On April 3, the U.S Department of Commerce Federal Audit Clearinghouse (FAC) proposed revisions to the Data Collection Form (DCF) that is submitted by all entities subject to Single Audit Act Amendments of 1996. As it currently stands, all nonfederal entities (states, local governments, institutions of higher education, not for profit organizations and others) that expend at least $750,000 a year in federal funds are required to have audits completed in accordance with 2 CFR part 200 (Uniform Guidance). The audits are designed to reduce risk of noncompliance and provide federal oversight. When the audits are completed, the single audit reports and data collection forms are submitted to the FAC.
The proposed changes are designed to make the reports easier to use by federal agencies, pass-through entities and the public. The FAC is proposing to include the following four elements on the form:
- Text of the federal award audit findings
- Text of the corrective action plan
- Notes to the Schedule of Federal Awards (SEFA)
- Communication from auditor to auditee in writing of any issues that did not constitute an audit finding, but warranted the attention of those charged with governance
Currently the first three of these elements are required to be included in the audit reports for these entities, but the FAC would like to streamline this process further to improve processing of any findings by the oversight agencies.
The proposed changes are intended to provide transparency to all users of the audit findings. Although the modifications do not appear overly difficult, the Census Bureau estimates that organizations could incur many more hours in education, data collection and data formatting to properly complete the form. Of the approximate 80,000 respondents, it’s been projected that it would take each of the 400 largest respondents 70 hours in total; for the remaining 79,600, the estimate is 21 hours. That makes 1,699,600 total annual hours if the proposed changes are accepted, a large additional burden placed on both auditors and auditees, and a major point of debate among all involved.
This proposal will have no effect on 2018 single audits, as the final form revision would not be effective until fiscal periods ending in 2019, 2020 or 2021.
The comment period on these changes recently expired and the FAC is currently reviewing those comments and other proposals and have no additional comment at this time. You can read the draft of the proposed form here.