| Dear Center Members: |
On August 18, 2020, OMB released the 2020 OMB Compliance Supplement (the 2020 Supplement). After reading this GAQC Alert you will be aware of the following:
- The effective date and how to access the Supplement;
- Some of the non-COVID-19-related changes made in the Supplement;
- COVID-19 guidance included, plans for a future addendum, and a draft listing of the addendum's expected contents; and
- How to learn more.
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Effective Date and Access Information
The 2020 Supplement is effective for audits of fiscal years beginning after June 30, 2019. It is available on the OMB Web site as one large PDF file. As a public service, the GAQC has posted the 2020 Supplement on the GAQC Web site broken down by individual section. Access the GAQC posting of the 2020 Supplement. We have also included comments on several sections to inform you on matters we believe you should pay particular attention to. You will also be able to find a link to the 2020 Supplement on the GAQC home page under "Quick Links."
Key Changes
We always recommend that auditors refer to Appendix V, List of Changes for the 2020 Compliance Supplement, to get a high-level overview of the detailed changes made. The following describes some of the non-COVID-19-related matters that you should be aware of:
6-Requirement Mandate Maintained. You will again see that the agencies have been required to limit the compliance requirements subject to the compliance audit to 6 for each program or cluster included in the 2020 Supplement. The only exception is the Research and Development cluster which was again permitted to identify 7 requirements. Keep in mind that for this purpose, the requirements relating to A. Activities Allowed and Unallowed, and B. Allowable Costs and Cost Principles, are treated as one requirement. While many agencies identified the same 6 requirements as last year, some agencies changed the requirements subject to audit. Part 2, Matrix of Compliance Requirements, identifies the requirements that have changed by identifying them in bold and yellow highlighting.
Section 3-1 Removed. Part 3, Compliance Requirements, no longer includes section 3-1. That section had previously been included during the transition to the Uniform Guidance and was used to audit federal awards made prior to December 26, 2014. OMB states that because they consider the transition complete, section 3-1 is no longer needed. Auditors are instructed to refer to section 3-1 in the 2019 Supplement on the rare occasion that audits continue to include these older awards in their scope.
Programmatic Changes. There are several program additions and deletions in Part 4, as well as programs with significant changes. Appendix V is a good place to identify these changes.
Student Financial Assistance. This program has numerous changes for the second year in a row. For example, changes have been made to the wording around the required sampling tables and enrollment reporting testing has been expanded. Requirements and suggested audit procedures around student information security have also been retained. However, it is important to note that while this program did not receive additional COVID-19 funding, the Department of Education made changes to certain compliance requirements due to the pandemic environment that are not reflected in the Supplement. Per Appendix VII, Other Audit Advisories, auditors should be alert to this fact. See below or further discussion of Appendix VII.
Other GAQC COVID-19 Guidance
Appendix VII has been expanded to include the primary COVID-19 guidance in this first release of the 2020 Supplement. While it is informative in many areas, it also raises questions that the GAQC will be following up on. A summary of some of the key areas covered are as follows:
COVID-19-Related Programs. The appendix refers to a federal Frequently Asked Questions (FAQ) document for purposes of identifying new COVID-19 programs and all other existing Assistance Listing numbers that received COVID-19 funding. In particular, this FAQ is very useful to identify the numerous existing programs impacted. Additionally, new programs are identified in the FAQ document with an asterisk. The appendix does not identify which of the new programs are subject to single audit. Remember that you can refer to the GAQC nonauthoritative Summary of Uniform Guidance Applicability for New COVID-19-Related Federal Programs for that information.
Separate Identification of COVID-19-Related Awards. The appendix includes instructions for how recipients should separately identify COVID-19-related awards on the schedule of expenditures of federal awards and the data collection form. This separate identification is required for existing awards that had COVID-19-related award expenditures and new COVID-19 programs.
Changes to Compliance Requirements for Existing Awards. The appendix states that some agencies made changes to existing programs which did not receive additional COVID-19 funding in response to the pandemic environment (e.g., SFA (see discussion above) and Child Nutrition clusters). It also states that auditors should be alert that the program information included in this Supplement may not have been modified for those changes. This is one section of the appendix that the GAQC will be looking into further.
Identification of Compliance Requirements for COVID-19-Related Awards. This section of the appendix is another section that raises more questions than it answers and the GAQC will be further discussing it with OMB and the agencies. In summary, it states that some compliance requirements for COVID-19 awards may have been communicated through agency Web sites and that the requirements may have been modified or not included in original terms and conditions agreements. It states that OMB plans to issue an addendum to the Supplement in the Fall but also discusses the use of Part 7, Guidance for Auditing Programs Not Included in This Supplement, for determining procedures to be performed and that reports issued prior to the publication of the addendum are not required to adhere to the requirements in the addendum. Finally, this section states that for existing programs with incremental COVID-19 funding, the auditor must use the framework outlined in Part 1, Background, Purpose and Applicability, to perform reasonable procedures to ensure that the compliance requirements identified as subject to audit are current. For example, it states that in addition to the original types of requirements identified in the Part 2 matrix as subject to audit, the COVID-19 funding may also require the "Reporting" or "Subrecipient Monitoring" compliance areas to be subject to audit. Again, we are unclear about the intent of this statement and will be requesting further clarity.
Audit Findings. The appendix states that auditors should include the COVID-19 identification for audit findings that are applicable to COVID 19 new or existing programs.
Future Addendum. The appendix states that the addendum to the Supplement addressing certain new COVID-19 programs will be issued in the Fall. However, it does not include a listing of the programs to be included in the addendum. The GAQC has received a draft listing of the addendum's contents from OMB that we have posted to our Web site. Access the document titled, Federal Programs Expected to be Included in the 2020 OMB Compliance Supplement Addendum. You will see that the list includes several new COVID-19 programs, as well as several existing programs with requirements that will be changing. Keep in mind that the list is nonauthoritative and is subject to change. However, it should help you with your audit planning. Finally, the appendix includes mention that OMB would like to focus more on performance.
How to Learn More
The GAQC team will continue to analyze the new Supplement over the coming weeks and work to get the questions we have answered. Look for future GAQC Alerts. Further, the GAQC Web event, 2020 Supplement and COVID-19 Single Audit Implications, will be held on September 9, 2020, from 1:00 PM – 3:00 PM (Eastern Time) and will cover more about the 2020 Supplement just released and other COVID-19-related items on our radar. Access registration information.* * * * *
Sincerely,
AICPA Governmental Audit Quality Center |
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| In This Alert |
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| Single Audit Fundamentals Series |
| Do you have staff in need of basic training due to the new COVID-19 funding? If so, register for one or multiple parts of this GAQC Web event series to be held on August 25-26, 2020, for up to 8 hours of CPE. Register for the whole series. Or, register for Part 1, Part 2, and/or Part 4.. |
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| Single Audit Help for Auditees |
| Auditees who are recipients of COVID-19 Relief Funding and are subject to their first ever single audit or governmental compliance audit and their auditors will benefit from this GAQC Web event, Preparing for your First Single Audit: An Auditee Perspective, to be held on Monday, September 14, 2020, from 1:00 PM to 3:00 PM (Eastern). Register now. |
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| Additional Resources |
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| Stay Informed |
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