1.November 2012 -Single Audit Quality

Report
Single Audit Quality Update
IIA Washington DC Chapter
November 16, 2012
1
Presenter
Rafael Roman, CPA
Rafael is a Technical Manager at the American Institute of Certified
Public Accountants in Washington, DC, where his primary
responsibility is to assist with governmental auditing and accounting
matters. He manages the activities of the AICPA Governmental Audit
Quality Center and helps staff both the AICPA Governmental Audit
Quality Center Executive Committee and the State and Local
Government Expert Panel. Rafael joined the AICPA on March 2005.
Prior to joining the AICPA, Rafael was a manager at a large national
firm working on Federal financial audits. However, the majority of his
governmental audit experience was obtained as an internal auditor for
the U.S. Marine Corps. Rafael is a graduate of Mary Washington
College and is a CPA, CGMA, CIA, CGAP, and CCSA.
Governmental Audit Quality Center
2
What Will Cover
The history of Single Audit Quality
The latest on the auditing standards that
apply to compliance audits
The 2012 Compliance Supplement
The status of the federal government’s
efforts to revise the single audit rules
Activity of federal agencies that have
compliance audit requirements outside of
the single audit
GAQC update and available audit tools
Governmental Audit Quality Center
3
Brief History of Single
Audit Quality
Governmental Audit Quality Center
4
History of Single Audit Quality Issues
History of quality issues:
• Federal Single Audit Quality Study Results
• The Project issued a report titled, Report on National Single Audit
Sampling Project (the PCIE report), that was issued by the President’s
Council on Integrity and Efficiency (PCIE) and can be accessed in its
entirety at : http://www.ignet.gov/pande/audit/natsamprojrptfinal2.pdf
# of Audits
$$$ Audited
48.60%
92.9%
Limited Reliability
16.00%
2.30%
Unacceptable
35.50%
4.80%
Category
Acceptable
Governmental Audit Quality Center
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History of Single Audit Quality Issues
Improvements needed in many areas
including:
•
•
•
•
•
•
•
•
Internal Control: Lack of Understanding and Testing
Documentation Issues
Lack of Due Professional Care
Sampling
Compliance Testing Problems
Lack of Testing of SEFA
Unreported Findings
Material Reporting Errors
Governmental Audit Quality Center
6
History of Single Audit Quality Issues
AICPA Task Forces
• Seven task forces to examine the study's detailed findings and
recommendations for the AICPA as follows:
- Sampling/Materiality Issues In A Single Audit Environment
- Internal Control And Compliance Responsibilities In A Single
Audit Environment
- Schedule Of Expenditures Federal Awards Reporting Issues
- Reporting Audit Findings In A Single Audit
- Single Audit Training Needs And Continuing Professional
Education Evaluation
- Practice Monitoring In A Single Audit Environment
- Compliance Auditing Considerations In Audits Of
Governmental Entities And Recipients Of Governmental
Financial Assistance
Governmental Audit Quality Center
7
GAQC Mission and History
Overall mission to improve governmental audit
quality and to be a resource to members
Why Center launched?
• Indicators of problems with these audits from federal agencies
(e.g., PCIE study), peer reviews, and ethics referrals
• Proactive launch in light of expected federal study on single
audit quality which began in 2005 (report issued in 2007)
Milestones
•
•
•
•
Council approved concept in 2003
Board approved GAQC membership requirements in 2004
Center launched September 2004
Board approved state audit organization membership in 2009
Governmental Audit Quality Center
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Latest on the Auditing
Standards that Apply to
Compliance Audits
Governmental Audit Quality Center
9
Technical Matters Impacting Single Audits
AICPA
• SAS No. 119
• Clarity, including SAS No. 125
• AICPA GAS-A133 and other relevant Guides
2011 Government Auditing Standards
Office of Management and Budget
• 2012 Compliance Supplement
- Changes to various parts and sections
• Potential revisions to single audit related regulations
Federal Audit Clearinghouse
Governmental Audit Quality Center
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Technical Update – AICPA
SAS No. 119, Supplementary Information in Relation to
the Financial Statements as a Whole
Effective for audits of financial statements for
periods beginning on or after 12/15/10.
Scope
• When the auditor is engaged to report on whether SI is fairly
stated, in all material respects, in relation to the f/s as a whole
Affects SEFA in-relation-to opinion (related GAQC
Practice Aids have been updated for SAS 119)
Requires the auditor to determine certain conditions
are met
Provides for specific management representation
Governmental Audit Quality Center
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Technical Update – AICPA
SAS No. 119, Supplementary Information in Relation to
the Financial Statements as a Whole
Specific procedures using the materiality level used
in the audit of the F/S
• However, keep in mind that auditor has to perform procedures
beyond SAS No. 119 due to the compliance audit
Consideration of subsequent events not required for
SI, however still have to consider any information
related to the F/S
Reporting requirements under various scenarios
(some changes in report language)
Dating – not earlier than the date on which the
auditor completed procedures on SI
Governmental Audit Quality Center
12
Technical Update – AICPA Clarity
Standards Issued
• SAS No. 122, Statements on Auditing Standards: Clarification
and Recodification
• SAS No. 123, Omnibus Statement on Auditing Standards–2011
• SAS No. 124, Financial Statements Prepared in Accordance
With a Financial Reporting Framework Generally Accepted in
Another Country
• SAS No. 125, Alert That Restricts the Use of the Auditor’s
Written Communication
Effective for audits of periods ending on or after
December 15, 2012; no early implementation
Includes revisions to SAS 117
• Appendix regarding what auditing standards do NOT apply to
compliance audit to be revised
• Reporting changes
Governmental Audit Quality Center
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Technical Update – AICPA Clarity
Keep in mind that many of the clarity
standards have “governmental
consideration” paragraphs that are specific
to the public sector
• May cover Yellow Book/compliance audit
considerations
• May cover financial statement audit considerations
Group audits will be more challenging in
financial statement arena
Still looking at impact of group audits on
compliance audits
Governmental Audit Quality Center
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Technical Update – AICPA Clarity
SAS No. 125 - Government Auditing Standards
reports (including A-133 reports) will contain
purpose alert instead of restriction alert
Pay particular attention to effective date
• Effective for the auditor’s written communications related to
audits of financial statements for periods ending on or after
12/15/12
• For all other engagements conducted in accordance with GAAS,
this SAS is effective for the auditor’s written communications
issued on or after 12/15/12
There has been a lot of discussion on how this
effective date affects single audit reports issued
after 12/15/12 (e.g., relating to 6/30/12 or 9/30/12)
ASB currently looking at issuing a question and
answer addressing this
Governmental Audit Quality Center
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Getting to Know the AICPA Clarity Standards
Clarity section of AICPA.org
Standards
• Videos
• Mapping from extant to new standards
• More
Listen to archived GAQC member web events
• Implementing the Clarified SASs in a Governmental and Not-For
Profit Audit Environment: What, When, and How?
• Understanding the Potential Impacts of the New Group Audits SAS
on Your Governmental and NPO Audit Engagements
Governmental Audit Quality Center
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Technical Update – AICPA A&A Guides
• Primary Focus
• Government Auditing Standards &
Circular A-133 Audits
• Other Industries Include
•
•
•
•
•
State and Local Governments
Not for Profit Entities
Health Care Entities
Gaming
Sampling
• Audit Risk Alerts
• Checklists & Illustrative
Statements
Governmental Audit Quality Center
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Technical Update – AICPA A&A Guides
AICPA Audit Guide, Government Auditing Standards
and Circular A-133 Audits
• 2012 edition issued in May
• SAS No 119 is fully incorporated into guide (including the
illustrative reports and SEFA practice aids in chapter 7)
• Appendix added with a summary of 2011 Yellow Book revisions
• Two new “clarity” Appendixes
- Information on AU-C sections with substantive changes or
significant clarifying changes resulting from clarity
- Table that maps current AU sections to the new AU-C
section numbers
2012 GAS-A133 Audit Risk Alert also issued
Guide - Looking forward
• Clarity and new Yellow Book
Governmental Audit Quality Center
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Technical Update – AICPA A&A Guides
AICPA A&A Guide, State and Local Governments
• 2012 Edition issued in July 2012
• Incorporated GASB 62 (earlier than normal) but did so with
appropriate footnotes to assist those that have not early
implemented.
• Also updated for SAS Nos. 118, 119 & 120; illustrative reports
updated for these statements and will also be posted on GAQC
Web site
• Plans for 2013 and 2014
SLG Audit Risk Alert
Other SLG Publications
• Updated SLG Practice Aid for Other Comprehensive Basis of
Accounting
Governmental Audit Quality Center
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Technical Update – Not-for-Profit
AICPA A&A Guide, Not-for-Profit Entities – Overhaul
• Overhaul in process; exposure draft posted for comment
• Some of the main areas being addressed
- Reporting relationships with other entities
- Reporting and measuring noncash gifts
- A new chapter on program-related investments and
microfinance loans
- Reporting the expiration of donor-imposed restrictions
- Suggestions for audit procedures an auditor might consider
as a supplement to the risk assessment procedures
AICPA A&A Guide, Not-for-Profit Entities –
Conforming Changes
• 2012 edition issued in May 2012
• Normal update changes for new standards
Governmental Audit Quality Center
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Technical Update – Health Care A&A Guide
Covers governmental, not-for-profit, and for-profit
health care entities
2012 edition expected in November 2012
Clarity standards to be incorporated
Governmental Audit Quality Center
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Technical Update – Government Auditing
Standards
Final 2011 edition issued
• Main change relates to independence, especially when
performing nonaudit services
• Very few changes made from interim version previously posted
Effective date same as AICPA clarity
• For financial audits for periods ending on or after 12/15/12
• No early implementation
However, auditors need to be independent
for entire audit period
• New Yellow Book independence requirements for nonaudit
services may need to be considered as early as 1/1/12
Governmental Audit Quality Center
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Technical Update – Government Auditing
Standards
Resources for 2011 Yellow Book (should be
referred to in other AICPA offerings – all open to
the public)
• Archived GAQC Web event, The New 2011 Yellow Book:
What You Need to Know Now, provides a more in-depth
discussion on 2011 Yellow Book
• GAQC practice aid titled, 2011 Yellow Book
Independence—Nonaudit Services Documentation
Practice Aid
• Archived GAQC Web event, Understanding the AICPA's
Yellow Book Independence Practice Aid for Performing
Nonaudit Services
• Ethics comparison of AICPA standards versus GAO
Governmental Audit Quality Center
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Technical Update – Government Auditing
Standards
New! Yellow Book Independence Practice Aid
• New practice aid developed by GAQC, working with the
AICPA ethics and peer review teams, to assist auditors in
meeting the Yellow Book requirements
• Federal agency representatives reviewed the practice aid
and provided feedback
• Includes documentation template to illustrate one way to
prepare required documentation in this area and many
informative appendices
• Issued free to AICPA members in flat PDF version and also
a for-sale version that permits input responses to the
documentation template
Governmental Audit Quality Center
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Technical Update – Government Auditing
Standards
Purpose of GAQC YB Practice Aid
• To assist auditors in:
- Applying the independence conceptual framework
- Identifying and evaluating threats to independence for
nonaudit services
- Identifying safeguards where necessary
- Assessing management’s Skills, Knowledge, or Experience
(SKE)
- Complying with YB documentation requirements
• Practice Aid highlights nonaudit services frequently performed
for smaller entities:
- Preparing financial statements (F/S)
- Preparing journal entries other than proposed audit entries
- Preparing reconciliations
Governmental Audit Quality Center
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Section II: Example Documentation
Governmental Audit Quality Center
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Section III: Example Documentation
Governmental Audit Quality Center
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Government Auditing Standards Practice Aid
Become familiar with the Practice Aid and its
Appendixes:
Governmental Audit Quality Center
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Technical Update – GAO – 2011 Yellow Book
How to Obtain the Practice Aid
• Flat PDF Version. Free to AICPA members, including GAQC
members. Access the free pdf version of the Practice Aid on the
GAQC Web site
• For Sale Version. Practice Aid Version Designed for Auditor
Documentation Input (Supplement) available for a small fee to
AICPA members, GAQC members, and non-members; order
the for-sale Supplement
- Can be saved and included as part of auditor’s
documentation
Governmental Audit Quality Center
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The 2012 Compliance
Supplement
Governmental Audit Quality Center
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Technical Update – OMB Compliance
Supplement
Final issuance Supplement issued in July 2012
Accessing the Final Supplement
• Upon issuance, go to OMB's Web site at "Grant
Management Circulars" link:
www.whitehouse.gov/omb/grants/ (scroll down to the
"Audit Requirements" section)
• Both current and prior Supplements available (use
the correct version!)
OMB previously provided a draft Supplement for
Audit “Planning” Purposes
• Previously posted on GAQC Web page
• Do not use the draft now that the final is issued
Governmental Audit Quality Center
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Technical Update – OMB Compliance
Supplement
Program changes by the numbers
Review Appendix V for changes made
Don’t overlook Appendix VII
• Effect of Recovery Act Awards on major program determination
Guidance
• List of Recovery Act programs not covered by Parts 4 or 5 but
that could be subject to a single audit and list of Recovery Act
programs not subject to single audit
• Late Filings and Low-Risk Auditee Status
• Treatment of Large Loan and Loan Guarantee Programs
Governmental Audit Quality Center
32
Technical Update – OMB Compliance
Supplement
Part 3, Requirement I, “Procurement and
Suspension and Debarment”
• Addressed relationship between procurement
requirements of A-102 common rule and change in federal
simplified acquisition threshold
Part 3, Requirements L, "Reporting"
• Clarified subaward reporting under the Federal Funding
Accountability and Transparency Act of 2006 (FFATA)
• Removed timeliness as an element of financial reporting
compliance requirement (change from draft Supplement)
Part 3, Requirement M, "Subrecipient Monitoring“
• Modified to add “subrecipient risk” as another factor for
pass-through entities to consider when determining the
nature, timing, and extent of during-the-award monitoring
Governmental Audit Quality Center
33
Technical Update – OMB Compliance
Supplement
What is FFATA?
• It is the federal award reporting requirements for direct
recipients of non-Recovery Act federal awards
• Direct recipients required to report certain first-tier subawards
• Public view Web site: www.USASpending.gov
• Input version of Web site: www.fsrs.gov
• Some similarities to section 1512 reporting for Recovery Act
awards but also several differences
Governmental Audit Quality Center
34
Technical Update – OMB Compliance
Supplement
When Does FFATA Apply?
• For grants and cooperative agreements, the effective
date was October 1, 2010, for all discretionary and
mandatory awards equal to or exceeding $25,000
made with a new FAIN on or after that date.
• Once the requirement applies, the recipient must
report, for any subaward under that award with a
value of $25,000 or more, each obligating action of
$25,000 or more in federal funds.
• For contracts, implementation was phased-in based
on their total dollar value (Supplement describes
staggered phase-in)
Governmental Audit Quality Center
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Technical Update – OMB Compliance
Supplement
State makes
subawards of
federal funds to
local governments
Local government
expends direct
federal funds but
makes no
subawards
Not-for-profit
expends federal
funds received
from local
government and
makes no
subawards
FFATA may apply to
state (but not to
local governments
unless they receive
other direct awards
and make
subawards)
FFATA does not
apply to local
government
(makes no
subawards)
FFATA does not
apply to not-forprofit (not a direct
recipient)
Governmental Audit Quality Center
36
Technical Update – OMB Compliance
Supplement
Clarifying FFATA Guidance
• How to understand if there is a new FAIN
• Obligating actions versus funding
• Incorporation in Supplement of Q&A issued on
www.fsrs.gov in February 2011
- If direct recipient made best effort to comply and has
documented evidence, no finding needs to be
reported (assuming no other issues)
- Guidance on how prior year findings in this area
affect current year major program determination
- Access the 2011 Q&A: https://www.fsrs.gov/#a-faqs
Governmental Audit Quality Center
37
Technical Update – OMB Compliance
Supplement
Part 5, Clusters of Programs,
• Student Financial Assistance (SFA) cluster has been modified
- Changed references to requirements associated with
Federal Family Education Loans,
- Numerous updates and deletions to various compliance
requirements and procedures specific to SFA
• Research and Development (R&D) cluster
- Modified to reflect an update to the "Indirect Cost Limitation"
based on the elimination of the requirement in 2011
- No change to NSF R&D (draft Supplement had indicated
there would be a change but it was removed in final)
• The Other Clusters have been revised for:
- Program changes to certain clusters
Governmental Audit Quality Center
38
Technical Update – OMB Compliance
Supplement
Recovery Act
• Recovery Act funds dwindling but will still will affect many
auditees
• Compliance Supplement guidance
- Clusters of programs with new Recovery Act CFDA number
would fail 2-year lookback and have to be audited (excludes
R&D and SFA clusters)
- Type A programs having Recovery Act expenditures
generally would not be low-risk unless meet defined
exception (2012 Supplement revised exception – next slide)
- Type B programs still considered higher risk
Governmental Audit Quality Center
39
Technical Update – OMB Compliance
Supplement
Exception for Type A Recovery Act programs
slightly revised
An auditor may consider a Type A program or
cluster to be low-risk if all of the following
conditions exist:
• Program or cluster had Recovery Act expenditures in the prior
audit period;
• Program or cluster was audited as a major program in EITHER
OF THE TWO PRIOR AUDIT PERIODS;
• Recovery Act expenditures in the current audit period are less
than 20% of the total program or cluster expenditures; and
• Auditor has followed Section 520(c) and 525 of OMB Circular A133 and determined that the program or cluster is otherwise lowrisk
Governmental Audit Quality Center
40
Technical Update – OMB Compliance
Supplement
Other Tools
• GAQC issued GAQC Alert 198 to alert members of the release
of the Supplement and how differed from the draft
• GAQC issued GAQC Alert 195 to alert members of the release
of the draft Supplement and what it contained
- Caution! If you began planning or performing interim work
using the draft Supplement, you need to check the final
Supplement
• GAQC member-only Web event on draft version of the 2012
Supplement held with two additional rebroadcasts – still useful
Governmental Audit Quality Center
41
Using the Compliance Supplement Correctly
Use all parts for a correct Single Audit
-
2: Matrix of Compliance Requirements
3: Compliance Requirements
4: Agency Program Requirements
5: Clusters of Programs
6: Internal Control
7: Guidance for Auditing Programs not Included in the
Supplement
Don’t forget Appendices – especially
Appendix 7 if auditee has Recovery Act
funds
Use the correct year’s Supplement
Governmental Audit Quality Center
42
Technical Update – OMB – Continued Single
Audit Quality Issues
Major Program Determination, including
improper clustering
Risk Assessment Documentation
Internal Control Understanding and Testing
Sampling
Schedule of Expenditures of Federal Awards
Summary of Prior Year Findings
Exception and deviation disposition
Finding Detail
Governmental Audit Quality Center
43
The Status of the Federal
Government’s Efforts to
Revise the Single Audit Rules
Governmental Audit Quality Center
44
Technical Update – OMB – Single Audit
Revisions
Various Executive Orders and Memorandums over
last several years has partially led to the revisions
being considered today.
OMB issued Memorandum 12-01 on October 27,
2011, creating Council on Financial Assistance
Reform (COFAR):
•
•
•
Charged with creating a more streamlined and accountable structure to
coordinate financial assistance
COFAR is co-chaired by the Office of Federal Financial Management at OMB
and includes the eight largest grant making agencies as well as one rotating
member
This group is leading the charge on single audit and other related revisions
Governmental Audit Quality Center
45
Technical Update – OMB – Advance Notice
OMB issued Advance Notice on potential reform
“ideas” on February 24, 2012
(http://www.whitehouse.gov/sites/default/files/omb/fi
nancial/fr-notice-grant-reform-2012.pdf)
Comments were due April 30 (access the AICPA
comment letter)
Specific regulatory proposed revisions next step
The reforms proposed are intended to improve the performance of federal grants and cooperative
agreements ,while targeting waste, fraud, and abuse to ensure accountability in the use of funds
Governmental Audit Quality Center
46
Technical Update – OMB – Advance Notice
Increase audit threshold from $500K to $1M
Establish “limited scope” single audit for entities
with expenditures between $1M and $3M:
• Test only two compliance requirements for a major program
- Allowable costs always tested
- Second requirement selected by federal agencies
- Target risk of improper payments, waste, fraud, and abuse
Require “full” single audit (with modifications) for
entities with expenditures more than $3M
• Streamlined compliance requirements
Governmental Audit Quality Center
47
Technical Update – OMB – Advance Notice
Full single audit modifications
• Target subset of compliance requirements for increased testing,
larger samples, and/or lower levels of materiality (e.g., Allowable
or unallowable activities and costs, Eligibility, Period of
availability, Reporting, Subrecipients)
• Reduce testing of other requirements by making them optional,
smaller samples, and/or higher levels of materiality (e.g., Cash
management, Davis-Bacon Act, Program income)
Governmental Audit Quality Center
48
Technical Update – OMB – Advance Notice
Other Ideas for Change in Advance Notice
•
•
•
•
Strengthening audit follow-up
More cross-agency coordination
Combining and clarifying cost principles
Modifications to administrative requirements
Governmental Audit Quality Center
49
Technical Update Circular A-133 – Status of Changes
Federal Register notice of proposed changes
expected before year-end with revisions to:
• OMB Circular A-133
• Cost principles and administrative requirements
GAQC has heard:
• Financial statement audit for entities expending between $500K
and $1M with in-relation to reporting on the SEFA
• Abandoned “limited scope single audit” between $1M and $3M
• A streamlined single audit for all above $1M (fewer compliance
requirements)
• Other changes likely (e.g., change in major program and finding
threshold. percentage of coverage, etc.)
• No word on proposed effective date
• No plans to amend Single Audit Act that we are aware of
Governmental Audit Quality Center
50
Potential Changes to Single Audit –
Impact of Tiered Approach
Number of Single Audits
Total Dollars Covered
$500K - $1 M: 10,724
$500K - $1M: $7.8B
$1M - $3 M: 16, 320
$1M - 3M: $28.9B
$3 M +: 17,376
$3M +: $1,384.3B
1%
39%
2%
24%
37%
97%
51
Potential Changes to Single Audit –
by Agency
Single Audits by
Agency
As Oversight
As Cognizant
> $3 million
$1 – 3 million
< $1 million
Agriculture
14
777
1,196
776
HUD
270
4,211
4,881
2,848
Labor
13
345
239
134
Transportation
70
653
537
391
NSF
9
35
38
37
Energy
2
139
148
68
Education
480
4,791
4,401
2,894
HHS
240
3,114
2,721
1,880
Homeland
Security
8
236
323
303
Governmental Audit Quality Center
52
Impact on Firms of Raising Threshold to $1
million
Total firms in Federal Audit Clearinghouse doing
single audits is 5,425
3,256 firms perform the 10,724 single audits that
cover less than $1 million
• There are 711 firms that do only 1 single audit and it is less than
$1 million
• Another 200 do more than 1 single audit but none are over $1
million
• The remainder also have single audits that fall above $1 million
Governmental Audit Quality Center
53
Technical Update – 2013 Data Collection
Form (Federal Audit Clearinghouse)
Federal Register Notice with proposed changes
likely before end of 2012
Significant increase in findings information on the
DCF
FAC planning to require unlocked pdf audit
reporting to be uploaded in future
• Unencrypted, unlocked, and at least 85% text searchable
FAC working towards making all reporting packages
transparent to the public
• Financial statements, SEFA
• Auditor reporting
• Schedule of Findings and Questioned Costs
Governmental Audit Quality Center
54
Use the Federal Audit Clearinghouse as a
Tool to Identify Audit Quality Issues
Consider using the database to perform a
few quality checks
• Check type A program thresholds for your audits (if you find
$500,000 you probably have a problem)
• See if doing any program-specific audits; if so, look at the data
collection form (DCF) to determine if only one program or cluster
noted
• Randomly drill down into some of your organization’s DCFs to
see if any other trends noted
Governmental Audit Quality Center
55
Technical Update – A Word of Caution
Be Cautious….
• Watch out for federal agency “interpretations” that
conflict with requirements of Circular A-133 or
Compliance Supplement
• CPA certifications without following professional
standards should not be signed
Governmental Audit Quality Center
56
QCR and Desk Review Checklists
Inspector General community has issued the
following checklists for use by federal agencies
• Guide for Quality Control Reviews of OMB Circular A-133 Audits
• Guide for Desk Reviews of OMB Circular A-133 Audit Reports
Both can be found at:
http://www.ignet.gov/pande/audit1.html#reports
(look under Single Audit Guides)
Consider using these checklists as an additional QC
tool
Governmental Audit Quality Center
57
Peer Review
Review both Parts A and B of the peer review single
audit checklists
Use the peer review checklists as a quality control
tool (before, during, and at the completion of your
engagements)
GAQC members can listen to an archived GAQC
Web event on the latest on peer review
Governmental Audit Quality Center
58
Activity of Federal
Agencies that have
Compliance Audit
Requirements Outside of
the Single Audit
Governmental Audit Quality Center
59
Technical Update – HUD Audits
HUD Consolidated Audit Guide
•
•
•
•
Covers for-profits (e.g., housing partnerships)
Different types of entities covered by each chapter
History has been for HUD to update on chapter-by-chapter basis
Chapters 1 (applicable to all audits) and 6 (GNMA) updated over
course of last year and effective
HUD staff attempting to advance Guide revisions
• Chapter 2 (may move to report formats similar to Circular A-133
reports in future)
• Chapter 4 (hospitals with HUD-insured mortgages)
• Chapter 7 and 8 (supervised/nonsupervised mortgages to be
combined and updated)
GAQC HUD Information Page:
• http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/R
esources/HUDInformation/Pages/default.aspx
Governmental Audit Quality Center
60
Technical Update – Other For-Profit
Compliance Audits
Trend is for federal government to issue audit
requirements similar to Circular A-133 for for-profit
entities receiving federal funds
Examples of for-profit guides:
• Dept. of Energy Audit Guide
• Dept. of Commerce Broadband Technology Opportunities
Program
• Dept. of Education (lenders, lender servicers, proprietary
schools, etc.)
• Department of Agriculture (Broadband)
GAQC recently issued a summary of “other” federal
guides which includes current status on the GAQC
Web site
Governmental Audit Quality Center
61
Technical Update – Other For-Profit
Compliance Audits
Recent Activity During Past Year
• Department of Energy Audit Guide (2011 edition) issued in 2012
• Confusion over updated 2011 Energy Guide resulted in issuance
of FAQ document
• Department of Commerce Broadband Technology Opportunities
Program Audit Guide to identify changes made in 2011 edition
- Change document available that identifies what was revised
Governmental Audit Quality Center
62
GAQC Update and
Available Audit Tools
Governmental Audit Quality Center
63
GAQC Update
Approximately 1,734 member firms representing 50
states, Puerto Rico, and US Virgin Islands
19 State Audit Organizations (SAO) have joined to
date
• AR, CA, DE, FL, GA, IA, IL, LA, MI, MN, ND, NH, OH, RI, SD,
TX, UT, VA, WV
Member Coverage in the FAC 2010 Database
• 91% of federal dollars
• 61% of number of audits
Hear from current GAQC members on value of the
GAQC (click on AICPA TV link)
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GAQC Update
Advocacy
•
•
•
•
Regular interaction with federal regulators and other stakeholders
OMB Advance Notice on single audit revisions
2012 Compliance Supplement and for-profit federal audit guides
New 2011 Yellow Book
Communication with members (GAQC Alerts)
Offerings of GAQC Web events
Technical guidance (e.g., publications, conferences)
Resources and practice aids
•
•
•
•
Yellow Book Independence practice aid
SEFA practice aids (updated for SAS 119)
Internal control practice aids
Illustrative reports
GAQC Web site
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GAQC Resources
GAQC Web site (www.aicpa.org/GAQC)
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Just Released!
Auditee Resource Center – Open to the
Public
• Why quality audit important?
• Auditee resources – some existing resources for auditors and
some new (single audit, Yellow Book, other compliance audits,
and financial statements audits)
- Archived Web events
- Practice aids
- Articles
- Access to GAQC Alerts
• Links to Publications
• Link to Conferences and other training available
• Access the Auditee Resource Center
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GAQC SEFA Practice Aids
SEFA Practice Aids (both for the auditor and auditee)
issued and available on the GAQC Web site (auditor
tools also incorporated in the GAS/A133 Guide)
• Audit Program and Disclosure Checklist for Auditors
• Document for auditees to accumulate important information on
federal awards and a Disclosure Checklist for Auditees
Updated in past year to reflect changes needed due
to SAS 119
• New auditor’s report checklist for in-relation-to reporting added
GAQC held a recent member event that has been
archived on the GAQC Web site (to further help you
understand SEFA responsibilities and the Practice
Aids)
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GAQC Internal Control Practice Aids
Practice aids illustrate:
• Documenting direct and material compliance requirements
• Documenting internal control
• Dual-purpose testing of IC and Compliance
How to Access
• GAQC members – free access to word and excel versions on
GAQC Web site
• GAQC members and non-members – small fee ($39.99) for
purchase of electronic PDF product where responses can be
input into form (order through CPA2BIZ at
http://www.cpa2biz.com)
• Product number: 006662PDF
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Major Program Determination & Risk
Assessment Tools
Utilize major program risk assessment software, if
your firm has it
Utilize the AICPA Audit Guide, “Government Auditing
Standards and Circular A-133 Audits”
Document thoroughly the risk analysis and the basis
for assessing risk (they should be consistent!)
At the end of the audit – recheck the coverage
achieved
Listen to archived GAQC Web events for more tips
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Sampling
Separate AICPA Audit Guide for Sampling in a F/S
audit environment
Separate chapter in GAS/A-133 Audit Guide to
address single audit sampling
• Chapter includes suggested minimum sample sizes and more
Executive summary of chapter available on GAQC
Web site under Resources tab
HUD Consolidated Audit Guide contains sampling
guidance for audits covered by that Guide
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HUD Audits
GAQC HUD Resource Center (much of this page is
open to the public)
•
•
•
•
Latest news
Archived member events (HUD multifamily housing audits)
Background
Status of each chapter of HUD Guide
http://www.aicpa.org/INTERESTAREAS/GOVERNMENTALAUDITQUALITY/
RESOURCES/HUDINFORMATION/Pages/default.aspx
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GAQC Resources – Archived GAQC Web Events from
Past Year
* Open to the Public
OCBOA Practice Aids*
Understanding Indirect Costs*
The HHS Head Start Program*
GASB and FASB Updates
Challenges with Fair Value Measurements
for NPOs*
New 2011 Yellow Book*
New Group Audit Standards Impact on
Governmental and NPO Audits
New HUD Rules for Banks*
Governmental Audit Quality Center
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GAQC Resources – Archived GAQC Web Events from
Past Year
* Open to the Public
Understanding the Effect of the Clarified Auditing
Standards on Governmental and NPO Audits
Updated SEFA Practice Aids (for SAS 119)
Subrecipient Monitoring: An Auditee and Auditor
Perspective*
Understanding the New AICPA Yellow Book
Independence Practice Aid*
Annual GAQC Webcast on Planning for 2012
Governmental and NPO Audits
2012 Compliance Supplement and Related Best
Practices
Governmental Audit Quality Center
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GAQC Resources – GAQC Alerts
 Archived Alerts from Past Year
• Final 2012 Compliance Supplement Issued
• Advance Notice of Changes Being Considered for A-133 and Cost
Principles
• New Yellow Book Independence Nonaudit Services Practice Aid Issued
• Access Updated SEFA Practice Aids and Report Wording; SAS 119
Information
• HUD Issues Compliance Audit Waiver for Small Supervised Lenders
• News on the Governmental Accounting and Auditing Front
• Draft 2012 OMB Compliance Supplement Available for Review and
Comment
• New 2011 Yellow Book Issued by GAO
• Important News and Information for GAQC Members
• Audit Resources, Annual Webcast; and Upcoming Events
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GAQC Team
General Inquiries - Best way to reach GAQC staff is
to send an e-mail to: [email protected]
• Mary Foelster, Director
- 202-434-9259 or [email protected]
• Teresa Bordeaux, Technical Manager
- 919-402-4959 or [email protected]
• Laura Hyland, Technical Manager
- 202-434-9233 or [email protected]
• Rafael Roman, Technical Manager
- 202-434-9272 or [email protected]
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Looking Forward
Implementation of Clarity and New Yellow Book
Changes to single audit rules?
Continued effects from Recovery Act?
Continued audit quality concerns
Continued look at how peer review can be enhanced
Continued advocacy
Continued GAQC support to members
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Questions???
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