| Dear Center Members: |
| This GAQC Alert should be of interest to members whose audits include transit agencies required to report to the Department of Transportation (DOT) Federal Transit Administration (FTA) National Transit Database (NTD). It also provides registration information for the September 25, 2018, GAQC Web event on the recently issued 2018 Government Auditing Standards (2018 Yellow Book), which will be offered to both GAQC members and non-GAQC members. |
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Register for Yellow Book Event
The GAQC Web event, The 2018 Yellow Book: What You Need to Know, will be held on Tuesday, September 25, 2018, from 1:00 PM - 3:00 PM (Eastern Time). As further discussed in GAQC Alert #364, the Government Accountability Office (GAO) recently issued the 2018 Yellow Book which will be effective for financial audits, attestation engagements, and reviews of financial statements for periods ending on or after June 30, 2020. This event will cover the key changes made, as well as a refresher on other important areas of the standards that have not changed. While the effective date may seem far off, keep in mind that the 2018 Yellow Book revises the independence rules and that auditors will need to be independent for the entire audit period. The CPA firm presenters for this event are both members of GAO's Advisory Council on Government Auditing Standards.
GAQC Member Registration: GAQC members can register now using the CPE or no-CPE options.
Non-GAQC Member Registration: This event will also be open to non-GAQC members. If you have clients or colleagues that are not members of the GAQC and would like to attend this event, have them register using the non-GAQC member registration link.
Transit Agency FTA-NTD Reporting Issue
The following highlights an important matter for auditors with transit agency clients. It provides background on an FTA announcement on transit agency NTD reporting, the status of discussions with FTA on this matter, and a caution to auditors about using the illustrative report provided by FTA which is not in accordance with AICPA professional standards.
In a recent communication, FTA reminded transit agencies of updated NTD reporting requirements and related auditor reporting for the 2018 NTD Report Year. The communication highlighted the following two changes:
- A "financial data review" as described in the "Declarations and Requests" section of the current NTD Policy Manual must be completed every ten report (fiscal) years and agencies should schedule the review by an independent auditor as soon as possible following the agencies' 2018 fiscal year end (assuming such an engagement was not performed in last ten years).
- The financial data review now applies to Reduced Reporters in addition to Full Reporters.
While the NTD Policy Manual has included a financial data review requirement for many years, the engagements have not been performed on a regular basis. The FTA announcement that the financial data review be performed as soon as possible has generated a lot of interest and questions by both transit agencies and their auditors, especially since the deadline for June 30, 2018, year-end transit agencies to submit required reporting is October 31, 2018. Several GAQC members have contacted us with concerns about a lack of clarity surrounding the auditor requirements and questions about the illustrative auditor report provided by FTD in the current NTD Policy Manual.
The GAQC recently met with FTA staff to clarify the intended objective of the "financial data review" engagement and to express concerns about the illustrative auditor report. The initial conclusion from that meeting is that an Agreed Upon Procedures (AUP) engagement under the AICPA's attestation standards may satisfy the needs of the FTA. We are currently working with FTA to determine next steps including potential procedures and related management assertions and plan to send an example AUP report to FTA in the coming weeks for consideration.
We have reviewed the illustrative auditor report for this engagement in the NTA Policy Manual and noted that it does not meet AICPA professional standards for either an examination, a review, or an AUP engagement. Therefore, our recommendation is that auditors with transit agency clients hold off performing these engagements and issuing the related report until we can finalize our discussions with FTA. If you need to perform the engagement sooner, you should ensure that the engagement and related reporting are in accordance with AICPA professional standards. We will inform you via a follow-up GAQC Alert as soon as we have more information to share.
As always, thank you for your commitment to governmental audit quality.* * * * *
Sincerely,
AICPA Governmental Audit Quality Center |
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