Single Audit The Super Circular

1. Single Audit The Super Circular Presented by: William Blend, CPA, CFE

2. Topics Overview of Super Circular Updates to Single Audit Requirements Data Collection Form

3. It’s Here – The Super CircularOMB - 2CFR Chapter 1 and Chapter II,Parts 200, 215, 220, 225 and 230Uniform Administrative Requirements,Cost Principles, and Audit Requirements for Federal Awards

4. Background Tailor regulations to impose the least burden, while being consistent with obtaining regulatory objectives Eliminate unnecessary and reforming requirements that are overly burdensome, including combining various circulars into one document Issued Original Notice of Reforms February 24, 2012 Issued most recent Notice of Reforms on February 1, 2013 Issued Super Circular on December 26, 2013

5. Council on Financial Assistance Reform (COFAR) Established pursuant to Chief Financial Officers Act of 1990 Organization of CFOs from Federal agencies, and Senior OMB and Treasury Officials Work collaboratively to improve financial management, information, standards, internal controls, and legislation

6. Super Circular ImplementationTime Line

7. What Was What Will Be

8. Circular Components Subpart A – Acronyms and Definitions Subpart B – General Provisions Subpart C – Pre-Award Federal Requirements and Contents of Federal Awards Subpart D – Post Federal Award Requirements Subpart E – Cost Principles Subpart F – Audit Requirements

9. Circular Appendices Appendix I – Full Text of Notice of Funding Opportunity Appendix II – Contract Provisions for Non-Federal Entity Contracts Under Federal Awards Appendix III – Indirect Cost Procedures Educational Institutions (IHEs) Appendix IV – Cost Identification and Assignment, and Rate Determination for NFPs Appendix V – S&LG, Indian Tribes – Wide Central Service Cost Allocation Plans

10. Circular Appendices (Cont.) Appendix VI – Public Assistance Cost Allocation Plans Appendix VII – S&LG and Indian Tribe Indirect Cost Proposals Appendix VIII – NFPs Exempted from Subpart E – Cost Principals Appendix IX – Hospital Cost Principles Appendix X – Data Collection Form Appendix XI – Compliance Supplement

11. Major Reforms

12. Major Reforms • Elimination of duplicative and conflicting guidance by combining eight separate circulars (previously demonstrated) • Focus on performance over compliance for accountability • Encourage efficient use of Information Technology and Shared Services

13. Major Reforms (Cont.) • Providing for consistent and transparent treatment of costs • Limiting allowable costs to make best use of federal resources • Setting standard business processes using data definitions

14. Major Reforms (Cont.) • Encourage Non-Federal entities to have Family-Friendly Policies • Strengthening oversight • Targeting audit requirements on Risk of Waste, Fraud and Abuse

15. Single Audit Changes

16. Single Audit Changes Increase audit threshold from $500,000 to $750,000 Expected to reduce burden on 5,000 Non-Federal entities Maintains coverage of more than 99% of federal grand funds currently covered

17. Single Audit Changes (Cont.) Increase minimum threshold for Type A programs from $300,000 to $750,000 Utilize table format for ease of comprehension

18. Single Audit Changes (Cont.) • Audit Coverage Rule • If auditee meets criteria in 200.520 (low risk), all major programs in aggregate must cover at least 20% of federal awards. Reduced from 25%. • If auditee does not meet criteria in 200.520 (low risk), all major programs in aggregate must cover at least 40% of federal awards. Reduced from 50%. • Focus continues to be on highest risk programs

19. Single Audit Changes (Cont.) • Auditor Type B Program Analysis • Identify Type B programs which are high risk using professional judgment and criteria in 200.519 • Expected to perform risk assessment of Type B programs that exceed 25% of the Type A threshold (previously stepped approach) (ex., $750k * .25 = $187,500) • Continues to encourage utilization of an assessment of risk that would result in different Type B programs to be audited over a period of time

20. Single Audit Changes (Cont.) • Findings and Questioned Costs • Must report known or questioned costs that are greater than $25,000 (increase from $10,000) • Continued emphasis on findings, including detail with specifics to allow auditee is to prepare the appropriate corrective action plan • Continued emphasis on identification of prior findings, including updates and details as to why finding is not corrected, if applicable

21. Changes to Major Program Determination • As in A-133, Type A programs will be designated as low risk if: • In the most recent period, the program received an unmodified opinion; • No material weakness in internal controls were reported; and • There were no questioned costs exceeding 5% of program expenditures • The program must have been audited as major in at least one of the tow most recent audit periods

22. Changes to Major Program Determination (Cont.) Reduce the number of Type B programs that must be tested as major from at least one-half (1/2) to at least one-fourth (1/4) of the number of low risk Type A Programs identified. Continues to allow the auditor to stop the risk assessment process at this point.

23. Other – Compliance Requirements No action taken related to the compliance require-ments at this time COFAR recommends further public outreach Compliance supplement is published as part of a separate process and, therefore, is included in the super circular by reference under Appendix XI

24. Other – Compliance Requirements (Cont.) The 2013 and 2014 compliance supplements will follow A-133 The 2015 compliance supplement will follow requirements issued on December 26, 2014

25. Designation of Agency Officials – 200.513 (5) Single Audit Accountable Official – Official responsible for ensuring the agency is in compliance with all audit requirements and improving effectiveness of agency’s use of single audits. Single Audit Liaison – Official serving as agency’s point of contact for the single audit process. Appointed by the Single Audit Accountable Official.

26. Keep a Look Out

27. Monitor Resources • OMB • http://www.whitehouse.gov/omb/financial_default/ • COFAR • https://cfo.gov/cofar

28. New Data Collection Form

29. Changes to the Data Collection Form • Beginning with 2013, the primary audit firm will be required to provide their EIN in Part I. • Secondary auditor(s), if applicable, would provide their EIN on the secondary auditor contact information page (Part I, Item 8). • AICPA felt this would improve the ability to conduct peer reviews. OMB endorsed the idea as part of its desire to improve audit quality.

30. Changes to Data Collection Form (Cont.) A response is required for each federal award (Y or N) to the question “Is this award a Federal loan or Federal loan guarantee?” This is expected to help Federal agencies verify that major programs were determined correctly and improve oversight of award expenditures.

31. Changes to Data Collection Form (Cont.) Requires standard finding which should match SFQC numbering. Format: four-digit year, hyphen, and three-digit sequence number (example - 2013-001) Will allow agencies to use software to search electronic audit reports and show the text of the audit findings Should also improve proficiency of agency staff in ensuring finding resolutions

32. Changes to Data Collection Form (Cont.) Question related to significant deficiencies, material weaknesses, and questioned costs have been moved to Part III, Section 7. Identification of the compliance requirement will also be moved and become part of Part III, Section 7. Combining finding information into a single section by program is intended to allow more detail on each, which is currently not available.

33. Changes to Data Collection Form (Cont.) • Auditors and auditees will be required to certify that Personally Identifiable Information (“PII”) is not contained in the reporting package. • PII: information which can be used to distinguish or trace an individual’s identity, such as their name, SSN, etc. • PDF files of audit report submissions must be unlocked, unencrypted, and at least 85% text searchable. PDFs not meeting this criteria will be rejected at the time they are uploaded.

34. Changes to Data Collection Form (Cont.) OMB has granted an extension until March 31, 2014 for reporting packages due to the Clearing-house if the new form is not available. The extension is automatic, and there is no approval required. The extension applies only to single audits for the fiscal periods ended in 2013. See http://harvester.census.gov/sac/ for details

35. Changes to Data Collection Form (Cont.) Please visit http://www.whitehouse.gov/omb/financial_default/ The 2013 Form SF-SAC is now available

36. Questions?