Chicago • Atlanta • Albany • Boston • Cleveland • Ft. Lauderdale • Indianapolis • New York • Los Angeles • Philadelphia • Washington, D.C.

ENSURING STATE AUDIT ORGANIZATIONAL RESILIENCY

IN A PANDEMIC ENVIRONMENT

NSAA 2020 Conference

June 3, 2020

GILA J. BRONNER, CPA, PRESIDENT AND CEO

BRONNER GROUP, LLC.

2

Agenda

▪ WHERE WE’VE BEEN: A COVID-19 TIMELINE

▪ FEDERAL AND STATE LANDSCAPE

▪ ORGANIZATIONAL RESILIENCY AND COVID-19

▪ WHERE WE’RE GOING: CONSIDERATIONS FOR STATE AUDIT ORGANIZATIONS

3

COVID-19 Timeline in the US

April 24Georgia becomes the first

state to reopen from a stay at home order

May 18Every state has issued a

reopening plan, and each is unique

March 13 & 15National Emergency declared

CDC social distancing guidelines

February 6First coronavirus related

death in US

March 26265 million Americans

are placed under various stay-at-home orders

April 16

POTUS and WH release Guidelines for

Reopening America

May 1FDA issues emergency

approval for remdesivir to treat COVID-19

February 26VPOTUS named Lead of

COVID-19 Response

January 29 & 31WH Coronavirus Task Force

HHS declares PH EmergencyTravel from China restricted

March 6, 18, & 27$8.3B Supplemental

$3.5B FFCRA$2T CARES Act

Current as of 5/19/20

4

Federal Landscape – Reopening and Recovery

Reopening

WH Coronavirus Task Force

Recovery

5

Federal Coronavirus Relief to Date

Current as of 5/19/20

6

CARES ACT IN FOCUS

Coronavirus Relief Fund • $150 billion • Direct funding to states and local

governments with over 500k population

Education Stabilization Fund • $30.75 billion • $14 billion to Higher education• $13 billion to K-12 • $3 billion to Governors

Paycheck Protection Program• $350 billion ($300b later added)• Grants to businesses to cover

payroll, critical operating expenses

Economic Stabilization Fund • $454 billion • Loans and loan guarantees to

support state and local governments

Housing & Urban Development• $17 billion • CDBG, ESG, and HOPWA• Public Housing, Section 8• Elderly, disabled housing

Economic Development Admin. • $1.5 billion • Support local econ. development and

public works investment • State, local governments eligible

FEMA Disaster Relief Fund • $45 billion• Assistance to state and local

governments for reimbursement of emergency expenses

Public Health Funding • $1.5 billion for states (CDC)• $100 billion to healthcare providers • $1 billion to CSBG

Election Assistance Grants• $300 million • State and local election assistance• Help America Vote Act formula

On March 27th, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The legislation includes $2 trillion in funding, much of which targeted to or available for state and local government to respond to COVID-19.

7

State Landscape – Reopening & Recovery

Current as of 5/19/20

8

State & Local – Financial Implications

ORGANIZATIONAL RESILIENCY AND COVID-19

ATTENDANCE CHECK

10

INTRODUCING ORGANIZATIONAL RESILIENCY

Organizational Resiliency is the ability of an organization to recover quickly from and adapt to unexpected challenges. Throughout this COVID-19 crisis, public sector entities are identifying, assessing, and addressing challenges at a pace and scale never seen.

Pre-identify incident command and crisis communications roles and relationships

Conduct Business Impact Analyses and develop continuity plans for each unit

Identify, prioritize, and develop recover plans for critical systems and processes

Maintain, update, and train and exercise on Emergency Operations Plans

11

ORGANIZATIONAL RESILIENCY IN FOCUS

• Pre-identify incident command team

• Activate crisis communications plan

• Complete safety and operational checklist

• Designate continuity of operations leaders

•Assess operational status

• Deploy and track continuity measures

• Conduct system and process risk assessment

• Develop, prioritize, and implement recovery plans

• Activate Emergency Operations Plan

• Contact State Emergency Management Agency

12

ORGANIZATIONAL RESILIENCY TOOLS FOR GOVERNMENT

Best Practice Gap Analysis Evaluate responses and existing organizational resiliency plans against pre-defined industry criteria and best practices. Determine the effectiveness of existing plans and highlight strengths and areas of improvement.

Current State Assessment Surveys Engage the entire organization, including key vendors and partner organizations, through online surveys. Solicit input regarding the agency’s organizational resiliency capabilities and its response protocols during COVID-19. Generate ideas for improving preparedness.

After Action Review (AAR) Assess each team’s response to COVID-19 and identify key observations, lessons learned, and areas for improvement. These AARs are developed through facilitated interviews with team leads. Observations and lessons learned that emanate from the review inform updates to the organization’s preparedness and resiliency plans.

13

ENSURING STATE AUDIT ORGANIZATIONAL RESILIENCY

Adapt to immediate challenges by implementing incident command and crisis communications plans

Assess capabilities to ensure continuity and recovery of operations during disruptions

Achieve effective response to and recovery from COVID-19 with strategic optimization of core areas

Accelerate to meet increased demands by incorporating initial lessons learned

CONSIDERATIONS FOR

STATE AUDIT ORGANIZATIONS

15

Understanding the Dual Roles of State Audit Organizations

• Organizational resiliency

• Remote work, reopen transitions

• Advisor to state (local) government

Entity

• June 30 FYE considerations

• COVID relief accounting, reporting

• Fraud prevention, detection

AuditorAccountable

Aware

Agile

Dual Roles of State Audit Demands on State Audit

16

State Audit as a State Organization

Role of State Audit• Changes to schedules, policy• Comply with state operational

reopening-safely guidelines • Fraud and risk awareness • Understand, adapt to a constantly

changing situation

State Revenue, Operational Factors• Plummeting state, local revenue• Remote work operations and

reopening considerations • Increased demand for critical

state services for key sectors • Fraud risk associated with remote

work and shift to digital

Need to define the role of state audit in a tumultuous public sector landscape, adapt to remote work, and drive operational excellence.

17

State Audit as an Audit Organization

Reporting Requirements• Compliance with CARES Act and

related programs • Extension of Single Audit

deadlines• State, local specific requirements

June 30 FYE Implications• 46 states have June 30 FYE• State, local governments are busy

responding to COVID-19• Stay-at-Home may restrict access

to critical data, systems• Audit planning, initiation, and

execution delays

Need to anticipate and manage audit delays, understand federal relief reporting requirements, and identify and mitigate fraud.

18

2020 and Beyond for State Audit

WHAT’S NEXT?

• NEW, CHANGING FEDERAL RELIEF PROGRAMS, REQUIREMENTS

• REMOTE WORKPLACE AND AUDIT PROCESS DYNAMICS

• INCREASING RELEVANCE OF THE FRAUD TRIANGLE

• CONTINUING WORKFORCE DISRUPTION

• ECONOMIC RECESSION AND LONG-TERM IMPACTS

• DEMANDS FOR TRANSPARENCY AND ACCOUNTABILITY

• DETERMINING AND ADJUSTING TO NEW NORMAL

QUESTIONS?