| Dear Center Members: |
The purpose of this GAQC Alert is to inform you of several recent developments and new resources issued by the GAQC, including the following:
- An announcement by the Small Business Administration (SBA) on the audit requirements for for-profit recipients of the Shuttered Venue Operators Grant (SVOG) program and a related 9-month audit submission extension for for-profit entities;
- Illustrative reports have been issued by the GAQC for practitioners to use when performing the alternative compliance examination engagement on eligible recipients of the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) program;
- Issuance of a GAQC comment letter to the Office of Management and Budget (OMB) on the 2022 OMB Compliance Supplement (2022 Supplement);
- A new GAQC Practice Aid, Government Auditing Standards Primer, for practitioners newer to performing audits under Government Auditing Standards; and
- An update to the GAQC tool, GAQC Summary of Uniform Guidance (UG) Applicability for New COVID-19-Related Federal Programs.
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SVOG Update
In recent months, the GAQC team has been consulting with the SBA SVOG team as it has been working to finalize its audit guidance for for-profit recipients of the SVOG program. During a July 14, 2022, SBA Webinar titled, Audit Requirements for For-Profit Entities, the SVOG Team announced several major audit-related developments for SVOG recipients that are for-profit entities.
For-Profit Audit Extensions. Many for-profit SVOG recipients and their auditors have voiced their concerns about the audit submission deadline in light of the SBA not yet issuing details around the for-profit audit requirements. Many for-profits have December 31st year-ends and without an extension, those fiscal year-end audits would be due September 30, 2022. The GAQC has also been advocating for a for-profit audit extension. The good news is that the SBA announced that for-profit entities subject to the SVOG audit requirements will be granted a 9 month audit submission extension. More specifically, for-profit recipients will be allowed to submit their audit by the later of 9 months from the date the SBA's for-profit SVOG guidance is released (which is expected soon) or 9 months after the end of their fiscal year. This SVOG audit extension only applies to for-profit entities and excludes nonfederal entities.
SVOG Guidance for For-Profit SVOG Recipients. During the Webinar, SBA staff announced that the for-profit SVOG audit guidance will be issued in the very near future. In the meantime, they provided details of what that guidance will include as follows:
- For-profit SVOG recipients may utilize one of four options to meet the SVOG audit requirements which include: 1) a single audit conducted in accordance with the Uniform Guidance; 2) a program-specific audit conducted in accordance with the Uniform Guidance; 3) an audit of the entity’s financial statements; or 4) a compliance examination attestation engagement.
- SBA stated that the audit threshold trigger for all for-profit audit options is $750,000 or more of SVOG revenue recognized during the entity’s fiscal year. Typically, the audit threshold for compliance audits of federal awards is based on expenditures. However, due to the nuances of the SVOG program, which allows for pre-award costs to be charged to the program, SBA has selected a different approach for for-profit entities.
Stay tuned for more from the GAQC on these for-profit SVOG engagements. Once SBA issues its final guidance, we will be reviewing it in detail and following up with another GAQC Alert. Further, the GAQC is planning a live Web event iin early Fall of 2022 to provide guidance for auditors with clients subject to the for-profit SVOG audit requirements. Watch for a future announcement with the specific details.
CSLFRF Illustrative Attest Reports
As noted in GAQC Alert #439, certain eligible recipients of the CSLFRF program are able to undergo a compliance examination engagement as an alternative to a single audit or program-specific audit. The GAQC has just posted illustrative reports to assist practitioners performing these engagements. Access the illustrations. These illustrative reports have been prepared in accordance with AT-C Section 315, Compliance Examinations, and Government Auditing Standards (GAGAS) and include two unmodified reports (one with reportable findings and one with no reportable findings) and one modified opinion example.
For more information about these engagements, read GAQC Alert #439 and listen to the GAQC archived Web event, Auditor Considerations: The Coronavirus State and Local Fiscal Recovery Funds Program. The GAQC is also developing a related practice aid to further assist practitioners and will communicate its issuance in a future GAQC Alert upon completion.
Supplement Comment Letter
In response to a Federal Register request for comments, the GAQC has issued a comprehensive comment letter to OMB on the 2022 Supplement. The letter, issued on June 30, 2022, summarizes our concerns on the Supplement and opportunities for improvement. We encourage members to review the letter to learn about the various issues raised since they may be relevant to your single audits.
Major concern areas include problems with performance and special reporting requirements, the use of Web hyperlinks in place of summarized program guidance, inclusion of requirements in the wrong compliance requirement categories, editorial problems, and various other matters. As it relates to performance and special reporting, the GAQC recommends substantial improvements be made by the agencies in the performance and special reporting sections included in the Supplement to enable auditors to provide assurance on performance matters related to a recipient’s federal program participation. To further illustrate these concerns, the letter includes a detailed Appendix that describes every program section included in the Supplement that has a performance/special reporting section and the related issues noted.
GAQC Yellow Book Practice Aid
The GAQC has released a new non-authoritative practice aid, Government Auditing Standards Primer, which provides an overview of the requirements of Government Auditing Standards, 2018 Revision (also referred to as the Yellow Book or GAGAS). The Practice Aid addresses common questions the GAQC receives from practitioners newer to performing audits under the Yellow Book, such as when an audit needs to be performed under GAGAS standards, what additional responsibilities auditors have when conducting such an audit, as well as other specific requirements related to Yellow Book audits. In addition to being a helpful resource for newer Yellow Book auditors, this Practice Aid is a good refresher for experienced practitioners as well.
GAQC UG Applicability Tool
The GAQC has updated its tool titled, GAQC Summary of Uniform Guidance (UG) Applicability for New COVID-19-Related Federal Programs. The revised document includes the following updates:
- Inclusion of programs established by the American Rescue Plan Act;
- An indication of whether programs are included in the 2022 Supplement and, for those that are, whether they are identified as higher risk;
- The latest links to federal agency guidance; and
- The latest GAQC notes and observations.
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Sincerely,
AICPA Governmental Audit Quality Center |
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