporting and
enhanced cost documentation requirements. As a result, the focus and range of the Superfund quality
assurance program may differ or be expanded when compared to other EPA financial management
programs. Certain basic review techniques, however, hold true. For example, an analysis of the general
control environment is still relevant and necessary. Also, testing requirements for the various accounting
event cycles can be applied to samples that include Superfund accounting transactions and non-Superfund
transactions.
SUPERFUND OVERVIEW
The statutory and regulatory basis of cost recovery and the application of cost recovery to the
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) program goals are
discussed briefly below. Additionally, a synopsis of the preparation of cost recovery packages is included.
As part of the cost recovery package synopsis, the various resources used in preparing the cost recovery
packages include computer systems, financial reports, and financial management resources.
November 2005 4-122 Office of the Chief Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
The trust fund established under CERCLA, commonly referred to as the Superfund Trust Fund, was
established in 1980 to provide resources needed to respond to actual or threatened releases of hazardous
substances, pollutants, or contaminants that may endanger human health or the environment. The
Superfund Trust Fund is financed by (1) taxes on crude oil and certain chemicals, (2) corporate
environment taxes, (3) general revenues, (4) cost recoveries, (5) fines and penalties, and (6) interest from
investments.
To substantially improve the Superfund program prior to re-authorization, EPA established the Superfund
Administrative Improvements Task Force. The task force's goals were to increase enforcement fairness
and reduce transaction costs; improve cleanup effectiveness and consistency; expand meaningful public
involvement; and enhance states' roles in the Superfund program.
Cost Recovery Packages
The fundamental goal of the Superfund program is to protect human health and the environment by
reducing risk associated with the release or threat of release of a hazardous substance. Although CERCLA
established the Superfund Trust Fund to finance these efforts, CERCLA also anticipates that potentially
responsible parties (PRPs) will finance or cleanup many of the sites through either a settlement or a court
order. If no settlement is reached, EPA may use the Superfund Trust Fund to finance the cleanup of a site
and later recover the costs from viable and liable PRPs. Cost recovery actions, therefore, are essential to
replenish the trust fund. Further, successful cost recovery actions deter other PRPs from attempting to
avoid responsibility.
Based upon the Superfund Activity Code, the accounting process EPA uses to identify Superfund related
activities with accounting transactions, four major components of the Superfund program are: (1) remedial
activities, (2) removal activities, (3) enforcement activities, and (4) other activities.
These components are integrated and coordinated to ensure that Superfund monies are used in a cost-
effective manner. Each of these components is summarized below.
Remedial activities represent the long-term response at a Superfund site and include the Preliminary
Analysis/Site Investigation (PA/SI), Remedial Investigation/Feasibility Study (RI/FS), Remedial Design
(RD), and Remedial Action (RA).
Removal activities represent the short-term response and stabilization of hazardous substances and
include removal actions and removal support and management.
Enforcement activities represent the actions EPA takes to recover Superfund expenditures, settlement
negotiations with responsible parties, and associated oversight.
Other activities represent EPA activities in supporting the Superfund program as a whole and include
research and development, contract award and management, financial management, human resource
activities, rent and utility costs, and finance center oversight. These costs are associated with and cross
the remedial, removal, and enforcement program lines.
Under the Superfund enforcement program, the federal government, with the Department of Justice (DOJ)
acting as EPA's attorney, may bring suit against PRPs to recover the costs of cleanup. A cost recovery case
has two priorities: (1) establishing the liability of the PRP, and (2) providing proof of government
expenditures. Cost recovery packages are needed most often as activities at a site move from one phase of
November 2005 4-123 Office of the Chief Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
a response to another phase. Generally, EPA takes action to recover from liable PRPs the costs of an
earlier phase of a Superfund response before EPA begins the next phase.
EPA generally conducts the following activities in compiling the cost recovery package:
Identifies the target sites ready for cost recovery and request cost information.
Generates the cost summary reports using the Superfund Cost Recovery Package and Online System
(SCORPIOS) and the ad hoc financial reporting procedures.
Uses the SCORPIOS cost summary report and the ad hoc financial reports to identify the supporting
documentation to be retrieved.
Retrieves from SCORPIOS and other sources the documentation that supports the relevant costs and work
performed and assembles the documentation in a specific order.
Reconciles the supporting documentation to the SCORPIOS cost summary report and ad hoc financial
reports.
Edits supporting documents to protect information covered under the Privacy Act.
Addresses Confidential Business Information (CBI) protected by confidentiality agreements or protective
orders.
Makes necessary changes in the cost data and provides a final SCORPIOS cost summary report.
Transmits the cost recovery package to the Office of Regional Counsel (ORC) or DOJ, if necessary.
The next subsections provide a high-level description of the various resources used in preparing a cost
recovery package. Those resources include computer systems, financial reports, and financial management
organizations.
COMPUTER SYSTEMS AND FINANCIAL REPORTS
The CERCLA computer system supports EPA headquarters and regions for the management and oversight
of the Superfund program. It has two purposes: (1) maintain an automated inventory of abandoned,
inactive, or uncontrolled hazardous waste sites, and (2) act as a vehicle for regions to report to
Headquarters the status of major stages of site cleanup. The CERCLA computer system provides a
decentralized national system in which each region controls and enters its respective data on regional
subsystems. The Office of Solid Waste and Emergency Response (OSWER) is responsible for
Comprehensive Environmental Response, Compensation, and Liability Act Information System (CERLIS)
operations.
The SCORPIOS financial management system was developed to process Superfund-unique documents and
to store related data. SCORPIOS is used to generate reports that summarize data on costs for a specific
site. To initiate preparation of SCORPIOS cost summary reports, a user requests a report on a particular
site. SCORPIOS cost summary reports can be reconciled against the actual cost documents and the ad hoc
financial reports. SCORPIOS is a database management program that:
Maintains detailed cost data for Superfund sites.
Organizes the cost information or financial data into categories.
November 2005 4-124 Office of the Chief Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
Produces reports that itemize the costs by site (summary and detail).
Calculates indirect costs and interest.
Scans original financial documents (e.g., payroll distribution timesheets, travel vouchers, interagency
agreements (lAGs), and contract invoices).
Stores the documents as computer images.
Reproduces copies of the original documents upon request.
Ad hoc financial reports are generated from Financial Data Warehouse (FDW), and OCFO Reporting and
Business Intelligence Tool (ORBIT). FDW and ORBIT allow for significantly expanded ad hoc reports
including financial, administrative, and program data.
FINANCIAL MANAGEMENT ORGANIZATIONS
Cincinnati Finance Center (CFC) manages payments under disbursement lAGs for Superfund and other
EPA programs. Approximately 80 percent of Superfund disbursement lAGs are held with the U.S. Army
Corps of Engineers. The remaining 20 percent are held with other government entities, including DOJ, the
Department of Interior (DOI), the Tennessee Valley Authority (TVA), and the U.S. Coast Guard (USCG).
Las Vegas Finance Center is responsible for providing documentation for proof of expenditures of the
National Enforcement Investigation Center (NEIC) under Superfund grants and cooperative agreements.
LV-FC ensures that file copies of the original documents are maintained and that a copy of the site-specific
file is sent to the regions on a monthly basis as costs are incurred.
RTP-FC, Contract Payment Section is responsible for recording, processing, and certifying all EPA
Superfund and non-Superfund contract obligations and payments. RTP-FC provides the following major
services to support Superfund activity:
Distributes Superfund costs to designated Superfund sites as approved by EPA project officers or
contracting officers.
Resolves problems with financial transactions supporting Superfund site-specific cost distribution.
Provides Superfund site-specific cost recovery documentation requested by EPA regional offices and
DOJ.
TESTING PROCEDURES
Overview
The elements of a cost recovery case are established by showing that the work was authorized, performed,
invoiced, and paid. A cost recovery package consists of the documentation and explanation of costs
associated with nine basic areas: (1) EPA payroll, (2) indirect costs, (3) EPA travel, (4) contract laboratory
programs, (5) disbursement interagency agreements, (6) allocation transfer interagency agreements, (7)
miscellaneous costs, (8) contracts, and (9) cooperative agreements. The documentation for each cost area
can be prepared separately and subsequently consolidated and submitted as a complete package.
November 2005 4-125 Office of the Chief Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
Costs incurred before October 1991 for contract expenditures should be in the region's historical files. If
costs were incurred after October 1991, or if the region has scanned its historical records, the appropriate
documents can be retrieved from SCORPIOS. Information on retrieving documents from SCORPIOS and
information on generating a bar code report can be found in the SCORPIOS Manual.
If documents are not in SCORPIOS, they can be retrieved from employee files in the regional or
Headquarters finance center (FC) or from the FC that paid the voucher. It may be necessary to submit a
cost documentation request form to obtain documents from a regional or headquarters office. Consultation
with appropriate parties, combined with review of ad hoc financial reports and SCORPIOS reports (e.g.,
cost summary reports, audit trail reports, and omit reports) can help identify missing documents and
understand the cost recovery documentation and preparation process.
Reconciling data involves checking data that have been reported through SCORPIOS and the ad hoc
financial reporting procedures against the source information (either hard copies or electronic data). When
discrepancies are noted, the SCORPIOS data or the accounting system data sometimes may be adjusted to
conform to data in the original documents, depending on the reason for the discrepancy. In some cases,
adjustment of the accounts in IFMS also may be required.
If the supporting documents clearly indicate that the wrong account number was charged in IFMS (e.g.,
transposition of the characters in the site ID), the information in the IFMS is adjusted. If errors are found in
the original documents, a corrected copy can be obtained. All discrepancies between the original contract
document and the information in the Agency's accounting system can be sent to the RTP-FC for research
and resolution.
Sample Selection
Depending on staff resources and available time for review, a judgmental sample of cost recovery packages
should be selected. The packages selected for review should be current (e.g., prepared within the last 12
months). Some of the packages selected should be updates of existing cost recovery packages, while other
packages selected should be completed packages.
Different size packages (e.g., small, medium, and large) should also be represented in the sample. In
general, the larger the dollar value, the more complex the package. If available, a list of current cost
recovery packages containing the site name, site ID, and amounts may facilitate the sample selection.
For each of the nine cost areas detailed below, a random sample of relevant supporting documentation for
each cost area should be selected. In the payroll area, for example, there should be a random sample and
review of employee names that show hours charged to the Superfund site.
Although there are interdependences between and among the nine cost areas, the documentation for each
cost category can be prepared separately and subsequently consolidated. The majority of the questions may
be reviewed as a separate unit if there are time constraints.
Question Format
The review questions have supporting documentation with language that is specific to a particular form.
For example, the first question in the payroll area asks:
November 2005 4-126 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
"Are the following items the same on the PeoplePlus payroll reports or paper timesheets, SCORPIOS
report, and an ad hoc financial report?" For some of the items (a-h), there is only one element. For
example, for item (a), "employee name" is the only element. The employee name appearing on the
PeoplePlus payroll report or paper timesheet, the SCORPIOS report, and an ad hoc financial report would
be compared for consistency.
For other items such as item (f), there are three elements listed: (1) "fourth, fifth, and sixth characters of the
account number," (2) "office code," and (3) "fifth, sixth, and seventh characters of the account number." In
this case, the fourth, fifth, and sixth characters of the account number on EPA Form 2560-28 would be
compared to the office code on the SCORPIOS report and then compared to the fifth, sixth, and seventh
characters of the account number on an ad hoc financial report.
1. PAYROLL
Overview
Payroll consists of personnel compensation and benefits of EPA staff that perform duties in connection
with individual Superfund sites. PeoplePlus is used for the documentation of payroll costs. Timesheets,
once used to distribute hours, were replaced with the PeoplePlus system on October 1, 2004.
EPA employees who perform site-specific Superfund activities record their time electronically. EPA
employees are assigned a fixed account number (FAN) to which their payroll expenses are charged. When
costs can be determined to have been of benefit solely to Superfund, the Superfund appropriation should be
charged directly through the EPA's account number structure. Employees performing site-specific
Superfund activities must record their time in the PeoplePlus payroll system, using a site-specific account
number that contains the appropriate site and activity code to show hours chargeable to that site. Since
many of the reviews cover periods prior to the use of electronic documentation, the questions are structured
to cover both paper and electronic documentation. Some of the questions below apply to paper
documentation (coded P), some apply to electronic documentation (coded E) and some apply to both (no
code).
1. Are the following items the same on the PeoplePlus payroll reports or timesheets and
SCORPIOS report.
a.
b.
c.
d.
e.
f.
g-
h.
Employee name?
Employee signature? (P)
SSID?
Fiscal year?
Pay period?
Organizational code?
Payroll hours?
Activity/Action code?
YES
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
NO
NO
Are appropriate signatures for a supervisor, an employee, and a timekeeper on the
timesheet? (P)
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Is the SSID valid?
YES
NO
Is the name of the site listed on the PeoplePlus payroll report or timesheet the same as
the name listed on the SCORPIOS report?
YES
NO
5. For each employee, does the PeoplePlus payroll report or timesheet ensure the
following:
a. Are all changes initiated by the employee? (P)
b. Does each line total?
c. Do hours charged for each day total? (P)
d. Have account numbers been listed for all hours charged?
e. Are regular hours separated from overtime, hazardous duty, and night
differential hours?
f. Does the pay period number correspond to the date?
g. Is the accounting string data valid?
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
NO
2. INDIRECT COSTS
Overview
Indirect costs are administrative costs (overhead) required to support the Superfund program in general and
response actions at sites which cannot be directly accounted for by an individual site. The indirect cost
pool consists of all costs classified as non-programmatic for all appropriations that fund administrative,
management, and support functions. Superfund non-site-specific costs are part of this pool. This includes
the non-programmatic or non-site portion of personnel compensation and benefits, facilities, travel, rent,
communications, utilities, contractual services, materials, and supplies costs. Depreciation and inter-entity
costs are also included. The major organizational units contributing costs to the indirect costs pool are:
1. EPA Headquarters. Organizations providing services on an Agency-wide or national basis include:
Office of the Administrator (OA), Office of Administration and Resources Management (OARM), Office
of the Chief Financial Officer (OCFO), Office of Environmental Information (OEI), Office of the Inspector
General (OIG), and Office of General Counsel (OGC). Management and support costs associated with
carrying out the Superfund program at headquarters include program management and support costs
incurred by the Office of Solid Waste and Emergency Response (OSWER) and Office of Enforcement and
Compliance Assurance (OECA).
2. Regions. Organizations similar in function to those of Headquarters include: the Regional
Administrator's office and offices providing general regional support services such as personnel, finance,
policy, and information management. Management and support costs associated with carrying out the
Superfund program in the regions include Superfund program management costs incurred by regional
program divisions.
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
The Superfund final indirect cost pool is allocated using Superfund site charges including: Headquarters
and regional site charges, ZZ charges, site charges made under the lAGs, and site allocable portions of the
Superfund response contracts (Annual Allocation).
Indirect costs are determined on a site-specific basis by multiplying the total direct site charges by an
indirect rate expressed as a percentage of total costs after October 1, 1990. Prior to October 1, 1990, the
old indirect rate methodology using overhead rates expressed as a rate per hour are applicable. The indirect
rates are developed by the Program Costing Staff (PCS), and the rates are specific to the region and the
year in which the costs were incurred by EPA. A SCORPIOS report is used to calculate such costs.
Indirect cost rates are available in SCORPIOS, and the automatic calculation is based on the direct costs
reported for the site on the SCORPIOS cost summary report.
1. Is the indirect cost rate included in the Superfund Actual Indirect Cost Rates Memo
effective as of the date when the SCORPIOS report was run?
a. Indirect cost rate listed on the SCORPIOS summary report?
b. Indirect cost rate listed on the SCORPIOS detail report?
YES
YES
NO
NO
3. TRAVEL
Overview
Documentation of travel costs includes electronic or paper travel authorization, travel voucher, common
carrier receipts, and proof of payment. Travel authorizations show the purpose of the travel and that the
travel was approved, as well as dates of travel, employee's name, and the SSID.
Travel vouchers may be located in the Travel Manager (TM) System or SCORPIOS.
Since many of the reviews cover periods prior to the use of electronic documentation, the questions are
structured to cover both paper and electronic documentation. Some of the questions below apply to paper
documentation (coded P), some apply to electronic documentation (coded E) and some apply to both (no
code).
I. TDY Costs
A. Travel Voucher
Is the name of the traveler
SCORPIOS report?
the
same on the
travel
voucher
orTM
report
and on
the
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Are the last six characters of the travel authorization number listed on the travel
voucher the same on the following?
a. Last six characters of the travel voucher number listed on the SCORPIOS
report?
b. Last six characters of the obligating document number listed on an ad hoc
financial report?
YES
YES
NO
NO
If the purpose of the travel benefits only one site, is the net amount listed on the travel
voucher the same as the total travel cost listed on the SCORPIOS report and the total
travel cost listed on an ad hoc financial report?
YES
NO
Did the claimant and the claimant's supervisor/authorized individual approve the travel
voucher?
YES
NO
B. Schedule of Expenses and Amounts Claimed
Does the travel voucher provide detailed information on the expenses and amounts
claimed?
YES
NO
C. Receipts
If an itemized cost is more than $75.00, are clear and legible receipts available?
YES
NO
D. Payroll Distribution Timesheet (EPA Form 2560-28)
Is the name of traveler on the payroll distribution timesheet or PeoplePlus Time report
the same as the name of the traveler listed on the travel voucher?
YES
NO
Is the SSID listed on the payroll distribution timesheet the same as the following?
a. SSID listed on the SCORPIOS report?
b. SSID on an ad hoc financial report?
YES
YES
NO
NO
Are the hours charged to the site (the traveler's payroll distribution timesheet/People
Plus Time report and the days cited on the travel voucher for work conducted by the
traveler) related to the site?
YES
NO
If the purpose of the travel benefits more than one site, was the percentage of time
spent on each site calculated to properly distribute the travel costs?
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
E.
Travel Authorization
Are the following items the same on the travel authorization and on the travel voucher?
a. Name of the traveler? (P)
b. Last six characters of the SSID on the travel authorization number?
YES
YES
NO
NO
Did an authorizing officer approve the travel authorization?
YES
NO
F. Multiple A ccount A llocation Form
1. If the travel authorization indicates that the purpose of the travel benefits more than
one EPA program or more than one site, the estimated cost of travel is distributed
according to the amount of time expected to be spent on each activity or at each site.
A multiple account allocation form is filed concurrently with the travel authorization.
Are the following items the same on the multiple account allocation form and on the
travel authorization?
a. Name of the traveler? (P)
b. Last six characters of the travel authorization number? (P)
c. Total amount/total authorized allowance? (P)
YES
YES
YES
NO
NO
NO
Is the SSID listed on the multiple account allocation form the same on the following:
a. SSID listed on the SCORPIOS report? (P)
b. SSID listed on an ad hoc financial report? (P)
YES
YES
NO
NO
Did an authorizing officer approve the travel authorization?
YES
NO
G. Electronic Funds Transfer (EFT) Detail Inquiry Table
1. Where applicable, the EFT detail inquiry table
payment. Are the following items the same on
voucher?
a. Payment voucher number?
b. Payment amount/net amount?
may be used for proof of electronic
the EFT inquiry table and the travel
YES NO
YES NO
Where applicable, are the last six characters of the schedule number listed on the
Treasury schedule the same as the Treasury schedule number listed on the SCORPIOS
report?
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
H.
Voucher Header Table
Where applicable, the voucher header table may be used as proof of payment. Are the
following items the same on the voucher header and on the travel voucher?
a. Payee name/name of the traveler?
b. Amount/net amount?
YES
YES
NO
NO
2. Where applicable, are the following items the same on the voucher header table and on
the SCORPIOS report?
a. Last six characters of the schedule number/Treasury schedule number?
b. Check date/Treasury schedule date?
YES
YES
NO
NO
II. Costs for Local Travel
A. Claim for Reimbursement for Expenditures on Official Business (SF1164)
1.
Are the following items the same on the claim for reimbursement for expenditures on
official business and on the SCORPIOS report?
a. Name of traveler?
b. SSID?
c. Amount/travel cost (applies only if the purpose of the travel benefits only one
site)?
YES
YES
YES
NO
NO
NO
2.
Are the following items the same on the claim for reimbursement for expenditures on
official business and on an ad hoc financial report?
a. Name of traveler?
b. SSID?
c. Amount/travel cost (applies only if the purpose of the travel benefits only one
site)?
YES
YES
YES
NO
NO
NO
B. Receipts
If an
itemized
cost is
more than
$75.00, are
clear and
legible
receipts
available?
YES
NO
C. Payroll Distribution Timesheet (EPA Form 2560-28)
Is the name of the traveler the same on the payroll distribution timesheet/PeoplePlus
Time report and on the claim for reimbursement for expenditures on official business?
YES
NO
Are the hours charged to the site (the traveler's payroll distribution timesheet/People
Plus Time report and the days claimed for reimbursement for expenditures on official
business as work conducted by the traveler) related to the site?
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Is the SSID listed on the payroll distribution timesheet/PeoplePlus Time report the
same as the following?
a. SSID listed on the SCORPIOS report?
b. SSID listed on an ad hoc financial report?
YES
YES
NO
NO
If the purpose of the travel benefits more than one site, are the travel costs distributed
based on the percentage of time spent on each site?
YES
D. EFT Detail Inquiry Table
The EFT detail inquiry may be used as proof of payment. Are the following items the
same on the EFT detail and on the SCORPIOS report?
a. Payment amount/travel costs?
b. Last six characters of the schedule number/Treasury schedule number?
YES
YES
NO
NO
Are the following items the same on the EFT detail table and on the claim for
reimbursement for expenditures on official business?
a. Payment amount/amount claimed?
b. Payment voucher number/bar code number?
YES
YES
NO
NO
Is the payment amount listed on the EFT detail table the same as
on an ad hoc financial report?
the total amount listed
YES
NO
E.
Voucher Header Table
The voucher header table inquiry may be used as proof of payment. Are the following
items the same on the voucher header and on the SCORPIOS report?
a. Payee name/name of traveler?
b. Amount/amount claimed?
YES
YES
NO
NO
Are the following items the same on the voucher header and on the claim for
reimbursement for expenditures on official business?
a. Payee name/name of traveler?
b. Amount/amount claimed?
YES
YES
NO
NO
the amount listed on the
hoc financial report?
voucher
header
the
same as the total amount
listed on an
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
4. CONTRACT LABORATORY PROGRAM
Overview
The Contract Laboratory Program (CLP) is a nationwide network of laboratories under contract to EPA to
perform organic and inorganic chemical analysis for the Superfund program. The Sample Management
Office (SMO) contractor provides management, operations, and administrative support to the CLP.
The costs incurred under the CLP fall into two categories: Routine Analytical Services (RAS) and SMO
program management. RAS costs are the actual costs of analytical samples; SMO costs are program
management costs that are apportioned to each case sample. The SMO rates are calculated at the end of
each fiscal year from the prior fiscal year figures. The actual SMO costs for each case are calculated by
multiplying the applicable SMO rate by the analytical cost. From fiscal year 1987 forward, SMO are
calculated as a percentage of total costs, before adjustments.
RAS contract costs are reviewed by the SMO and the EPA Contracting Officer Representative (COR) for
approval of payment. After the project officer has approved an invoice, it is forwarded to RTP-FC which
issues payment to the contractor.
All invoices are received by RTP-FC electronically via Web-base Invoicing System (WIS). The COR approves the electronic
invoices through the Electronic Approval System (EASY). Prior to implementation of EASY, the Project Officers used a paper
document, the Project Officer Invoice Approval Form.
I. RAS Contract Costs
A. Contractor Invoice
1.
Are the following items the same on the contractor invoice and on the case cost form
of RAS financial information?
a. Case number?
b. Invoice number?
c. Contract number?
d. Contractor/laboratory name?
YES
YES
YES
YES
NO
NO
NO
NO
2. Are the following items the same on the contractor invoice and on the case cost form
of RAS invoice numbers?
a. Contractor/laboratory name?
b. Case number?
YES
YES
NO
NO
3.
Is the case
for sample
number the
analysis?
same on the
contractor
invoice and
on the financial
summary
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
B. Contracting Officer Representative Invoice Approval or EASY
1.
Are the following items the same on the project officer invoice approval and on the
contractor invoice?
a. Invoice number?
b. Contract number?
c. Contractor laboratory name?
d. Total amount/net amount?
YES
YES
YES
YES
NO
NO
NO
NO
2.
Did the project officer approve the project officer invoice approval?
YES
NO
C. Site-Specific Attachment
1. Are the following items the same on
invoice?
a. Case number?
b. Invoice number?
c. Contract number?
d. Laboratory/contractor?
e. Total amount/net amount?
the site-specific attachment and on the contractor
YES NO
YES NO
YES NO
YES NO
YES NO
2.
Is the site name listed on the site-specific attachment the same on the following
documents?
a. Financial summary for sample analysis?
b. Case cost form of RAS financial information?
c. Case cost form of RAS invoice numbers?
YES
YES
YES
NO
NO
NO
D. EFT Detail Inquiry
The EFT detail inquiry may be used as proof of payment. Are the following items the
same on the Treasury schedule and on the contractor invoice?
a. Invoice number?
b. Contract number?
c. Vendor/contractor?
d. Paid amount/net amount?
YES
YES
YES
YES
NO
NO
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
E. Voucher and Schedule of Payments
1.
The voucher and schedule of payments may be used as proof of payment. Are the last
four characters of the schedule number listed on the voucher and schedule of
payments the same as the last four characters of the Treasury schedule number listed
on the Treasury schedule?
YES
NO
2.
Did an authorized certifying officer approve the voucher and schedule of payments?
YES
NO
F. Agency Confirmation Report
1. Are the following items the same on the agency confirmation report and on the voucher
and schedule of payments?
a. First five characters of the schedule number/last five characters of the reel
number?
b. Line-item dollar amount under heading "certified no check net"/grand total
amount?
YES
YES
NO
NO
G. Financial Summary for Sample Analysis
1. After all RAS CLP costs reported on the financial summary for sample analysis have
been reconciled with the amounts listed on the laboratory invoices, the financial
summary for sample analysis is reviewed. Are the following items the same on the
financial summary for sample analysis and on the case cost form of RAS financial
information?
a. Analytical cost/total analytical case cost?
b. Sample management cost/total amount under heading "SM cost"?
c. Total case cost/total cost?
YES
YES
YES
NO
NO
NO
H. SCORPIOS Cost Summary Report CLP Costs
1. After all RAS CLP costs reported on the summary for sample analysis have been
reconciled with the laboratory invoices, the reconciled cost information for each
contractor invoice is entered into the SCORPIOS cost summary report. Are the
following items the same on the SCORPIOS cost summary report and on the financial
summary for sample analysis?
a. Site name?
b. SSID?
c. Case number?
d. Total case cost?
YES
YES
YES
YES
NO
NO
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
2. Are the following items the same on the SCORPIOS cost summary report and on the
case cost form of RAS financial information?
a. SSID?
b. Voucher number?
c. Contract number?
d. Contractor?
e. Sample management costs?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
Are the last two characters of the SSID listed on the SCORPIOS cost summary report
the same on the case cost form of RAS invoice numbers?
YES
NO
Is the Treasury schedule date on the SCORPIOS cost summary report the same on the
agency confirmation report?
YES
Is the voucher date on the SCORPIOS cost summary report the same on the contractor
invoice?
YES
6. Is the Treasury schedule number on the SCORPIOS cost summary report the same as
the first character and the last four characters of the schedule number on the voucher
and schedule of payments?
YES
7. Is the voucher amount net of adjustments on the SCORPIOS cost summary report the
same on the contractor invoice (if the contractor invoice covers only one site, the
voucher amount net of adjustment will be the same as the analytical costs listed on the
SCORPIOS cost summary report)?
YES
5. INTERAGENCY AGREEMENTS (DISBURSEMENT)
Overview
Interagency agreements (lAGs) are made with other federal agencies to obtain specific services and provide
expertise in the cleanup of sites. Disbursement lAGs are used for payments under agreements under which
other federal government agencies provide goods or services to EPA. EPA disburses funds to other
agencies to pay for actual expense incurred by those agencies in the performance of Superfund activities.
Some of the agencies that provide goods or services to EPA are the U.S. Army Corps of Engineers, U.S.
Coast Guard, Department of the Interior, and Tennessee Valley Authority.
For sites where work was performed under an IAG, the actual agreement is needed to demonstrate that
services were authorized and performed. Specifically, the work authorization document which includes the
scope of work is needed. Progress reports may also be used for documentation. Identification of a
particular IAG is available through the regional Grants Management Office or EPA headquarters Grants
Management Office.
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
The TAG is the obligating document that indicates the set-aside of funds for delivery of the services.
Copies of the TAG, Standard Form (SF) 1080, or Intra-governmental Payment and Collections (IPAC)
system bills, and proof of payment for withdrawals are used as documentation. It may be necessary to
contact other federal agencies to obtain documentation of costs for cost recovery packages. An agency or
its contractors are required to retain Superfund documents as described in the record retention
requirements.
I. Disbursement IAG Costs Paid by Check
A. Voucher for Transfers between Appropriations and/or Funds (DA Form 4445-R) or Voucher
for Transfers between Appropriations and/or Funds (SF 1080)
1. The voucher for transfers between appropriations and/or funds (DA Form 4445-R) is
used only by the Department of the Army and is used in lieu of the voucher for
transfers between appropriations and/or funds (SF 1080). Are the following the same
on the voucher for transfers between appropriations and/or funds and the SCORPIOS
report?
a. Name of the site?
b. SSID?
c. Billing office/contractor name?
d. First four characters and the last six characters of the IAG number/contract
number (the fifth and sixth characters "93" of the IAG number listed on the
voucher for transfers between appropriations and/or funds indicate an IAG
document)?
e. Dates of service?
f. Activity/action code described in summary of service?
g. Bill number/voucher number?
h. Bill amount/voucher amount?
YES
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
NO
NO
2. Are the following items the same on the voucher for transfers between appropriations
and an ad hoc financial report?
a. SSID?
b. Activity/action code?
c. First four characters and the last six characters of the IAG number/obligation
document number?
d. Total bill amount/voucher amount (If payment has been made to U.S. Army
Corps of Engineers)?
YES NO
YES NO
YES NO
YES NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Does an authorized certifying officer's stamp appear on the voucher for transfers
between appropriations and/or funds?
YES
NO
B. Project Officer's Interagency Agreement Invoice Approval (EPA Form 2550-21) and
Inter agency Document On-line Tracking System (IDOTS)
1. Are the following items the same on the project officer's interagency agreement
invoice approval or IDOTS and on the voucher for transfers between appropriations
and/or funds?
a. Name of the site?
b. Agency/billing office?
c. IAG number/first four characters and the last six characters of the IAG
number?
d. Invoice number/bill number?
e. Invoice amount/total bill amount?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
Are the following items the same on the project officer's interagency agreement
invoice approval or IDOTS and on the SCORPIOS report?
a. Date/voucher date?
b. Project officer name?
YES
YES
NO
NO
Does an authorized certifying officer's stamp appear on the voucher for transfers
between appropriations and/or funds? (P)
YES
NO
C. Interagency Agreement/Amendment (EPA Form 1610-1)
1. Are the following items the same on the interagency agreement/amendment and on
the Voucher for Transfers between Appropriations and/or Funds (DA Form 4445-R) or
Voucher for Transfers between Appropriations and/or Funds (SF 1080)?
a. Agency /billing office name?
b. IAG number?
c. Project period/dates of personal services?
d. Scope of work/project represented by eighth character of account number?
YES
YES
YES
YES
NO
NO
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
D. Check Header Inquiry
The check header inquiry, also referred to as the check header, is used
payment. Are the following items on the check header the same on the
report?
a. Amount/voucher amount?
b. Check date/Treasury schedule date?
as proof of
SCORPIOS
YES
YES
NO
NO
Is the payee name listed on the check header the same as the billing office listed on the
voucher for transfers between appropriation and/or funds?
Are the last six characters of the schedule number listed on the check header the same
as the last six characters of the Treasury schedule number listed on the Treasury
schedule?
YES
YES
NO
NO
E. Treasury Schedule Control Line Inquiry (Where applicable)
The Treasury schedule control line inquiry, also referred to as the Treasury schedule, is
used as proof of payment. Are the following items the same on the Treasury schedule
and on the SCORPIOS report?
a. Payment amount/site amount?
b. Last six characters of the schedule number/Treasury schedule number?
YES
YES
NO
NO
Is the payment voucher number listed on the Treasury schedule the same as the bar
code number printed on the voucher for transfers between appropriations and/or
funds?
YES
Are the following items the same on the Treasury schedule and on an ad hoc financial
report?
a. Payment voucher number/reference transfer number?
b. Last six characters of the schedule number?
YES
YES
NO
NO
II. Disbursement IAG Costs Paid Through IPAC System
A. Interagency Agreement/Amendment
Are the following items the same on the interagency agreement/amendment and the
IPAC system bill?
a. Agency name/billing agency?
b. Third through thirteenth characters of the EPA/IAG identification number/lAG
number?
YES
YES
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Is the scope of work described or the project title listed on the interagency
agreement/amendment similar to the description presented in the summary of service
on the SCORPIOS report?
YES
NO
B. IP AC Prepaid Code Sheet
Are the following items the same on the IPAC prepaid code sheet and on the
SCORPIOS report?
a. Payment amount/site amount?
b. SSID?
c. Last four characters of the direct disbursement schedule number/last four
characters of the Treasury schedule number?
YES
YES
YES
NO
NO
NO
Are the last eight characters of the reference document number listed on the IPAC
prepaid code sheet the same as the first two characters and the fifth through tenth
characters of the IAG number listed on the IPAC system bill?
YES
NO
Are the following items the same on the IPAC prepaid code sheet and on an ad hoc
financial report?
a. SSID?
b. Disbursement schedule number?
YES
YES
NO
NO
C. Project Officer's Interagency Agreement Invoice Approval (EPA Form 2550-21) and
(Interagency Document On-line Tracking System (IDOTS)
1. Are the following items the same on the project officer's interagency agreement invoice
approval and on the IPAC system bill?
a.
b.
c.
d.
e.
f.
Agency name/billing agency?
Invoice number/document reference number?
Date/accomplished date?
Invoice amount/dollar amount?
Name of the site?
Last eight characters of the IAG number/first two characters and fifth through
tenth characters of the IAG number?
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
Are the following items the same on the project officer's interagency agreement invoice
approval and on the SCORPIOS report?
a. Project officer's name?
b. Invoice amount (applies only if invoice covers one site)?
YES
YES
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
D. IP AC System Bill
1. Are the following items the same on the IPAC system bill and on the SCORPIOS report?
a.
b.
c.
d.
e.
f.
g-
Billing agency/federal agency?
Document reference number/invoice number?
Accomplished date/voucher date?
Dollar amount/voucher amount?
Accounting date/Treasury schedule date?
Name of the site?
First two characters and the fifth through tenth characters of the IAG
number/last eight characters of the IAG number (the third and fourth
characters "93" of the IAG number listed on the IPAC system bill indicate an
IAG document)?
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
NO
2. Are the following items the same on the IPAC system bill and on an ad hoc financial
report?
a. Barcode number/cash transfer number?
b. First two characters and the fifth through tenth characters of the lAG/last eight
characters of the obligation document?
c. Voucher amount/site amount (applies only if IPAC system bill covers one site)?
YES
YES
YES
NO
NO
NO
6. ALLOCATION TRANSFER INTERAGENCY AGREEMENTS
Overview
The EPA Superfund program uses interagency agreements (lAGs) to request certain federal government
agencies to assist with site cleanups and provide ongoing support or services. Allocation transfer lAGs are
used for payment under agreements in which federal agencies deliver goods and services to EPA. EPA
transfers obligational and spending authority to the other agency to pay for expenses related to Superfund
activities. Funds are transferred rather than disbursed. Disbursement of lAGs occurs when EPA disburses
funds to the other agencies to pay for the actual expenses incurred by those agencies in the performance of
Superfund activities.
The allocation transfer agencies, including Agency for Toxic Substances and Disease Registry (ATSDR),
Federal Emergency Management Agency (FEMA), and National Oceanic and Atmospheric Administration
(NOAA), prepare their own cost summary reports, provide supporting documentation, and reconcile their
own costs for a site.
1.
Is the cost recovery package complete?
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
2.
Does the cost recovery package list the major categories of cost (e.
commercial, and miscellaneous)?
g., payroll, travel,
YES
NO
3.
Is the supporting documentation sufficient to adequately support each item listed in
the cost recovery package?
YES
NO
7. MISCELLANEOUS EXPENDITURES
Overview
Miscellaneous expenditures include those costs not captured in the other eight cost categories. Examples
include payments under purchase orders (PO) for low-cost items, travel requests in small amounts, and
payments of credit card charges.
A. Order for Supplies or Services (Optional Form 347)
1. Are the following items the same on the order for supplies or services and on the
SCORPIOS report?
a. Contractor/vendor name?
b. Requisitioning office/request?
c. Description of supplies or services?
d. Order number/procurement number?
e. SSID?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
Are the following items the same on the order for supplies or services and on an ad
hoc financial report?
a. Object class number?
b. Document control number?
c. Order number/obligation document number?
YES
YES
YES
NO
NO
NO
B.
Vendor Invoice
Are the following items the same on the vendor invoice and on the order for supplies
or services?
a. Vendor/contractor?
b. Purchase order number/order number?
c. Description of supplies or services?
d. Request/requisitioning office?
YES
YES
YES
YES
NO
NO
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Are the following items the same on the vendor invoice and on the SCORPIOS report?
a. Date/service date?
b. Account number/voucher number?
c. Invoice date/voucher date?
d. Charges/voucher amount? Is this amount on an ad hoc report?
YES
YES
YES
YES
NO
NO
NO
NO
C. Treasury Schedule Control Line Inquiry
1.
The Treasury schedule control inquiry, also referred to as the Treasury schedule, is
used as proof of payment. Are the payment amounts listed on Treasury schedule the
same as the site amount listed on the SCORPIOS report?
YES
NO
2.
Are the last six characters of the schedule number listed on the Treasury schedule the
same as the schedule number listed on the SCORPIOS report and the last six
characters listed on the financial ad hoc report?
YES
NO
3.
Is the payment voucher number listed on the Treasury schedule the same as the
barcode number printed on the vendor invoice?
YES
NO
D. Check Header Inquiry
1.
The check header inquiry, also referred to as the check header, is used as proof of
payment. Are the following items the same on the check header and on the vendor
invoice?
a. Payee name/vendor?
b. Last six characters of the schedule number?
YES
YES
NO
NO
2.
Are the following items the same on the check header and on the SCORPIOS report?
a. Amount/voucher amount?
b. Check date/schedule date?
YES
YES
NO
NO
Effective September 1, 2004
SCORPIOS captures proof of payment and displays it in a report format
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide 4. Accounting Event Test Plans
8. CONTRACT EXPENDITURES AND ANNUAL ALLOCATION
Overview
EPA procures the services of contractors pursuant to procedures and rules provided in the Federal
Acquisition Regulations. The headquarters Office of Acquisition Management (OAM) procured most of
the active and past Superfund contracts. In some years, contracts have been awarded in the regions.
Beginning at the time of pre-contract solicitation, every contract has a contracting officer (CO) who is
considered the government's official representative in all dealings with the contractor. For some contracts,
the CO is OAM. For other contracts, such as the Alternative Remedial Contracts Strategy (ARCS)
contracts, as well as most Superfund contracts awarded since the 1990s, COs are in the regional offices.
Each contract contains a statement of work that specifies the work to be performed by the contractor. For
most Superfund contracts, the site response work is specified in a work-initiation document. Depending on
the type of contract and response activity, these work initiation documents are known as work assignments
(WA), technical direction documents (TDD), or delivery orders (DO). All of these vehicles and the basic
contract prescribe reporting requirements, for example, periodic, interim, and final progress reports. These
work initiation documents and progress reports will constitute documentation of work performed.
While the CO is the official charged with contract management, EPA's technical representative for dealing
with a contractor is the Contracting Officer Representative (COR). The project officer (PO) is an employee
of the EPA program office either in Headquarters or the regions, depending on the contract. In addition to
the COR, the lower level contract vehicles described above have a technical representative known as a
work assignment manager (WAM) or delivery order project officer (DOPO). Some contracts have several
deputy project officers (DPO).
EPA's payments for these contracted services are based on invoices submitted monthly by the contractor.
EPA's payment of invoices is contingent on approval of the COR. The invoices, supporting attachments
such as the redistribution sheet, COR approval forms and other documents provide evidence or payment.
RTP-FC accepts approval in either electronic or paper format. The redistribution sheets are sent to RTP-FC
for entry into the Contract Payment System so that specifically related costs can be recovered to the sites.
The site-specific charges are then uploaded from the Contract Payment System into IFMS, the agency's
accounting system, then into the SCORPIOS system. The SCORPIOS system is used by the regional
Superfund accountants to prepare cost packages for each site.
Audit Reports
For cost-reimbursement type contracts, contract costs consisting of contractors' indirect and direct costs are
audited to ascertain whether they are properly allocable to the contract and allowable under the Federal
Acquisition Regulations and the individual contract provisions. In reviewing a cost recovery package, it is
important to know which contracts have undergone audits and when those audits occurred, because audits
often require additional transactions (e.g., reimbursements or credits) in the financial system. For example,
if the contract is a "cost plus fixed fee" type and the contractor claimed $1.50 overhead for every dollar of
direct labor, the costs will increase if the audited actual overhead costs were $1.65 for every direct labor
dollar.
November 2005 4-145 Office of the Chief Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
Additional transactions resulting from an audit can affect the total amount of recoverable costs. The
accounting for these transactions should result in charges or credits to the same site accounts as the original
charges. Accordingly, these adjustments should be reflected in the SCORPIOS report and the ad hoc
financial reports. However, it is beneficial to determine the status of audits to ensure that the applicable
adjustments have been processed. OAM's Cost Advisory and Financial Analysis Division can provide
information concerning the status of audits.
The annual incurred contract cost audit provides for timely resolution of cost and accounting problems. It
finalizes contract costs to a specified date, and it expedites the closeout audit at contract completion. The
scope and extent of the audit is influenced by: (1) the dollar volume of government business as compared to
the contractor's total business volume, (2) the dollar volume of cost-reimbursable contracts versus fixed
price contracts, and (3) the results of prior audits of the cost accounting system and incurred costs.
Contract closeout audits arise because many contracts, even some fixed price contracts, leave the total
government payment subject to final audit quantification. A CO may retain a portion of the contract
proceeds as protection to the government until an audit closes out the contract. The CO may adjust final
payment by any amounts found not to constitute allowable costs or for prior overpayment or underpayment.
A. Public Voucher for Purchases and Services Other Than Personal (SF1034) and
Continuation Sheet (SF 1035)
1.
Are the following items the same on the public voucher for purchases and services
other than personal and on the SCORPIOS report?
a. Payee/contractor?
b. Date/voucher date?
c. Voucher number?
d. Contract number?
e. Total dollar amount after adjustment/voucher amount?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
2.
Is the contract number listed on the public voucher for purchases and services other
than personal the same as the last eight characters of the obligation document number
listed on the ad hoc financial reports?
YES
NO
B. Contracting Officer Representative Invoice Approval or Electronic Approval System (EASY)
1.
Are the following items the same on the COR invoice approval and on the public
voucher for purchases and services other than personal?
a. Invoice number/voucher number?
b. Contract number?
c. Net invoice amount/total dollar amount?
YES
YES
YES
NO
NO
NO
2.
Is the invoice approving official's name on the COR invoice approval the
name of the project officer listed on the SCORPIOS report?
same as the
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
C. Site-Specific Invoice
1. Are the following items the same on the site-specific invoice and on the SCORPIOS
report?
a. Contractor?
b. Voucher number?
c. Contract number?
d. Name of the site?
e. SSID?
f. Amount/site amount?
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
2.
Are the following items the same on the site-specific invoice and on an ad hoc financial
report?
a. SSID?
b. Amount?
YES
YES
NO
NO
D. Treasury Schedule
1. The Treasury schedule may be used as proof of payment. Are the following items the
same on the Treasury schedule and on the SCORPIOS report?
a. Vendor name/contractor?
b. Invoice number/voucher number?
c. Contract number?
d. Amount/voucher amount?
e. Treasury schedule number?
YES NO
YES NO
YES NO
YES NO
YES NO
2.
Are the following items the same on the Treasury schedule and on an ad hoc financial
report?
a. Contract number/last eight characters of the obligation document number?
b. Last four characters of the Treasury schedule number?
YES
YES
NO
NO
E. Consolidated Voucher and Schedule of Payments
1. Is the schedule number listed on the consolidated voucher and schedule of payments
the same as the Treasury schedule number listed on the Treasury schedule?
YES
NO
2. Is the line-item dollar amount listed under the heading "certified no check net" on the
agency confirmation report the same amount listed on the consolidated voucher and
schedule of payments?
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
F. Agency Confirmation Report
1.
Is the schedule number listed on the agency confirmation report the same as
Treasury schedule number listed on the Treasury schedule?
the
YES
NO
2. Is the line-item dollar amount listed under the heading "certified no check net" on the
agency confirmation report the same amount listed on the consolidated voucher and
schedule of payments?
YES
3.
Is the confirmed date listed
schedule date listed on the
on the agency confirmation
SCORPIOS report?
report the same as
the Treasury
YES
NO
9. COOPERATIVE AGREEMENTS
Overview
A Cooperative Agreement (CA) is a legal instrument between EPA and a state, political subdivision, or
Indian Tribe that allows the recipient to participate in the Superfund response action. The nature of the CA
depends on the extent of other party involvement. All recipients of Superfund C As are required to comply
with 40 Code of Federal Regulations (CFR) Part 35, Subpart O and 40 CFR Part 30, which prescribe
accounting, recordkeeping, and reporting requirements. Payments are made to CA recipients by a
drawdown process, either through Automated Clearing House (ACH), letter of credit (LOG), or request for
advance or reimbursement. Since many of the reviews cover periods prior to the use of electronic
documentation, the questions are structured to cover both paper and electronic documentation. Some of the
questions below apply to paper documentation (coded P), some apply to electronic documentation (coded
E), and some apply to both (no code).
I. CA Costs Paid by Letter of Credit (LOC)
A. EPA Assistance Agreement/Amendment (EPA Form 5700-20A)
1. The EPA Assistance Agreement/Amendment (EPA Form 5700-20A) is also referred to
as the CA award document. Are the following items the same on the EPA assistance
agreement/amendment and on the SCORPIOS report?
a. Recipient/state agency?
b. Fourth through ninth characters of the assistance identification (ID)
number/State Cooperative Agreement (SCA) number?
c. Project/state officer?
d. Project period/dates of service?
YES
YES
YES
YES
NO
NO
NO
NO
2.
Is the project title and description listed on the EPA assistance agreement/amendment
the same as the project represented by the eighth character of the account number
listed on the LOC request form?
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
B. Letter of Credit Request Form (P)
1. Are the following items the same on the LOG request form and on the SCORPIOS
report?
a. Request number/voucher number?
b. Date/voucher date?
c. Amount/voucher amount?
d. Schedule number/Treasury schedule number?
e. Date paid/Treasury schedule date?
f. SSID?
g. Line item amount/site amount?
h. Other agency/state agency?
i. Last six characters of the document number/SCA
j. Activity/action code?
YES
YES
YES
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
NO
NO
NO
NO
2.
Are the following items the same on the LOG request form and
report?
a. SSID?
b. Last six characters of SCA
document number?
number/last six characters
on an ad hoc financial
of the obligation
YES
YES
NO
NO
3.
Did an authorized certifying official approve the LOG request form?
YES
NO
C. Letter of Credit Code Sheet (P)
1.
Are the following items the same on the LOG code sheet and on the LOG request form?
a. Date?
b. Schedule number?
c. SSID?
d. Amount/line item amount?
e. Last six characters of the document number/last six characters of the SCA
number?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
2.
Are the following items the same on the LOG code sheet and on an ad hoc financial
report?
a. Document control number?
b. Object class code?
YES
YES
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
II. CA Costs Paid by ACH
A. EPA Assistance Agreement/Amendment (EPA Form 5700-20A) (P)
1. Are the following items the same on the EPA Assistance Agreement/Amendment and
on the SCORPIOS report?
a. Recipient/state agency?
b. Fourth through ninth characters of the assistance ID number/SCA?
c. Project/state officer?
d. Project period/date of service?
YES
YES
YES
YES
2.
Is the project title and description listed on the EPA assistance agreement/amendment
the same as the project represented by the eighth character of the account number
listed on the ACH payment request or the continuation form?
YES
NO
B. EPA-ACH Payment Request and Continuation Form (P)
1. Are the following items the same on the EPA-ACH payment request and continuation
form and on the SCORPIOS report?
a. Date/voucher date?
b. Request number/voucher number?
c. Recipient name/state agency?
d. Approved amount/voucher amount?
e. Last six characters of the assistance agreement/contract number/SCA
number?
f. Activity/action code?
g. Line item amount/site amount?
h. Activity Code/action code/summary of service?
YES
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
NO
NO
2. Are the following items the same on the EPA-ACH payment request and continuation
form and on an ad hoc financial report?
a. Recipient name/vendor name?
b. Last six characters of the assistance agreement/contract number/last six
characters of the obligation document?
c. Activity Code/Action Code?
d. Line item account/cash amount?
YES
YES
YES
YES
NO
NO
NO
NO
3.
Did an
authorized
certifying
official
approve
the
EPA-ACH
payment
request?
YES
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
C. ACH Code Sheet (P)
1.
Are the following items the same on the ACH code sheet and on the EPA-ACH payment
request and continuation form?
a. Last six characters of the document number/last six characters of the
assistance agreement/contract number?
b. SSID?
c. Amount/line item amount?
YES
YES
YES
NO
NO
NO
2.
Are the following items the same on the ACH code sheet and on the SCORPIOS report?
a. Schedule number/Treasury schedule number?
b. Date/Treasury schedule date?
YES
YES
NO
NO
3.
Is the bar code number listed on the ACH code sheet the same as the bar code number
listed on an ad hoc financial report?
YES
NO
III. CA Costs Paid by Request for Advance or Reimbursement
A. EPA Assistance Agreement/Amendment (EPA Form 5700-20A) (P)
1. The EPA Assistance Agreement/Amendment is also referred to as the CA award
document. Are the following items the same on the EPA Assistance
Agreement/ Amendment and on the SCORPIOS report?
a. Recipient agency?
b. Fourth through ninth characters of the assistance ID number/SCA number?
c. Project period/dates of service?
d. Project/state officer project officer?
YES
YES
YES
YES
NO
NO
NO
NO
2.
Are the following items the same on the EPA Assistance Agreement/ Amendment and
on the request for advance or reimbursement?
a. Site name?
b. Project title and description/project represented by the Activity/action code?
YES
YES
NO
NO
B. Request for Advance or Reimbursement (SF 2 70) (P)
1. Are the following items the same on the request for advance or reimbursement and on
the SCORPIOS report?
a. Recipient organization/state agency?
b. Last six characters of the federal grant number/SCA number?
c. Partial payment request number/voucher number?
YES
YES
YES
NO
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
d.
e.
f.
g-
h.
i.
j-
Period covered/dates of service?
Name of site?
Federal share amount/voucher amount?
Total federal share amount/voucher amount?
Date of request/voucher date?
SSID?
Activity/action code described in summary of service?
YES
YES
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
NO
NO
2. Are the following items the same on the request for advance or
an ad hoc financial report?
a. Recipient organization/vendor name?
b. Last six characters of the federal grant number/last six
obligation document number?
reimbursement and on
characters of the
c. Federal share amount/amount (SPUR report)/cash amount (MARS report)?
d. SSID?
YES
YES
YES
YES
NO
NO
NO
NO
3.
Did
authorized
certifying official
approve
request for advance
reimbursement?
YES
NO
C. Grant Payment Code Sheet (P)
1. Are the following items the same on the grant payment code sheet and on the request
for advance or reimbursement?
a. Payee/recipient organization?
b. Last six characters of the project number/last six characters of the federal
grant number?
c. Line item amount/federal share amount?
d. Total amount listed/total federal share?
e. SSID?
YES
YES
YES
YES
YES
NO
NO
NO
NO
NO
2.
Are the following items the same on the grant payment code sheet and on an ad hoc
financial report?
a. First six characters of the document control number/document control
number?
b. Object class code?
c. Bar code number/reference transfer number?
YES
YES
YES
NO
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
4. Accounting Event Test Plans
D. Treasury Schedule Control Line Inquiry
1.
The Treasury schedule control line inquiry, also referred to as the Treasury schedule,
is used as proof of payment. Are the following items the same on the Treasury
schedule and on the SCORPIOS report?
a. Payment amount/site amount?
b. Last six characters of the schedule number/Treasury schedule number?
YES
YES
NO
NO
Is the payment voucher number listed on the Treasury schedule the same as the bar
code number printed on the grant payment code sheet?
YES
E. Check Header Inquiry
1.
The check header inquiry, also referred to as the check header, is used as proof of
payment. Is the payee name listed on the check header the same as the recipient
organization listed on the request for advance or reimbursement?
YES
NO
2.
Are the last six characters of the schedule number listed on the check header the same
as the last six characters of the Treasury schedule number listed on the Treasury
schedule?
YES
NO
3.
Are the following items the same on the check header and on the SCORPIOS report?
a. Amount/voucher amount?
b. Check date/Treasury schedule date? Confirmed date on an ad hoc financial
report?
YES
YES
NO
NO
November 2005
Jiiice oi the Chiet Financial Officer
-------
Chapter 5
Appendices
APPENDIX A: WORKING PAPER PREPARATION
Working papers serve as tools to aid the performance of review work and as written evidence of the work
performed. Statement on Auditing Standard (SAS) Number 41, Working Papers, provides authoritative
guidance on, among other things, the functions, nature, and general content of working papers. Although
conducting quality assurance reviews is not the same as conducting a financial statement audit, the concepts
of SAS 41 are relevant and applicable. Working papers:
Serve as evidence of work performed
Support the validity of conclusions and recommendations reached
Provide a permanent record of the methodology used
Identify exceptions encountered and their relative importance
Suggest ways to improve the scope and efficiency of future reviews
V Subsequent quality assurance reviewer
V Other internal reviewers
V Office of Inspector General (especially CFO auditors) and GAO auditors
Identify preparers
Further guidance on working papers can be obtained through authoritative literature and other reference
materials. It is important to keep working papers in proper perspective and recognize that they facilitate a
review. Working paper preparation should not be unduly burdensome and time-consuming.
To assist with the preparation of working papers, this Appendix provides information on test plans, sample
selection, general considerations, and types of working papers.
TEST PLANS
The starting point in the documentation of any review or audit is the test plan. A test plan, or work program,
can take a variety of forms, types, and styles. This QA Guide includes two basic types of test plans:
questionnaires (Test Plans A and C) and test procedures (Test Plan B).
One purpose of test plans is to provide an outline of the work to be performed. Prior to beginning any test
procedures, be sure to understand:
The objective for which test procedures are being performed
How to perform each test
Where to go for necessary EPA records or data
The documentation needed to support the work performed
November 2005
-------
Quality Assurance Guide Appendix A
Budgeted hours for the work to be performed
Planned completion date for the work to be accomplished
Since test plans describe the evidence-gathering steps to be used, they should be carefully followed. Three
major considerations are addressed when developing a test plan:
Decide what procedures to applythe nature of the review tests.
Decide when to apply the proceduresthe timing of review tests.
Decide which items against which to apply the proceduresthe extent of the review tests.
These considerations are defined to the extent possible when the test plan is designed. Professional judgment
should be exercised when executing the testing proceduresespecially when determining the extent of
testing necessary, including sample selection.
SAMPLE SELECTION
There are two basic approaches to sampling: (1) judgmental and (2) statistical. Both approaches require
judgment in planning, selecting, and evaluating a sample and in relating the results derived from the sample
to the population from which the sample was selected.
Judgmental sampling includes any form of sampling in which the sample size is determined and selected
through personal judgment. The reviewer relies entirely on discretion and judgment in deciding how many
and which items to select for examination and which to exclude.
Judgmental sampling is used for:
Small populations (generally fewer than 500 items)
Populations where internal controls have been found to be effective
Populations of manual records from which it will not be cost-effective to select statistical samples
Potential weaknesses of judgmental sampling may include:
Sufficiency of the evidence (sample size)
Objectivity (unbiased sample selection)
Difference in interpretation by reviewer
Extent of required testing
Result of the testing for population as a whole
The use of statistical techniques in estimating sampling size and/or selecting samples allows the reviewer to
achieve a more objective and defensible degree of reliability and preciseness in the testing process.
Ultimately, it is a matter of judgment by the reviewer that determines whether statistical sampling is
necessary.
November 2005
-------
Quality Assurance Guide Appendix A
Statistical sampling is an objective process for testing a limited number of transactions in order to draw a
conclusion about a larger span of transactions. Statistical sampling is appropriate when the number of
transactions is too large to review one hundred percent (100%) to obtain a valid result.
GENERAL CONSIDERATIONS
The following items highlight some general considerations on working paper content:
Working papers should be sufficiently intelligible, clear, and neat so that another person who has no
previous association with the review can scan the papers and determine the nature and extent of the work
completed and how conclusions were reached.
The content of an individual working paper or group of related working papers should identify (1) the
source of the information presented (e.g., sample, August SF-224), (2) the nature and extent of the work
completed and conclusions reached, and (3) the appropriate cross-references to other working papers.
Information and comments in the working papers generally represent statements of fact and professional
conclusions. Accordingly, language should be clear and free from vague judgmental adjectives such as
"good" or "bad." Conclusions should be supported by documented facts, especially if they concern the
adequacy of EPA's records or systems. All inferences and conclusions should be objective and no
misleading or irrelevant statements should be made.
Typical shortcomings of working papers include:
Unsatisfactory conclusions
Incomplete documentation/partially completed procedures
Extraneous/duplicative information
Mechanical performance of test procedures
Inadequate resolution of deficiencies/problems noted
TYPES OF WORKING PAPERS
Working papers can be completed questionnaires, records of meetings (including interview notes), schedules,
copies of documentation, or findings sheets. Regardless of the format of the working paper, each should
contain certain basic elements. All working papers prepared in connection with Quality Assurance Reviews
should contain at least the following elements:
Title or Heading: All working papers should have a title or heading comprising (1) a caption that briefly
describes the contents of the paper, (2) the nature of the work, and (3) the applicable period or closing date
covered by the review. An example of a heading is:
FY (year)
Quality Assurance Review
Accounts Receivable
Year-End Reconciliation
November 2005
-------
Quality Assurance Guide Appendix A
Preparer's Initials and Date: When the working paper is completed, the preparer should initial and date the
working paper at the top right-hand corner.
Index number: A number or alphanumeric code should be placed in the lower right-hand corner of the
working paper. The formulation of the index number is dictated by personal preference. Generally, a basic
scheme is developed at the beginning of a review and will evolve, as necessary, as the review proceeds. For
illustrative purposes, the general index letters used in a recent EPA Integrity Act review are provided:
A Administrative
C Contract Payment System (CPS)
G Integrated Grant Management System (IGMS)
I Integrated Financial Management System (IFMS)
IGL IFMS General Ledger (GL) Subsystem
IB IFMS Budget Execution/Funds Control/Budget Preparation Subsystem
IAP IFMS Accounts Payable (AP) Subsystem
IAR IFMS Accounts Receivable (AR) Subsystem
IFA IFMS Fixed Assets (FA) Subsystem
IP IFMS Purchasing (P) Subsystem
IPCA IFMS Project Cost Accounting System (PCAS) Subsystem
IT IFMS Travel Subsystem
The working papers for each general index above contain a basic filing sequence:
100 System Test Plan
200 Findings Sheets
300 Supporting Test Papers (schedules, documentation, interview, etc.)
For example, the CPS Test Plan would be indexed and filed as "C100." This index number should be placed
in the bottom right-hand corner of the CPS Test Plan working paper.
Working paper files are generally classified as current files and permanent files. Current files contain
information pertinent to a single review. Permanent files include documents that have background and
general information, such as a flowchartrelevant to multiple or recurring reviews. Many of the working
paper indexes listed above are divided between current and permanent files.
November 2005
-------
Quality Assurance Guide Appendix A
FINDING SHEETS - A SPECIAL TYPE OF WORKING PAPER
A "finding" is a statement describing a deficiency or problem found during the course of a review or an
audit. Findings are the basis for audit and review reports. Findings should be:
Significant enough to warrant communication to others
Based on accurate and established facts and evidence contained in the working papers
Developed objectively
Based on adequate review work to support any conclusions reached
Logical, reasonable, and convincing
In order to properly develop a finding, a finding sheet (a special type of working paper), is prepared. A
finding sheet does not have a particular format, but it does contain standard elements necessary for complete
findings: condition, cause, criteria, effect, recommendation, and comments from the staff being reviewed.
Condition: A concise statement of the deficiency noted. It is usually the opposite of criteria.
Possible problems and issues in demonstrating condition include: (1) the quality of the data used is
not credible, (2) the time frame is not representative, and (3) the individual instances of problems
may not relate to or flow from the same root cause.
Cause: The underlying reason for the existence of the condition. It is the basis for sound
recommendations. A strong cause strengthens the persuasiveness of the finding and increases the
likelihood of the recommendations being accepted. Causes of deficiencies may reflect: (1) approval
authority in the wrong place or too many layers of approval needed, (2) an inadequate allocation of
resources, (3) operating procedures fail to keep up with processes, (4) traditions of an organization
(culture), (5) internal controls that could prevent the condition are absent or did not work correctly,
and (6) staff are not adequately trained. Some questions to ask about cause include the following:
Is it the primary cause (fundamental/root cause)?
Is it actionable? Can a recommendation be devised to fix it?
Is it isolated or systemic? (A statistical projection to the universe can be very helpful in assessing the
magnitude of errors to determine if they are isolated or systemic.)
Is it an error or omission? Is it intentional?
Is it internal or external to the organization?
What internal controls failed or were absent that might have prevented the cause from occurring?
Is it worth fixing?
Criteria: The standard, regulation, or sound management concept that is violated. Criteria usually
set up effect. Without criteria, there is no finding. Possible criteria include laws, regulations, OMB
Circulars and Bulletins, the Treasury Financial Manual, various GAO guidance and manuals, and
professional standards. Steps to identify and develop criteria include:
November 2005
-------
Quality Assurance Guide Appendix A
Collecting initial data on condition
Investigating legal and regulatory environment
Reviewing the policies and procedures of the organization
Extracting relevant parts of existing criteria
Deciding whether criteria provide a sufficient and specific standard for assessing the condition
Effect: The adverse results that have occurred, or might occur, due to a condition that does not meet
criteria. Effects serve as catalysts for change and add persuasiveness and validity to the argument for
change. Effects should be considered as they relate to the primary mission or goals of an
organization. Some questions that may be used to develop effect are:
Is it actual or potential?
Is it measurable?
Is it solely the result of the condition or are there other contributing conditions?
Is it significant or likely to become significant?
Recommendation: A statement of the corrective action that should be implemented to correct the
adverse condition. A recommendation should not be made if the cause is not addressed in the
finding. The ideal future condition should be based on criteria and the recommendation directed at
the cause of the problem. A determination must be made as to what is preventing the current
condition from being the ideal future condition. Recommendations should help an organization
remove barriers to efficient operations. Also, in developing recommendations, alternative strategies
for addressing the cause should be identified and analyzed. Some strategies for analyzing
recommendations include:
Consider the rationale of the organization for not acting previously on the cause.
Be sensitive to how recommendations might affect the organization.
Consider the trade-offs between pros and cons of alternative strategies. Possible cons include: (1)
transition costs and transition time and (2) competing values or goals of other components in the
organization or other processes.
Additional points for developing recommendations:
State specifically what actions should be taken and by whom.
Direct recommendations to those who have authority and responsibility to act.
State recommendations positively and constructively.
Emphasize awareness of costs and risks.
Consider practical constraints - financial and other principles.
Avoid recommending additional studies.
Call for corrective action consistent with other elements.
November 2005
-------
Quality Assurance Guide
Appendix A
Comments: A restatement of the response given by the office reviewed regarding the finding and
recommendation.
November 2005
-------
Quality Assurance Guide
Appendix B
APPENDIX B: ANNUAL ASSURANCE LETTER REPORTING REQUIREMENTS
The purpose of this Appendix is to consolidate information from quality assurance reviews and provide the
reporting requirements for the Annual Assurance Letter. The attachments include the annual report along
with appropriate supporting materials. Several schedules presented in other chapters of this QA Guide are
shown as suggested data collection and reporting formats.
A conceptual overview, including schematics on the Integrity Act certification process (Exhibit 2-1) and
assurance letter information flow (Exhibit 2-2), is presented in Chapter 2, Legislative Background. Other
explanatory information is provided in other parts of this Guide. Questions about reporting requirements
should be directed to FPPS.
REFERENCES
Attachment I, Sample Letter: Annual Report and Certification on Assessment of Financial Controls and
Conformance with FASAB Principles - FY (year).
Attachment I, Schedule A: Illustration using Exhibit 3-3, Quality Assurance Review Tracking System.
Attachment I, Schedule B: Illustration in narrative form.
Attachment I, Schedule C: Illustration using Exhibit 3-4, QA Work Plan - Phases and Identified Deficiencies
Schedule.
Attachment I, Schedule D: Illustration using Exhibit 4-1, Analysis of General Control Environment Summary of
Results.
Attachment I, Schedule E: Illustration using Exhibit 4-2, Analysis of Accounting Event Transaction Testing
Summary of Results.
November 2005
-------
Quality Assurance Guide Appendix B
Attachment I
SAMPLE ASSURANCE LETTER
MEMORANDUM
SUBJECT: Annual Report and Certification on Assessment of Financial Controls and
Conformance with FASAB Principles - FY (year)
FROM: Name
Director, (office)
TO: Name
Director, (office)
In accordance with your delegation of responsibilities to me, I have directed an evaluation of the (office)
system of internal accounting and administrative controls in effect during the year ending (enter actual date
of report), required by the Federal Manager's Financial Integrity Act and guidelines provided in the EPA
Quality Assurance Guide. Included is an evaluation of whether the system of internal accounting and
administrative control of (office) was in compliance with the standards prescribed by the Federal Accounting
Standards Advisory Board (FASAB).
The objectives of (office) system of internal accounting and administrative control are to provide reasonable
assurances that:
Obligation and costs are in compliance with applicable law.
Funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or
misappropriation.
Revenues and expenditures applicable to agency operations are properly recorded and accounted for to
permit the preparation of accounts and reliable financial and statistical reports and to maintain
accountability over the assets.
The results of the evaluation and other information indicate that (office) system of internal accounting and
administrative control in effect during the year ending (actual date of report), taken as a whole, complies
with the requirement to provide reasonable assurance that the above-mentioned objectives were achieved
within acceptable limits. These evaluations are identified in the following schedules:
Quality Assurance Review Tracking System, identifying the specific activities that were examined during
the fiscal year. (Attachment I, Schedule A)
November 2005
-------
Quality Assurance Guide
Appendix B
Summary ofQA Activities Performed, a synopsis of each review conducted. (Attachment I, Schedule B)
(Note: The following example is provided to reflect discrepancies found during a review and reported in the
assurance letter.)
The evaluation, however, did disclose discrepancies. The discrepancies and the proposed corrective action
plans and schedules are identified in the following schedules:
1. QA Work Plan Phases & Identified Deficiencies Schedule, identifying deficiencies and the working
paper references for Test Plans A, B, and C. Also included are planned and actual start dates as well as
planned and actual completion dates. (Attachment I, Schedule C)
2. Analysis of General Control Environment Summary of Results, identifying no discrepancies or areas
for improvement based on an analysis of general control environment functions. (Attachment I, Schedule
D)
3. Analysis of Accounting Event Transaction Testing Summary of Results, identifying discrepancies and
corrective actions based on test results of individual accounting events. (Attachment I, Schedule E)
I have reviewed all the attached forms and believe the forms accurately reflect the conditions of our office.
Name
Director, (office)
Date
November 2005
-------
Quality Assurance Guide
Appendix B
Attachment I
Schedule A
SAMPLE-WORKPLAN
(Office Name)
Quality Assurance Review Tracking System
Fiscal Year 2005
Types of Quality Assurance Review Risk Level Reviewer Beg. End FY FY FY FY FY FY
Jt^ J Date Date 2002 2003 2004 2005 2006 2007
Accounts Payable
Accounts Receivable
Payroll Processing
Fund Balance with Treasury
Disbursements
Small Purchase Card
Property, Plant, and Equipment
Interagency Agreements
Grants and Cooperative Agreements
Collections and Deposits
Advances and Prepayments
Financial Reporting
Funds Control
Travel Expenses and Reimbursements
Claims Against the Government
Other Types of Reviews Performed
Total Reviews
1
1
1
4
1
3
Myer
Doe
Johnson
Davidson
Jones
Smith
Feb05
Apr 05
May 05
JunOS
Mar 05
Jan 05
Feb05
Apr 05
May 05
JunOS
Mar 05
May 05
c
c
c
c
c
c
Notes:
C= Completed
P= Planned
I = In Process
November 2005
-------
Quality Assurance Guide
Appendix B
Attachment I
Schedule B
SAMPLE SUMMARY OF QA ACTIVITIES
SUMMARY OF QA Activities Performed - FY 2005
ACCOUNTS PAYABLE - Accounts Payable documentation was reviewed to verify that the payments were
recorded promptly and accurately. The documentation was reviewed to verify timing differences between the
creation of the payable, billing, and entry in the accounting records.
ACCOUNTS RECEIVABLE - Accounts receivable documentation was reviewed to verify that accounts
receivable are being recorded in a timely manner and that adequate supporting documentation exists for all
transactions.
DISBURSEMENTS - Disbursements were reviewed to verify that the payments are supported by obligating
documents; appropriate discounts are taken; and certifying officer approved the disbursements.
GRANTS and COOPERATIVE AGREEMENTS - Grant balances in the Automated Standard Application
for Payments (ASAP) were compared with the balances in IFMS. All discrepancies were researched and
resolved.
COLLECTIONS and DEPOSITS - A review was performed to verify that collections are deposited promptly
upon receipt and properly recorded in the accounting system. Internal control standards for separation of duties
were reviewed to ensure proper control over collection is maintained.
ADVANCES and PREPAYMENTS - The review was conducted to verify timely recording of advances. In
addition, an analysis of the recording and liquidation of prepayment transactions to the general ledger account
was performed.
NOTE: List and provide a narrative for any additional reviews that were performed.
November 2005
Otiice oi the Chiet Financial Onicei
-------
Quality Assurance Guide
Appendix B
SAMPLE - IDENTIFIED DEFICIENCIES
Attachment I
Schedule C
QA Work Plan - Phases & Identified Deficiencies Schedule
FISCAL₯EAR
TEST PLAN A -
Analysis of General Control Environment
TEST PLAN B -
Transaction Testing for Accounting Events
Accounts Payable
Accounts Receivable
Payroll Processing
Fund Balance with Treasury
Disbursements
Government-wide Credit Card
Property, Plant, and Equipment
Interagency Agreements
Grants and Cooperative Agreements
Collections and Deposits
Advances and Prepayments
Financial Reporting
Funds Control
Travel Expenses and Reimbursements
Claims Against the Government
TEST PLAN C -
Quality Assurance Review for Systems that Interface
with the Integrated Financial Management System
(IFMS) (Financial Systems Staff coordinates reviews)
Identified Deficiencies
No deficiencies identified
No deficiencies identified
No deficiencies identified
Four files were not reconciled timely
No deficiencies identified
Erroneous balance of $100,000 in general
ledger
Start Date Completion Date
Planned Actual Planned Actual
May 05
Jan 05
May 05
Jan 05
JunOS
May 05
JunOS
JunOS
November 2005
Otiice oi the Chief Financial Onicei
-------
Quality Assurance Guide
Appendix B
SAMPLE - ANALYSIS OF GENERAL CONTROL ENVIRONMENT (SUMMARY)
ANALYSIS OF GENERAL CONTROL ENVIROMENT
SUMMARY OF RESULTS
Attachment I
Schedule D
Fiscal Year 2005
"
Section
4A-1
4A-3
Question #
8c
14
Yes
X
X
No
If "Yes," Describe Corrective Action
Provide Suggestion List
Create Individual Development Plan
Accomplishment
Planned
May 05
May 05
Actual
JunOS
JunOS
SECTIONS
A. Control Environment E. Separation of Duties and Supervision
B. Reasonable Assurance and Safeguards F. Access to and Accountability for Resources
C. Integrity, Competence, and Attitude G. Recording and Documentation
D. Delegation of Authority and Organization H. Resolution of Audit Findings and Other Deficiencies
November 2005
Otiice oi the Chiet Financial Onicei
-------
Quality Assurance Guide
Appendix B
Attachment I
Schedule E
SAMPLE - ANALYSIS OF ACCOUNTING EVENTS
Analysis of Accounting Event Transaction Testing Summary of Results
DATE OF REPORT: June 30, 2005
FISCAL YEAR: 2005
PERIOD COVERED: October 1,2004 - June 30,2005
1
ACCOUNTING EVENT
Accounts Payable
Accounts Receivable
Payroll Processing
Fund Balance with
Treasury
Disbursements
Government-wide Credit
Card
Property, Plant, &
Equipment
Interagency Agreements
Grants &Cooperative
Agreements
Collections and Deposits
Advances and
Prepayments
Financial Reporting
Funds Control
Travel Expenses &
Reimbursements
Claims Against the
Government
PRIOR YEAR OUTSTANDING
DISCREPANCIES
PK1OKVEAK CURRENT YEAR CURRENT YEAR REPORT DA1E
NUMBER OF $ VALUE OF OUTSTANDING OF
k DISCREPANCIES DISCREPANCIES DISCREPANCIES
DISCREPANCY
0
0
0
0
0
$100,000
4
3
Jun05
X
X
X
X
X
May
05
May
05
Jun05
Jun05
No discrepancies identified
No discrepancies identified
No discrepancies identified
Deficiencies were corrected
No discrepancies identified
Erroneous GL transaction. Need OFM
adjustment. Contacted OFM May 05
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
Appendix C
APPENDIX C: TERMINOLOGY
Accounting
System
Accrual Basis of
Accounting
Adjusting Entry
Agency (Federal)
Allocation
Apportionment
Appropriation
Assets
Cash Basis of
Accounting
Chart of
Accounts
Commitment
Control Objective
Disbursements
The methods and records established to identify, assemble, analyze, classify, record,
and report an entity's transactions and to maintain accountability for the related assets
and liabilities.
The accounting under which revenues are recorded when earnings and expenditures
are recorded when goods are received and services performed even though the
receipt of the revenue or the payment of the expenditure may take place, in whole or
part, in another accounting period.
Entries made to EPA's general ledger, generally at month-end and year-end, as part
of the accrual basis of accounting, in order to recognize revenue and expenses in the
period in which they were incurred.
Any department, agency, commission, authority, administration, board, or other
independent establishment in the executive branch of the government, including any
corporation wholly or partly owned by the United States that is an independent
instrumentality of the United States, not including any municipal government of the
District of Columbia.
The amount of obligational authority transferred from one agency, bureau, or account
that is set aside in a transfer appropriation account to carry out the purpose of the
parent appropriation or fund.
A distribution made by OMB of amounts available for obligation in an appropriation or
fund account into amounts available for specified time periods, activities, projects,
objects, or combinations thereof. The amounts so apportioned limit the obligations
that may be incurred.
One of the basic forms of authority. Statutory authority that allows federal agencies to
incur obligations and to make payments out of the Treasury for specified purposes.
An appropriation act is the most common means of providing budget authority, but in
some cases the authorizing legislation itself provides the budget authority.
Tangible or intangible items owned by the federal government that would have
probable economic benefits that can be obtained or controlled by a federal
government entity.
The accounting method whereby revenues are recorded when received in cash and
expenditures (outlays) are recorded when paid, without regard to the accounting
period to which the transaction occurred.
A list of general ledger accounts systematically arranged applicable to a specific
activity or accounting entity, giving account names and numbers.
The amount of allotment or lower level authority committed in anticipation of an
obligation.
A desired goal or condition for a specific event that reflects the application of the
overall objectives of internal control to that specific event.
Payments made using cash, checks, or electronic transfers. Disbursements include
advances to others as well as payments for goods and services received and other
November 2005
-------
Quality Assurance Guide
Appendix C
Entity
Event
Expenditures
Expense
FISMA
Fund
Trust Funds
Funds Control
General Ledger
IFMS
Inherent Risk
types of payments made.
A unit within the federal government, such as a department, agency, bureau, or
program, for which a set of financial statements would be prepared. Entity also
encompasses a group of related or unrelated commercial functions, revolving funds,
trust funds, and/or other accounts for which financial statements will be prepared in
accordance with OMB annual guidance on Form and Content of Financial Statements.
The processes used to initiate and perform related activities, create the necessary
documentation, and gather and report related ideas.
The incurring of a liability, or payment in cash, for the purpose of acquiring an asset or
service. The expenditure represents receipt of goods and services. It includes travel
and other advances. It does not include undelivered orders (obligations) or
commitments.
The outflows of assets or incurrence of liabilities during a period resulting from
rendering services, delivering or producing goods, or carrying out other normal
operating activities related to EPA's programs and missions, the benefits from which
do not extend beyond the present operating period.
Federal Information Security Management Act of 2002 (FISMA) requires each federal
agency to develop, document, and implement an agency-wide program to provide
information security for the information and information security systems that support
the operations and assets of the agency, including those provided or managed by
another agency, contractor, or other source.
A self-balancing group of accounts assets, liabilities, revenues, capital, and
expenses - that are segregated for the purpose of carrying on specific activities or
attaining certain objectives in accordance with special regulations, restrictions, or
limitations.
Accounts that are designed by law as trust funds, for receipts earmarked for specific
purposes and the associated expenditure of those receipts.
The control over the use and management of fund appropriations to ensure that (1 )
funds are used only for authorized purposes, (2) obligations and expenditures do not
exceed the amounts authorized and available, and (3) the obligation or disbursement
of funds is not reserved or otherwise withheld without Congressional knowledge and
approval.
A summary of all financial transactions for a fund or any accounting entity within EPA
for which a complete system of accounts is maintained and for which separate
financial reports are prepared. The general ledger contains each account used by the
reporting entity, grouped by accounting classification and numbered in ascending
order in accordance with the U.S. Standard General Ledger.
The Integrated Financial Management System is the official accounting system used
by EPA to record and report on financial transactions. IFMS is composed of a
database and various subsystems. The database contains journals, tables, and a
general ledger.
The inherent potential for waste, loss, unauthorized use, or misappropriation due to
the nature of an activity itself.
November 2005
-------
Quality Assurance Guide
Appendix C
Internal Control
The plans, methods, and procedures used to meet missions, goals, and objectives
that support performance-based management: effectiveness and efficiency of
operations; reliability of financial reporting; and compliance with applicable laws and
regulations.
Internal Control
Review
A detailed examination of a system of internal controls. All reviews should produce
written material documenting what was done and related findings.
Journal
A tabular record in which accounting transactions are recorded as debits and credits in
chronological order. The journals are the original point of entry for all accounting
transactions. These transactions are later posted to the general ledger.
Liability
A probable and measurable future outflow of resources arising from past transactions
or events.
Management
Control
The organization policies and procedures used to reasonably ensure that programs
achieve intended results; resource use is consistent with the mission;
programs/resources are protected from fraud, waste, and mismanagement;
laws/regulations are followed; and reliable, timely information is obtained, maintained,
and reported.
Management
Control Plan
A brief written plan that summarizes EPA's risk assessments, planned actions, and
internal control evaluations to be undertaken to provide reasonable assurance that
controls are in place and working and used to manage Integrity Act implementation.
Material
Weakness
A situation in which the designed procedures or degree of operational compliance
does not provide reasonable assurance that the objectives of internal control specified
in the Integrity Act are being accomplished.
Obligation
Amounts of orders placed, contracts awarded, services received, and similar
transactions for bona fide needs existing during a given period that will require
payments during the same or a future period and that comply with applicable laws and
regulations.
OMB Circular A-
123-Revised
(Effective FY
2006)
OMB Circular A-123-Revised, Management's Responsibility for Internal Control,
defines the scope of assessing and documenting internal control over financial
reporting to include the annual financial statements and other significant internal or
external financial reports and compliance with laws and regulations that pertain to the
financial reports.
OMB Circular A-
127-Revised
OMB Circular A-127-Revised, Financial Management System, implements Section 4
of the Integrity Act. It prescribes specific policies and procedures for developing,
operating, evaluating, and reporting on financial management systems.
OMB Circular A-
130-Revised
OMB Circular A-130-Revised, Management of Federal Information Resources,
establishes policy, procedures, and analytical guidelines for management of federal
information resources.
OMB Circular A-
136
OMB Circular A-136, Financial Reporting Requirements, establishes a central point of
reference for all federal financial reporting guidance for Executive Branch
departments, agencies, and entities required to submit audited financial statements,
interim financial statements, and Performance Accountability Reports (PARS) under
the Chief Financial Officers (CFO) Act of 1990 and the Accountability of Tax Dollar Act
(ATDA) of 2002.
November 2005
-------
Quality Assurance Guide
Appendix C
Posting
Program
Quality Standards
Quality
Assurance
Review
Reasonable
Assurance
U.S. SQL
Trial Balance
Vulnerability
Assessment
The transcribing of amounts from journals to the general ledger. It involves
reorganizing information from a chronological format to a format of individual
accounts.
A major EPA endeavor that is mission oriented and fulfills statutory or executive
requirements, and which is defined in terms of the principal actions required to
achieve a significant end objective.
Guidelines established as rules for measurement of quality.
An evaluation effort imposed and conducted by sources external to the
units/personnel being reviewed to ensure that the overall work of a financial manager
meets certain quality standards.
A standard that recognizes that the cost of acceptable, but not absolute, confidence of
achieving a particular objective should not exceed the benefits derived, and that the
benefits consist of reductions in the risks of failing to achieve the stated objective.
A general ledger containing a uniform chart of accounts and supporting transactions.
This general ledger format is to be used by all federal agencies to standardize federal
agency accounting and to support the preparation of standard external reports.
A listing, in ascending account number order, of each general ledger account balance.
The trial balance further indicates whether the balance condition is a debit or credit.
The sum of all the debit account balances should equal the sum of all the credit
account balances.
A review of the susceptibility of a program or function to the occurrence of waste, loss,
unauthorized use, or misappropriation.
November 2005
-------
Quality Assurance Guide Appendix D
APPENDIX D: FEDERAL MANDATES AND EPA REQUIREMENTS GUIDING QA
PROGRAM
- Government Management Reform Act of 1994 (GMRA)
http://www.whitehouse.gov/omb/financial/ffs ffmia.html
- Government Performance and Results Act of 1993 (GPRA)
http://www.whitehouse.gov/omb/mgmt-gpra/gplaw2m.html
- Cash Management Improvement Act of 1990 (CMIA)
http://www.fms.treas.gov/cmia/statue.html
- Chief Financial Officers Act of 1990 (CFO Act)
http://www.gao.gov/policy/12 19 4.htm
- Federal Managers' Financial Integrity Act of 1982 (FMFIA)
http://www.whitehouse.gov/omb/financial/fmfia1982.html
- Federal Financial Management Improvement Act of 1996 (FFMIA)
http://www.whitehouse.gov/omb/financial/ffs ffmia.html
- Budget and Accounting Procedures Act of 1950
http://161.203.16.4/t2pbat7/145379.pdf
- Federal Financial Management Improvement Act of 1996
http://www.whitehouse.gov/omb/financial/ffs ffmia.html
- Inspector General Act of 1978, as Amended (IG Act)
http://access.gpo.gov/uscode/title5a/5a 2 .html
- Federal Information Security Management Act of 2002 (FISMA)
http://csrs.nist.gov/policies/FISMA-Final.pdf
- Improper Payments Information Act of 2002 (I PI A)
http://www.whitehouse.gov/omb/financial/fin report.html
- Single Audit Act, as amended
http://www.gao.gov/new.items/do2877t.pdf
November 2005 5-20 Office of the Chief Financial Officer
-------
Quality Assurance Guide
Appendix D
- Clinger-Cohen Act of 1996 (formerly known as the Information Technology Management Reform Act)
http://www.whitehouse.gov/omb/egov/e-1-legislation.html
Regulations
- OMB Circular A-123-Revised (Effective FY 2006), Management's Responsibility for Internal Control
http://www.whitehouse.gov/omb/circulars/a123.html
- 5 CFR 1315: Prompt Payment (formerly OMB Circular A-125, Prompt Payment Act)
http://www.fms.treas.gov/prompt/5cfr1315.txt http://www.fms.treas.gov/prompt/5cfr1315.pdf
- OMB Circular A-127-Revised, Financial Management Systems
http://www.whitehouse.gov/omb/circulars/a127/a127.html
- OMB Circular A-130 Revised, Management of Federal Information Resource
http://www.whitehouse.gov/omb/circulars/a130/a130trans4.html
- OMB Circular A-136, Financial Reporting Requirements
http://www.whitehouse.gov/omb/circulars/a136/a136.pdf
Guidelines
GAO Policy and Procedures:
- Standards for Internal Control in the Federal Government, November, 1999 (Green Book)
http://www.gao.gov/special.pubs/ppm.html
- GAO Special Publications
http://www.gao.gov/special.pubs/afm.html
- The Chief Financial Officers Act: A Mandate for Federal Financial Management Reform. GAO/AFMD-12.19.4.
September 1991
http://www.gao.gov/special.pubs/af12194.pdf
- Core Financial System Checklist: Checklist for Reviewing Systems Under the Federal Financial
Management Improvement Act. GAO-05-225G. February 2005
http://www.gao.gov/new.items/d05225g.pdf
- Federal Information System Controls Audit Manual: Volume I Financial Statement Audits AIMD-12.19.6.
June 2001
http://www.gao.goV/special.pubs/ai12.19.6.pdf
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
Appendix D
- Financial Audit Manual, A Joint GAO/PCIE Publication GAO-04-942G. July 2004
http://www.gao.gov/special.pubs/gaopcie
- Maintaining Effective Control Over Employee Time and Attendance Reporting, GAO-03-352G, January 2003
http://www.gao.gov/special.pubs/gpg.html
- Human Resources and Payroll System Requirements, March 2000
http://www.gao.gov/special.pubs/ai2123.pdf
- Treasury Financial Manual
http://fms.treas.gov/tfm/vol1/index.html
http://fms.treas.gov/ASAP/fedusersguide
http://fms.treas.gov/eft/index.html
equirements
- Statements of Federal Accounting Standards Advisory Board (FASAB):
http://www.fasab.gov/standards.html
Accounting for Selected Assets and Liabilities
Accounting for Direct Loans and Loan Guarantees
Amendments # SFFAS 18 - May 2000; #SFFAS 19 - March 2001
Accounting for Inventory and Related Property
Objectives of Liabilities of the Federal Government
Managerial Cost Accounting Standards for Federal Government, Amendment #SFFAS 9 - October 1997
Accounting for Property, Plant, and Equipment
Revenue and Other Financing Sources
Supplemental Stewardship Reporting, Amendments # SFFAS 11, October 1998; #SFFAS 14, April 1999;
#SFFAS 16, July 1999
- OMB - Office of Federal Financial Management (OFFM)
http://www.whitehouse.omb/financial
EPA Policies and Procedures
EPA Management Integrity Principles
EPA Resource Management Directives
EPA Financial Policy Announcements
EPA Financial Performance Measures
-
November 2005
Otiice oi the Chiet Financial Officer
-------
Quality Assurance Guide
Appendix E
APPENDIX E:
ACH
ARA
ASAP
CBI
CERCLA
CFC
CFO
CFOC
CMIA
DOI
DOJ
EASY
EFT
FASAB
FC
FDW
FFMIA
FISMA
FMFIA
FMO
FPPS
FSS
GAO
GAO/PCIE
ACRONYMS
Automated Clearing House
Assistant Regional Administrator
Automated Standard Application for Payments
Confidential Business Information
Comprehensive Environmental Response, Compensation, and Liability Act
Cincinnati-Finance Center
Chief Financial Officer
Chief Financial Officers Council
Cash Management Improvement Act
Department of Interior
Department of Justice
Electronic Approval System
Electronic Funds Transfer
Federal Accounting Standards Advisory Board
Finance Center
Financial Data Warehouse
Federal Financial Management Improvement Act
Federal Information Security Management Act
Federal Managers' Financial Integrity Act
Financial Management Officer
Financial Policy and Planning Staff
Financial Systems Staff
Government Accountability Office
Government Accountability Office/President's Council on Integrity and Efficiency
November 2005
-------
Quality Assurance Guide Appendix E
GMRA Government Management Reform Act
GPRA Government Performance and Results Act
IAG Interagency Agreement
IDOTS Interagency Document On-line Tracking System
IFMS Integrated Financial Management System
IGMS Integrated Grant Management System
IPAC Intra-governmental Payment and Collections
IPIA Improper Payments Information Act
LVFC Las Vegas-Finance Center
NEIC National Enforcement Investigation Center
OA Office of the Administrator
OAM Office of Acquisition Management
OB Office of Budget
OCFO Office of Chief Financial Officer
OFFM Office of Federal Financial Management (OMB)
OFM Office of Financial Management
OFS Office of Financial Services
OIG Office of Inspector General
OMB Office of Management and Budget
OPAA Office of Planning Analysis and Accountability
ORBIT OCFO Reporting and Business Intelligence Tool
PCS Program Costing Staff
QA Quality Assurance
QAR Quality Assurance Review
RA Regional Administrator
RAS Reports and Analysis Staff
November 2005
-------
Quality Assurance Guide
Appendix E
RMD
RTPFC
SCORPIOS
SRO
TFM
WCF
WCFS
WFC
Resources Management Division
Research Triangle Park-Finance Center
Superfund Cost Recovery Package and On-line System
Senior Resource Officer
Treasury Financial Manual
Working Capital Fund
Working Capital Fund Staff
Washington-Finance Center
November 2005
------- |