Non-Profits Receiving Grants Preparing for Audits and Protecting - - PowerPoint PPT Presentation

Circular A-133 Audits for Non-Profits Receiving Grants

Preparing for Audits and Protecting Grant Eligibility Given Current Government Priorities

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WEDNESDAY, MARCH 13, 2013

Presenting a live 110-minute teleconference with interactive Q&A

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.

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Circular A-133 Audits for Non-Profits Receiving Grants Seminar

Angela Wright, Johnson Lambert awright@johnsonlambert.com March 13, 2013 Paul Preziotti, Johnson Lambert ppreziotti@johnsonlambert.com Lisa Hilling, Bruner-Cox LLP lisa.hilling@brunercox.com

Today’s Program

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

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7

OVERVIEW OF CIRCULAR A- 133, RELATED LAWS AND GUIDANCE

Andrea Wright, Johnson Lambert Paul Preziotti, Johnson Lambert

Background

• Single audit, AKA A-133 audit
• 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

Ways To Receive Federal Funds

Non-Profit Organization Federal Agency State Agency Non-Profit Organization

10

Single Audit Changes In 2012

• AICPA clarity standards
• Yellow Book independence
• Compliance supplement

11

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

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

Non-Audit Services

• Financial statement preparation, including footnote preparation
• Preparation of Form 990
• Bookkeeping services

– Cash-to-accrual adjustments

14

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

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 www.whitehouse.gov/omb/circulars/A-

133_compliance_supplement_2012

16

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

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

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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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 2003

21

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

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

EXPERIENCES WITH SINGLE AUDITS

Lisa Hilling, Bruner-Cox LLP Andrea Wright, Johnson Lambert Paul Preziotti, Johnson Lambert

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

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
• http://www.whitehouse.gov/omb
• Provides a wealth of information on each program
• Can provide insights into what the federal government is

looking for

26

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Pre Audit: Auditor’s Responsibilities And Best Practices

• Review prior-year SEFA
• Communicate with clients
• Review GAQC Web site

http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality

• Obtain contracts and compliance supplement from OMB Web

site to plan/design tests

28

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

Fieldwork: Auditee’s Responsibility (Cont.)

• Sub-recipient or vendor documentation
• Monitoring sub-awardees
• Submitting timely financial reports

30

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

Post-Audit Data Collection Form – Part I

• General information
• 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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Post-Audit Data Collection Form – Part II

• Financial statements – completed by auditor
• Type of audit report
• Disclosure of going concern, internal control and material non-

compliance, if any.

34

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

Submission Process

• Auditor and auditee both required to electronically sign
• You will receive an e-mail when submission is received and when the

Federal Audit Clearinghouse (FAC) has processed the report.

36

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LEADING ISSUES FOR AUDITEES TO ANTICIPATE

Paul Preziotti, Johnson Lambert Andrea Wright, Johnson Lambert Lisa Hilling, Bruner-Cox LLP

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

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