| Dear Center Members: |
As noted our recent GAQC Annual Webcast, the 2019 OMB Compliance Supplement (2019 Supplement) is expected to contain many more significant changes than is usual. The purpose of this GAQC Alert is to explain some of the upcoming changes and to announce that the GAQC has posted a draft of the 2019 Supplement Part 2, Matrix of Compliance Requirements. This GAQC Alert covers the following:
- Key changes expected in the 2019 Supplement;
- The draft Part 2 matrix; and
- A reminder to register for a June 5, 2019, GAQC Web event to learn more about the 2019 Supplement.
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Key Changes Expected
OMB is making many more changes to the OMB Compliance Supplement than is normal this year. The GAQC staff and members of our GAQC Executive Committee have been spending many hours reviewing and commenting on vett drafts of various sections and have been closely working with OMB as it works to finalize the 2019 Supplement. The following are several important areas for you to be aware of:
Format. Unlike last year's Supplement, the 2019 Supplement is expected to be issued in one complete stand-alone document. Upon issuance, the GAQC team will immediately work to break the 2019 Supplement down into individual sections for easier access and will post it to our Web site as we have done the last few years.
6-Requirement Mandate. Each federal agency has been mandated by OMB to limit the number of compliance requirements subject to the compliance audit to six, except for the Research and Development cluster which will likely be permitted to identify seven compliance requirements as subject to the audit. For this purpose, the requirements relating to A. Activities Allowed and Unallowed, and B. Allowable Costs and Cost Principles, will be treated as one requirement (i.e., allowability in its entirety will be considered one requirement even though the Supplement breaks it into two sections). To get down to six requirements, some agencies are having to place an "N" in the Part 2 matrix for what have historically been tested as direct and material requirements in the past. This 6-requirement mandate will not apply to programs not included in the 2019 Supplement.
Programmatic Changes. OMB asked federal agencies to select several programs within their portfolio of programs and perform a closer review than usual. As a result, you can also expect to see more extensive programmatic changes. In particular, the Student Financial Assistance program will have more significant changes this year.
Part 6 Overhaul. We have been working closely with OMB and the federal agencies to enhance Part 6, Internal Control, of the Supplement. The objective of these changes is to more closely align Part 6 with how auditors consider internal control and to provide more illustrative controls. This updated section should be very useful to auditors in their consideration of internal control going forward.
Timing. We are not able to estimate a final date of issuance at this point. However, we are aware that a good portion of the 2019 Supplement has been placed into the OMB clearance process. As soon as we have a better idea of timing, we will inform you.
Draft Part 2 Matrix Available
Almost every program line in the 2019 Part 2 matrix will be revised to reflect the 6-requirement mandate discussed above. Because we know that many auditors are currently planning their June 30th single audits, we asked OMB if we could post a draft of the Part 2 matrix. They agreed, and we have made the draft matrix available. Using the draft matrix should help you avoid performing interim work on requirements that may not be subject to audit this year.
Keep in mind that the draft matrix is intended for auditors to use for planning purposes only. Once the final 2019 Supplement is issued, you will have to closely check the matrix to ensure that there have been no changes.
Access the matrix here. You can also find the matrix under a quick link on our home page titled, "2019 OMB Compliance Supplement." This location will eventually be where we post the entire 2019 Supplement.
Upcoming Supplement Event
To help you understand the expected changes in the Supplement, the GAQC is hosting a GAQC Web event, OMB Compliance Supplement and Single Audit Update, on Wednesday, June 5, 2019, from 1:00 PM – 3:00 PM (Eastern Time). Access registration information for both the CPE and no-CPE attendance options. The event will be led by two members of the GAQC Executive Committee that have been very involved in the GAQC efforts to comment on the vett draft of the Supplement.
The session will walk you through the key changes mentioned above with a focus on the effect of the 6-requirement mandate. There are several nuances to this change that you will need to become familiar with. Additionally, we will also spend time on the updated Part 6 on internal control and how it may assist you in your single audits. Because of the numerous changes expected this year, we encourage you and your staff to attend this session.* * * * *
Sincerely,
AICPA Governmental Audit Quality Center |
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| In This Alert |
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| 2019 NFP Conference! |
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| Register now! |
| The GAQC Web event, 2019 Data Collection Form and Federal Audit Clearinghouse Update, will be held on Thursday, June 20, 2019, from 1:00 PM to 3:00 PM (Eastern Time). Access registration information. |
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