Dear Center Members: |
Since the Office of Management and Budget (OMB) released the final 2019 OMB Compliance Supplement (see GAQC Alert #384), there has been more advocacy work going on behind the scenes than usual. This is, in part, due to a significant number of errors that have been identified. After reading this GAQC Alert you will be aware of the following:
- A comment letter has been issued by the GAQC to OMB on the 2019 Supplement which identifies the specific errors noted to date, matters that need to be addressed by OMB in the near term, and recommendations for the 2020 Supplement.
- Efforts by OMB to address making needed corrections to the Supplement.
- Steps you may consider taking if you are performing a single audit involving a program section containing an error.
- Registration information for two upcoming rebroadcasts of previous GAQC Web events covering the 2019 Supplement and the 2019 Data Collection Form and a hold the date reminder for the next GAQC required annual Webcast rebroadcast.
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GAQC Comments on Supplement Errors
The GAQC participates in a vett draft review of significant changes proposed in the Supplement each year. This comprehensive review is carried out by GAQC staff and members of our Executive Committee and is intended to identify audit and other issues before the Supplement is issued. This year we provided many more vett draft comments than usual due to the number of changes proposed. After the Supplement's issuance, we reviewed the document to determine how some of our vett draft comments had been addressed and began noting errors and other issues. At the same time, we began hearing from GAQC members that were beginning to use the Supplement with questions about certain changes made and errors noted. As a result of this activity, the GAQC has issued a comprehensive comment letter to OMB containing suggestions on areas that need to be addressed in the near term, along with recommendations for the 2020 Supplement. Access the comment letter.
The 2019 Supplement errors and other issues identified by the GAQC involve the following areas, all of which are described in more detail in the comment letter.
- Inconsistencies between the matrices in Part 2 and Part 4 for individual programs.
- Misidentification of programs identified as new or deleted.
- A single program is identified as a cluster.
- Questions and clarifications need to be addresssed in the Student Financial Assistance cluster.
- There are several "other cluster" issues and questions.
- Certain programs in Part 4 include requirement details for requirements identified as not subject to audit.
- Certain programs in Part 4 do not include requirement details for requirements identified as subject to audit.
- Cross-cutting section problems; for example, discussing requirements that for some programs covered by the cross-cutting section are not subject to audit.
- Some federal agencies have identified certain requirements that have historically been direct and material to a program as not subject to audit which has led to questions about whether errors have been made.
- The illustrative controls in Part 6 contain errors that appear to have occurred when the original Excel file was converted to Word.
Among the recommendations for the 2020 Supplement are that OMB:
- Consider an alternative to the 6-requirement approach;
- Make changes to the 6-requirement approach if retained;
- Understand that challenges will be introduced if requirements are rotated each year; and
- Adopt improvements to the Supplement final clearance process to avoid future errors.
Finally, the GAQC recommends that OMB modify its burden reduction messaging on the Supplement to ensure that grantees understand compliance is required regardless of whether a requirement is to be audited, as well as to recognize that audit effort and related fees may not be reduced in every situation.
Future Supplement Corrections
OMB is currently working with federal agencies to confirm the errors and is contemplating whether to issue a corrected version of the 2019 Supplement in the coming weeks to address some of the most pressing matters. Exactly how that correction will be issued is still being determined. The GAQC will inform you of developments in this area as they progress and will post any corrections made on the GAQC 2019 Supplement page.
Steps to Consider When Errors Noted
Our advice to auditors that are auditing programs that are believed to contain errors is to use your professional judgment and to prepare related audit documentation supporting that judgment. Contacting the agency single audit coordinator for advice and documenting that consultation is also a good step to take. Another option, if possible, may be to wait several weeks to find out if OMB will issue a correction to the Supplement. Members should be aware that the GAQC has been very diligent in reminding OMB that we recommend it instruct federal agencies and pass-through entities to be judicious in their consideration of the quality of audits performed using the 2019 Compliance Supplement due to the errors identified, the potential for additional errors to be identified, and because some auditors may not become aware of any future corrections on a timely basis since they will be made after the original Supplement's issuance.
Web Event Rebroadcasts
If you have not yet viewed the following GAQC Web events we will be rebroadcasting them for CPE in early September. Registration information follows for two of the events and a hold the date reminder for the third. All events are from 1:00 PM – 3:00 PM (Eastern Time). If you do not wish to obtain CPE, you can always view the no-CPE archives anytime. We encourage you to ensure you have viewed the required annual Webcast and that you and your staff are up-to-date on both single audit topics as they will be important for your 2019 single audits.
2019 Compliance Supplement and Single Audit Update. Wednesday, September 4, 2019.
2019 Data Collection Form and Federal Audit Clearinghouse Update, Thursday, September 5, 2019.
Hold the date: GAQC Annual Update Webcast, Friday, September 6, 2019. Watch for future registration information.
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As always, thanks for being a GAQC member and for your continued committment to audit quality.
Sincerely,
AICPA Governmental Audit Quality Center
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In This Alert |
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Risk Assessment Web Event |
The GAQC 2019/2020 Web event calendar is in process and we will communicate it by early September. For now, mark your calendars for the first event, Risk Assessment Considerations in State and Local Government Financial Statement Audits, on September 19, 2019, from 1:00 PM – 3:00 PM (Eastern Time). |
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Additional Resources |
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Stay Informed |
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