AICPA Single Audit Update - macpamedia.orgmacpamedia.org/media/downloads/2012GNFP/Single_Audit_Update... · 4/26/2012 1 1 AICPA Single Audit Update ... Effective date same as AICPA

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AICPA Single Audit UpdateMACPA Government and NPO Conference

April 27, 2012Mary Foelster, AICPA, Director, Governmental Auditing and Accounting

2Governmental Audit Quality Center

What Will Cover

Technical Matters Impacting Single Audits• Standards

• Guides

• Other matters

Governmental Audit Quality Center (GAQC) Tools and Resources

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Technical Matters Impacting Single Audits


Technical Matters Impacting Single Audits

SAS No. 119

Clarity, including SAS No. 125

AICPA GAS-A133 Guide

Government Auditing Standards

OMB

HUD

Compliance Audits: For-Profit Entities

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SAS No. 119

Effective for audits of financial statements for periods beginning on or after 12/15/10.

Supersedes (along with SAS No. 118) AU 551

Certain conditions must be met to report “in-relation-to”

Required procedures

Reporting


Audit Guides

• Primary Focus• Government Auditing Standards &

Circular A-133 Audits

• Other Industries Include• Health Care Entities• Gaming• SLGs• Not for Profit Entities• Sampling

• Audit Risk Alerts• Checklists & Illustrative

Statements

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GAS-A133 Audit GuideAICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits, 2012 available mid-May• SAS No 119 is fully incorporated into guide, including the

illustrative reports and SEFA practice aids found in an appendix to 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

Looking forward• Clarity

• New Yellow Book


Clarity Standards 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

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Clarity Standards

Keep in mind that many of the clarity standards have paragraphs that are specific to the public sector• Governmental considerations may cover Yellow

Book/compliance audits

• Need to be considered as updating publications and courses for clarity standards

Group audits will be more challenging

Still looking at impact of group audits on compliance audits


SAS No. 125Audits done under Government Auditing Standards (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

Single audit reports issued after 12/15/12, new wording must be used (could affect 6/30/12 audits)

Yellow Book reports associated with f/s audit, new wording not used until periods ending on or after 12/15/2012

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Final 2011 edition issued • 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 need to be followed as of 1/1/12



New! Yellow Book Independence Practice Aid• Main change in the 2011 Yellow Book relates to independence,

especially when performing nonaudit services

• New practice aid developed by GAQC, working with the AICPA ethics and peer review teams, to assist auditors in meeting the Yellow Book requirements

• Includes documentation template 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

• http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/Resources/AuditPracticeToolsAids/DownloadableDocuments/2011YellowBookPracticeAid.pdf

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OMB Circular A-133

Proposed Changes to Single Audit• OMB issued an Advance Notice of Proposed Guidance titled,

Reform of Federal Policies Relating to Grants and Cooperative Agreements; cost principles and administrative requirements (including Single Audit Act)

GAQC Executive Committee task force responding to the OMB Advance Notice on behalf of AICPA

Comments will be issued by deadline of April 30


OMB Circular A-133

2012 Compliance Supplement soon

Accessing the Supplement

• OMB's Web site under the "Grant Management Circulars" link at: www.whitehouse.gov/omb/grants/(then scroll down to the "Audit Requirements" section)

• Both current year and prior Supplements located at the above Web link

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FFATA - Reminder

Required federal award reporting requirements for direct recipients of for non-Recovery Act federal awards

• Direct recipients required to report certain first-tiersubawards

• Web site (public face): www.USASpending.gov

• Some similarities to section 1512 reporting for Recovery Act awards but also several differences

Reporting made by direct recipients into www.fsrs.gov

Recent OMB Q&A indicating finding may not be necessary if best efforts to comply were made and documented


FFATA – When Does it Apply?

For grants and cooperative agreements, the effective date is 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)

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Don’t Forget About….

Impact of loan programs

No waivers for late filings and effect on low-risk auditee status

Continued Recovery Act implications

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


HUD Audits

HUD Consolidated Audit Guide• Covers for-profits (e.g., housing partnerships)

• Different types of entities covered by each chapter

• Chapters 1 and 2 apply to all

• Updated by HUD on a chapter by chapter basis over a several year period

Supervised mortgagees (banks and credit unions) became subject to Chapter 7 of HUD Guide in 2010

Compliance audit waiver for small supervised lenders

GAQC HUD Information Page:• http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/R

esources/HUDInformation/Pages/default.aspx

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Compliance Audits of For-Profits

Trend is for federal government to issue audit requirements similar to Circular A-133 for for-profit entities receiving federal funds

Examples of new or recently effective guides:• Department of Energy Audit Guide

• Department of Commerce Broadband Technology Opportunities Program Program-Specific Guide

• Department of Education (lenders, lender servicers, proprietary schools, etc.)

• Department of Agriculture (Broadband)

New! Department of Energy and Commerce already looking at revisions to the guidance they issued in 2011


GAQC Resources & Tools

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Governmental Audit Quality Center

CPA Firms: 1676• Representing 50 states in addition to Puerto Rico, US Virgin

Islands & Washington DC

State Audit Organizations: 17

Arkansas Delaware Florida Georgia Iowa

Illinois Louisiana Michigan Minnesota North Dakota

New Hampshire Ohio Rhode Island South Dakota Texas

Utah Virginia


GAQC Resources & Activities of Interest

Single Audit Tools

Auditee Resource Center

Archived Web Events – some open to the public

Audit & Accounting Guides

Resources for GAQC Members

www.aicpa.org/GAQC

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GAQC Resources – Tools & Practice Aids

Single Audit Practice Tools & Aids • Schedule of Expenditures of Federal Awards Practice Aids

(recently updated for SAS No.119)

• Internal Control over Compliance and Compliance Tools

• New Yellow Book Independence Practice Aid

HUD Information

Illustrative Auditors Reports • Single Audit

• Yellow Book

• HUD

OMB Circular A-133 • Recovery Act Resource Center


Resources for GAQC Members

Web events (with/without CPE) on current, relevant topics

Distribution of GAQC Alerts as news develops• Release of OMB Circular A-133 Compliance Supplement

• HUD notices

• Issuance of auditing and other standards

• Updates to illustrative reports

Marketing Toolkit

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GAQC Resources – Web Events

Web Events Past topics include:

- Understanding the AICPA's Yellow Book Independence Practice Aid for Performing Nonaudit Services

- Understanding the Potential Impact of the New Group Audits SAS on Your Governmental and Not-For-Profit Audit Engagements

- The New 2011 Yellow Book: What You Need to Know Now

- Challenges with Fair Value Measurements for Not-for-Profits

- An Overview of the OMB Compliance Supplement

- Subrecipient Monitoring - An Auditor and Auditee Perspective

- The OMB Cost Principles and Their Relevance to Your Single Audits

- Walking Your Way Through the AICPA's Audit Guide for Performing Yellow Book and Single Audits

- Internal Control over Compliance: Getting it Right Using the GAQC Practice Aids


Auditee Resource Center

Soon to be launched

Resources to better understand compliance requirements and the Single Audit process• Importance of audit quality

• Federal grant recipient tools & resources

• GAQC archived web events for auditees

• CPE opportunities

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Questions?