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Organization Title

Audit Process

Introduction

Employment Training Panel (ETP) agreements are performance-based since payment is only earned upon a trainee's successful completion of training, full-time employment following training, and has met the ETP minimum wage requirement. ETP conducts performance audits of agreements to determine whether the costs claimed for reimbursement by the Contractor comply with program regulations and the terms of the contract with ETP.

The following information explains what a Contractor should expect from an ETP audit and how to prepare for an audit, if selected. An auditor will provide more in-depth information about the audit process with a selected Contractor throughout the audit process outlined below.

Authority and Reference

The Unemployment Insurance Code, Section 10205 (g) and Title 22 California Code of Regulations, Section 4448 authorizes the Employment Training Panel (ETP) to conduct audits of training projects reimbursed from the Employment Training Fund.

Audit Notification

An ETP Contractor will be notified in writing if their agreement has been selected for an audit that will be conducted at the Contractor's site (field audit) or by telephone if selected for a desk audit (or "review"). These notifications will occur in advance to allow ample preparation time and will include a list of documentation that will be examined by the auditor. The notification letter will also ask the Contractor to provide contact information and the location of records so the auditor can coordinate scheduling of the field audit at the Contractor's facility. Desk audits generally do not require a site visit. Once an audit is assigned, the auditor will seek to be flexible and work with the contractor to make scheduling as convenient as possible to avoid disruption of normal business practices. An Audit Confirmation Letter will be sent prior to audit fieldwork and will include scheduling details and documentation requirements.

Entrance Conference

A list of the trainee sample will be sent to the Contractor via fax the morning of the entrance conference. The Contractor or its representative may begin retrieving appropriate records (training, payroll, etc.) prior to this appointment. During the entrance conference, the ETP auditor will discuss the purpose of the audit and the audit process. ETP field audits are performed in accordance with Generally Accepted Government Audit Standards (GAGAS) 2011 GAGAS Peer Review. Since we will obtain an understanding of the Contractor's management controls as required by GAGAS, the conference should be attended by Contractor personnel having knowledge of all aspects of the ETP Agreement. The Contractor's representative will have the opportunity to ask questions regarding ETP audit policies, procedures, and processes.

Recordkeeping

A list of the documentation typically examined during an audit will be included along with the Audit Notification and Audit Confirmation letters. To provide support of training, original training attendance documentation is required; photocopied records are not acceptable. Listed below are types of records typically requested during an ETP field audit:

  • Training attendance records such as rosters, sign-in sheets, etc.
  • Payroll records of individual trainees to verify wage and hours worked
  • Personnel records regarding occupation and dates of employment
  • Documentation of employer paid health benefits (if applicable)
  • Cash receipts to verify receipt and accounting of ETP funds

Audit Scope and Objectives

The scope of an ETP audit is limited to planning and performing audit procedures to obtain reasonable assurance that the Contractor complied with the terms of the agreement and the applicable provisions of the CUIC. The audit scope includes, but is not limited to, conducting compliance tests to determine whether:

  • Trainees were eligible to receive ETP funded training
  • Training provided met the specifications identified in the Agreement
  • Trainees completed the required or reported number of training hours
  • Trainees were employed full-time during the retention period
  • Trainees were employed in an occupation specified in the Agreement
  • Trainees completed a qualifying retention period within the Agreement term
  • Trainees received the required ETP wage specified in the Agreement
  • Contractor's cash receipts agree with ETP cash disbursement records

Discussion of Audit Results

The Auditor will conduct an informal exit conference, either in person or by phone, to advise the Contractor of the audit results, including any potential audit findings (administrative or disallowed costs) or noteworthy accomplishments. Administrative findings may result in questioned costs, which represent the monetary value of instances of noncompliance. If there were disallowed costs, they require payment of unearned funds and any applicable interest to ETP. If any noteworthy accomplishments of the Contractor's management are identified they will be included in the audit report to provide appropriate balance to the report. The Contractor may provide additional information/documentation for the Auditor to consider prior to issuing the results in the draft and/or final audit report. Any findings that are developed by the Auditor are subject to management review prior to issuance of the report(s).

Formal Notice of Audit Results

Upon completion of all audit steps, notification of audit results will be made in writing. If there are findings that result in disallowed costs, a Draft Audit Report will be issued. The contractor may dispute any finding(s) contained in that report with a written response containing additional information. The response and additional information will be evaluated by the auditor as to whether changes in the audit results are warranted. Afterwards, a Final Audit Report is prepared; if the Contractor submits a response it will be included as an attachment to the final audit report along with Auditor's comments and revisions, if applicable. All Final Audit Reports with findings that result in disallowed costs will include an itemized schedule of those costs including a calculation of the interest due. Instructions regarding repayment will also be included in the Final Audit Report.

Audit Appeal Rights

All Employment Training Panel contractors have a legal right to appeal any adverse audit findings. To do so, they must file an appeal in writing with the Panel's Executive Director within 30 days of the receipt of the final audit report. Appeals will then be reviewed by the ETP Legal Unit for resolution.

Conclusion

This information has been provided to develop a general public awareness of the ETP audit process. The policy of the ETP Audit Unit is to approach each audit from an independent, unbiased position. Each audit is conducted with due professional care and complete accountability in mind as mandated by GAGAS. The goal of the Audit Unit is to maintain a high level of professionalism and to interact with all ETP contractors in a manner suitable to the public interest. ETP audits must accomplish the program performance accountability requirements delineated by the Legislature, and should provide ETP Contractors with objective feedback that may lead to improved performance to help achieve success and positive benefits resulting from their ETP-funded training project.



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August 22, 2014
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