Grant Accounting

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Grant Accounting Auditing
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Grant Accounting

• Often complicated
• Technical expertise often lacking
• Cost allocation issues
• Grant defined
• Allowable
• Allowed
• Allocable
• Accounting system limitations
• Need for separate accounting for each
  grant/grantor, etc.
• Periodic reports

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Grant Auditing
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What is the Purpose of a Single Audit?

• Improve the efficiency effectiveness of
  governmental audit effort
• Replace a multitude of grant-by-grant audits with
  a single, comprehensive, entity-wide audit
• Provide all federal awarding agencies a single
  report of a recipient of federal awards to
  satisfy programs audit requirements

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How Did We Get Here?

• Single Audit Act of 1984
• Uniform audit requirements
• SLGs Indian tribes
• A128 (1985) for SLGs
• Up to 8 reports required
• SAA A-128 major programs
• A133 (1990) for NFPs
• Difference in major programs

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How Did We Get Here?

• Single Audit Act Amendments of 1996
• Expanded to include NFPs
• Revised A133 (6/30/97)

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Single Audit

• 1996 Single Audit Act Amendments
• Establishes risk-based approach for audit testing
• Places greater audit coverage on high risk
  programs

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Single Audit

• 1996 Single Audit Act Amendments
• Improves contents timeliness of single audit
  reporting
• Permits OMB to administratively revise Single
  Audit requirements without requiring additional
  legislation
• OMB Circular A-133 Compliance Supplement have
  implementation guidance

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What Entities Must Have a Single Audit?

• Those that expend more than 500,000 in federal
  financial assistance in a year
• Up from 100,000 in 1984 300,000 in 1996
• increased in 2005 to 500,000
• State local governments, not-for-profit
  organizations, including hospitals.
• If expended only for one program or one program
  cluster, may have a program audit, otherwise the
  audit must be a single audit

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Federal Award
Federal financial assistance and federal
cost-reimbursement contracts that non-federal
entities receive directly from federal awarding
agencies or indirectly from pass-through entities
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Federal Financial Assistance

• Assistance that non-federal entities receive or
  administer
• Grants
• Loans loan guarantees
• Cooperative agreements
• Donated surplus property property

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Federal Financial Assistance

• Assistance that non-federal entities receive or
  administer
• Interest subsidies
• Insurance
• Food commodities
• Direct appropriations
• Other assistance

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Revised A-133 Key Definitions

• Auditee
• Recipient subrecipient
• Cluster of programs
• Federal award
• Federal financial assistance
• Federal program
• Internal controls

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Revised A-133 Key Definitions

• Internal controls over federal programs
• Major program
• Nonfederal entity
• Non-profit organization
• Programspecific audit

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Cognizant Agencies

• To promote quality control, nonfederal entities
  expending more than 50 million in federal awards
  are assigned a cognizant agencyusually the
  agency providing the predominant amount of
  support

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Cognizant Agencies

• Cognizant agency provides technical advice
  liaison, conducts quality control reviews, refers
  substandard audits for disciplinary action,
  facilitates communication

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Oversight Agencies

• Nonfederal entities expending less than 50
  million are assigned an oversight agency rather
  than a cognizant agency
• Oversight agencies have similar but less
  extensive responsibilities than oversight
  agencies

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Single Audit Requirements
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Single Audit Requirements

• Annual audit encompassing entitys FS schedule
  of expenditures of federal awards (SEFA)
• Audit must be conducted by an independent auditor
• Auditors must follow GAGAS (Yellow Book)

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Single Audit Requirements

• Auditor must determine whether FS present fairly
  in conformity with GAAP the schedule of federal
  financial awards is presented fairly in relation
  to FS

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Single Audit Requirements

• Auditor must obtain an understanding of internal
  controls pertaining to the compliance
  requirements for each major program assess
  control risk perform tests of control

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Single Audit Requirements

• Federal nonfederal Pass-through agencies are
  assigned certain responsibilities for compliance

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Single Audit

• Calculation of amount of federal awards expended
• Expended may not only be cash disbursed
• Calculation can be complex
• Cash or accrual basis allowed
• Basic rule
• Federal award has been expended when federal
  agency has become at risk nonfederal recipient
  has duty of accountability

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Compliance Audits As part of a Single Audit

• For each major program auditor must test whether
  the program
• Was administered in conformity with appropriate
  OMB Circular (A-102 or A-110)
• Complied with detailed requirements in the A-133
  Compliance Circular other specified
  requirements

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Selection of Programs for Single Audit

• Identify Type A programs
• Identify low-risk type A programs
• Based on no audit findings in most recent audit
  absence of certain risk factors
• Identify high risk Type B programs (major
  programs that are not Type A programs)
• Select major programs

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Selection of Programs for Single Audit

• At a minimum, audit all high risk Type A programs
  either
• Half of the high-risk Type B programs OR
• Not required to audit more high risk Bs than low
  risk As
• One high-risk Type B program for each low-risk
  Type A program

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Selection of Programs for Single Audit

• Audit at least enough major programs to ensure
  that at least 25/50 of total federal award
  expenditures are audited
• Low risk entity 25 coverage
• High risk entity 50 coverage

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Required Reporting Under Single Audit

• Auditee auditor have responsibilities for
  reporting package that must be filed with the
  Federal Audit Clearinghouse

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Required Reporting Under Single Audit

• Reporting package consists of
• Data Collection Form
• Financial statements schedule of expenditures
  of federal awards
• Summary schedule of prior audit findings
• Auditors reports
• Corrective action plan

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Required Reporting Under Single Audit

• Schedule of findings and questioned costs
• Describes such matters as
• IC weaknesses
• Instances of noncompliance
• Questioned costs
• Fraud
• Material misrepresentations by the auditee
• Internal control weaknesses are reported as
  either significant deficiencies or material
  weaknesses

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Schedule of Findings and Questioned Costs

• Questioned cost
• Usually involves instance of noncompliance with a
  law/regulation where costs are either
  unallowable, are unreasonable, or not supported
  by adequate documentation

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Schedule of Findings and Questioned Costs

• Known questioned costs greater than 10,000 or
  likely costs greater than 10,000 must be
  reported in the schedule of findings and
  questioned costs

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Report Submission

• 9-month period
• When guide available
• When guide not available