A.
PURPOSE
AND APPLICABILITY
EFFECTIVE DATE: July 1, 2012
Pursuant to 5 M.R.S.A. Section1660-H, this document presents
implementing regulations for the Maine Uniform Accounting and Auditing
Practices for Community Agencies (MAAP). The regulations establish accounting,
audit and administrative requirements for community agencies receiving
financial assistance in the form of agreements with the Department.
The Accounting and Financial Management Standards for
Community Agencies (Section .02) provide a framework of standards of
accountability over Department agreement funds received by community agencies.
The rules prescribe internal control standards and financial reporting
standards for every community agency receiving agreement funding from the
Department. Total amounts of agreement expenditures will determine whether
community agencies must submit entity-wide audited financial statements and a
compliance audit or reviewed entity-wide financial statements and supplemental
Schedule of Expenditures of Department Awards (SEDA). All community agencies
with $50,000 or more of annual agreement expenditures are responsible for a
Schedule of Expenditures of Department Agreements.
The Audit Requirements (Section .03) provide
rules to assist Independent Public Accountants (IPA) in auditing Department
agreements with community agencies. The rules define those community agencies
which must obtain audits of entity-wide financial statements and Schedule of
Expenditures of Department Agreements and compliance with applicable laws and
regulations. This document recognizes the federal audit requirements of Office
of Management and Budget Circular A-133 as applicable to community agencies and
builds upon those requirements.
1.
These rules require all community agencies with total agreement expenditures of
at least $500,000 per year to have an entity-wide financial audit conducted by
a qualified IPA and to have a compliance audit of the SEDA.
2. Community agencies with less than $500,000
per year in total agreement expenses are not required to have an entity-wide
financial audit or compliance audit of the SEDA conducted by a qualified IPA.
Standard Administrative Requirements and Compliance
for Department agreements (Section .04) provide uniform rules for
Department agreements with community agencies to include such areas as standard
cost principles, and additional compliance requirements.
The Department Responsibilities (Section .05)
define the duties of Department program and audit personnel in administering
agreements under these rules.
TheCommissioner of the Maine Department of Health and Human
Services is responsible for the administration of these regulations.
B.
DEFINITIONS
Unless the context clearly requires otherwise, the following
terms shall have the following meanings.
1.
Agreement means a legally
binding written document between two or more parties, including, but not
limited to, a document commonly referred to as accepted application, proposal,
prospectus, contract, grant, joint or cooperative agreement, purchase of
service or state aid.
2.
Agreement amendment is a legally binding change or modification of
the existing agreement.
3.
Agreement funds means all agreement funds received by the
community agency from the Department that require a periodic financial or
service claim to the Department for settlement purposes. It includes State and
Federal pass-through funds.
4.
Agreement expenditures means the amount of agreement funds earned
based on financial and service claims submitted to the Department.
5.
Budget is an estimate of
expenditures of a program during a given time period and the means by which the
expenditures will be financed.
6.
Budget revision is an approved change or modification to the
existing budget.
7.
Client
fees (private) are fees self-paid by clients or covered by third party
insurance.
8.
Client fees
(program) are fees from agreement or MaineCare subsidized
clients.
9.
Commissioner means the Commissioner of the Maine Department of
Health and Human Services, who has responsibility for the administration of
this chapter.
10.
Commitment means the amount of funding the community agency has
pledged to the program.
11.
Community agency (or Agency)means any public or private nonprofit
organization, firm, individual, partnership or business corporation operated
for profit, which:
(a) Operates a social
service program at the community level; and
(b) Receives public funds, either directly or
indirectly, from one or more state departments or agencies; and
(c) Is not an administrative unit of the
Federal government or State government.
(d) Is not exclusively a general or
psychiatric hospital within the meaning of Maine Administrative Procedures Act
10-144, Chapter 112.
12.
Continuation agreements are agreements with an end date that does
not coincide with Agency's fiscal year.
13.
Cost sharing or matching
means that portion of project or program costs not borne by the Federal and/or
State government.
14.
Cost
sharing settlement is a cost sharing agreement where multiple funding
sources share in the expense of a funded service.
15.
Department means the Maine
Department of Health and Human Services, as well as other Departments and
agencies of State government approved for inclusion in this chapter by the
Commissioner. As of July 1, 1996 the Maine Department of Transportation was
approved for inclusion in this chapter by the Commissioner.
16.
Department examination means
actions determined to be necessary by the Department's Division of Audit,
including, but not limited to, analyses and/or testing of reported agreement
balances and transactions, provisions of internal control systems and
compliance with rules. Examinations conducted by the Department may be of a
limited scope and are not considered an audit under generally accepted auditing
standards or generally accepted government auditing standards.
17.
Department review means a
review by the Department's Division of Audit of the community agency's
submitted annual financial statements. A review may include desk and/or quality
control reviews or such other reviews as the Department may establish by rule.
Reviews are done for the purpose of accepting or rejecting the audit submission
for Federal and State Department purposes or for the purpose of financially
closing out the agreement(s) for the Department.
18.
Division of Audit is the
responsible audit group in the Maine Department of Health and Human Services
and the Maine Department of Transportation.
19.
Federal funds means all
federal funds received by the community agency as defined by OMB Circular A-133
and MAAP and not just those agreements received from the Department. It
includes Federal direct, indirect and pass-through funds from all
sources.
20.
Federal
pass-through funds means those funds received by a community agency from
the Department and identified in the agreement as federal funds.
21.
Financial/service claims are
periodic reports from a community agency that provide the financial and/or
service activity of a "social service" agreement over a period of
time.
22.
Generally Accepted
Accounting Principles (GAAP) are uniform minimum standards and
guidelines for financial accounting and reporting ordinarily employed by
skilled accountants and agreed upon by authoritative practitioners of
recognized professional standing, such as the Financial Accounting Standards
Board (FASB), Governmental Accounting Standards Board (GASB) and other
recognized professional bodies.
23.
Generally Accepted Auditing Standards (GAAS) are auditing
standards promulgated by the American Institute of Certified Public
Accountants.
24.
Government
Auditing Standards are auditing standards promulgated by the Comptroller
General of the United States.
25.
Independent Public Accountant (IPA) means a person who complies
with generally accepted government auditing standards and who is one of the
following:
(a) A licensed certified public
accountant or person working for a licensed certified public accounting firm;
or
(b) A public accountant licensed
on or before December 31, 1970, or a person working for a public accounting
firm licensed on or before December 31, 1970.
26.
Indirect expenses are costs
that have been incurred for common or joint objectives that cannot be readily
identified with a particular final cost objective.
27.
Known questioned costs means
a cost that is questioned by the auditor because of an audit finding:
(a) Which resulted from a violation or
possible violation of a provision of a law, regulation, contract, grant,
cooperative agreement, or other agreement or document governing the use of
Agreement funds, including funds used to match Agreement funds.
(b) Where the costs, at the time of the
audit, are not supported by adequate documentation; or
(c) Where the costs incurred appear
unreasonable and do not reflect the actions a prudent person would take in the
circumstances.
28.
Likely questioned costs are the IPA's estimate of the total costs
questioned as a result of the specifically identified questioned
costs.
29.
Major
agreement is an agreement or combination of agreements (continuation
agreements) which purchase the same service with expenditures equal to or
exceeding $100,000 during the fiscal year of the agency.
30.
Nonparticipating department
is a department or division of State government other than one defined as a
Department in this section that has not been approved for inclusion in this
chapter by the Commissioner.
31.
Nonprofit organization means any agency, institution or
organization that consists of or is owned and operated by one or more
corporations or associations no part of the net earnings of which inures, or
may lawfully inure, to the benefit of any private shareholder or
individual.
32.
Program is an activity or set of activities intended to help
achieve a particular outcome for the public.
33.
Program income means gross
income earned by the community agency that is directly generated by a supported
activity or earned as a result of the award. Program income includes, but is
not limited to income from fees for services performed, the use or rental of
real or personal property acquired under Department-funded projects, the sale
of commodities or items fabricated under an agreement, license fees and
royalties on patents and copyrights and interest on loans made with agreement
funds. MaineCare revenue, whether fee for service, unit based or cost settled,
is program income.
34.
Public means a municipal, county or other governmental body that
is a political subdivision within the state.
35.
Restricted revenue is income
from organizations or individuals that require the funds to be used for a
specific purpose by the donor.
36.
Risk pool means utilizing and assessing risk factors for
determining the need for an examination of an agreement. Such risk factors may
include the value of the agreement and prior and current community agency
historical profile.
37.
Service area means the name of the program or the type of service
being funded through a Department agreement.
38.
Single audit means an audit
made pursuant to Federal OMB Circular A-133 or any subsequent revisions to that
circular. The single audit must be conducted by a qualified independent public
accountant.
39.
Social
service means any social services program funded in whole or in part
through an agreement issued by the Department. MaineCare funding, whether
cost-based or fee for service, is excluded unless MaineCare specifically is
identified as a social service program in an agreement award. (Note
1)
40.
State funds
mean those State funds received by a community agency directly from a State
department, bureau, office or agency that do not represent Federal pass-through
funds.
41.
Sub-contract means an award of financial assistance in the form of
money, or property in lieu of money, made under an award by a recipient to an
eligible subrecipient or by a subrecipient to a lower tier subrecipient.
42.
Subrecipient means
the legal entity to which a sub-contract is made and which is accountable to
the recipient for the use of the funds provided. Guidance for distinguishing
between a subrecipient and a vendor is provided in Federal Circular OMB A-133,
§__.210.
43.
Tier 1
agency is a community agency with less than $500,000 in total annual
agreement expenditures of agreement funding from the Department.
44.
Tier 2 agency is a community
agency with $500,000 or more in total annual agreement expenditures of
agreement funding from the Department.
45.
Unrestricted revenue is
revenue from funding sources to a community agency that is not restricted for a
specific purpose by the donor. For cost-sharing purposes, revenue that has been
designated to a specific program by the donor is considered unrestricted
revenue.
46.
Vendor
means a dealer, distributor, merchant, or other sellers providing goods or
services that are required for the conduct of a State or Federal program. These
goods or services may be for an organization's own use or for the use of
beneficiaries of the State or Federal program. Guidance for distinguishing
between a subrecipient and a vendor is provided in Federal Circular OMB A-133,
§__.210.
Note 1 - "Social services" includes, but is not
limited to social, correctional, legal, health, medical, mental health,
developmental disability, rehabilitation, substance abuse, transportation
services, programs for children, juveniles, teens and adults, families and the
elderly.