OUR THOUGHTS ON:

Proposed Revisions to Single Audit Requirements

Audit

By Trevor Warren

In March 2012, the Office of Management and Budget (OMB) issued for comment proposed guidance titled: Reform of Federal Policies Relating to Grants and Cooperative Agreements: cost principles and administrative requirements (including Single Audit Act). The following are the key proposed changes:

- Entities that expend less than $1,000,000 if federal awards would not be required to undergo a single audit. The current threshold is $500,000.

- For Organizations expending between $1,000,000 and $3,000,000 of federal awards, a single audit would be required. However, only two compliance requirements would be required to be tested.

- For Entities expending more than $3,000,000 of federal awards, a full single audit would be required. However, federal agencies may identify subsets of compliance requirements that they believe may most effectively address certain risk factors.

On April 30, 2012 the AICPA’s Governmental Audit Quality Center issued a comment letter on the OMB’s proposed changes. The AICPA stated that the support the OMB’s goals of eliminating unnecessary and overly burdensome requirements and enabling resources to be focused on those activities that are most effective at reducing payment errors and eliminating waste, fraud and abuse. However, the AICPA had the following high level concerns regarding the proposed changes:

- Increasing the audit threshold.

- Narrow scope single audit may be difficult for users to distinguish the results/reports from a full single audit.

- Proposed changes to the full single audit requirements are not consistent with an auditor’s risk-based methodology for the purpose of opining on compliance.

The AICPA strongly recommended that the OMB not pursue two levels of single audit. In the AICPA’s view, a better approach to streamlining the single audit process was for the OMB to require a full single audit for any entity meeting the single audit process, but reducing the number of compliance requirements that the auditor must consider from 14 to 4 to 6 types. The AICPA had some additional comments and recommendations, but the overall spirit of the AICPA comment letter is that the OMB should continue to look for additional ways to refine the A-133 requirements to better achieve their goals and objectives.

The AICPA comment letter can be found using the following link.

© 2012 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2018 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

comments