Single Audit The Super Circular

Presented by: William Blend, CPA, CFE

TopicsOverview of Super CircularUpdates to Single Audit RequirementsData Collection Form

It’s Here – The Super Circular

OMB - 2CFR Chapter 1 and Chapter II,Parts 200, 215, 220, 225 and 230

Uniform Administrative Requirements,Cost Principles, and Audit Requirements for Federal Awards

BackgroundTailor regulations to impose the least burden, while being consistent with obtaining regulatory objectives

Eliminate unnecessary and reforming requirements that are overly burdensome, including combining various circulars into one document

Issued Original Notice of Reforms February 24, 2012

Issued most recent Notice of Reforms on February 1, 2013

Issued Super Circular on December 26, 2013

Council on Financial Assistance Reform (COFAR)

Established pursuant to Chief Financial Officers Act of 1990

Organization of CFOs from Federal agencies, and Senior OMB and Treasury Officials

Work collaboratively to improve financial management, information, standards, internal controls, and legislation

Super Circular ImplementationTime Line

December 26, 2013

• OMB Issued 2 CFR Chapters I, II, Parts 200, 215, 220, 225, & 230

• Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

• Effective Immediately for All FEDERAL AGENCIES

December

26, 2014

• Federal Agencies and OMB to Issue Final Guidance to Non-Federal Agencies

• Compliance Supplements

Beyond

• Non-Federal Agencies to Implement New guidance for FYE Beginning on or after December 26, 2014. Florida Govts FYE 2016.

What Was

Administrative Requirements• A

-89

• A-102

• A-110

Cost Principles• A

-21

• A-87

• A-122

Audit Requirements• A

-133

• A-50

Super Circular

What Will Be

Circular ComponentsSubpart A – Acronyms and DefinitionsSubpart B – General ProvisionsSubpart C – Pre-Award Federal Requirements and Contents of Federal AwardsSubpart D – Post Federal Award RequirementsSubpart E – Cost PrinciplesSubpart F – Audit Requirements

Circular AppendicesAppendix I – Full Text of Notice of Funding OpportunityAppendix II – Contract Provisions for Non-Federal Entity Contracts Under Federal AwardsAppendix III – Indirect Cost Procedures Educational Institutions (IHEs)Appendix IV – Cost Identification and Assignment, and Rate Determination for NFPsAppendix V – S&LG, Indian Tribes – Wide Central Service Cost Allocation Plans

Circular Appendices (Cont.)

Appendix VI – Public Assistance Cost Allocation PlansAppendix VII – S&LG and Indian Tribe Indirect Cost ProposalsAppendix VIII – NFPs Exempted from Subpart E – Cost PrincipalsAppendix IX – Hospital Cost PrinciplesAppendix X – Data Collection FormAppendix XI – Compliance Supplement

Major Reforms

Major Reforms

Elimination of duplicative and conflicting guidance by combining eight separate circulars (previously demonstrated)

Focus on performance over compliance for accountability

Encourage efficient use of Information Technology and Shared Services

Major Reforms (Cont.)

Providing for consistent and transparent treatment of costs

Limiting allowable costs to make best use of federal resources

Setting standard business processes using data definitions

Major Reforms (Cont.)

Encourage Non-Federal entities to have Family-Friendly Policies

Strengthening oversight

Targeting audit requirements on Risk of Waste, Fraud and Abuse

Single Audit Changes

Single Audit Changes

Increase audit threshold from $500,000 to $750,000

Expected to reduce burden on 5,000 Non-Federal entities

Maintains coverage of more than 99% of federal grand funds currently covered

Single Audit Changes (Cont.)Increase minimum threshold for Type A programs from $300,000 to $750,000Utilize table format for ease of comprehension

Federal Awards Expended Type A/B Threshold$750,000 less than equal to $25 million

$750,000

Exceed $25 million less than equal to $100 million

Amt. of Federal Awards times .03

Exceed $100 million less than equal to $1 billion

$3 million

Exceed $1 billion less than equal to $10 billion

Amt. of Federal Awards times .003

Exceed $10 billion less than equal to $20 billion

$30 million

Exceed $20 billion Amt. of Federal Awards times .0015

Single Audit Changes (Cont.)

Audit Coverage RuleIf auditee meets criteria in 200.520 (low risk), all major programs in aggregate must cover at least 20% of federal awards. Reduced from 25%.If auditee does not meet criteria in 200.520 (low risk), all major programs in aggregate must cover at least 40% of federal awards. Reduced from 50%.

Focus continues to be on highest risk programs

Single Audit Changes (Cont.)

Auditor Type B Program AnalysisIdentify Type B programs which are high risk using professional judgment and criteria in 200.519Expected to perform risk assessment of Type B programs that exceed 25% of the Type A threshold (previously stepped approach) (ex., $750k * .25 = $187,500)Continues to encourage utilization of an assessment of risk that would result in different Type B programs to be audited over a period of time

Single Audit Changes (Cont.)

Findings and Questioned CostsMust report known or questioned costs that are greater than $25,000 (increase from $10,000)Continued emphasis on findings, including detail with specifics to allow auditee is to prepare the appropriate corrective action planContinued emphasis on identification of prior findings, including updates and details as to why finding is not corrected, if applicable

Changes to Major Program DeterminationAs in A-133, Type A programs will be designated as low risk if:

In the most recent period, the program received an unmodified opinion;No material weakness in internal controls were reported; andThere were no questioned costs exceeding 5% of program expenditures

The program must have been audited as major in at least one of the tow most recent audit periods

Changes to Major Program Determination (Cont.)

Reduce the number of Type B programs that must be tested as major from at least one-half (1/2) to at least one-fourth (1/4) of the number of low risk Type A Programs identified. Continues to allow the auditor to stop the risk assessment process at this point.

Other – Compliance Requirements

No action taken related to the compliance require-ments at this time

COFAR recommends further public outreach

Compliance supplement is published as part of a separate process and, therefore, is included in the super circular by reference under Appendix XI

Other – Compliance Requirements (Cont.)

The 2013 and 2014 compliance supplements will follow A-133

The 2015 compliance supplement will follow requirements issued on December 26, 2014

Designation of Agency Officials – 200.513 (5)

Single Audit Accountable Official – Official responsible for ensuring the agency is in compliance with all audit requirements and improving effectiveness of agency’s use of single audits.

Single Audit Liaison – Official serving as agency’s point of contact for the single audit process. Appointed by the Single Audit Accountable Official.

Keep a Look Out

Monitor Resources

OMBhttp://www.whitehouse.gov/omb/financial_default/

COFARhttps://cfo.gov/cofar

New Data Collection Form

Changes to the Data Collection Form

Beginning with 2013, the primary audit firm will be required to provide their EIN in Part I.

Secondary auditor(s), if applicable, would provide their EIN on the secondary auditor contact information page (Part I, Item 8).

AICPA felt this would improve the ability to conduct peer reviews. OMB endorsed the idea as part of its desire to improve audit quality.

Changes to Data Collection Form (Cont.)

A response is required for each federal award (Y or N) to the question “Is this award a Federal loan or Federal loan guarantee?”

This is expected to help Federal agencies verify that major programs were determined correctly and improve oversight of award expenditures.

Changes to Data Collection Form (Cont.)

Requires standard finding which should match SFQC numbering. Format: four-digit year, hyphen, and three-digit sequence number (example - 2013-001)

Will allow agencies to use software to search electronic audit reports and show the text of the audit findings

Should also improve proficiency of agency staff in ensuring finding resolutions

Changes to Data Collection Form (Cont.)

Question related to significant deficiencies, material weaknesses, and questioned costs have been moved to Part III, Section 7.

Identification of the compliance requirement will also be moved and become part of Part III, Section 7.

Combining finding information into a single section by program is intended to allow more detail on each, which is currently not available.

Changes to Data Collection Form (Cont.)

Auditors and auditees will be required to certify that Personally Identifiable Information (“PII”) is not contained in the reporting package.

PII: information which can be used to distinguish or trace an individual’s identity, such as their name, SSN, etc.

PDF files of audit report submissions must be unlocked, unencrypted, and at least 85% text searchable. PDFs not meeting this criteria will be rejected at the time they are uploaded.

Changes to Data Collection Form (Cont.)

OMB has granted an extension until March 31, 2014 for reporting packages due to the Clearing-house if the new form is not available. The extension is automatic, and there is no approval required. The extension applies only to single audits for the fiscal periods ended in 2013.

See http://harvester.census.gov/sac/ for details

Changes to Data Collection Form (Cont.)

Please visit http://www.whitehouse.gov/omb/financial_default/

The 2013 Form SF-SAC is now available

Questions?