Circular A-133 Audits for Non-Profits Receiving Grants Preparing for Audits and Protecting Grant Eligibility Given Current Government Priorities

Transcription

1 Presenting a live 110-minute teleconference with interactive Q&A Circular A-133 Audits for Non-Profits Receiving Grants Preparing for Audits and Protecting Grant Eligibility Given Current Government Priorities WEDNESDAY, MARCH 13, pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Lisa Hilling, Assurance Services Partner LLP, Bruner-Cox, Akron, Ohio Paul Preziotti, Manager, Johnson Lambert, Falls Church, Va. Andrea Wright, Partner, Johnson Lambert, Arlington Heights, Ill. For this program, attendees must listen to the audio over the telephone. Please refer to the instructions ed to the registrant for the dial-in information. Attendees can still view the presentation slides online. If you have any questions, please contact Customer Service at ext. 10.

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5 Circular A-133 Audits for Non-Profits Receiving Grants Seminar March 13, 2013 Paul Preziotti, Johnson Lambert Angela Wright, Johnson Lambert Lisa Hilling, Bruner-Cox LLP

6 Today s Program Overview Of Circular A-133, Related Laws And Guidance [Andrea Wright and Paul Preziotti] Slide 8 Slide 23 Experiences With Single Audits [Lisa Hilling, Andrea Wright and Paul Preziotti] Slide 24 Slide 37 Leading Issues For Auditees To Anticipate [Paul Preziotti, Andrea Wright and Lisa Hilling] Slide 38 Slide 40

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8 Andrea Wright, Johnson Lambert Paul Preziotti, Johnson Lambert OVERVIEW OF CIRCULAR A- 133, RELATED LAWS AND GUIDANCE

9 Single audit, AKA A-133 audit Background Audits of entities that expend $500,000 or more in federal funds Objective: To provide assurance that recipients are managing federal awards appropriately and in accordance with program requirements 9

10 Ways To Receive Federal Funds Federal Agency State Agency Non-Profit Organization Non-Profit Organization 10

11 Single Audit Changes In 2012 AICPA clarity standards Yellow Book independence Compliance supplement 11

12 AICPA Clarity Standards Effective for audit periods ending on or after Dec. 15, 2012 Specific sections related to compliance audits Experts analyzing effects of group audit standards in relation to compliance audits New wording in opinions related to compliance audits 12

13 Independence Under Yellow Book Defines independence of mind and in appearance Requires new documentation for auditors Identify non-audit services Determine if prohibited Evaluate and document skill, knowledge, experience Assess whether threats are significant Identify and apply safeguards 13

14 Non-Audit Services Financial statement preparation, including footnote preparation Preparation of Form 990 Bookkeeping services Cash-to-accrual adjustments 14

15 Non-Audit Services: Prohibited Management responsibilities Leading and directing the organization Control over human, physical and intangible resources Assuming management responsibilities impair independence; there are no safeguards to eliminate or reduce threats 15

16 2012 A-133 Compliance Supplement: Key Points Updates to ARRA high-risk determination (Appendix VII) FFATA reporting Sub-recipient monitoring Other minor administrative changes Full list of changes at 133_compliance_supplement_

17 Appendix VII Effect of Recovery Act awards on major program determination Lists Recovery Act awards not covered in Parts 4 or 5 but that could be subject to a single audit, and the list of Recovery Act awards that are NOT subject to single audit Late-filing and low-risk auditee (no waivers) Treatment of large loan and loan guarantee programs 17

18 What Is FFATA? Federal Funding Accountability and Transparency Act of 2006 Federal award reporting requirement for all direct recipients of non- Recovery Act awards Direct recipients required to report certain first-tier sub-awards Became effective in October 2011 Q&A incorporated in compliance supplement 18

19 Proposed Changes To OMB Circular A-133 Issued Jan. 31 by the U.S. Office of Management and Budget (OMB) Proposes broad revisions to OMB Circular A-133 Also includes a number of other key grant reforms 19

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21 Increase In Single Audit Threshold Entities that expend less than $750,000 in federal awards would not be required to undergo a single audit. Represents an increase from the current $500,000 threshold, which was established in

22 Proposed Auditing Changes Affect what programs your auditors are required to audit Change in Type A/B program determination Percentage of coverage changes Criteria for low-risk auditee status Increased reporting surrounding findings 22

23 Other Proposed Changes Consolidation of cost principles into a single document, in order to avoid variations of application Changes to indirect costs Potential alternatives to time and expense reporting for salaries and wages 23

24 Lisa Hilling, Bruner-Cox LLP Andrea Wright, Johnson Lambert Paul Preziotti, Johnson Lambert EXPERIENCES WITH SINGLE AUDITS

25 Pre Audit: Auditee s Responsibilities And Best Practices Ask for a PBC list - Provided by auditor - Shows what documents will be needed from you - Begin gathering information sooner vs. later Know your funding sources - Federal dollars may be hidden. - Is the program considered high-risk? Engage your grant writer - Can be a great resource for ensuring all programs are accounted for - Aware of program requirements 25

26 Pre Audit: Auditee s Responsibilities And Best Practices (Cont.) Know the history of the federal funds - Investigate whether they are new to your entity - Have they been tested by your auditors in the past? Review OMB Web site Provides a wealth of information on each program - Can provide insights into what the federal government is looking for 26

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28 Pre Audit: Auditor s Responsibilities And Best Practices Review prior-year SEFA Communicate with clients Review GAQC Web site Obtain contracts and compliance supplement from OMB Web site to plan/design tests 28

29 Fieldwork: Auditee s Responsibility Identify all federal awards expended and the related programs (be mindful of clusters) CFDA numbers /program numbers/pass-through entities Federal funds include: Loans and loan guarantees, if there are continuing compliance requirements, food commodities, program income Maintain internal control over programs and ensure compliance Comply with laws and contract regulations 29

30 Fieldwork: Auditee s Responsibility (Cont.) Sub-recipient or vendor documentation Monitoring sub-awardees Submitting timely financial reports 30

31 Filing Of Data Collection Form Responsibility of the auditee after the audit has been completed Internet data entry System (IDES) allows you to print out a draft version before filing 31

32 Post-Audit Data Collection Form General information Part I Completed by both auditee and auditor Check EIN, DUNS and check-boxes for clerical accuracy Secondary information when is this required? 32

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34 Post-Audit Data Collection Form Part II Financial statements completed by auditor Type of audit report Disclosure of going concern, internal control and material noncompliance, if any. 34

35 Post-Audit Data Collection Form Part III Disclosure surrounding dollar threshold to distinguish Type A/B programs Low-risk auditee status Federal awards expended during fiscal year All of this information should match the audit report EXACTLY. 35

36 Submission Process Auditor and auditee both required to electronically sign You will receive an when submission is received and when the Federal Audit Clearinghouse (FAC) has processed the report. 36

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38 Paul Preziotti, Johnson Lambert Andrea Wright, Johnson Lambert Lisa Hilling, Bruner-Cox LLP LEADING ISSUES FOR AUDITEES TO ANTICIPATE

39 Top Five Takeaways: Auditee Include all sources of federal funds on SEFA, whether direct or indirect Obtain CFDA numbers from funding source a) It is their responsibility to inform you that you are receiving federal funds. File data collection form timely a) Not submitted is not filed Stay informed ASK QUESTIONS 39

40 Top Five Takeaways: Auditor Check and double-check major program determination, especially if there are adjustments Look out for clusters Review low-risk auditee criteria (no waivers for late filers) Independence considerations Document, document, document 40