American Recovery and Reinvestment Act of 2009

In February 2009 Congress approved the American Recovery and Reinvestment Act of 2009. Billions of dollars will be awarded to agencies and organizations in an effort to stimulate our economy. For the first time many organizations will meet the requirements stipulated by the Single Audit Act of 1984. If an organization annually expends more than $500,000 in federal awards, the organization is required to comply with the Single Audit Act of 1984, see this post. 

Is your organization ready for the strict rules of oversight, transparency and accountability? Can your internal control structure prevent and detect fraud? In an effective internal control system, the following five components work to support the achievement of the organization’s mission, strategies and objectives:

1. Control environment – describes the “consciousness” of the individuals within the organization. This element is the foundation for the remaining components and is exhibited by discipline and structure.

2. Risk assessment – describes how management identifies, analyzes and manages the risks relating to preparing financial statements in accordance with GAAP.

3. Control activities – defines the organization’s policies and procedures in accomplishing its objectives.

4. Information and communication – mechanism for transmitting pertinent information timely, so that individuals can fulfill their responsibilities.

5. Monitoring – determines the quality and effectiveness of the system.

Will your internal control structure provide the boundaries necessary to ensure that the federal funds are expended appropriately? If you are uncertain, consider having your system evaluated before you accept and expend the federal funds.  

For more information about the American Recovery and Reinvestment Act of 2009, see www.recovery.gov.