The Office of Management (OMB) released the final the 2013 OMB Circular A-133 Compliance Supplement on July 2, which can be accessed at http://www.whitehouse.gov/omb/circulars/a133_compliance_supplement_2013.
The revised Supplement is effective for audits of fiscal years beginning after June 30, 2012. Appendix V lists the changes to the Supplement.
The OMB has released proposed changes to the Data Collection Form (DCF) and its instructions. The DCF is used to summarize and submit the results of a single audit, with input from both the auditee and the auditor.
Proposed changes include a new section that will require additional information regarding the findings reported by the auditors.
A summary of the proposed changes and a copy of the proposed form and instructions can be found on http://www.whitehouse.gov/omb/financial_default under the heading “Recent News”.
The US Office of Management and Budget (OMB) has issued proposed guidance that would make some significant changes to OMB Circular A-133, which provides guidance for single audits. Some of the key proposed changes follow.
An increase in the threshold for single audits to $750,000 in federal expenditures from $500,000.
An increase in the minimum threshold for the determination of Type A/B programs to $500,000 from $300,000.
Revisions to the major program determination process criteria for Type A programs designations as high-risk.
A decrease in the percentage of coverage to 40% for normal and 20% for low-risk auditees.
A reduction of the 14 types of compliance to be tested to 6.
The proposed guidance can be found at https://federalregister.gov/a/2013-02113. The comment period closes on May 2, 2013.
Under the guidance of the Single Audit Act; OMB Circular A-133, Audits of States, Local Governments, and Non-profit Organizations, nonfederal entities that expend $500,000 or more of federal awards in a fiscal year are required to have a single or program-specific audit. A single audit is an examination of the organization’s compliance with the federal requirements applicable to awards. This includes an examination of the controls in place to ensure compliance. The key to a successful single audit is to be well-prepared.
At the time a grant is first awarded, and periodically thereafter, the organization should review the applicable grant requirements to identify its compliance requirements. The grant agreement will identify many of the requirements, and the Catalog of Federal Domestic Assistance (CFDA) has additional guidance. A review of the OMB Circular A-133 compliance supplement will identify compliance requirements that may not have been specifically stated in the grant contract. OMB Circular A-122 Cost Principles for Non-Profit Organizations also provides guidance on determining costs applicable to grants.
Once the compliance requirements are identified, an analysis of internal controls appropriate to meet the objectives should be performed. Management should determine whether the controls that are in place are operating effectively. These controls should also be well documented. Using the COSO (Committee of Sponsoring Organizations) internal control framework to evaluate and document the adequacy of controls can be helpful.
As the end of the year and the single audit approaches, the organization should prepare the Schedule of Expenditures of Federal Awards (SEFA). This will help the organization get a sense of which federal programs may be audited as major programs during the single audit. A final reconciliation of the SEFA to the total award expenditures can be done when the year-end accounting is completed.
The AICPA Governmental Audit Quality Center website has two practice aids for auditees that may be helpful. The Worksheet for Identifying Federal Program Information is intended to assist the auditee in accumulating and documenting important information for each of its federal awards. This information could be provided to the auditor at the beginning of the single audit. The Auditee Disclosure Checklist for the SEFA intended to assist auditees with preparing a SEFA that includes all of the elements required by Circular A-133. These can be accessed through the AICPA website.