1 / 91

AICPA Governmental Audit Quality Center with a Focus on Single Audit and Audit Quality

This course provides an overview of the AICPA's Enhanced Audit Quality efforts and risks identified, focusing on the significant changes that will impact Single Audits in 2019 and beyond. Topics include the "Pick-Six" mandate, new Compliance Supplement changes, the new Data Collection Form, and potential future changes to Uniform Guidance.

reyesr
Download Presentation

AICPA Governmental Audit Quality Center with a Focus on Single Audit and Audit Quality

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Governmental Audit Quality Center AICPA Governmental Audit Quality Center with a Focus on Single Audit and Audit Quality October 30, 2019 1:15-2:30 pm

  2. GASB 34

  3. George D. Strudgeon, CPA Audit Director Virginia Auditor of Public Accounts

  4. Brief Course Description: Audit quality is very important and not properly adapting to new changes is a risk to audit quality. In the fourth year of Uniform Guidance for Single Audits, when we thought all was going to be the same, there are big changes that will impact your 2019 Single Audits and beyond. This session will provide an overview of the AICPA’s Enhanced Audit Quality efforts and risks it has identified, and new items related to Single Audit: “Pick-Six” mandate, new Part 6 in the Compliance Supplement, the new Data Collection Form, and possible future changes to Uniform Guidance. Finally, this session will recap some of the Single Audit quality issues reported the last time there was a national sample of Single Audits. Not properly adapting to new changes is a risk to audit quality Big changes that will impact your 2019 Single Audits and beyond AICPA’s Enhanced Audit Quality efforts and risks it has identified Single Audit quality issues

  5. Outline: • Single Audit Numbers: National & Ohio • 2019 Compliance Supplement Changes • AICPA’s Enhanced Audit Quality • Single Audit quality issues reported

  6. Terminology and abbreviations AICPA - American Institute of CPAs ASB - Auditing Standards Board ASU - Accounting Standards Update AU-C - Clarified Auditing Sections in the Codification of Statements on Auditing Standards AUP - Agreed Upon Procedures Code or ET section - reference AICPA Code of Professional Conduct CPE - Continuing professional education DCF - Data Collection Form DOT - Department of Transportation EAQ - Enhanced Audit Quality EPA - Environmental Protection Agency EQCR - Engagement Quality Control Review F/S - Financial Statements FAC - Federal Audit Clearinghouse FAQ - Frequently Asked Questions FTA - Federal Transit Administration GAS-SA Guide - AICPA Audit Guide, Government Auditing Standards and Single Audits GAO - Government Accountability Office HUD - U.S. Department of Housing and Urban Development

  7. Terminology and abbreviations IG - GASB Implementation Guide IT - Information Technology KAM - Key Audit Matters MTMI - More Than Minimal Influence NFP - Not-for-Profit OPEB - Other post employment benefits QCR - Quality Control Review R&D - Research and Development RMM - Risk of Material Misstatement RUS - USDA Rural Utilities Service SAO - State Audit Organizations SAS - Statements on Auditing Standards SEFA - Schedule of Expenditures of Federal Awards SFA - Student Financial Assistance SKE - Skills, Knowledge, and Experience SLG - State or Local Government TCWG - Those Charged With Governance UG - Uniform Guidance USDA - U.S. Department of Agriculture WCGW - What could go wrong YB - Yellow Book

  8. Policy on Questions Please ask throughout the presentation!

  9. Outline: • Single Audit Numbers: National & Ohio • 2019 Compliance Supplement Changes • AICPA’s Enhanced Audit Quality • Single Audit quality issues reported

  10. OH 1,863

  11. OH $42.8B

  12. 2018 Ohio Single Audits Audit of the State ½ of Ohio Single Audits Cover Less than $2.1 million $135.00 in Federal Expenditures Caused a Single Audit to be Required

  13. 2018 Ohio Top 10 Single Audits

  14. BATTELLE MEMORIAL INSTITUTE 1. BUSINESS OVERVIEW Battelle Memorial Institute (“Battelle”) is a nonprofit Ohio corporation headquartered in Columbus, Ohio, with offices throughout the United States and in foreign countries. Battelle was formed in 1925, pursuant to the Will of Gordon Battelle (the “Will”), for the purposes of using technology to deliver practical solutions to the problems of government and industry and of making distributions to charitable causes. Battelle’s primary source of revenue is from providing technology-based research, management, commercialization, and educational services to government and industrial clients.

  15. 2018 Ohio Bottom 10 Single Audits

  16. 2018 NATIONAL TRAIL LOCAL SCHOOL DISTRICT SEFA

  17. Outline: • Single Audit Numbers: National & Ohio • 2019 Compliance Supplement Changes • AICPA’s Enhanced Audit Quality • Single Audit quality issues reported

  18. Single Audits - Key areas needing attention in planning and performing 2019 audits • 2019 Compliance Supplement • Two Versions 6/28/19 – 9/20/19 • One document this year • New 6-requirement mandate (Pick-6+) and programmatic changes • Revamped Part 6, Internal Control • New DCF and FAC system updates • Areas susceptible to quality issues

  19. Two Versions - Be Careful

  20. Single Audit - 2019 Supplement Pick-6+ 6-requirement mandate • Agencies required to limit compliance requirements to be tested to 6, but some got 7 and one got 8 (R&D) • Review of Supplement Part 2 matrix will be critical • Some requirements that previously have been direct and material could be eliminated • Reduction of audit burden not automatic • Do not need to “tweak” auditor’s report to clarify this change

  21. Pick-6+ • Old “Y” = Applicable Compliance Requirement • New “Y” = Compliance Requirement that is Subject to the Compliance Audit • Old & New: Need to determine if likely to have a direct and material effect on the Federal program at the auditee before testing • Old & New: Auditors have responsibility under GAAS and GAGAS for compliance material to the amounts in financial statements and fraud and abuse

  22. Pick-6+ (Part IV) III. COMPLIANCE REQUIREMENTS In developing the audit procedures to test compliance with the requirements for this Federal program, the auditor must determine, from the following summary (also included in Part 2, “Matrix of Compliance Requirements”), which of the 12 types of compliance requirements have been identified as subject to the audit (noted with a “Y” in the summary matrix below), and then determine which of the compliance requirements that are subject to the audit are likely to have a direct and material effect on the Federal program at the auditee. For each such compliance requirement subject to the audit, the auditor must use Part 3 (which includes generic details about each compliance requirement other than Special Tests and Provisions) and this program supplement (which includes any program specific requirements) to perform the audit. When a compliance requirement is shown in the summary below as “N,” it has been identified as not being subject to the audit. Auditors are not expected to test requirements that have been noted with an “N.” See the Safe Harbor Status discussion in Part 1 for additional information.

  23. Pick-6+ (Part 1) Safe Harbor Status For compliance audit purposes, an “N” in a program matrix indicates that a type of compliance requirement is not subject to the audit. Auditors are not expected to test requirements that have been noted with an “N.” However, while a requirement may not be subject to the audit for compliance audit purposes, auditors have a responsibility under GAAS and GAGAS related to noncompliance with provisions of laws, regulations, contracts, and grant agreements that may have a material effect on the financial statements and also with the requirements related to the auditor’s consideration of fraud and abuse.

  24. Medicaid Cluster

  25. Special Education Cluster (IDEA)

  26. Pick-6+ (Part 7) • Pick 6+ does not apply to programs NOT in the Compliance Supplement • Still need to evaluate all 12 to determine which Type of Compliance Requirements could have a direct and material on programs not in the Compliance Supplement

  27. Single Audit - 2019 Supplement Programmatic changes • Every program section in Parts 4 and 5 of the Supplement revised to remove deleted compliance requirements due to 6-requirement mandate • Additionally, numerous programs will have more significant changes than usual • Examples of programs with significant change: • USDA • SFA • EPA drinking water and clean water revolving loan programs

  28. Single Audit - 2019 Supplement - SFA More changes to program section than usual expected Education will not mandate that SFA needs to be an automatic major program No need to contact school participation division if will not be a major program Perkins loan impact Education is to get single audits to assist the agency in meeting its own requirement to calculate improper payments

  29. Required Reporting for the Pell Grant and Direct Loan Programs – Part 5 • Auditors must prepare the information described below in items 1, 2, and 3. • Auditors must provide this information directly to Federal Student Aid, Director, Financial Management Group, at FSAPellandDLReporting@ed.gov • 60 days after the Data Collection Form and reporting package are submitted to the Federal Audit Clearinghouse

  30. Required Reporting for the Pell Grant and Direct Loan Programs – Part 5 • 1. Pell: • Provide a Description of Each Sample • 2. Direct Loans: • Provide a Description of Each Sample • 3. Each Finding: • Pell and/or Direct Loans: • Must Provide the portion of the finding that relates to the Pell and Direct Loan • 4. Optional Same Information for Non-findings

  31. Other Clusters Student Financial Assistance ClusterN. Special Tests and Provisions 9. Gramm-Leach-Bliley Act –Student Information Security • Determine whether the institution designated an individual to • coordinate the information security program. • Determine whether the institution performed a risk assessment that addresses the three areas noted in 16 CFR 314.4 (b). • Determine whether the institution documented safeguards for identified risks.

  32. Single Audit - 2019 Supplement - Procurement This compliance area still unsettled as it relates to micropurchase threshold and simplified acquisition threshold Timing of implementing higher thresholds Whether federal agency approval was needed? OMB Memorandum M18-18 OMB provides relief from development of audit findings in this area due to confusion

  33. A lot of Changes, does my Report need to Change? The GAQC has worked with the auditing standards team to develop several nonauthoritative TQAs that provide background information on the revisions made in the 2019 Supplement and discuss whether an auditor may provide an opinion on compliance if the Supplement excludes certain direct and material types of compliance requirements from the scope of the audit, whether the Supplement's change of approach requires the auditor to revise the report on compliance, and whether an auditor may include an other-matter paragraph in the report to communicate information about the change to the Supplement. https://www.aicpa.org/content/dam/aicpa/interestareas/frc/downloadabledocuments/tqa-sections/tqa-section-9110-24-27.pdf No change required, but Other Matter Optional

More Related