Changes to Audit Requirements

Report
Presented by Edward A. Hofma, CPA, CGMA
Principal in the CPA firm of Averett Warmus Durkee, PA
1417 East Concord Street
Orlando, Florida 32803
(407) 849 -1569
[email protected]
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https://www.federalregister.gov/
articles/2013/12/26/201330465/uniform-administrativerequirements-cost-principlesand-audit-requirements-forfederal-awards#h-36
| Averett Warmus Durkee | Certified Public Accountants and Business Advisors |
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Pre-Award
Requirements
Post-Award
Requirements
After-theAward
Requirements
| Averett Warmus Durkee | Certified Public Accountants and Business Advisors |
| www.awd-cpa.com |
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Financial and program management
Cash management
Compliance with matching requirements
Program income
Property standards
Procurement standards
Termination and enforcement standards
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| www.awd-cpa.com |
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Articulates basic considerations of cost
Differentiates direct and indirect costs
Provides guidance on indirect cost allocations
Provides guidance on indirect cost rates
Provides guidance on over 50 items of cost
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Sets thresholds for
when audits are
required
Sets responsibilities
for the cognizant
agent
Sets responsibilities
for the auditee
Sets responsibilities
for the auditor
| Averett Warmus Durkee | Certified Public Accountants and Business Advisors |
| www.awd-cpa.com |
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Circular A-21: Cost Principles for Educational Institutions
Circular A-87: Cost Principles for State, Local and Indian Tribal Governments
Circular A-89: Catalog of Federal Domestic Assistance
Circular A-102: Grants and Cooperative Agreements with State and Local
Governments
Circular A-110: Uniform Administrative Requirements for Grants and Other
Agreements with Institutions of Higher Education, Hospitals and Other NonProfit Organizations
Circular A-122: Cost Principles for Non-Profit Organizations
Circular A-133: Audits of States, Local Governments and Non-Profit
Organizations
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| www.awd-cpa.com |
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Eliminating duplicative and conflicting guidance
Focusing on performance instead of compliance for accountability.
Encouraging efficient use of information technology and shared services
Providing for consistent and transparent treatment of costs
Limiting allowable costs to make best use of federal resources
Setting standard business processes using data definitions
Encourages family-friendly policies
Strengthening oversight
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Changes the threshold for classifying personal property as supplies to $5,000
Mandatory conflict of interest policies to be included in contracts as
determined by each agency
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Final guidance issued to allow “Fixed Amount” awards rely more on
performance than on compliance.
Requires that funding opportunities be available for application for 60 days
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Internal control guidance that previously was only discussed in the audit
requirements has been moved to the administrative requirements to encourage
recipients to better structure internal control earlier in the process
Incorporates the guidance of the GAO Standards for Internal Control for the
Federal Government
Incorporates the guidance of the Committee of Sponsoring Organizations
(COSO) of the Treadway Commission
Both of these documents emphasize entity level controls over activity level
controls
Areas of entity level controls are control environment, risk assessment,
information and communication, control activities, and monitoring
| Averett Warmus Durkee | Certified Public Accountants and Business Advisors |
| www.awd-cpa.com |
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Requires non-federal entities to take reasonable measures to safeguard
protected personally identifiable information
Procurement policies will follow former OMB Circular A-122 rather than A-110.
Requires a three year record retention policy
Expresses a preference for electronic records over paper records
Allows termination of a contract for cause
In close out, agencies have 90 days to file their final reports
The government has a statute of limitations of three years for recoveries of
funds under the contract that they determine were not properly used.
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| www.awd-cpa.com |
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Direct costs – makes changes regarding when administrative costs can be
charged as a direct cost instead of an indirect cost.
Specifically authorizes use of indirect costs rates, and gives agencies standards
for developing and using indirect cost rates.
Authorizes a de minimis indirect cost rate of 10% of direct costs
Institutions of Higher Educations that expend more than $50,000,000 must
use the Federal Acquisition Regulations (FAR) Cost Accounting Standards
Addresses changes to about 40 categories of cost
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| www.awd-cpa.com |
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Advertising is now allowed if it is used for program outreach
Personal compensation – allows the federal agencies flexibility in
documentation required to support payroll, but implemented in its place
requirements for internal controls over payroll.
Conferences – allows costs of identifying sources of dependent care are
allowable, but not the costs of providing the care.
Idle Facilities and Capacity – Such costs can be allowable for a reasonable
period of time not to exceed one year.
Materials and supplies – Personal property less than $5,000 can be classified
as materials and supplies.
Travel costs can now include dependent care costs within specific parameters.
| Averett Warmus Durkee | Certified Public Accountants and Business Advisors |
| www.awd-cpa.com |
Identify federal funds
received
Prepare financial
statements and SEFA
Maintain internal
control
Comply with
applicable provisions
of laws, regulations,
contracts, and grant
agreements
Procure an audit
Develop corrective
action plans for
findings
Report submission
and Data Collection
Form
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| www.awd-cpa.com |
Identify federal funds
made to subrecipients
Advise sub-recipients
of the compliance
requirements for their
grant
Monitor the activities
of the sub-recipients
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| www.awd-cpa.com |
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The federal funds threshold for requiring a Single Audit is raised from
$500,000 to $750,000
Requires program specific audit guides be included in the compliance
supplement
A list is provided of valid reasons for why an audit finding does not warrant
further action
The threshold for questioned costs raised from $10,000 to $25,000
The threshold for Type A programs is raised from $300,000 to $750,000
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There were discussions of many approaches in the exposure drafts
It has been left hanging pending further announcement
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| www.awd-cpa.com |
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Identify Type A programs
Identify low risk Type A programs
Identify high risk Type B programs, but not required to identify high risk Type B
programs that exceed 25% of the low risk Type A programs.
Must audit all high risk Type A and B programs, and such additional programs
as are necessary to cover the percentage of coverage requirement.
Percentage of coverage requirement is lowered from 50% to 40% for high risk
auditees, and from 25% to 20% for low risk auditees.
| Averett Warmus Durkee | Certified Public Accountants and Business Advisors |
| www.awd-cpa.com |
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Weaknesses in internal control
A program administered under multiple control structures
Significant pass-through to sub-recipients
Prior audit findings
Programs not recently audited (within the last two years)
Complexity of the program
New programs
Programs at the end of their life cycle
| Averett Warmus Durkee | Certified Public Accountants and Business Advisors |
| www.awd-cpa.com |
| Averett Warmus Durkee | Certified Public Accountants and Business Advisors |
| www.awd-cpa.com |

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