State of Vermont ©2019 CliftonLarsonAllen LLP Single Audit for … · 2019-04-17 · relied on by federal agencies as part of their administrative responsibilities for determining

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State of VermontSingle Audit for the Non-Auditor



Sean Walker, CPA, CFE, CGFM, CGMS, Principal Aires Coleman, CPA, Engagement Director

Presenters

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Create Opportunities

AgendaStart & End Time Topic Instructor Name Field of Study

(For Licensure & CPE Team Use ONLY)

8:30 – 10:10 a.m. Single Audit for the Non-Auditor

A key element to a successful single audit is to first understand what a single audit is and the requirements. This course will provide an overview of the purpose of a single audit and how to prepare for a single audit.

Sean Walker &Aires Coleman

2 creditsAuditing (Governmental)

10:10 – 10:20 a.m. Break (10 Minutes)

10:20 – 12:00 p.m. Internal Controls Over Compliance

This course will provide an overview of what is an effective internal control and how internal controls over compliance differ from internal controls over financial reporting.

Sean Walker &Aires Coleman

2 creditsAuditing (Governmental)

12:00 – 1:00 p.m. Lunch (Participants on their own – 60 Minutes)

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Agenda Cont’d.Start & End Time Topic Instructor Name Field of Study

(For Licensure & CPE Team Use ONLY)

1:00 – 2:15 p.m. Service Organization Control Reports – Why Are They So Important and How To Utilize Them Effectively

Discussion will center on types of reports, opinions, and various considerations of complimentary user entity controls and assessing the impacts of report results. This course will engage in conversation about reporting impacts and how best to leverage SOC reporting.

Jim Kreiser & AmandaKemp

1.5 creditsAuditing (Governmental)

2:15 – 3:05 p.m. Writing in Plain Language: Quick and Useful Tips

Writing for the public presents the challenge of using words and terms everyone can read and understand. Since 2010, the federal government has expected its agencies to follow “plain language” principles. This session will cover plain language concepts and offer tips to help you communicate your messages to all audiences.

Lynette Kemp 1 credit Communications and Marketing

3:05 – 3:15 p.m. Break (10 Minutes)

3:15 – 4:30 p.m. Intergovernmental Dependency: Impact of Federal Funding and Grants

This session will include discussion on the federal budget framework, grant related issues, and how federal agencies, state governments, and nonprofits may be impacted.

Bill Early 1.5 credits Finance

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Learning Objectives

At the end of the session, you will be able to: Identify what is a Single audit, its purpose and reporting

requirements Identify and describe the roles and responsibilities of the

auditee and auditor Identify when is a Single audit required Identify what expenditures are reported on the Schedule of

Expenditures of Federal Awards (SEFA) Identify Uniform Guidance compliance requirements and how

they relate to your program Identify and describe how to prepare for a single audit• Identify best practices for grants management

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Single Audit- Basics

Key elements to know about the single audit:• Understanding what is a single audit is, • Identifying and documenting compliance with

specific compliance requirements • Understanding your role in the single audit

– Program team– Finance– Procurement/Human Resources (indirect)

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Single Audit Background- Fun Facts

• “The Single Audit Act Amendments of 1996 (Single Audit Act) wereenacted to streamline and improve the effectiveness of audits of federalawards expended by states, local governments, and not-for-profit entities(referred to as non-federal entities), as well as to reduce audit burden.”The Single Audit Act requires these audits, referred to as “single audits” tobe conducted by an independent auditor.

• The Single Audit Act gives the Director of the Office of Management andBudget (OMB) the authority to develop government-wide guidelines andpolicy on performing audits to comply with the Act.

• The Uniform Guidance (UG) is the most recent OMB regulation issued forthis purpose. It includes uniform cost principles and audit requirementsfor federal awards to nonfederal entities and administrative requirementsfor all federal grants and cooperative agreements

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Single Audit Background- Fun Facts, Cont’d.

• 2 CFR 200, also known as the Uniform Guidance, went into effect December 26, 2014 and was meant to simplify federal rules and regulations regarding grant management and make everything more efficient. You may still run across the terms Circular A-133 or OMB A-133 audit.

• Each federal agency that gives out grants outlines specific items it feels are important for recipients to meet to ensure the successful management of the program and alignment with the legislative intent of the program. These items are laid out in the OMB Compliance Supplement, which is updated annually https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A133/2017/Compliance_Supplement_2017.pdf or https://www.aicpa.org/interestareas/governmentalauditquality/resources/singleaudit/2018-omb-compliance-supplement.html

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https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A133/2017/Compliance_Supplement_2017.pdf

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Single Audit Background- Fun Facts, Cont’d.

• Single audits are highly scrutinized by the federal government. Eachfederal agency has an inspector general (IG) who is responsible formonitoring the activities over federal expenditures.

• “Single audits have a significant public interest component as they arerelied on by federal agencies as part of their administrativeresponsibilities for determining compliance with the requirements offederal awards by non-federal entities. However, because each grant hasits own unique requirements, no two audits are exactly the same.

• For CPA’s: one of the reasons for an ethic investigation

• CLA is #1 in performing single audits in the country.

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• An organization-wide financial statement and federal awards’ audit of a non-federal entity that expends Perform from the federal government’s perspective. The U.S. Office of Management and Budget forth standards (Uniform Guidance, formerly A-133) for obtaining consistency and uniformity among Federal agencies for the audit of States, local governments, and non-profit organizations expending Federal awards. Non-federal entities commonly include states, cities, universities, and non-profit organizations.

What is a single audit?

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• Simply put, it is a review of the way inwhich your organization has manageda grant to make sure you are incompliance with the rules andregulations of each grant award.

What is a single audit?

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Purpose of the Single Audit

• To provide assurance to the Federal government/grantor thatthe recipient of federal funds is in compliance with thefederal program's requirements and allowable uses of thefunds.

• The Single Audit is a review of the recipient's financialrecords, financial statements, federal award transactions andexpenditures, internal control systems, and the federalassistance it received during the audit period

PresenterPresentation NotesMany different types of organizations that receive federal funds – obtaining consistency and uniformity

If received federal funding need to follow this act, whether or not it will be audited

What is most commonly seen on funding sources that the federal government wants to have reported back to them.

Clients are spending money for programs that the governments wants carried out – need to use those funds responsibly.

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Purpose of the Single Audit

In addition to determining compliance, the single audit: Promotes sound financial management, including

effective internal controls. Establishes uniform audit requirements. Promotes efficient and effective use of audit

resources.

PresenterPresentation NotesMany different types of organizations that receive federal funds – obtaining consistency and uniformity

If received federal funding need to follow this act, whether or not it will be audited

What is most commonly seen on funding sources that the federal government wants to have reported back to them.

Clients are spending money for programs that the governments wants carried out – need to use those funds responsibly.

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Single Audit in relation to Financial Audit

• In accordance with Generally Accepted Auditing Standards

• Same year end as compliance audit, not the federal government year-end

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PresenterPresentation NotesReport at the front of the basic financial statements

Needs to have the same year end as compliance – i.e. 12/31 for both or 6/30

Unit – can pertain more to governments What you are reporting on in financial statement audit needs to be what you are reporting in the single audithave seen on a consolidated basis financial statements but a note in the report that government auditing standards was done only on the parent company (subsidiaries may have their own stand alone compliance audit)

Sample reports engagement under Y-Templates (National Assurance Resource and binder Forms and Letters – Audit) updated by National Assurance Resource Group when changes are made.Within the Forms and letters – Audit template binder, section 0100 Reports (a variety of reports)

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When is a Single Audit required?

When a government entity incur $750,000 or more of federal grant expenditures during a fiscal year and/or have an outstanding loan with continuing requirements.

For the single audit federal expenditures includes federal award and federal financial assistance.

PresenterPresentation NotesEXPENDITURES – not receiptsFederal loans that are outstanding with continuing requirements such as report, would also require a single audit.

Clearinghouse facilitates Federal oversight of entities expending federal money –

For profit – OMB A-133 does not require audit of For-profit entities but they may be required to do a program specific audit. Need to contact funding agency to see if there is a guide that should be followed for the funding.

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What is Considered a Federal Award / Financial Assistance?

Federal award means Federal financial assistance and Federal cost-reimbursement

contracts that non-Federal entities receive directly from Federal awarding agencies or indirectly from pass-through entities

does not include procurement contracts, under grants or contracts, used to buy goods or services from vendors

Federal financial assistance assistance that non-Federal entities receive or administer in the form of

grants, loans, loan guarantees, property (including donated surplus property), cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, and other assistance

does not include amounts received as reimbursement for services rendered to individuals

PresenterPresentation NotesDifferent forms of assistance and can receive these individually or a combination

Can receive as a cost reimbursement basis, advanced basis and lump sum

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Basis for Determining Federal Awards Expended 2 CFR §200.502• Determination based on when the activity related to federal award has

occurred: – Incurrence of expenditures – Disbursement of funds to subrecipients– Use of loan proceeds under loan and loan guarantee programs – Receipt of property or surplus property – Receipt or use of program income – Cumulative balance of federal awards for endowment funds that are federally restricted– Distribution or use of food commodities– Disbursement of amounts entitling NFE to an interest subsidy– Period when insurance is in force

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Basis for Determining Federal Awards Expended 2 CFR §200.502 Cont’d.• How to calculate the value of federal awards expended under loan

programs (with few exceptions): – Value of new loans made or received during the audit period PLUS – Interest subsidy, cash, or administrative cost allowance received PLUS – Outstanding loan balance at the beginning of the audit period for which federal

government imposes continuing compliance requirements

• Free rent received as part of a federal award to carry out a federal program (at fair market value)

• Value of federal non-cash assistance at fair market value at the time of receipt or assessed value provided by federal agency (such as free rent)

• Program Income (Be cautious and know when to include)

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Overview of Auditee Responsibilities

Arrange for Single Audit in Accordance with 2 CFR

200.509

Prepare Financial Statements

Prepare Schedule of Expenditures of Federal

Awards (SEFA)

Provide the Auditor with Access to

Documentation/Records

Prepare Corrective Action Plan

Prepare Summary Schedule of Prior Audit

Findings

Follow-Up and Take Corrective Action on

Findings

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Single Audit - Auditor’s Responsibilities

Conduct an audit of the financial statements presented fairly in conformity with US GAAP

SEFA is presented fairly in Relation to the financial statements

Test internal control over Federal programs

Test the entity’s compliance with others laws and regulations

Follow up on prior year findings

Certify the reporting package and data Collection form

Retention of audit working papers

PresenterPresentation NotesConduct audit in accordance with GAGAS

Determine if auditee’s financial statements are prepared and presented fairly in conformity with US GAAP

Determine whether the SEFA is presented fairly in all material respects in relation to the auditee's financial statements taken as a whole

Perform procedures to obtain an understanding of internal control over Federal programs sufficient to plan the audit to support a low assessed level of control risk for major programs

Plan the testing of internal control over major programs to support a low assessed level of control risk for the assertions relevant to the compliance requirements for each major program . Perform testing of internal control as planned

Determine whether the auditee has complied with laws, regulations, and the provisions of contracts or grant agreements that may have a direct and material effect on each of its major programs.

Follow-up on prior audit findings, perform procedures to assess the reasonableness of the summary schedule of prior audit findings prepared by the auditee

Complete and electronically certify specified sections of the data collection form (Module 5)

Issue audit report

Retain working papers and reports for a minimum of three years after the date of issuance of the auditor's report(s) to the auditee, unless the auditor is notified in writing by the cognizant agency for audit, oversight agency for audit, or pass-through entity to extend the retention periodMake available upon request to the cognizant or oversight agency for audit or its designee, a Federal agency providing direct or indirect funding, or GAO at the completion of the audit, as part of a quality review, to resolve audit findings, or to carry out oversight responsibilities

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When is the Single Audit Due? What’s Required

• Reporting package must be submitted to the Federal Audit Clearinghouse within 9 months of the auditee’s fiscal year or 30 days after receipt of auditor’s report, whichever is earlier.

• Reporting package consists of the following: – Financial statements – Auditor’s reports – Schedule of Expenditure of Federal Awards – Summary Schedule of Findings and Questioned Costs (including

corrective action plan) – Summary Schedule of Prior Audit Findings




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Auditor’s Reports Issued

– Independent Auditors’ Report on Internal Control OverFinancial Reporting and on Compliance and Other MattersBased on an Audit of Financial Statements Performed inAccordance with Government Auditing Standards

– Independent Auditors’ Report on Compliance WithRequirements That Could Have A Direct and MaterialEffect on Each Major Program, on On Internal Control OverCompliance, and on the Schedule of Expenditures ofFederal Awards in Accordance with Uniform Guidance






Why was my program selected for testing

Major Program Determination

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Major Program Determination 2 CFR § 200.518

• (a)General. The auditor must use a risk-based approach todetermine which Federal programs are major programs. Thisrisk-based approach must include consideration of: currentand prior audit experience, oversight by Federal agencies andpass-through entities, and the inherent risk of the Federalprogram.

• The client prepared SEFA is the first step to determining themajor programs

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Overall Major Program Determination Process

Identify Large Type A

Programs

Identify Low Risk Type A Programs

Identify High-Risk Type B Programs

Percentage of Coverage

Rule

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Major Program Determination Cont’d.

• 2 CFR § 200.518(b)(1) The auditor must identify the larger Federalprograms, which must be labeled Type A programs. Type A programs aredefined as Federal programs with Federal awards expended during theaudit period exceeding the levels outlined in the table in this paragraph(b)(1):

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Total Federal awards expended Type A/B thresholdEqual to or exceed $750,000 but less than or equal to $25 million

$750,000.00

Exceed $25 million but less than or equal to $100 million

Total Federal awards expended times .03.

Exceed $100 million but less than or equal to $1 billion

$3 million.

Exceed $1 billion but less than or equal to $10 billion

Total Federal awards expended times .003.

Exceed $10 billion but less than or equal to $20 billion

$30 million.

Exceed $20 billion Total Federal awards expended times .0015.

Table 1

CLA Vermont Training

Thursday, 04/18/2019

Pavilion Auditorium, 109 State Street, Montpelier VT

Start & End TimeTopicInstructor NameField of Study(For Licensure & CPE Team Use ONLY)

8:30 – 10:10 a.m.Single Audit for the Non-AuditorA key element to a successful single audit is to first understand what a single audit is and the requirements. This course will provide an overview of the purpose of a single audit and how to prepare for a single audit.Required Element of Engagement: Q&A within each 50 minute segment of this sessionSean Walker &Jatana Coleman2 creditsAuditing (Governmental)

10:10 – 10:20 a.m.Break (10 Minutes)

10:20 – 12:00 p.m.Internal Controls Over ComplianceThis course will provide an overview of what is an effective internal control and how internal controls over compliance differ from internal controls over financial reporting.Required Element of Engagement: Q&A within each 50 minute segment of this sessionSean Walker &Jatana Coleman2 creditsAuditing (Governmental)

12:00 – 1:00 p.m.Lunch (Participants on their own – 60 Minutes)

1:00 – 2:15 p.m.Service Organization Control Reports – Why Are They So Important and How To Utilize Them Effectively Discussion will center on types of reports, opinions, and various considerations of complimentary user entity controls and assessing the impacts of report results. This course will engage in conversation about reporting impacts and how best to leverage SOC reporting.Required Element of Engagement: Q&A within the first 50 minutes of this segmentJim Kreiser & AmandaKemp1.5 creditsAuditing (Governmental)

2:15 – 3:05 p.m.Writing in Plain Language: Quick and Useful TipsWriting for the public presents the challenge of using words and terms everyone can read and understand. Since 2010, the federal government has expected its agencies to follow “plain language” principles. This session will cover plain language concepts and offer tips to help you communicate your messages to all audiences.Required Elements of Engagement: Q&ALynette Kemp1 credit Communications and Marketing

3:05 – 3:15 p.m.Break (10 Minutes)

3:15 – 4:30 p.m.Intergovernmental Dependency: Impact of Federal Funding and GrantsThis session will include discussion on the federal budget framework, grant related issues, and how federal agencies, state governments, and nonprofits may be impacted.Required Element of Engagement: Q&A within the first 50 minutes of this segmentBill Early1.5 credits Finance

CLA Vermont Training

Thursday, 04/18/2019

PROGRAM INFORMATION

Program Title:CLA Vermont Training

Date(s) of Program:Thursday, 04/18/2019

Location of Program:Pavilion Auditorium, 109 State Street, Montpelier VT

Start and end Time:8:30 a.m. - 4:30 p.m.

Learning Objectives: Define the purpose of a single audit and why/when it may be required for nonfederal entities. Identify the importance of adequately preparing for a single audit. Identify internal controls and ensuring controls are properly designed, implemented, and documented. Define what is a SOC report and the ways to leverage these reports. Identify what plain language is and ways to communicate to all audiences. Define intergovernmental dependency and the impact on federal funding and grants.

Program Content: Provide a brief description of the main topics of the program contentSingle Audit for the Non-Auditor – A key element to a successful single audit is to first understand what a single audit is and the requirements. This course will provide an overview of the purpose of a single audit and how to prepare for a single audit.Internal Controls over Compliance –This course will provide an overview of what is an effective internal control and how internal controls over compliance differ from internal controls over financial reporting.Service Organization Control Reports- Why Are They So Important and How to Utilize Them Effectively? – Discussion will center on types of reports, opinions, and various considerations of complimentary user entity controls and assessing the impacts of report results. This course will engage in conversation about reporting impacts and how best to leverage SOC reporting.Writing In Plain Language: Quick and Useful Tips – Writing for the public presents the challenge of using words and terms everyone can read and understand. Since 2010, the federal government has expected its agencies to follow “plain language” principles. This session will cover plain language concepts and offer tips to help you communicate your messages to all audiences.Intergovernmental Dependency: Impact of Federal Funding and Grants - This session will include discussion on the federal budget framework, grant related issues, and how federal agencies, state governments, and nonprofits may be impacted.

Instructor(s):Sean Walker, Jatana Coleman, Jim Kreiser, Amanda Kemp, Lynette Kemp, and Bill Early

Who should attend thisprogram:Individuals who are involved in the single audit process or grant monitoring process.

Level:Overview

Prerequisite:None

Delivery Method:Group Live

Advance Preparation:None

Recommended CPE:8 credits (5.5 credits Auditing (Governmental), 1.5 credits Finance, 1 credit Communications and Marketing )

NASBA Statement:CliftonLarsonAllen LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through itswebsite: www.nasbaregistry.org

CPE Sponsor Policies:For more information regarding CliftonLarsonAllen’s CPE Sponsor policies, contact [email protected]

Last Updated September 25, 2017

http://www.nasbaregistry.org/mailto:[email protected]

Sheet1

Total Federal awards expendedType A/B threshold

Equal to or exceed $750,000 but less than or equal to $25 million$750,000.00

Exceed $25 million but less than or equal to $100 millionTotal Federal awards expended times .03.

Exceed $100 million but less than or equal to $1 billion$3 million.

Exceed $1 billion but less than or equal to $10 billionTotal Federal awards expended times .003.

Exceed $10 billion but less than or equal to $20 billion$30 million.

Exceed $20 billionTotal Federal awards expended times .0015.

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• 2 CFR § 200.518(b)(2)Federal programs not labeled Type A underparagraph (b)(1) of this section must be labeled Type B programs.

• 2 CFR § 200.518 (c)(1) The auditor must identify Type A programswhich are low-risk. In making this determination, the auditor mustconsider whether the requirements in § 200.519 Criteria for Federalprogram risk paragraph (c), the results of audit follow-up, or anychanges in personnel or systems affecting the program indicatesignificantly increased risk and preclude the program from beinglow risk.

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• For a Type A program to be considered low-risk, it must have beenaudited as a major program in at least one of the two most recent auditperiods (in the most recent audit period in the case of a biennial audit),and, in the most recent audit period, the program must have not had:– (i) Internal control deficiencies which were identified as material

weaknesses in the auditor's report on internal control for majorprograms as required under § 200.515 Audit reporting, paragraph (c);

– (ii) A modified opinion on the program in the auditor's report on majorprograms as required under § 200.515 Audit reporting, paragraph (c);or

– (iii) Known or likely questioned costs that exceed five percent of thetotal Federal awards expended for the program

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• At a minimum, the auditor must audit all of the following as majorprograms:– (1) All Type A programs not identified as low risk under step two

(paragraph (c)(1) of this section).– (2) All Type B programs identified as high-risk under step three

(paragraph (d) of this section).– (3) Such additional programs as may be necessary to comply with the

percentage of coverage rule discussed in paragraph (f) of this section.This may require the auditor to audit more programs as majorprograms than the number of Type A programs.

• 2-year look back criterion

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• Exclusion of large loan and loan guarantee programs (loans) thatexceeds 4 times the largest non-loan program still applies,however, a program is considered to be a program providing loansonly if the value of the awards expended for loans within thatprogram is 50% or more of the total awards expended

• Threshold for assessing high-risk Type B program which waspreviously $100,000, is now based on Type A threshold (>25% ofType A threshold)

• Percentage of Coverage Rule– Minimum % of testing is now 20% (from 25%) for low-risk auditee – Minimum % of testing is now 40% (from 50%) for high-risk auditee

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Major Program Determination - Risk Assessment?

• A risk assessment in the next stage in considering who will be audited.

• A determination is made to put an entity in either a high or low risk category.

• An entity is high risk if they have not been audited as a major program in the last two years and what the findings of their previous audits were.

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Major Program Determination - Risk Assessment of Type A Programs

•Not audited in the last two years•Modified Opinion•Material Weakness in internal controls•Known or likely questioned costs exceeding 5% of total program expenditures•Other – Auditor’s judgment

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Major Program Determination - Risk Assessment of Type B Programs

•Assess if there are low risk Type A’s (Type A’s not audited for thecurrent year)

•Assess with the same mindset of a Type A•Modified Opinion•Material Weakness or Significant Deficiency in internalcontrols•Known or likely questioned costs exceeding 5% of totalprogram expenditures•Other – Auditor’s judgment



What the auditor sees

Single Audit Testing

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Single Audit Testing

• Internal Control Over Financial Reporting-Comprehensive Annual Financial Report (CAFR) or financial statements

• Internal Control Over Compliance- for each direct and material compliance requirement

• Compliance- for each direct and material compliance requirement

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Internal Control Over Financial Reporting

• Plan to support a low assessed level of control risk– results of the control testing and corresponding control risk

assessed could result in a lower level of RMM for the overall financial statement audit. i.e. reduced sample sizes for year-end testing.

• Planned vs. Achieved Risk Level– low level must be planned for, does not have to be

achieved,– if achieved, consideration should be made regarding the

assessment of control risk for risk of material noncompliance

– If not achieved, finding should be reported

PresenterPresentation NotesLow level not achieved – does not mean additional testing is required for control testing, it may increase the sample size for compliance testing, however

results of the control testing and corresponding control risk that is assessed could result in a lower level of RMM for the overall financial statement audit

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Internal Control Over Compliance and Compliance Testing

• Tests of controls over compliance are required – support a low assessed level of control risk for the

assertions– perform testing of internal control as planned.

• Tests of compliance are required– determine whether the auditee has complied with laws,

regulations, and the provisions of contracts or grant agreements

• Dual Purpose Testing-– test internal controls and compliance with the same

sample

PresenterPresentation NotesTests of controls over compliance are required plan the testing of internal control over major programs to support a low assessed level of control risk for the assertions relevant to the compliance requirements for each major program perform testing of internal control as planned.

Tests of compliance are requireddetermine whether the auditee has complied with laws, regulations, and the provisions of contracts or grant agreements that may have a direct and material effect on each of its major programs. Auditor may be able to perform compliance testing for major programs concurrently with tests of controls (dual purpose testing)Internal control tests and compliance tests should be distinguished from each other so there is clear documentation to support both types of tests and the separate conclusions reach on both internal control and compliance

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• Determine which requirements are direct and material– Is it a possible requirement according to either:

◊ OMB Compliance Supplement, Part 4◊ Part 2 Matrix of Compliance Requirements◊ The requirements of grant agreements

– Dollar amount of transactions involved◊ Review the total dollar amounts of transactions involved in

comparison to materiality over the major program

PresenterPresentation NotesTest those over 10% of expenditures

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• Sample Sizes– Based on AICPA sampling guidance– Depends on the

◊ Significance of the control beings tested ◊ Inherent risk of the compliance requirement

– Significance of the control being tested refers to the potential magnitude of noncompliance (both qualitatively and quantitatively) if the control were to fail.

PresenterPresentation NotesFactors to consider when assessing the significance of the control being tested are as follows:If only one key control is identified, then it is likely that the control is very significant since no other key controls were identified that would aid in detecting material noncomplianceIf several key controls are identified, and the controls are compensating controls (meaning if one control fails another control would detect material noncompliance), then it is likely that the controls are each moderately significantWhen assessing the significance, keep in mind the main question: “What could go wrong if this control failed?” If there is a very significant ramification of the control failing, then it is likely that the control is very significant. If other controls compensate when this control fails, then it is likely that the control is moderately significant. We need to test each of the compensating controls.Consider the potential magnitude of noncompliance. For example, if payroll is a large portion of program expenditures, then the key controls are likely very significant. However, if payroll is not a large portion of program expenditures, then the key controls might be considered moderately significant.

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• Sample Sizes (Continued)– Inherent Risk of Compliance Requirement

◊ Evaluated as either Higher or Limited Inherent Risk◊ Factors to consider

• Organization history with program• Processing Complexities• Findings in past audits • Volume of activity• Changes in policies, processes, or personnel associated

with requirements◊ Required to document support for limited inherent risk

PresenterPresentation NotesSeparate tab on matrix provides space for documentation of inherent risk assessment considerations

For example, if there were findings in past audits for a program, the auditor would conclude that there is a higher inherent risk. Likewise, if the organization has a long history with the program , is familiar with the requirements and has not had findings in past audits, the auditor would conlclude that there is a low inherent risk for that provision.



What is tested during the single audit

Single Audit compliance requirements

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A – Activities Allowed or Unallowed

• 2 CFR 200.400 Subpart E- Cost Principles (general) and are unique to each federal program

• Activities allowed under grant’s purpose

• Specific activities may not be funded under a specific program

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B - Allowable Costs/Cost Principles

• 2 CFR 200.400 Subpart E- Cost Principles• Costs that are reasonable and necessary for the program

based on requirements of grant• Direct and Indirect CostsExamples of direct costs procedures:

– Costs were approved by the Federal-awarding agency, if required – Costs were not included as a cost or used to meet cost-sharing

requirements of other federally supported activities – Costs represent charges for actual costs, not budgeted amounts.– Costs were estimated, accumulated, and reported consistently

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Allowable costs/Activities: Time and Effort

• UGG provides for more flexibility in documenting staff time and effort spent on federal awards, but it is not clear exactly what documentation will be sufficient.

• Guidance is less prescriptive on documentation and places more emphasis on internal control. Shift from focus on Compliance to focus on Performance.

• Allows entities to replace detailed time and effort reports (timesheets) with performance-based reporting (based on milestones).

• Charges to Federal awards for salaries and wages must be based on records, and budget estimates alone do not qualify to support charges to Federal awards, but may qualify for reporting during interim periods.

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C - Cash Management

2 CFR 200.305 Payment• Treasury-State Cash Management I Act (CMIA) For states, payments are

governed by Treasury-State CMIA agreements and default procedures codified at 31 CFR Part 205 “Rules and Procedures for Efficient Federal-State Funds Transfers” and TFM 4A-2000 Overall Disbursing Rules for All Federal Agencies.

General: Advances or reimbursement• If advances received:

– Procedures in place to minimize time between receipt of funds and disbursement (Generally 3 days)

– Generally cannot keep interest earnings on funds advanced• If reimbursement received:

– Costs must be paid for prior to submission of request for reimbursement

PresenterPresentation NotesAdvances – entire grant received at inception; or advances requested at different intervals during the grant period

Reimbursement request –example is monthly reimbursement request reports or quarterly drawdowns

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E - Eligibility

• Unique to each Federal program (program specific)• Specifies the criteria for determining the individuals,

groups of individuals, or subrecipients that can participate in the program and the amounts for which they qualify

PresenterPresentation NotesExamples – Head Start and Energy Assistance Program – specific income guidelines; Jobs and Training Programs – specific guidelines regarding being a U.S citizen, dislocated worker, training needs assessment, etc.

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F – Equipment and Real Property Management

• 2 CFR 200.310-316 Property Standards• Applies when federal funds used to acquire

property/equipment – Equipment = cost > $5,000 and useful life > 1 year

• Need to maintain records to track purchases and take a physical inventory every 2 years

• If equipment or real property sold, federal government/state entitled to a portion of sales proceeds depending on funding level

PresenterPresentation NotesExample – grant award used to purchase research equipment

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F – Equipment and Real Property Management

Examples of Audit Procedures: for Inventory Management of Equipment

• Physical Inventory– Inquire if a required physical inventory of equipment acquired under

Federal awards was taken within the last two years

• Proper Records– Identify equipment acquired under Federal awards and trace selected

purchases to the property records

• Inspect Equipment– Select a sample from all equipment identified as acquired under

Federal awards from the property records and physically inspect the equipment

PresenterPresentation NotesPhysical inventory - Inquire if a required physical inventory of equipment acquired under Federal awards was taken within the last two years. Test whether any differences between the physical inventory and equipment records were resolved.

Proper records - Identify equipment acquired under Federal awards and trace selected purchases to the property records. Verify that the property records contain the necessary information about the equipment.

Inspect Equipment - Select a sample from all equipment identified as acquired under Federal awards from the property records and physically inspect the equipment, including whether the equipment is appropriately safeguarded and maintained.

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G – Matching, Level of Effort, and Earmarking

• Matching - provide contributions of a specific amount or percentage to match federal awards. – 2 CFR 200.306, must be non-federal source

• Level of effort (program specific)– a specified level of service to be provided or expenditures to be

maintained from period to period – Federal funds to supplement and not supplant non-federal funding of

services

• Earmarking - (program specific)– a minimum or maximum amount or percentage of the program’s

funding to be used for certain activities

PresenterPresentation NotesExample of matching - $15,000 of $100,000 grant needs to come from non-federal sourcesExample of level of effort – program established that a recipient must provide medical service to 1,000 patients daily Earmarking – example – 20% of individuals served need to be considered low income

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H – Period of Performance

• Federal awards may specify a time period during which the federal funds may be used

• Organization may charge only costs incurred during the funding period

• Generally specified in the grant award

PresenterPresentation NotesExample – grant period from June 1, 2010 to May 31, 2011

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I – Procurement, Suspension and Debarment

2 CFR 200.317 Procurements by States•When procuring property and services under a Federal award, a state mustfollow the same policies and procedures it uses for procurements from itsnon-Federal funds. The state will comply with §200.322 Procurement ofrecovered materials and ensure that every purchase order or other contractincludes any clauses required by section §200.326 Contract provisions.

2 CFR 200.318 General Procurement Standards•All other non-Federal entities, including subrecipients of a state, will follow §§200.318 General procurement standards through 200.326 Contract provisions.

PresenterPresentation NotesExample of procurement policy – all purchases over $10,000 require bids

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• Must maintain records sufficient to detail the history of the procurement– rationale for method of procurement– selection of contract type– contractor selection or rejection– basis for contract price

• Procedures must be designed to:– Provide oversight of contractors’ performance– Avoid acquisition of unnecessary or duplicative items (i.e. lease vs.

buy)– Consider the use intergovernmental agreements– Encouraged to use federal surplus property in lieu of purchasing


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• No longer emphasis on suspension and debarment (this is now impliedthrough responsible contractors)

– Suspension and Debarment - Contracts can not be made with those on the “ExcludedParties List System” (www.sam.gov) “Covered transactions” include those procurementcontracts for goods and services that are expected to equal or exceed $25,000

• Contracting with small and minority businesses, women’s businessenterprises, and labor surplus area firms

• Necessary affirmative steps to assure minority businesses, women’sbusiness enterprises, and labor surplus area firms are used when possible


http://www.sam.gov/

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J – Program Income

• 2 CFR 200.307 Program Income• Gross income received directly generated by a federally

funded project during the grant period

• Examples include:– Use or rental of real or personal property acquired with grant funds – Sale of commodities or other items

• Has to be deducted from outlays, added to the project budget, or used to meet matching requirements

PresenterPresentation NotesExample – participant contributions for senior nutrition meals

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L - Reporting

• Reporting specified in grant agreements (program specific)

• Standard forms for reporting directly to federal government

PresenterPresentation NotesFinancial – reporting expendituresPerformance – reporting enrollment levels, etc.

First-tier subaward reporting (referred to as “subcontracts” if subject to the FAR) under the Transparency Act

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Subrecipient Monitoring – Why the Change?

• 2 CFR 200 330-332 BIG DEAL FOR Pass-through Entities!!!• Standards have expanded to provide greater standardization

of pre-award and during-the-award monitoring activities• Previous standards did not provide a clear picture of what the

expectation is of the pass through entity (PTE)• New standard provides clear framework of what is required

for monitoring activities

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Critical Determination: Subrecipient vs. Contractor

Subrecipients. A subaward is for the purpose of carrying out a portion of a Federal award and creates a Federal assistance relationship with the subrecipient. Characteristics which support the classification of the non-Federal entity as a subrecipient include when the non-Federal entity:

– Determines who is eligible to receive what Federal assistance;– Has its performance measured in relation to whether objectives of a

Federal program were met;– Has responsibility for programmatic decision making;– Is responsible for adherence to applicable Federal program

requirements specified in the Federal award; and– In accordance with its agreement, uses the Federal funds to carry out

a program for a public purpose specified in authorizing statute, as opposed to providing goods or services

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Subrecipient vs. Contractor (cont.)

Contractors. A contract is for the purpose of obtaining goods and services for the non-Federal entity's own use and creates a procurement relationship with the contractor. Characteristics indicative of a procurement relationship between the non-Federal entity and a contractor are when the non-Federal entity receiving the Federal funds:

– Provides the goods and services within normal business operations;– Provides similar goods or services to many different purchasers;– Normally operates in a competitive environment;– Provides goods or services that are ancillary to the operation of the

Federal program; and– Is not subject to compliance requirements of the Federal program as

a result of the agreement, though similar requirements may apply for other reasons.

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Subrecipient Monitoring: Awardee’s Responsibility – Risk Assessment

Evaluate and document each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring procedures. Consider such factors as:

– The subrecipient's prior experience with the same or similar subawards;– The results of previous audits including whether or not the subrecipient

receives a single audit in accordance with Subpart F—Audit Requirements of and the extent to which the same or similar subaward has been audited as a major program.

– Whether the subrecipient has new personnel or new or substantially changed systems; and

– The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency).

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Subrecipient Monitoring: Awardee’s Responsibility - Subrecipient’s Program Activities

• Consider imposing specific subaward conditions upon a subrecipient as deemedappropriate.

• Document monitoring activities of the subrecipient to ensure that the subaward isused for authorized purposes, in compliance with Federal statutes, regulations,and the terms and conditions of the subaward; and that subaward performancegoals are achieved. Pass-through entity monitoring of the subrecipient mustinclude:

– Reviewing financial and performance reports required by the pass-throughentity.

– Following-up and ensuring that the subrecipient takes timely andappropriate action on all deficiencies pertaining to the Federal awardprovided to the subrecipient from the pass-through entity detected throughaudits, on-site reviews, and other means.

– Issuing a management decision for audit findings pertaining to the Federalaward provided to the subrecipient from the pass-through entity asrequired by §200.521 management decisions

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Subrecipient Monitoring: Awardee’s Responsibility

• Depending upon the pass-through entity's assessment of risk posed by thesubrecipient the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance withprogram requirements and achievement of performance goals:

– Providing subrecipients with training and technical assistance on program-related matters; and

– Performing on-site reviews of the subrecipient's program operations;arranging for agreed-upon-procedures engagements as described in §200.425audit services.

– Consider taking enforcement action against noncompliant subrecipients asdescribed in §200.338 Remedies for noncompliance of this part and inprogram regulations.

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Subrecipient Monitoring: Subaward – Required Information

• Required Information at time of Subaward:1. Subrecipient Name2. Subrecipient’s DUNS Number3. Federal Award Identification Number (FAIN)4. Federal Award Date5. Subaward Period of Performance Start and End Date6. Amount of Federals Funds Obligated by this action7. Total Amount of Federal Funds Obligated to the

subrecipient8. Total Amount of the Federal AwardNOTE: Bold items are new requirements

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Subrecipient Monitoring: Subaward – Required Information (cont.)

• Required Information at time of Subaward (Cont’d):9. Federal award project description, as required to be

responsive to the Federal Funding Accountability and Transparency Act

10. Name of Federal awarding agency, pass-through entity, and contact information for awarding official

11. CFDA Number and Name12. Identification of whether the award is R&D; and13. Indirect cost rate for the Federal AwardNOTE: Bold items are new requirements

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Remedies for Noncompliance

• Failure to comply with Federal statutes, regulations, or the terms and conditions of a Federal award can result in additional imposed conditions– Requiring payments as reimbursements rather than advance

payments;– Withholding authority to proceed to the next phase until receipt of

evidence of acceptable performance within a given period of performance;

– Requiring additional, more detailed financial reports;– Requiring additional project monitoring;– Requiring the non-Federal entity to obtain technical or management

assistance; or– Establishing additional prior approvals.

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Remedies for Noncompliance

• SEVERE: Further noncompliance can result in the following actions: – Temporarily withhold cash payments pending correction of deficiency;– Disallow all or part of the cost of the activity or action not in

compliance;– Wholly or partly suspend or terminate the Federal award;– Initiate suspension or debarment proceedings – New;– Withhold further Federal awards for the project or program;– Any other remedies legally available.

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N – Special Provisions

• Unique to each Federal Program and are found in the laws, regulations and the provisions of the grant agreements.

• Compliance requirements identified in OMB compliance supplement part 4, examples:– Test compliance status of provider’s licenses– Test the annual graduation rate report– Review the organizational structure

PresenterPresentation NotesExample - Where grants are used to pay for rent for all or a part of a structure, the rent paid must be reasonable in relation to rents being charged in the area for comparable space (HUD loan program)

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Single Audit Findings

• The auditee will prepare the corrective action plan– Must be on the auditee’s letter head– Identified the date the corrective action will be

implemented.– Provide contact information for the employee responsible

for the implementation of the plan

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PresenterPresentation Notes8022.00 (Findings & questioned costs worksheet) can help summarize information needed to prepare the finding for the financial statement disclosure. (Both F/S findings and Compliance and IC over compliance findings)

Also a template within the resource binder under the single audit section 8020 of what it could look like.

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Single Audit Findings

• 2 CFR 200.516 Audit Findings

• Types of Reported Findings– Financial statement – Major federal program– Prior year findings-

◊ Reported until resolved

• Findings can be reported as both financial statement and as a major program findings– Errors in the Schedule of Expenditures of Federal Awards (SEFA)– Internal control findings over payroll and accounts payable

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PresenterPresentation Notes8022.00 (Findings & questioned costs worksheet) can help summarize information needed to prepare the finding for the financial statement disclosure. (Both F/S findings and Compliance and IC over compliance findings)

Also a template within the resource binder under the single audit section 8020 of what it could look like.

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Summary of Prior Year Findings

• 2 CFR 200.511 Audit follow-up• Client prepares the summary of prior year findings

– What to report– Reference number from the previous year, Condition,

Current status– Finding status is either resolved, partially resolved or

unresolved– Document should be on client letterhead

• Auditors are required to follow-up and corroborate the status of the prior year finding as reported by the client

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Overview

Single Audit

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Single audit- Overview for non-auditors

• Single Audit is a federal Act and compliance with therequirements is not optional. Auditors and auditees mustcomply with requirements.

• The Single Audit is in accordance with Uniform Guidance (2CFR 200).

• Single Audit compliance requirements are based on the OMBcompliance supplements, grant agreements and notice ofawards.

• The auditee is responsible for creating the schedule of federalawards which is used to determine the major programs.

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Single audit- Overview for non-auditors

• Major programs are determined based on criteria set forth bythe Uniform Guidance.

• Each major program will be audited in accordance with thecompliance requirements that are direct and material to theprogram. Auditor will test the internal control over acompliance requirement and compliance.

• A corrective action plan is required for each audit finding.• The auditee require to provide the auditor a summary of prior

year findings which includes the current year status of thefindings.

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Top Five Ways to Prepare for a Single Audit

Make yourself available•When scheduling your single audit (both preliminary and final fieldwork), be sure to communicate the schedule to all affected staff.

•The most efficient and effective single audits are those where the auditor has full access to the appropriate program and fiscal staff.

Read your client assistance letter•The letter is designed to assist the fiscal and program staff in gathering the appropriate information for the audit, such as government contracts and summaries, narratives about internal controls over key transactions, and major program compliance.

•Take the time to review this letter with staff immediately upon receipt and start communicating any questions or concerns to your auditor as soon as possible.

Prepare your Schedule of Expenditures of Federal Awards•Prepare your Schedule of Expenditures of Federal

Awards•It is important for you to understand the required

elements of the SEFA, including:•Appropriate Catalogue of Federal Domestic

Assistance (CFDA) number(s)•Federal awarding agency•Federal expenditures by funding source•Grant numbers•Award period•Separate identification of funding under the

American Recovery and Reinvestment Act (ARRA)•Separate identification and reporting of clusters of

programs

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Top Five Ways to Prepare for a Single Audit

Understand and identify applicable compliance requirements•It is vital for program and fiscal staff to understand the applicable compliance requirements for each government grant.

•Obtain and review the UG Compliance Supplement.•Federal grants are generally assigned a CFDA number, and each CFDA number can have up to 14 associated compliance requirements. Some examples of potential compliance requirements would include allowable costs, eligibility, and period of availability.

Be familiar with Uniform Administrative Requirements/Applicable cost circulars•Once all staff members are familiar with the appropriate administrative requirements and cost circulars, hold a staff meeting to discuss the types of expenditures that occur under each federal grant, and whether potential unallowable costs can be identified and segregated in your accounting records.

•Also consider proactively communicating with your auditors about any potential questionable areas when identifying allowable and unallowable costs

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Other Tips

• Maintaining records in such a way that you could easily: – Segregate federal and nonfederal awards activity – Safeguard authorized use of assets acquired from federal funds – Comply with reporting disclosure requirement

• Keep up to date on all the latest guidance and developments.– Includes being aware of the changes that the Uniform Guidance

introduced.

• Identify and address problem areas in advance.

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Consequences of an Unsuccessful Audit

• Results of the audits made public• Grantee having to pay back disallowed costs• Suspension of the grant• High risk category, which increases the risk of additional

audits• Impact the organization's ability to win future awards

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Single Audit state of mind all year long

Grants Management

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What is Grants Management?

Grant ComplianceCornerstone

of proper grants

management

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Grants Management

• The federal government distributes around $530 billion, about 14 percentof its budget, each year to states and localities, providing about a quarterof these governments’ general revenues. The bulk of the funds arededicated to health care. (U.S. Department of Health and Human Services)

Source: Office of Management and Budget, Budget of the United States Government, fiscal year 2017, historical tables 12.2

• State and local governments often receive significant grants from othergovernments and organizations to support their programs and activities.Grants may, either as a condition of the grant itself or politically, commit agovernment to financially maintain a program or asset after the expirationof the grant.

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Grants Management: Entity Structure

• Within an organization grants may be decentralized, managed by differentdepartments, or centralized where one person (department) handles allgrants from start to finish.

• Some organizations have a grants management structure. In this model,there is usually at least one person who knows what’s going on with everygrant an organization applies for and receives. (audit liaison, internalaudit).

• Only Actual Authority should bind the government.

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Grants Management

• Grant management is complicated. There are a thousand regulations andrequirements – particularly with government grants. Failing tounderstand and comply with these regulations has resulted in fundsbeing cut and worse – legal restitution of grant funds.

• Grants “generally” come with specialized requirements that can apply tothe general operations of the grant, specific compliance rules,monitoring of other parties that may receive resources from the grants,and specialized reporting requirements. There are typically negativeconsequences for failing to meet these requirements.

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Grants Management

• Normally a failure to meet all grant requirements is not intentional.Instead, it’s because all appropriate parties within the government arenot aware of all the requirements or are not aware of the requirementsat the appropriate time.

• Noncompliance is usually due to:– Lack of education and training programs related to the grant– Ineffective or lack of communication between grant manager and

employees– Improper employee or employees designated as the grant manager

and responsible for developing and monitoring compliance– Untimely action to program offenses, allegations and risks.

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Grants Management- Possible Results of Improper Grant Compliance

Improper Grant Compliance

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What is Grants Management: Common Findings

National Science Foundation:– Policies and procedures inadequate or absent: 24%– Lack of source documentation to support costs: 18%– Inadequate system to track, manage, or account for costs/assets: 14%– Unallowable costs: 7%– Lack of proper approval, certification, or authorization: 6%– Lack of subrecipient monitoring: 6%– Inadequate or absent project or technical report: 6%– Reconciliations inadequate or not performed: 4%– Inadequate or absent financial report or proposal: 4%– Costs claimed > amounts or rates allowed by award provisions or Federal regulations: 4%– Lack of segregation of duties: 4%

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Grants Management- Keys to Success

• Considered from Implementation to Close Out• Regulatory Compliance• Policies and Procedures • Roles and Responsibilities

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Grants Management- Implementation to Close Out• Successful grant management starts with the end in mind. Grant

management starts with designing a potential project in the strategicplanning phase and is included as the organization moves to grantseeking; and then from the time the grant is awarded to the final grantclose out report.– It is critical during budget design phase to have someone who knows

the regulations participate in grant budget development. Mistakes inthis area can be really costly later.

– Pre-planning and training to ensure all understand regulations beforejumping in to program & budget design.

– Risk assessment and monitoring at various stages.

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Grants Management- Risk and Monitoring at Various Stages

Pre-award

Structuring the award

During the award

Closeout

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Grants Management- Risk Areas

• Adequate program documentation• Travel documentation• Cost-sharing• Records retention• Separate financial administration for each award• Violations of institutional conflict of interest rules• Subgrantee monitoring• Residual funds – accounting and disposition

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Grants Management- Regulatory Compliance

• Essential to successful grant management is an understanding ofand adherence to the regulations covering grant management.This is one area that is currently in a rapid evolution.

• Regulatory compliance starts with federal guides for CostPrinciples and Auditing from the Office of Budget andManagement which subsequently impacts state and other localgovernment grants and sets models of best practices forfoundation and other private grantors.

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Grants Management- Sources of Regulatory Requirements

2 CFR Part 200 “The Uniform Administrative Requirements,

Cost Principles, and Audit Requirements for Federal

Awards”

State Statues and Regulations

Terms and Conditions of

federal awards

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Grants Management- Policies and Procedures

Best Practice• Even if you are not seeking federal funds,

implementing systems, policies and practices areessential items to consider and implement forsuccess with any type of grant management.

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Grants Management- Policies and Procedures

Policies and procedures (at a minimum) should address:– Internal controls: accounting and procurement– Auditing policies and procedures that meet standards in Uniform

Guidance– Cash management that meets standards in the Cash Management

Improvement Act– Budget controls– Records retention policy– Procurement system – Personnel system that complies with all laws and regulations– Time keeping system– Property management system– Travel policy

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Grants Management- Internal Controls

Organizations must establish and maintain effective internal controls over federal awards

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Grants Management- Roles and Responsibilities

Clearly defined roles and responsibilities can mean the difference between successfulgrants management and losing your grant funding.

– Grants management is not limited to a program manager or limited to your financial office. Grantsmanagement is a system, a process with many levels.

– Grants management is certainly a part of your financial department’s responsibility, but it is also part ofthe board’s work, the project manager’s and your grant professional’s responsibility.

– In addition, your partners and sub-grantees are responsible for grants management. Ensuring that youand your partners have budget and project management assignments, strong fiscal systems and controlsand that each party understands and adheres to relevant laws are all part of grants managementsuccess.

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Grants Management- Roles and Responsibilities

• Holding a post-award implementation meeting after the grant is fully executed.Review the grant requirements in depth with the project team and outlineeveryone’s expectations and responsibilities.

• During that meeting, the grant manager makes certain that everyone understandstheir responsibilities related to things like:

– managing the budget, how often the budget will be reviewed– hiring employees– determining who will complete financial and programmatic reports– verifying reporting dates

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Grant Management: Who is responsible for management and compliance?

Responsibility of all

departments involved

Accounting

Procurement / Purchasing

Contract / Legal

Program Personnel

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Grants Management: Overview

Identify specialized reporting (i.e. certification, performance, Schedule of Expenditures of Federal Awards)

Draw and reimbursement procedures are adequate

Grants are integrated into annual budget process

Financial Management designed to record grant transactions (i.e. indirect costs)

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Grants Management: Overview

Identify specific personnel and obtain proper training

Read through the Uniform Grant Guidance, OMB Compliance Supplement any related guidance – identify and understand changes

Read through the grant award notice: are the terms and conditions reasonable

Develop a grant policy before application and acceptance

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Single audit- odds and ends

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Single Audit Acronyms and Key Terminology

Cognizant Agency

Non-federal entity

Pass-through entity

Primary recipient, sub-recipient and vendor

Research and development (R&D)

Cluster of programs

Major program

PresenterPresentation NotesNote to presenter – make sure you discuss a general definition of each of these

Cognizant Agency – entities expending more than $50 million a year in federal awards – contact at the federal level (can help with technical questions, liaison to auditees and auditors, consider extensions, conduct quality control reviews, communicate with others on irregularities or illegal acts

Non-federal entity – state, local government or non-profit organization

Pass-through entity – a non-federal entity that provides a Federal award to a subrecipient to carry out a federal program

Primary recipient, sub-recipient and vendor – recipient expends federal awards received directly from federal agency to carry out program, sub-recipient is a non federal agency that expends federal awards received from a pass-through to carry out the programVendor is a dealer, distributor, merchant or other seller providing goods or services that are required for the conduct of a federal program

R&D – all research activities and development activities that are performed by a non-federal entity

Cluster – grouping of closely related programs that share common compliance requirement

Major program – federal program determined by the auditor or federal agency or pass through entity in accordance to standards (and is tested)

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Single Audit Acronyms and Key Terminology

SEFA – Schedule of Expenditures of Federal Awards

CFDA # - Catalog of Federal Domestic Assistance number

DCF – Data Collection Form

GAGAS - “Yellow Book” or Generally Accepted Government Auditing Standards

SAMs– System for Award Management


SEFA – details out the different federal funding expended for the year by funding agency and grant program

CFDA – number assigned to the Federal program

DCF – General information on the auditee and auditor, entities financial statements and federal program compliance

GAGAS – applicable standards in financial audit with federal funding

EPLS – can’t use federal funding with anyone who is on this list

ARRA – Stimulus funds, they are dwindling

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Single Audit Acronyms and Key Terminology Used High risk / low risk auditee

High risk / low risk program

Type A, Type B or Other program classifications

Controls over financial statements

Controls over compliance

Finding and Questioned cost

Significant deficiency and material weakness


High risk /low risk auditee: 1) single audit done in the last 2 years 2) opinion on the f/s was unqualified for last 2 years 3) No deficiencies in internal control that were determined material weaknesses in last two years and 4) no federal program tested as major programs had findings in the past 2 years.

High risk / low risk program: Risk assessments of non compliance done on the various programs (by CFDA #). Various criteria covered during assessment and it is based on auditor judgment.

Type A, Type B or Other program classifications: Dollar threshold (total SEFA under $10m) Type A would be greater than $300k or 3% If >$100m

Controls over financial statements: significant transactions classes or control systems within the financial reporting of the financial statements

Controls over compliance: those controls over the 14 compliance requirements that are applicable to single audits (will go over in detail in module 3)

Finding and questioned costs: Deficiencies the auditor is required to report and costs that are questioned by the auditor as a violation of law/contract, unsupported, or unreasonable charge.

SD/MW: SD - A deficiency, or combination of deficiencies in internal control less severe than a material weakness but important enough to merit attention of those charged with governance. MW - A deficiency, or combination of deficiencies in internal control with reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis

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Data Collection Form (Continued)

• Prepared and sent electronically– http://harvester.census.gov/fac/collect/ddeindex.html#

– CLA prepares prior to finalizing the audit

– Notify client it is ready to review

– Client reviews and certifies

– Auditor certifies

– Auditor submits to the Federal Audit Clearing House (after the audit is complete)

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Resources

• Part 200—Uniform Administrative Requirements, Cost Principles, And Audit Requirements For Federal Awards

– https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=1&SID=6095f90f2dac8634a2489095de8697e6&ty=HTML&h=L&n=2y1.1.2.2.1&r=PART

• AICPA Governmental Audit Quality Center Resources– https://www.aicpa.org/interestareas/governmentalauditquality/resources/sin

gleaudit.html• Federal Audit Clearinghouse

– https://harvester.census.gov/facweb/Default.aspx

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https://www.ecfr.gov/cgi-bin/retrieveECFR?gp=1&SID=6095f90f2dac8634a2489095de8697e6&ty=HTML&h=L&n=2y1.1.2.2.1&r=PARThttps://www.aicpa.org/interestareas/governmentalauditquality/resources/singleaudit.htmlhttps://harvester.census.gov/facweb/Default.aspx

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CLAconnect.com

Thank You!

Sean Walker Principal

[email protected]

Aires R. Coleman, CPAEngagement Director

[email protected]

��State of Vermont�Single Audit for the Non-AuditorPresentersAgendaAgenda Cont’d.Learning ObjectivesSingle Audit- BasicsSingle Audit Background- Fun FactsSingle Audit Background- Fun Facts, Cont’d.Single Audit Background- Fun Facts, Cont’d.What is a single audit?What is a single audit?Purpose of the Single AuditPurpose of the Single Audit�Single Audit in relation to Financial AuditWhen is a Single Audit required?What is Considered a Federal Award / Financial Assistance?Basis for Determining Federal Awards Expended �2 CFR §200.502Basis for Determining Federal Awards Expended �2 CFR §200.502 Cont’d.Overview of Auditee Responsibilities Single Audit - Auditor’s ResponsibilitiesWhen is the Single Audit Due? What’s RequiredAuditor’s Reports IssuedMajor Program DeterminationMajor Program Determination 2 CFR § 200.518Overall Major Program Determination ProcessMajor Program Determination Cont’d.Major Program Determination Cont’d.Major Program Determination Cont’d.Major Program Determination Cont’d.Major Program Determination Cont’d.Major Program Determination - Risk Assessment?Major Program Determination - Risk Assessment of Type A ProgramsMajor Program Determination - Risk As

Documents

State of Vermont ©2019 CliftonLarsonAllen LLP Single Audit for … · 2019-04-17 · relied on by federal agencies as part of their administrative responsibilities for determining