Overview of OMB A-133 Part 1

1. Presented by Raaj Kurapati and Charlene Hart Overview of OMB A-133 Part 1

2. Introduction • The Single Audit Act Amendments of 1996 was enacted to streamline and improve the effectiveness of audits of federal awards and to reduce the audit burden on states, local governments, and not-for profit entities. • The Act requires the audits to be conducted by an independent auditor.

3. Introduction • The Act gives the Director of OMB the authority to develop government-wide guidelines and policy on performing audits to comply with the act. • The OMB issued Circular A-133 to establish audit guidelines and policy for a uniform system of auditing expenditures of federal awards. • Individual federal departments and agencies have adopted Circular A-133 in regulation.

4. Administrative Requirements • Administrative requirements that apply to most programs arise from two sources: • The “Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments” (also knows as the “A-102 Common Rule”) and 2 CFR part 215

5. Administrative Requirements • The “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations” and the agencies’ codification of OMB Circular A-110

6. Administrative Requirements • OMB A-21 – Cost Principles for Educational Institutions (2 CFR part 220) • All institutions of higher education are subject to the cost principles contained in OMB Circular A-21, which incorporates the four Cost Accounting Standards Board (CASB) and the Disclosure Statement (DS-2) requirements as described in OMB Circular A-21, sections C.10 through C.14 and Appendices A and B.

7. Administrative Requirements • OMB Circular A-133 describes the non-Federal entity’s responsibilities for managing Federal assistance programs (§___.300) and the auditor’s responsibility with respect to the scope of audit (§___.500). Auditors are required to follow the provisions of OMB Circular A-133 and this Supplement.

8. A-133 Compliance Supplement • A-133 Compliance Supplement • Updated annually. • Serves to identify existing types of compliance requirements that the federal government expects to be considered as part of an audit in accordance with the Single Audit Act Amendments of 1996 and Circular A-133. • The Circulars and Supplements can be located at http://www.whitehouse.gov/omb/circulars/

9. A-133 Compliance Supplement • The compliance supplement provides a source of information to understand the federal program’s objectives, procedures and types of compliance requirements.

10. Internal Controls • Circular A-133 defines Internal Controls over Federal Programs as: • Internal control pertaining to the compliance requirements for federal programs means a process – effected by an entity’s management and other personnel – designed to provide reasonable assurance regarding the achievement of three objects for federal programs.

11. Internal Controls • Transactions are properly recorded and accounted for to: • Permit the preparation of reliable financial statements and federal reports. • Maintain accountability over assets; and • Demonstrate compliance with laws, regulations, and other compliance requirements.

12. Internal Controls • Transactions are executed in compliance with: • Laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on a federal program; and • Any other laws and regulations that are identified in the compliance supplement. • Funds, property, and other assets are safeguarded against loss from unauthorized use or disposition.

13. OMB CIRCULAR A-13314 Types of Compliance Requirements • Activities Allowed or Unallowed • Allowable Costs/Cost Principles • Cash Management • Davis-Bacon Act • Eligibility • Equipment and Real Property Management • Matching, Level of Effort, Earmarking

14. OMB CIRCULAR A-13314 Types of Compliance Requirements • Period of Availability of Federal Funds • Procurement and Suspension and Debarment • Program Income • Real Property Acquisition/Relocation Assistance • Reporting

15. OMB CIRCULAR A-13314 Types of Compliance Requirements • Subrecipient Monitoring • Special Tests and Provisions

16. American Recovery and Reinvestment Act (ARRA) • The ARRA Act of 2009 was enacted in February 2009 and was designed to stimulate the U.S. economy. • The total cost of the spending in the ARRA is $787 billion dollars, a significant portion of which will become subject to single audit requirements.

17. American Recovery and Reinvestment Act (ARRA) • Has significant implications for audits performed under OMB Circular A-133 • OMB Circular A-133 provides additional guidance for ARRA requirements that relate to the following sections: • Activities Allowed or Unallowed • Davis-Bacon Act • Procurement and Suspension and Debarment • Reporting • Subrecipient Monitoring • Special Tests and Provisions

18. American Recovery and Reinvestment Act (ARRA) • Additional considerations of ARRA funds • Recipients and subrecipient of ARRA funds are subject to significant additional compliance requirements. • One significant requirement is that ARRA funds are to be segregated and tracked separately from non-ARRA funds and the segregation will have to carry through to the Schedule of Expenditure of Federal Awards (SEFA) and the Data Collection Form.

19. American Recovery and Reinvestment Act (ARRA) • Another additional compliance requirement relates to the reporting of expenditures of ARRA funds by recipients and certain subrecipients.

20. American Recovery and Reinvestment Act (ARRA) • Oversight of ARRA funding • The inspectors general across government are expected to audit the programs, grants and projects funded under the ARRA. They are also charged with performing quality control reviews of single audits performed on recipients that have expended ARRA funds. • These reviews are expected for 2010 and 2011 single audits. Results likely will be make public.

21. Q & A Time Overview of OMB A-133 Part 1