1 State Single Audit Requirements In accordance with federal - - PDF document

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Compliance Auditing Update Compliance Auditing Update NC Local Government Auditing, Reporting and Review NC Local Government Auditing, Reporting and Review

June 14, 2016 June 14, 2016

Uniform Guidance Overview

Course Objectives-Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

• Review the reasons why the Uniform Guidance was

developed

• Brief review of the goals of the Uniform Guidance
• Review and discuss certain changes as they relate to

the entity and to auditors

• Review and discuss other changes related to NC
• Briefly review Clarity Attestation Standards

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North Carolina State Single Audit Authoritative Sources

• Title 2 U.S. Code of Federal Regulations Part

200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance);

• Audit Manual for Governmental Auditors in North

Carolina - Discussion of Single Audit in North Carolina

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State Single Audit Requirements

• In accordance with federal requirements, beginning in fiscal

years ending after December 26, 2015, local governments and public authorities that expend $750,000 or more in federal financial assistance must have a single audit performed

• Local governments with fiscal years ending June 30, 2016 or

later that have expended $500,000 or more in State financial assistance must have a single audit performed in accordance with the State Single Audit Implementation Act.

• Local governments and public authorities that expend

$100,000 or more in combined Federal or State financial assistance must have an audit performed in accordance with Government Auditing Standards (GAGAS).

4 The Federal threshold for a Single Audit increased from $500,000 to $750,000 under Uniform

• Guidance. There are no changes to the State threshold.

NEW

Uniform Guidance Sections that Apply to State Awards

Subpart A - Definitions, as applicable 200.502 - Basis for determining awards expended 200.330 - Subrecipient and contractor determinations 200.503(a, b, c) - Relation to other audit requirements 200.505 - Sanctions 200.508 - Auditee responsibilities 200.509 - Auditor selection 200.510 - Financial statements 200.511 - Audit findings follow-up 200.331 - Requirements for pass-through entities 200.521(a, c, d, e) - Management decision 200.514 - Scope of audit 200.515 - Audit reporting 200.516 - Audit findings 200.517 - Audit documentation

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LGC Review of Audit Reports

• Number of audits reviewed by LGC

for fiscal years ending in 2015: *1,213 audits 595 Single Audits (49%) 251 GAGAS only (21%) 367 GAAS only (30%) * received as of May 31, 2016

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Uniform Guidance-How Did We Get Here?

• Developed in response to the November 23, 2009

Executive Order 13520 on Reducing Improper Payments

• President directed OMB to work with Executive Branch

agencies; state, local, and tribal governments; and other key stakeholders to evaluate reforms to Federal grant policies

• COFAR (Council on Financial Assistance Reform) was

established in October 2011 to help lead the effort to improve management and accountability of Federal grants

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Uniform Guidance-Impact of This Reform

Major goal of Uniform Guidance is to reduce administrative burden and the risk of waste, fraud and abuse by:

• 1. Eliminating duplicated and conflicting guidance
• 2. Focusing on performance over compliance for

accountability

• 3. Encouraging efficient use of information technology and

shared services

• 4. Providing for consistent and transparent treatment of

costs

• 5. Limiting allowable costs to make the best use of Federal

resources

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Uniform Guidance-Impact of This Reform

• 6. Setting standard business processes using data

definitions

• 7. Encouraging entities to have family-friendly

practices

• 8. Strengthening oversight
• 9. Targeting audit requirements on risk of waste,

fraud, and abuse

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Uniform Guidance-Impact of This Reform

• One set of comprehensive regulations that should

streamline requirements and supersedes eight existing circulars, including those applicable to State and Local Governments:

• A-87, Cost Principles for State, Local and Tribal

Governments

• A-102, Grants and Cooperative Agreements with

State and Local Governments

• A-133, Audits of States, Local Governments, and

Non-Profit Organizations

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Uniform Guidance-Effective Dates

Federal Agencies Non-federal Entities Audit Requirements

Implement policies and procedures for regulations to be effective December 31, 2014

Implement the new administrative requirements and cost principles for all new Federal awards made on or after December 26, 2014, and to incremental funding made after that date Effective for audits of fiscal years beginning on or after December 26, 2014 Early implementation not allowed

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Uniform Guidance-Key Sections

• Subparts A through F
• Subpart A-200.XX- Acronyms and Definitions
• Subpart B-200.1XX- General Provisions
• Subpart C-200.2XX- Pre-Federal Award

Requirements & Contents of Federal Awards

• Subpart D-200.3XX- Post Federal Award Requirements
• Subpart E-200.4XX- Cost Principles
• Subpart F-200.5XX- Audit Requirements
• Appendices I through XI

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Uniform Guidance-Audit Requirements

Scope of the Audit

§200.514

Determine if financial statements are reported in accordance with GAAP Determine if Schedule

• f Federal and State

Awards (SEFSA) is stated fairly Gain an understanding

• f internal controls

and test those controls Determine if auditee has complied with Federal and State statutes, regulations and grant agreements Follow-up on prior audit findings Report any current year findings Complete and sign specified sections of the data collection form

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Uniform Guidance-Audit Requirements

Identify all Type A programs Identify low-risk Type A programs Identify high-risk Type B programs Determine major programs to audit §200.518

Major Program Determination

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Uniform Guidance-Audit Requirements

Major Program Determination Major program determination for State awards is $500,000

§200.518 Federal single audit threshold and single audit major programs determination amounts are now the same per Uniform Guidance. In the State Single Audit Implementation Act, these amounts are the same as well.

Total Federal Awards Expended Type A/B Threshold

Equal to $750,000 but < $ 25 billion $750,000 > $25 million but < $100 million .03 times total Federal awards expended > $100 million but < $1 billion $3 million > $1 billion but < $10 billion .003 times total Federal awards expended >$10 billion but < $20 billion $30 million >$20 billion .0015 times total Federal awards expended 15

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Uniform Guidance-Audit Requirements

Major Program Determination

• High Risk Type A Programs
• To be considered low risk, the program must not have had:
• Internal control deficiencies identified as material weaknesses
• A modified opinion on compliance
• Known or likely known questioned costs that exceed five

percent of the total Federal awards

• High Risk Type B Programs
• Single criteria in risk would seldom cause a Type B to be high risk

(except material weaknesses)

• The number of high risk Type B’s to be audited is one-quarter of

the number of Type A’s

• The threshold not to perform risk assessment on Type B’s is

$187,500 (assuming a major program threshold of $750,000)

§200.518 Uniform Guidance simplifies the process of determining high risk Type B programs. Uniform Guidance also encourages an approach that could lead to different high risk Type B programs audited as major in a given period. 16

Uniform Guidance-Audit Requirements

Major Program Determination

Special Considerations for Loans and Loan Guarantees

• In identifying Type A programs, the inclusion of large loans

and loan guarantees must not result in the exclusion of other Federal programs as Type A programs

• Special calculation:
• When a Federal loan program exceeds four times the largest

non-loan program it is considered a “large loan program”. The auditor must consider this Federal program as Type A and exclude its values in determining the Type A threshold.

§200.518 For purposes of this calculation, a program is only considered to be a Federal program providing loans if the value of the Federal awards expended for loans within the program comprises fifty percent

• r more of the total Federal awards expended for the program.

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Uniform Guidance-Audit Requirements

Major Program Determination-Low Risk Auditee

• Entity must meet all of the following for each of the two

preceding years:

• Annual singe audits, including timely filing of the data

collection form

• Unmodified opinion on financial statements in

accordance with GAAP or basis of accounting required by state law

• Unmodified in-relation-to opinion on the SEFSA
• No material weaknesses in internal control
• No reporting of going concern

§200.520

NEW NEW NEW

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Uniform Guidance-Audit Requirements

Major Program Determination-Low Risk Auditee

• No Type A program had any of the following in either of the

two preceding years

• Material weaknesses in internal control over compliance
• Modified opinion on a major program
• Known or likely questioned costs >5% of expenditures
• Percentage of Coverage Rule
• The minimum percentage of total Federal awards to be tested

as major decreased from 25% to 20% for low risk auditees and from 50% to 40% for all others

• The percentage of coverage for State awards has been reduced

from 50% to 40%

• There is still no low-risk auditee determination for State Awards

§200.520/521 19

Uniform Guidance-Auditee Responsibilities

§200.508

Arrange for Single Audit in accordance with §200.509 Prepare appropriate financial statements in accordance with §200.510 Prepare Schedule of Expenditures of Federal and State Awards in accordance with §200.510 Follow-up and take corrective action on findings Provide the auditor with access to personnel, accounts, records, supporting documentation Prepare corrective action plan Prepare summary of Schedule of Prior Audit Findings

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Uniform Guidance-Auditee Responsibilities

Auditor Selection

• Objective is to obtain a high-quality audit
• The objectives and scope of the audit must be clear in

the proposal

• Auditee must follow procurement standards in 200.317

through 200.326

• Auditee must request a copy of he audit firm’s peer

review

• Auditor who prepares an indirect cost proposal cannot

perform the audit if the indirect costs recovered in the previous year exceeds $1 million.

§200.509 21

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Uniform Guidance-Auditee Responsibilities

Financial Statements

• Must prepare financial statements for the fiscal year

audited that reflect current:

• Financial position
• Results of operations of changes in net assets
• If appropriate, cash flows
• Must be for the same unit and fiscal year that is chosen

to meet the requirements of Uniform Guidance

• May include departments, agencies, and other units that

have separate audits under Uniform Guidance

§200.510 22

Uniform Guidance-Auditee Responsibilities

Schedule of Expenditures of Federal and State Awards (SEFSA)

• Must prepare a SEFSA for the period covered by the entity’s

financial statements

• SEFSA includes the total Federal awards expended in

accordance with §200.502, “Basis for Determining Federal Awards Expended”.

• Should reconcile to accounting records or the financial

statements themselves

• Completeness and accuracy are critical to avoid missed

programs

§200.510 The State Single Audit Implementation Act follows that same guidance in 200.502 in determining State awards expended. 23

Uniform Guidance-Auditee Responsibilities

What Qualifies as a Federal and/ or State Award?

• Financial assistance and cost-reimbursement contracts

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

• Does not include procurement contracts used to buy

goods or services

• Entity has to determine if a vendor relationship exists

§200.38 24

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Uniform Guidance-Auditee Responsibilities

When Does the Expenditure Occur?

• Determination should be based on when the activity

related to the award occurs

• Other examples:
• Disbursement of funds passed through to

subrecipients

• Use of loan proceeds under loan and loan guarantees
• Receipt of property
• Receipt or use of program income (potential)
• Disbursement of amounts entitling the entity to an

interest subsidy

• Distribution or consumption of food commodities
• Period when insurance is in force

§200.502 25

Uniform Guidance-Auditee Responsibilities

When Does the Expenditure Occur? Loans and Loan Guarantees

• Because the government is at risk for loans until the debt

is repaid, a formula is used to calculate the amount of the loan expended. The value is equal to the sum of:

1. The value of new loans made or received during the audit period 2. Beginning balance of loans from previous years for which the government imposes continuing compliance requirements 3. Any interest subsidy, cash, or administrative cost allowance received

§200.502 26

Uniform Guidance-Auditee Responsibilities

SEFSA-Required Elements

• List of individual programs by Federal or State agency
• For clusters, provide the cluster name, a list of the individual programs

within the cluster, and provide the applicable Federal or State agency. A total for each cluster should also be provided.

• For Federal awards received as a subrecipient, the name of the pass-

through entity and identifying number assigned by the pass-through entity

• Total awards expended for each Federal or State program and the

CFDA or other identifying number when CFDA is not available

• The total amount provided to subrecipients for each Federal program
• SEFSA must include the total awards expended for loans and loan

guarantees

§200.510

NEW NEW

27 Prior year loans and loan guarantees expended in prior years are not considered awards expended when statutes, regulations, and terms and conditions impose no continuing compliance requirements, other than to repay the loans. Therefore these amounts should not appear on the SEFSA.

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Uniform Guidance-Auditee Responsibilities

SEFSA-Footnote Disclosures

• For loans and loan guarantees, identify the balances
• utstanding at the end of the audit period
• Notes that describe the significant accounting

policies used in preparing the SEFSA

• Note whether the entity elected to use the 10% de

minimis cost rate

§200.510

NEW

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Uniform Guidance-Auditee Responsibilities

SEFSA-Auditor Considerations

• Remember that the SEFSA is the responsibility of the

entity

• Auditor must be familiar with changes to the SEFSA as a

result of Uniform Guidance

• Determine that clusters and programs are identified

correctly

• Determine whether information required on the face of the

SEFSA is there and that all required disclosures included

• Reconciliation of SEFSA to the financial records

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Uniform Guidance-Auditee Responsibilities

Providing Access

• Uniform Guidance states that entities must provide

access of the following to auditors:

• Personnel
• Accounts
• Books
• Records
• Supporting Documentation
• Other information as needed

§200.508 30

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Uniform Guidance-Auditee Responsibilities

Internal Controls and Compliance Requirements

§200.303

Take prompt action when noncompliance is identified Safeguard protected personally identifiable information (PPI) Establish and maintain internal control over Federal programs Comply with Federal statutes, regulations, and terms of the Federal award Evaluate and monitor compliance

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Uniform Guidance-Auditee Requirements

Internal Controls

• Internal control requirements under Uniform Guidance are

not significantly different from those reflected in the OMB Circulars

• Moved from the audit requirements section into post

federal award of administrative requirements to encourage entities to better structure their internal controls

§200.303 32

Uniform Guidance-Auditee Requirements

Internal Controls

• The internal control process should be designed

to provide reasonable assurance regarding the achievement of the following objectives:

• Effectiveness and efficiency of operations
• Reliability of reporting for internal and external

use

• Compliance with applicable laws and

regulations

§200.303 33

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Uniform Guidance-Auditee Requirements

Internal Controls

• The entity must establish and maintain effective internal

control over the Federal award that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.

• Internal controls should be in compliance with guidance in:
• “Standards for Internal Control in the Federal Government”

[Green Book] issued by the Comptroller General of the United States, US Government Accountability Office

• “Internal Control Integrated Framework” issued by the

Committee of Sponsoring Organizations of the Treadway Commission (COSO)

§200.303 34

Uniform Guidance-Auditee Requirements

Internal Controls-Sample Questions

• Control Activities: How are you certain that your entity is in

compliance with (Allowable Costs)?

• Risk Assessment: How did you determine that

(authorization and approval) was necessary to ensure compliance?

• Monitoring: What is the process used to ensure that

(authorization and approval) is performed correctly and consistently?

• Information and Communication: How and when do you

notify people that (authorization and approval) is required?

• Control Environment: What is management’s attitude

about internal control?

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Uniform Guidance-Auditee Requirements

Internal Controls-Example

Activities Allowed or Unallowed and Allowable Costs/Cost Principles

• Control Environment
• Management sets reasonable budgets- minimize incentives to

miscode expenditures

• Risk Assessment
• Management has sufficient understanding of procedures and

controls to identify unallowable costs

• Information and Communication
• Comparison of budget to actual is provided to project managers for

review on a timely basis

• Control Activities
• Program managers approve invoices prior to payment
• Monitoring
• Financial reports provided to appropriate management on periodic

basis for review

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Uniform Guidance-Auditee Requirements

Compliance-Procurement

• Uniform Guidance does not substantially change the

procurement documentation requirements under Circular A- 102

• §200.317-326 describes:
• Applicable procurement standards
• Methods of procurement that are allowed
• Specific items that must be included within contracts under

Federal awards

• At a minimum documentation must contain:
• The rationale for the method of procurement
• Selection of contract type
• Contract selection or rejection
• Basis for the contract price

§200.317-326 37

Uniform Guidance-Auditee Requirements

Compliance-Procurement

• States follow the same policies and procedures they use for

procurements from non-federal funds (i.e., State procurement statutes

• Other entities follow the five procurement methods outlined in

Uniform Guidance:

• micro purchase
• small purchase
• sealed bids
• competitive proposals
• noncompetitive proposals (one source)
• solicitation of a proposal from only one source (may be used

in certain circumstances)

§200.317-326

Per §200.318, non-federal entities are allowed to piggy-back on State procurement standards

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Uniform Guidance-Auditee Requirements

Compliance-Procurement

• §200.318 describes mandatory conflict of interest language each

entity must have

• The conflict of interest guidance was expanded from the existing

language in A-102 to include a provision for organizational conflict of interest

• The expansion will require entities to have strong policies

preventing organizational conflicts of interest, which will be used to protect the integrity of procurements under Federal awards and subawards

• Two types of conflict of interest policies must be maintained:

Employee conflict of interest and organizational conflict of interest

§200.317-326 In addition §200.112 requires that a entity must disclose in writing any potential conflict of interest to the federal awarding agency or pass-through entity in accordance with applicable federal awarding policy. 39

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Uniform Guidance-Auditee Requirements

Compliance-Allowable Costs and Costs Principles

• Need to understand Subpart E- Cost Principles
• Describes the cost accounting requirements associated

with Federal awards

• Includes requirements for indirect costs
• Includes requirements for compensation- personal services
• OMB Compliance Supplement includes a table of

selected allowable costs for different types of

• rganizations
• Use in conjunction with Uniform Guidance
• Key areas of focus
• Compensation- personal services
• Indirect Costs
• Items that require prior approval to be allowable (§200.407)

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Uniform Guidance-Auditee Responsibilities

Subrecipient Monitoring

§200.330/331

Determine if subrecipient or contractor Clearly identify subawards to subrecipients Provide certain subaward information at the time of subaward Verify subrecipient has been audited as required by Subpart F Consider imposing specific subaward conditions Consider taking enforcement action for noncompliant subrecipients Consider results of subrecipient audits Evaluate each subrecipient’s risk of noncompliance Monitor activities of subrecipients

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Uniform Guidance-Auditee Requirements

Subrecipient and Contractor Determinations

• Pass-through entities must make case-by-case

determinations as to whether an agreement designates a recipient as a subrecipient or contractor.

• Federal and State awards expended as a recipient
• r a subrecipient are subject to single audit.
• Payments for goods and services received by a

contractor are not considered Federal or State awards

§200.330 42

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Uniform Guidance-Auditee Requirements

Subrecipient and Contractor Determinations

§200.330 Subrecipient Contractor Determine who is eligible to receive federal assistance Has a procurement relationship with the entity Has its performance measured according to whether the objectives

• f a federal program were met

Provides goods and services within normal business operations and to many different purchasers Is responsible for program related decision-making Provides goods and services that are ancillary to the operation of the Federal program Must adhere to applicable Federal program requirements specified in the Federal awards Normally operates in a competitive environment Uses the Federal awards to carry

• ut a program for specific purpose

as opposed to providing goods or services for the benefit of the pass- through entity Is not subject to the compliance requirements of the Federal program as a result of the agreement 43

Uniform Guidance-Auditee Requirements

Subrecipient Monitoring

• All subrecipients, regardless of the size of the award,

must be monitored

• Requirements include:
• Performing a risk assessment of the subrecipient
• Following up on any audit findings or other issues

revealed in that process

• Ongoing monitoring

§200.331 44

Uniform Guidance-Auditee Requirements

Subrecipient Monitoring Risk Assessment

• A pass-through entity should assess the risk of a

subrecipient’s noncompliance at the outset of the relationship and at least annually afterward.

• The assessment should be explicit in the criteria used to

evaluate risk, and risk factors should be customized to suit individual programs.

• Documentation of the risk assessment process and results is

critical to ensuring that support is available in the event of an audit by external auditors or cognizant agency.

• Monitoring efforts may result in a determination to impose

additional conditions of the subrecipient.

§200.331 45

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Uniform Guidance-Auditee Requirements

Subrecipient Monitoring Follow Up

• Uniform Guidance makes it explicit (rather than implied) that:
• The pass-through entity must actively issue management

decisions regarding audit findings identified during the monitoring process

• The subrecipient must implement remediation plans
• Deficiencies discovered:
• Should be discussed and agreed upon by both the pass-

through entity and the subrecipient

• Subrecipient should be given a specified period of time to

submit a corrective action plan

• The plan should create controls that prevent the situation

from reoccurring

§200.331 46

Uniform Guidance-Auditee Requirements

Subrecipient Monitoring Ongoing Monitoring

• To ensure a good foundation of quality monitoring,

necessary activities and the parties responsible for those activities should be clearly identified

• A system should be in place for determining how

subrecipients will be monitored

• Consider the establishment of baseline monitoring

procedures that can be applied universally to all subrecipients

• Customized plans should then be developed to address

specific areas of concern

§200.331 47

Uniform Guidance-Audit Requirements

What Does the Auditor Do?

• Uniform Guidance requires the auditor to plan the audit to
• btain a low control risk
• That is, controls that “operate effectively”
• Controls are reliable
• How do auditors get to low control risk?
• Document understanding of controls
• Test control design and implementation
• Test control effectiveness
• Sampling is often used
• Ineffective control = finding

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Uniform Guidance-Audit Requirements

Compliance Testing

• All applicable parts of the Compliance Supplement

should be used to perform a Single Audit correctly

• Per the 2015 Compliance Supplement, Part 6 for Internal

Controls will be updated for revised language for the COSO framework and the Green Book for 2016

• Appendices provide useful information
• Use the correct year’s Supplement

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Uniform Guidance-Audit Requirements

“Applicable” Versus “Direct and Material” Compliance Requirements

• Auditor looks to the OMB Compliance Supplement

for information on each type of compliance requirement and determines which are “applicable” to Federal programs

• Do auditors look at all applicable compliance

requirements?

• No, only direct and material compliance requirements
• A entity should comply with all applicable

compliance requirements

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Uniform Guidance-Audit Requirements

Compliance Requirements

FEDERAL STATE

• A. Activities Allowed or Unallowed
• 1. Activities Allowed or Unallowed
• B. Allowable Costs/Cost Principles
• 2. Allowable Costs/Cost Principles
• C. Cash Management
• 3. Cash Management
• D. Reserved
• 4. Conflict of Interest
• E. Eligibility
• 5. Eligibility
• F. Equipment & Real Property Mgmt
• 6. Equipment & Real Property Mgmt
• G. Matching, Level of Effort, Earmarking
• 7. Matching, Level of Effort, Earmarking
• H. Period of Performance
• 8. Period of Performance

I. Procurement, Suspension and Debarment

• 9. Procurement, Suspension and

Debarment

• J. Program Income
• 10. Program Income
• K. Reserved
• 11. Reserved
• L. Reporting
• 12. Reporting
• M. Subrecipient Monitoring
• 13. Subrecipient Monitoring
• N. Special Tests and Provisions
• 14. Special Tests and Provisions

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Uniform Guidance-Audit Requirements

Changes Related to the State Compliance Supplements- 2016

**Note that the Federal supplement for the Child Nutrition Cluster includes CFDA 10.559. But NC DPI, who administers the program, has decided to issue 10.559 as a separate supplement. Therefore when auditing the Child Nutrition Cluster, both supplements 10.553-CL and 10.559 must be used.

SUPPLEMENT NUMBER SUPPLEMENT NAME CHANGE 14.228 Community Development Block Grants There are now 2 supplements for this program: The Infrastructure Fund is separate and administered by DEQ. The Small Cities Program is still administered by Commerce **10.553-CL Child Nutrition Program/Nutrition Cluster CFDA ‘s 10.579 and 10.582 have been added as part of the Nutrition Cluster for the State supplement 15.916, 20.219, DNCR-5 and DNCR-6 Land and Water Conservation Fund Recreational Trails Program Clean Water Management Trust Fund NC Parks & Recreation Trust Fund These grants are no longer administered by DEQ but by Natural and Cultural Resources 52

State Cluster of Programs

• Federal and State programs added by State

agencies to a OMB’s cluster of programs in Part 6 should be clearly separated on the SEFSA from OMB’s cluster of programs.

• OMB’s clusters of programs should have a total as

required by §200.510(b)(3). There should be a total for the entire cluster of program.

• Examples: Subsidized Child Care cluster, Foster

care and adoption cluster, Child Nutrition Cluster

• There should be a footnote stating that programs

were clustered by a State Agency (state the name) and was treated separately for State audit purposes.

53

Uniform Guidance-Audit Requirements

Single Audit-End Result

• Contents of the Single Audit Submission
• Auditor’s report on the financial statements of the entity
• Auditor’s in-relation-to reporting on the SEFSA
• Financial statements prepared by the entity
• SEFSA prepared by the entity
• Auditor’s report on internal control over financial reporting

and on compliance and other matters to meet Government Auditing Standards requirements

• Auditor’s report on compliance and internal control over

compliance-major programs

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Uniform Guidance-Audit Requirements

Single Audit-End Result

• Contents of the Single Audit Submission
• Auditor’s schedule of findings and questioned costs
• Includes summary of auditors results and findings
• Schedule of prior audit findings prepared by the entity
• Corrective action plan prepared by the entity
• All of the items listed are referred to as the “reporting

package”

• Reporting package and the Data Collection Form are

submitted electronically to the Federal Audit Clearinghouse by the entity

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Uniform Guidance-Audit Requirements

Audit Reports

• Reports must use up-to-date language and include all

appropriate references to Government Auditing Standards, Uniform Guidance, etc.

• Report on internal control over compliance and

compliance refers to major programs in the Summary of Auditor Results

• Major programs in the Summary of Auditor Results must

be correct and match what is in audit documentation

• Ensure that the Data Collection Form identifies the same

major programs

56

Uniform Guidance-Audit Requirements

Uniform Guidance Findings

• The auditor must report the following as audit findings in the

Schedule of Finding and Questioned Costs:

• Significant deficiencies and material weaknesses in internal

control over major programs and significant instances of abuse

• Material noncompliance with the provisions of Federal

regulations or the terms and conditions of Federal awards related to a major program

• Known questioned costs that are greater than $25,000 for a

type of compliance requirement for a major program

• Known questioned costs when likely questioned costs are

greater than $25,000 for a type of compliance requirement for a major program

§200.516 57

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Uniform Guidance-Audit Requirements

Uniform Guidance Findings

• The auditor must report the following as audit findings in

the Schedule of Finding and Questioned Costs:

• Known questioned costs that are greater than $25,000 for

a Federal program which is not audited as major

• Known or likely fraud affecting a Federal award, unless

already reported as a finding

• If follow-up procedures detect that the status of a prior

year finding is materially misrepresented

§200.516 58

Uniform Guidance-Finding Elements

§200.330/331

Program Information Criteria Condition Found Context Questioned Costs

Whether sampling was statistically valid

Repeat finding from prior year Cause and Effect

Recommendations

View of Responsible Officials

NEW NEW

Reference Numbers

59

Uniform Guidance-Audit Requirements

Uniform Guidance Findings

• Ensure single audit report on compliance and internal

control over compliance appropriately identifies findings

• Findings listed in the report should agree to the Summary
• f Auditor Results and the Schedule of Findings and

Questioned Costs

• Include all required elements in the write-up of the

finding

60

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DST SLG Monitoring and Unit Visits

• Internal Control issues that need at least a

management letter:

• Computer software issues
• Pre-audit function is not working as planned or

has flaws (purchasing, budget amendments, etc.)

• Interim reports are not being provided to the

governing board timely and with accurate information.

• Key accounts are not being reconciled timely,

primarily checking accounts.

• Segregation of duties

61

Uniform Guidance-Audit Requirements

Schedule of Prior Audit Findings

• Prepared by the entity
• Must report the status of all audit findings included in the prior

audit’s schedule of findings and questioned costs

• Must include the reference numbers the auditor assigns to audit

findings

• Must include the fiscal year in which the finding initially occurred
• Must include findings related to the financial statements which

are required to be reported in accordance with Government Auditing Standards

• For findings that were not corrected or partially corrected, the

schedule must describe the reason(s) for the finding’s recurrence and planned corrective action, and any partial corrective action taken

§200.511 62

Uniform Guidance-Audit Requirements

Schedule of Prior Audit Findings

• Auditor must follow-up on prior audit findings
• Auditor must perform procedures to assess the

reasonableness of the schedule in accordance with Uniform Guidance

• If the auditor concludes that the schedule materially

misrepresents the status of any prior audit finding, there must be a current-year finding

• Auditor must perform follow-up regardless of whether a

prior audit finding relates to a major program in the current year

63

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Uniform Guidance-Audit Requirements

Corrective Action Plan

• At the completion of the audit the entity must prepare in

a document separate from the auditor’s findings, a Corrective Action Plan to address each audit finding included in the current year auditor’s report

• Corrective Action Plan must provide the name(s) of the

contact person(s) responsible for the corrective action, the corrective action planned, and the anticipated completion date

• If the entity does not agree with the audit findings or

believes corrective action is not required, then the corrective action plan must include an explanation and specific reasons

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Uniform Guidance-Audit Requirements

Data Collection Form

• Joint Responsibilities of entity and auditor, completed

electronically and submitted by the auditee

• Represents a summary of the information contained in the

reporting package

• Includes contact information for entity and auditor
• Includes SEFSA information, reference to findings, and

relevant compliance requirements

• Electronic signature of both the entity and the auditor
• Authorizes Federal Audit Clearinghouse to make reporting

package publicly available

• Auditee certifies that submission does not include any personally

identifiable information

§200.79 of Uniform Guidance discusses personally identifiable information and gives examples of what is considered personally identifiable information 65

Common Reporting Problems

• Prior loans and loan guarantees that do not have any

continuing compliance requirements were listed in the SEFSA and/or footnote to the SEFSA

• Amounts reported in the SEFSA did not reconcile to the

financial records

• The SEFSA had inadequate notes
• Auditee identified as low-risk did not meet all of the

requirements

• The calculation of amounts tested as major programs

was incorrect. The amount of expenditures tested did not reach the required threshold for the entity

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Common Reporting Problems

• A Federal program that was part of a cluster was not included

in testing major programs

• Names of programs identified as major on the summary of

auditor’s results did not agree to program names listed on the SEFSA

• The schedule of findings and questioned costs did not contain

all required elements

• Findings listed in the auditor’s report on internal control did

not agree to the summary of auditor’s results or to the schedule of findings and questioned costs

• Findings listed in the report on compliance and internal

controls over compliance did not agree to the summary of auditor’s results or to the schedule of findings and questioned costs

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Auditing Standards Board (ASB) issued SSAE No. 18, Attestation Standards: Clarification and Recodification

• Provides for attestation standards for examinations, reviews, and

agreed-upon procedures

• Restructures attestation standards so that the applicability of any

AT-C section to a particular engagement depends on the type of service provided

• SSAE No 18 allows a practitioner to report on almost any subject

matter as long as:

• The party responsible for the subject matter is someone other than the

practitioner and takes Responsibilities for the subject matter

• The subject matter is appropriate
• The criteria to be used in evaluating the subject matter are suitable and

available

• The practitioner expects to be able to obtain evidence needed to arrive

at an opinion or conclusion

• The opinion or conclusion is to be contained in a written report

See paragraph .25 of AT-C section 105 for greater detail about these preconditions 68

Auditing Standards Board (ASB) issued SSAE No. 18, Attestation Standards: Clarification and Recodification

• Separates reporting requirements for review

engagements from examination engagements

• Requires a written representation letter in all

engagements

• Requires practitioners to obtain a more in-depth

understanding of the subject matter to better identify risks of material misstatement in an examination engagement

• Incorporates detailed requirements that are similar to

SASs

• Effective for reports dated on or after May 1, 2017

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Website - Single Audit Resources

• www.nctreasurer.com: select Division – Local Fiscal

Management, select Single Audit Resources.

• 2016 State Compliance Supplements
• Description of Audit Requirements in NC
• OSA Documents
• Audit Manual: Sample reports and documents

for presentation.

• Templates for reporting Subsidized Childcare,

Mental Health, and Public Health awards.

• Confirmation reports from State agencies (DHHS,

DOT, others)

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Website - Audit Resources

• www.nctreasurer.com: select Division – Local Fiscal

Management, select Audit Manual

• Statutory Compliance Checklist:
• Local Government Budget Fiscal Control Act,
• School Budget Fiscal Control Act,
• Contract/Purchasing/Minority Business Participation
• Related Party Transactions and Self Dealing
• Audit Programs
• Local Government Budget Fiscal Control Act,
• Conflict of Interest and Self Dealing
• Unclaimed Property

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Website – Reporting and Other Resources

• Financial Reporting Checklist:
• NC Municipality
• NC County
• NC Board of Education
• NC Charter School
• Audit Opinions and Reports
• Firms providing accounting services

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Thank You! Thank You!

Together we can build and maintain a fiscally strong and prosperous North Carolina. Together we can build and maintain a fiscally strong and prosperous North Carolina.

www.NCTreasurer.com www.NCTreasurer.com