|Dear Center Members:
|This GAQC Alert informs you about the following important matters:
- An e-mail sent by the Federal Audit Clearinghouse (FAC) on behalf of the Office of Management and Budget (OMB) to all auditors and auditees in the FAC database regarding the correction edition of the 2019 Compliance Supplement (Supplement); and
- Several related questions and answers (Q&As) regarding the correction edition of the 2019 Supplement from a recent GAQC Web event.
|FAC Supplement E-Mail
Late on Friday, October 18, 2019, the FAC sent an e-mail to every auditor and auditee of record to clarify the effect of the correction edition of the 2019 Supplement on audits that have already been submitted to the FAC, as well as audits near completion. As noted in GAQC Alert #389, the OMB issued a correction edition of the Supplement in September 2019 (dated August 2019 and referred to as the August 2019 edition) to address errors in the originally issued Supplement (referred to as the June 2019 edition). The e-mail instructs auditors as follows for single audits subject to the 2019 Supplement (i.e., audits of fiscal years beginning after June 30, 2018):
You can find the August 2019 edition of the Supplement in one large PDF file on the OMB Web site. However, keep in mind that the GAQC has posted the August 2019 edition broken down by section on the GAQC 2019 OMB Compliance Supplement Web page, along with an indication of which sections were changed.
- Auditors are permitted to perform the audit using either the June 2019 or August 2019 edition of the Supplement for reports dated on or before October 31, 2019.
- Auditors are required to perform the audit using the August 2019 edition for reports dated after October 31, 2019.
- A request is made for auditors to document the version of the Supplement used for the audit.
If you have questions about the e-mail or the corrected edition of the 2019 Supplement, contact the relevant agency National Single Audit Coordinator (NSAC) using the contact information found in Appendix III of the Supplement.
Relevant GAQC Q&As
The GAQC held a Web event last week titled, Single Audit Lightning Round, which included commonly asked Q&As, some of which related to the issuance of the August 2019 edition of the Supplement. Those Q&As are included below to further emphasize some of the nuances of the issuance of the August 2019 edition.
Question 1. I have a single audit that is almost done (using the June 2019 edition) but we will not be able to issue and date our reports by October 31, 2019. Advice?
Answer 1. You need to determine whether your major programs have been affected by August 2019 edition using the Supplement's Errata page which identifies the changes made. If yes, you will have to perform procedures to address the changes using the August 2019 edition. If no, the work you performed using the June 2019 edition was not affected by the August 2019 edition. Good communication with clients with respect to this situation is also recommended.
Question 2. We performed the majority of a single audit using the June 2019 edition but we wlll not be in a position to date our reports by October 31, 2019. None of our major programs are affected by the August 2019 edition. Any special considerations for us?
Answer 2. There is no difference between the work you performed using the June 2019 edition and the August 2019 edition for your major programs, so your main consideration relates to documentation. The e-mail sent by the FAC asks auditors to prepare documentation supporting which Supplement was used. Therefore, you should document that your audit is being performed using the August 2019 edition as your audit report will be dated after October 31st. Since you started the audit using the June 2019 edition, if you have Supplement copies from that edition in your documentation, you may want to consider swapping them out with the same pages from the August 2019 edition. Alternatively, you can keep the June 2019 copies in your documentation but explain in the documentation that all June 2019 edition copies in the audit documentation were verified against the August 2019 edition and did not change.
Question 3. We completed a single audit using the June 2019 edition of the Supplement that was submitted to the FAC in September. The August 2019 edition revised the requirements to be audited for one of our major programs. Advice?
Answer 3. No action is required as the FAC e-mail is clear that auditors with reports dated on or prior to October 31st may use either the June or August 2019 editions. Good communication with clients with respect to this situation is also recommended.
Question 4. As soon as OMB issued the August 2019 edition, we sent teams back out into the field to address corrections affecting our major programs since much of our work had been performed during interim using the June 2019 edition. That additional work is almost complete and resulted in additional cost to our clients. Now we find out that OMB has provided a grace period through October 31st. If we had known that at the time, we could have just completed those audits and issued and dated our reports prior to October 31st. What do we do now?
Answer 4. Unfortunately, the process surrounding the 2019 Supplement issuance and subsequent correction is an unprecedented situation. Given this late date, it is probably best to complete the audit using the August 2019 edition since your additional work is almost complete. Good communication with clients with respect to this situation is also recommended so they understand the timing. The good news is that the FAC also sent the e-mail announcing the grace period to auditees. Therefore, clients should understand that the grace period announcement came very late.
Question 5. We haven't started our June 30, 2019, single audits yet. Are there any considerations for us?
Answer 5. You should be sure to use the August 2019 edition to perform the audit. Keep in mind that it is possible to access the June 2019 edition via a google search of the 2019 Supplement, so ensuring teams are using the correct edition of the Supplement early on is highly recommended. Instructing them to use the GAQC 2019 OMB Compliance Supplement Web page to access the Supplement is one way to ensure they use the correct version.
Question 6. We have found several errors that we believe should have been corrected in the August 2019 edition but were not. What should we do?
Answer 6. Contact the agency NSAC to report the errors and to ask for advice on how to address the matters noted in your single audit. You can find contact information for the Coordinators in Appendix III of the Supplement. We also ask that you inform the GAQC at firstname.lastname@example.org regarding any errors noted as we are collecting that information to ensure they are corrected by OMB for 2020.
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AICPA Governmental Audit Quality Center
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