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HOW TO WRITE A CORRECTIVE ACTION

PLAN (CAP)

Presented by Nancy Gates

Chief, Financial Policy and Compliance Division

April 29, 2008

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Outline

Audit Finding Timeline Corrective Action Plans Do’s Corrective Action Plan Don’ts Format Calendar Example of a CAP

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Audit Findings Timeline

Draft Notice of Finding

(NFR)

Comment & Concurrence

Period

KPMG Auditor

Final NFR

Draft Mgmt. Letter

Comment Period

Final Mgmt. Letter

Corrective Action Plans

(CAP)

Implement Corrective

Actions

Monthly Updates to

CFO

NOAA Internal Auditor

KPMG Auditor

Review

June - Nov Nov - Dec Jan - June

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Corrective Action PlansDo’s

Begin working on your CAPs as soon as the draft Management Letter is issued.• Draft issued – 1st week of December

• Final issued – 3rd week of December

• CAPs due – 2nd week of January Use format provided with draft Management

Letter. Clearly state actions to be taken to remedy

the finding with corresponding dates.

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Corrective Action PlansDo’s

Provide overall date of completion and responsible party contact information.

Limit the use of “Ongoing” as a completion date.• Most corrective actions can be identified by a

completion date.

Submit your CAPs by the due date. Provide detailed monthly updates and status.

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Corrective Action PlansDon’ts

Don’t state the CAP is not your responsibility. • Dispute the Notice of Finding and Recommendation

(NFR) when issued; not when it becomes a CAP.

Don’t include negative comments about the auditors or audit process in the CAP.

Don’t use staff or resource shortages as the cause for the finding.• The auditors may see this as a vulnerable area for

next year’s audit!

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Corrective Action Plan Format

Title of Management Letter Comment:• Verbatim from Management Letter or IT NFR

Auditor’s Recommendation:• Verbatim from Management Letter including

recommendation number or IT NFR.

Actions Taken or Planned:• Description of each corrective action and the

estimated completion date for each corrective action step.

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Corrective Action Plan Format

Projected Completion Date:• Date when all actions are to be completed.

Actual Completion Date• Date Finance Office considers the CAP to be

complete.

Responsible Party:• Person coordinating all actions to assure

timely completion; include phone number.

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Corrective Action Plans

Monthly Updates to CAPs• Due 10 days after the 1st of the month.

• Provide sufficient detail for the actions taken during the past month.

• Be able to provide support for actions taken. • For example – if the CAP requires new policy to be

written; provide copy of the policy with CAP update.

• Delays in completing the CAP need to be thoroughly explained and new date provided.

• All CAPs must be completed by June 30.

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Corrective Action Due Date Calendar

FOR PERIOD

ENDING

DATA CALL ISSUED BY

DUE DATE TO FINANCE

DUE DATE

NOAA CFO

January 31, 2008

February 1, 2008

February 12, 2008

February 15, 2008

February 29, 2008

March 3, 2008 March 12, 2008 March 17, 2008

March 31, 2008 April 1, 2008 April 10, 2008 April 15, 2008

April 30, 2008 May 1, 2008 May 12, 2008 May 15, 2008

May 31, 2008 June 2, 2008 June 11, 2008 June 16, 2008

June 30, 2008 July 1, 2008 July 11, 2008 July 16, 2008

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Example of a Complete CAP

Title of Management Letter Comment:Controls Over Reconciling Intragovernmental Transactions Should be Improved

Contract Auditor’s Recommendation:19. We recommend that the NOAA Finance Office investigate and resolve the unreconciled differences identified in TP00in a timely manner. Once resolved, the applicable adjustments should be promptly recorded in the general ledger.

Actions Taken or Planned:The NOAA Financial Reporting Division (FRD) is responsible for using queries of CBS Data Warehouse data to determinethe Federal and non-Federal portions of each general ledger account balance in the NOAA trial balance for financial reporting purposes. In addition, for the Federal portions of each general ledger account balance, the same queries are usedto determine the amount of each general ledger account balance attributable to each Federal trading partner (each Federalagency that we are engaged in the transactions with).

For customer-based transactions, the CBS “TP Code” field is used to determine the trading partner. For vendor-based transactions, the CBS “Federal Agency Code” field is used to determine the trading partner. For reimbursable activity transactions, the CBS Project Code “Budget Initiative” field and the Data Warehouse Agency ID table is used to determine the trading partner for some reimbursable activity. When any of these fields contain incorrect, incomplete or inconclusive data with regards to the latest OMB A-11 guidance, a trading partner of “00” (unknown trading partner) is assigned forfinancial reporting purposes.

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Example of a Complete CAP

Prior to March 31, 2007, FRD will identify codes that result in trading partners of “00” for review by the Accounting Operations Division (AOD), Budget Execution (BEX) and Line/Staff Offices. Prior to April 30, 2007, AOD, BEX &Line/Staff Offices will provide corrections and information needed for federal codes identified that result in unknown trading partners (AOD-Vendor & Customer tables; BEX & Line/Staff Offices-Reimbursable Project Code Budget Initiative Agency IDs). For federal reimbursable budget initiative codes resulting in Agency ID “4900,” the AOD and/or Line/Staff Offices will be required to assign a percentage split of customers for reporting trading partners.

Prior to June 25, 2007, AOD, with review assistance from FRD, will enter all corrections for TP Codes, Federal Agency Codes and Budget Initiative Agency ID codes received into CBS to ensure that all transactions can be assigned to the correct trading partner code.

Standard Operating Procedures for identifying TP00 transactions, correcting them and monitoring will be developedby March 31, 2007.

Projected Completion Date:6/25/2007 Actual Completion Date:6/30/2007Responsible Party:Mark P. Miller301-444-2704

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Example of a Complete CAP

UPDATE AS OF May 3, 2007: 3 active CBS Customer #s that would result in TP '00' have been identified & corrected.  As of yesterday, no active customer numbers that would result in TP '00' exist in CBS.63 active CBS Vendor #s that would result in TP '00' have been identified & corrected.  As of yesterday, no active vendor numbers that would result in TP '00' exist in CBS.Current Agency ID table (FY 2006 OMB A-11) has been submitted to systems staff to load into DW for useReimbursable projects with multiple federal sponsors (Agency ID 4900)

111 active reimbursable project codes with multiple federal sponsors (Agency ID 4900) initially identified.94 projects deactivated17 remaining active 4900 projects with multiple federal sponsors (Agency ID 4900)

4 exceptions - TP cannot be determined & will result in TP '00' (amounts available for materiality discussion)1 exception - agency ID information will be provided in quarterly data call7 exceptions - will be prorated to valid agency IDs during intra-government process5 NWS projects will be cleared before June 2007

AOD provided with valid Agency ID codes & notified not to accept projects or activate future projects with invalid Agency ID code.

Reimbursable projects with invalid Agency IDs = 2692 active CBS project codes - could result in TP '00'We are in the process of working with the LOs to either deactivate the projects (for ones without TB) or assigning valid Agency ID.

Still on target for June 30 completion date.

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How to Write a CAP

Questions?