963 CMR 2.16 - Audit Procedures

Current through Register 1466, April 1, 2022

(1) General Audit Process.
(a) In order to determine the eligible costs of an Approved Project and to ensure that only eligible costs are included in a Total Facilities Grant, the Authority shall conduct an Audit or Audits of each Approved Project, at such time or times as may be required by the Authority. The Authority may designate any person it deems qualified to perform an Audit, and such person shall use agreed upon procedures, as determined by the Authority in the performance of said Audit or Audits. Such person shall certify in writing to the Authority that, in conducting the Audit or Audits on behalf of the Authority, he or she is and shall remain in full compliance with the Massachusetts Conflict of Interest Law, M.G.L. c. 268A.
(b) The Eligible Applicant shall cooperate with the Authority and/or its designee, if any, in the conduct of an Audit or Audits. Such cooperation shall include, but not be limited to, scheduling, provision of Audit Materials, provision of adequate work space, responding to requests for documents, providing access to personnel with knowledge of the Approved Project, providing access to Approved Project-related materials stored electronically, or complying with any other requirement of the Authority for the thorough and expeditious conduct of the Audit.
(c) Audits of Approved Projects shall be performed in accordance with MSBA Audit Guidelines, established by the Authority. To advise the Authority on appropriate audit guidelines, the Authority may convene an MSBA Audit Advisory Council, which may consist of representatives from the Office of the Auditor of the Commonwealth, the Office of the Inspector General of the Commonwealth, the Comptroller of the Commonwealth, Division of Local Services of the Massachusetts Department of Revenue, local officials, or other members which the Authority may determine.
(d) Except as provided in 963 CMR 2.00, the cost of the Audit or Audits shall be borne by the Authority. If the Authority determines that the Eligible Applicant:
1. has not reasonably cooperated with the Authority in the conduct of an Audit or Audits;
2. is responsible for any delay in an Audit or Audits; and/or
3. is making frivolous or non-meritorious appeals the Authority may, in its sole discretion, deduct all or a portion of the cost of conducting an Audit or Audits from the Eligible Applicant's Total Facilities Grant, discontinue making payments to the Eligible Applicant or seek to recover any payments that the Authority may have already made to the Eligible Applicant.
(2) Progress Payment Audits.
(a) The Authority, and/or its designee, may perform an Audit of each request for reimbursement submitted by an Eligible Applicant for an Approved Project. Each Audit shall be conducted according to 963 CMR 2.00 and the MSBA Audit Guidelines. In the event that the Authority determines that an item in the submittal is ineligible for reimbursement, the Authority shall adjust the amount of reimbursement to account for the ineligible costs. The Eligible Applicant shall receive from the Authority a summary letter recapitulating the eligible and ineligible costs as determined by the Authority.
(b) If an Eligible Applicant does not concur with the findings of the summary letter, the Eligible Applicant shall respond, in writing of their intent to appeal, within ten calendar days of the date of said letter. The Eligible Applicant's written correspondence shall include a detailed listing of the specific ineligible costs to which the Eligible Applicant does not concur and is appealing. For each ineligible cost being contested by the Eligible Applicant, the Eligible Applicant shall submit to the Authority, documentation that supports the Eligible Applicant's position. If no supporting documentation is submitted within ten days after the date of the Eligible Applicant's letter of intent to appeal, or within a reasonable amount of time as determined by the Authority, the Eligible Applicant's appeal of the Authority's determination of ineligible costs shall not be accepted and the Authority's audit findings shall stand. The Authority shall review properly submitted documentation to determine if the Eligible Applicant's appeal has merit and take the appropriate action thereafter. If the Authority determines that the Eligible Applicant's supporting documentation is insufficient, the audit findings will stand and the Eligible Applicant will have exhausted any further appeal opportunities for those specific non-concurred ineligible costs. In no event including, but not limited to the final Audit, shall the Authority reconsider ineligible costs once an appeal has been completed. All costs related to an appeal may be assessed to an Eligible Applicant.
(3) Final Audit Report.
(a) A final Audit is required to determine the final Total Facilities Grant due to an Approved Project. The Authority and/or its designee shall prepare a draft report, in a form to be determined by the Authority, stating Audit findings and conclusions. The draft report may include findings, schedules and ineligible costs as determined by the monthly Audits performed for Approved Projects receiving funding from the Authority under the progress payment system. The draft report shall be reviewed by the Authority. Following the Authority's review of a draft report, the report shall be made available to the Eligible Applicant. If an Eligible Applicant accepts the draft report, said Eligible applicant shall file said acceptance in writing to the Authority within ten calendar days of the date of the draft report letter by concurring with the schedules, findings and ineligible costs contained in the draft audit report, in which case the draft report shall be submitted to the Board of the Authority for its review and approval. Acceptance of a draft report by an Eligible Applicant does not bind the Authority to take any action regarding the determination of the Final Project Costs of an Approved Project.
(b) If an Eligible Applicant declines to accept the draft report, said Eligible Applicant shall respond in writing to the Authority within ten calendar days of the date of the draft report letter of their intent to appeal. The Authority, in its sole discretion, may grant additional time in which the Eligible Applicant may respond, but in no event shall such additional time exceed an additional ten calendar days. These deadlines must be met in order to be eligible to appeal draft findings. Said written correspondence shall include a detailed listing of the specific ineligible costs to which the Eligible Applicant does not concur and for each ineligible cost, documentation that supports the Eligible Applicant's position. If no supporting documentation is included in said written correspondence, the Eligible Applicant's appeal of the draft report shall not be accepted and the draft report, as originally reviewed by the Authority, shall go to the Board of the Authority for approval. The Authority shall review properly submitted documentation to determine if the Eligible Applicant's appeal has merit or not and take the appropriate action thereafter. If the Authority determines the Eligible Applicant's support documentation has no merit the audit findings will stand and the Eligible Applicant will have exhausted all of their appeal opportunities. In no event shall the Authority reconsider ineligible costs once an appeal has been settled. All costs relating to an appeal may be assessed to an Eligible Applicant.
(c) All prior appeal decisions by the Authority shall stand and an Eligible Applicant shall have no right to re-file or request review of previous audit decisions nor shall the Authority have any obligation to review any previous audit decision.
(4) Record-keeping.
(a) Eligible Applicants shall maintain all records related to an Application, a Proposed Project, and/or an Approved Project, if approval for a Proposed Project is granted by the Authority, to ensure that minimum record-keeping requirements to facilitate uniform, fair and efficient administration are met and to ensure accountability for all documents. Nothing in 963 CMR 2.00 is intended to alter the otherwise applicable requirements of M.G.L. c. 66, pertaining to the keeping of public records and access thereto.
(b) It shall be a condition on every Eligible Applicant that the Eligible Applicant maintains, in a secure place and in an organized fashion, all records necessary to evidence conformity with M.G.L. c. 70B, 963 CMR 2.00, and any other requirements of the Authority.
(c) The Eligible Applicant shall maintain all records related to an Approved Project, including a full set of the Project Documents, requests for proposals, proposals and evaluations, and "As-Built" drawings, for as long as the Approved Project is in service as a public school. For the purposes of 963 CMR 2.16(4), "all records" shall include, but not be limited to:
1. all executed contracts and purchase orders, including contract amendments and change orders;
2. all Owner's Project Manager's reports, including monthly progress reports;
3. issues log;
4. the potential change order log;
5. all meeting minutes;
6. a schedule or milestone summary;
7. all requests for reimbursement and forms as submitted to the Authority;
8. all invoices and contractors' applications for payment; and
9. other such other information, data, logs, documentation, or records as may be required by the Authority.
(d) The Authority shall, in its sole discretion, disallow any costs not adequately supported by contemporaneous, accurate and complete records.
(5) Ineligible Costs. Costs that are categorically ineligible for reimbursement or payment by the Authority shall include, but not be limited to:
(a) Any costs for an Approved Project in excess of the Total Facilities Grant.
(b) Financing costs incurred by an Eligible Applicant, including, but not limited to, interest, principal, costs of issuance and any other cost related to short or long term bonds, notes or other certificates of indebtedness, refunding notes or bonds, temporary loans, or any other form of indebtedness issued by an Eligible Applicant in relation to an Approved Project.
(c) All costs associated with credit rating services, legal services related to the issuance of any indebtedness, and financial consulting services.
(d) The cost of legal services.
(e) The provision of any direct or indirect municipal services shall be ineligible costs, except the provision of public safety services as required by law, or services which the Authority determines are necessary for the completion of the Approved Project.
(f) Any funds expended by the Eligible Applicant prior to the execution of a Project Funding Agreement, unless said costs are costs approved by the Authority in writing related to a Feasibility Study as approved by the Authority, shall be ineligible costs and are not reimbursable by the Authority unless the Board votes to allow reimbursement of such expenses incurred prior to the execution of the Project Funding Agreement.
(g) All costs associated with site acquisition.
(h) Unsupported or inadequately supported project costs, as determined by the Authority.
(i) Maintenance or service contracts and warranties.
(j) Duplicate costs or costs unrelated to the project.
(k) The lease, purchase or rental of storage space, storage facilities, storage trailers, or storage containers.
(l) Costs that are normal operating and maintenance costs of the school district, as determined by the Authority, such as textbooks, classroom supplies, custodial supplies, administrative support, telephone service and other such operating costs.
(m) Swimming pools, skating rinks, field houses (only to the same extent as gymnasia), district administrative office space, indoor tennis courts, and other spaces which may be determined ineligible by the Authority.
(n) Penalties, processing fees, catalogue fees, sales tax, memberships, and subscriptions.
(o) The costs of local building permits, inspection fees, and any other such fees.
(p) Athletic equipment, bases, balls, bats, racquets, uniforms, helmets, gloves, and all other related equipment.
(q) All costs associated with the purchase, lease, improvement, or maintenance of modular units, unless such costs are deemed by the Authority in writing prior to said purchase or lease, to be the most cost effective option.
(r) All costs associated with the upgrades, maintenance or improvements to swing spaces used for the housing of students.
(s) All costs associated with the transportation of students.
(t) All costs associated with the purchase, lease or use of any vehicle, including but not limited to automobiles, trucks, tractors, and golf carts.
(u) The costs of any supplies related to the Assisted Facility.
(v) All costs associated with the demolition of buildings, unless such costs are deemed by the Authority in writing prior to said demolition, to be the most cost effective option.
(w) All costs associated with utilities.
(x) All costs associated with cell phone purchase or service.
(y) Dedication, ceremonial or celebratory costs.
(z) The Authority reserves it right to disallow any costs associated with any change order that deviates from the scope of the project, as determined by the Authority pursuant to the Project Scope and Budget Agreement.
(aa) Any costs determined by the Authority to be ineligible pursuant to M.G.L. c. 70B, St. 2004, c. 208, 963 CMR 2.00, the MSBA Audit Guidelines, or any other policy, rule, or guideline of the Authority.

Notes

963 CMR 2.16

The following state regulations pages link to this page.



State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.