AICPA Single Audit Update MACPA Government and NPO Conference

Transcription

1 AICPA Single Audit Update MACPA Government and NPO Conference April 27, 2012 Mary Foelster, AICPA, Director, Governmental Auditing and Accounting 1 What Will Cover Technical Matters Impacting Single Audits Standards Guides Other matters (GAQC) Tools and Resources 2 1

2 Technical Matters Impacting Single Audits 3 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 4 2

3 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 inrelation-to Required procedures Reporting 5 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 6 3

4 GAS-A133 Audit Guide AICPA 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 7 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 8 4

5 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 9 SAS No. 125 Audits 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/

6 Government Auditing Standards 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 11 Government Auditing Standards 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 esources/auditpracticetoolsaids/downloadabledocuments/201 1YellowBookPracticeAid.pdf 12 6

7 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 OMB Circular A Compliance Supplement soon Accessing the Supplement OMB's Web site under the "Grant Management Circulars" link at: (then scroll down to the "Audit Requirements" section) Both current year and prior Supplements located at the above Web link 14 7

8 FFATA - Reminder Required federal award reporting requirements for direct recipients of for non-recovery Act federal awards Direct recipients required to report certain first-tier subawards Web site (public face): Some similarities to section 1512 reporting for Recovery Act awards but also several differences Reporting made by direct recipients into Recent OMB Q&A indicating finding may not be necessary if best efforts to comply were made and documented 15 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) 16 8

9 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 17 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: esources/hudinformation/pages/default.aspx 18 9

10 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 GAQC Resources & Tools 20 10

11 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 21 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

12 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 23 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 24 12

13 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 25 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 26 13

14 Questions? 27 14