Grants Blog

Archive for the ‘A-133 Audits’ Category

Finally, the Office of Management and Budget has released the 2011 Circular A-133 audit guidance document.

As usual, new programs have been added, other programs have been deleted, and individual program descriptions have been updated. In addition, OMB has added guidance and references relating to Transparency Act reporting, and clarified reporting requirements and auditors’ responsibilities relating to Recovery Act funding.

Watch this blog for additional information in the future. In the meantime, go here to view or download the Compliance Supplement.

Enjoy!

So are we.

Nearly two months ago I wrote in this blog that OMB might be close to meeting its goal of releasing the 2011 Circular A-133 Compliance Supplement by the end of March. But it’s now May and OMB has yet to publish the annual audit guidance.

In fact, at the recent National Grants Management Association annual conference, OMB’s Gil Tran said it might be “several weeks” before the document is released. This would put the publication date well into mid- or late May.  Auditors, grantees. and federal program personnel who rely on the guidance — which will be effective for audits of fiscal years beginning after June 30, 2010 — will have to wait a little longer.

Keep watching this post for further information. You can also learn more about A-133 audit developments and other grants management issues at Management Concepts’ Federal Grants Update seminar. Click here for more on the topics, dates, locations, and registration information.

 The Office of Management and Budget recently provided AICPA’s Governmental Audit Quality Center a draft version of the 2011 OMB Circular A-133 Compliance Supplement for review. While only AICPA members can currently access the document, it could be an indication that OMB is on track to issue the guidance very soon.

In the past, the Compliance Supplement was traditionally updated each spring, but in recent years the guidance has been released later and later. The 2010 version was not posted to the OMB website until July.

In response to a recommendation in a recent GAO report, OMB said its goal this year was to publish the Compliance Supplement by March 31 — and it looks like they may be close!

Information about Management Concepts’ annual Federal Grants Update seminar is now available. This one-day course is a great way to keep track of the latest developments in grants management and to learn about pending changes that may impact your day-to-day grants work.

This year we’ll be discussing GPRA, subaward reporting, transparency and accountability, audit guidance, presidential and congressional priorities, and more.

Classes start the first week in April and run throughout the summer in cities around the country. We can also bring the course to your location. Click here to see dates, locations, topics, and registration options.

Are you interested in audits? Do your job responsibilities entail audit reviews? Want to know what a quality audit looks like? The Council of Inspectors General on Integrity & Efficiency (CIGIE) has a revised Guide for Quality Control Reviews of OMB Circular A-133 Audits.

The guide is a fairly easy-to-understand tool that offers a checklist of issues to consider when evaluating the quality and reliability of a single audit. It will help reviewers determine whether the audit was conducted in accordance with applicable standards and identify any follow-up work needed to support the audit report opinions. It is organized by audit standards and elements of an A-133 audit, focusing on the portions that are of most interest to federal officials.

Visit the IGnet website here to download a copy.

GAO has released the 2010 draft revisions to Government Auditing Standards (the Yellow Book). Comments on the proposed changes are due Nov. 22, 2010.

The revisions consolidate many of the current Yellow Book chapters, and amend language and requirements to align with AICPA standards. But one of the most significant changes is a shift in the Yellow Book approach to auditor independence. Rather than establishing a specific list of “do’s” and “don’ts”, GAO is proposing a “conceptual framework” for making independence determinations based on each situation’s unique facts and circumstances.

Auditors would identify potential risks to independence, evaluate the significance of those threats, and apply safeguards to eliminate the risks if necessary. The independence section also identifies six specific nonaudit services that would impair auditor independence in the government environment.

The draft Yellow Book is only available in online PDF format. Click here to view the draft and for instructions on submitting comments.

The 2010 A-133 Compliance Supplement is now available on the OMB website. As usual, changes have been throughout the guidance to reflect new statutory and regulatory requirements, and to make technical and clarifying revisions. But perhaps the most important change, at least for this year, is the information on the Recovery Act and its impact on single audits.

The Recovery Act discussion is found in Appendix VII, which is called a rather vaguely named  ”Other OMB Circular A-133 Advisories.” The guidance addresses the impact of these new funds on the SEFA, major program determination, and risk assessment.

I’ll post more information once I have looked through the supplement, but for now, I just wanted to alert everyone to the release.

Well, it’s been a while since I posted to this blog, so this one will make up for the lack of frequency in the amount of volume.

I attended the Association of Government Accountants Professional Development Conference earlier this week and want to share a summary of some of the sessions I attended. My notes are fairly basic and lack some context, so if you need more info, please feel free to contact me directly (lhayes@managementconcepts.com), or post to the blog.

Here we go…

Grants Management Line of Business

Danny Werfel, Controller of OMB’s Office of Federal Financial Management, discussed the agency’s view of lines of business. While he was specifically speaking about financial management systems, the overall principles he discussed also may be applicable to the Grants Management Line of Business (GMLoB). OMB still believes in the concept, but has learned that the model of forcing agencies to move to a complete service center doesn’t work. Instead they are looking to focus more on “shared services.” For example, an agency may  share a vendor invoicing service with other agencies but would not have to migrate their entire financial system to a common source.

 Federal Grants Reporting

The implementation of the Federal Funding Accountability and Transparency Act’s subrecipient reporting requirements in October means a lot of things need to be changed, such as grant terms and conditions, according to Werfel. He said OMB is working on these changes, but gave no details on exactly what actions will be taken or when.

 He also specifically noted one of the most significant and pervasive Recovery Act reporting problems: subsequent reports from the same recipient on the same project often don’t get “linked.” For instance, a change in identifying information, such as a correction to a DUNS number or grant number, means reports are not connected to one another. Anyone looking at a particular entity or project might assume a recipient just stopped reporting on the project, and that another project was started. Werfel emphasized that federal agencies, recipients, and pass-through entities need to be aware of this.

 Recovery Act A-133 Pilot Demonstration Project

OMB plans a second A-133 Recovery Act pilot project that will be announced later this month (July). It will include more states, and probably different programs this time, according to John Fisher, of the HHS Office of Inspector General, and a lead in the implementation of the first pilot project. The second pilot is also likely to focus more on audit resolution. The Recovery Act requires federal entities to make management decisions on the findings that were reported in the pilot project within 3 months (March 31, 2010). But a significant number of the findings still had not been resolved as of July 8, he commented. (It’s important to note that slow and incomplete audit resolution by federal agencies came up in almost every grants session, and several presenters, including Danny Werfel, said OMB and Congress will be taking a close look at this issue.)

 On a side note, Gil Tran was supposed to make this presentation but was not at the conference because he was still working on the A-133 Compliance Supplement, which was supposed to be out “this week,” meaning July 15 or16. One interesting tidbit: Gil has to get sign-off from 19 different federal officials before he can release the supplement.

 Reducing Improper Payments

Werfel said one of the most promising and interesting ideas they are looking at to reduce improper payments is revising A-87 (2 CFR Part 225. the state and local cost principles) to allow states to recapture more indirect costs. This incentive would reward states that reduce improper payments by allowing them to keep more for administrative expenses and offset the costs of program administration. OMB is seriously looking at how A-133 audits can be used more effectively in preventing, rather than simply detecting, improper payments. This could mean anything from speeding up the audit timeline to focusing more on larger entities or larger grant programs. However, he gave no specifics on A-133 revisions.

 Werfel also told attendees that in the fall, OMB plans to launch a grant program to support innovative streamlining and grants management partnership projects. The goal is to promote efficiency while improving program services and is based on ideas submitted to Partner4Solutions.gov.

 Yellow Book Update

The Government Accountability Office is drafting a revised Yellow Book and expects that draft to be ready for public comment in late July or early August, with the final revision complete by February or March 2011. But those are moving targets because GAO is attempting to align the Yellow Book with AICPA standards, which are still in the process of being revised.

 Most of the changes that auditors will see are technical in nature or align Yellow Book requirements with other standards. But one area that will change is the standard for auditor independence. Marcia Buchanan, Assistant Director for Auditing Standards at GAO, said Chapter 3, on auditor independence, will be restructured. There will be a conceptual framework that will serve as a guideline for determining whether an auditor is independent, but there will no longer be a laundry list of prohibited activities. This will give auditors more flexibility and allow them to apply judgment in unique situations.

Just days before the next Recovery Act reporting cycle begins, OMB has issued further reporting guidance for federal agency personnel and recipients. In the March 22 memo, OMB addresses data quality, technical issues, and the importance of single audits, among other topics.

Some of the specific items covered in the memo include the actions federal agencies must take during the new “continuous corrections” phase of the reporting cycle, a new category of data quality that federal officials must now review, immediate actions that should be taken to review and act on single audit findings, and for recipients, technical issues such as when a report is considered to be the “final” report.

And in the area of single audits, there is an interesting note. Because of the need to quickly review and act on audits, OMB has told federal agencies not to grant any requests for A-133 filing extensions.

OMB says it realizes the April reporting period is fast approaching and that it will respond to questions and concerns in a timely manner.

You can download the new guidance here.

Now that the Recovery Act is one year old, the Government Accountability Office is taking a look back — and a look forward — at how state and local agencies have used the money they received, and the efforts being made to improve accountability for those awards.

Most of the nearly 200-page report deals with specific programs and agencies, including Medicaid, Transportation, and Education, but GAO also addresses issues relating to recipient reporting, and a significant amount of attention to the OMB A-133 single audit process.

GAO seems generally pleased with OMB’s efforts to use single audits, although the office continues to urge OMB — and Congress — to amend the single audit process so that it can be more efficient and timely. And GAO has several agency-specific recommendations, such as encouraging the Education Department to work with OMB on a formula for determining FTE jobs during the summer months.

One new recommendation that should be of interest to most recipients is that OMB develop a “formal and feasible” framework for review of recipient reporting changes during the continual update period and consider providing more time for agencies to review and provide feedback to recipients before posting updated reports on Recovery.gov.

You can read the full GAO report here.