| Dear Center Members: |
The purpose of this GAQC Alert is to inform you about the following information:
- New for-profit entity audit guidance issued by the Small Business Administration (SBA) for the Shuttered Venue Operators Grant (SVOG) program and updates to SBA's SVOG guidance and frequently asked questions (FAQs) applicable to all recipients;
- A delay in the transition of the Federal Audit Clearinghouse (FAC) to the General Services Administration (GSA);
- New guidance for submitting completed alternative compliance examination engagements related to the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) program;
- Statement on Auditing Standards (SAS) No. 148, Amendments to AU-C Section 935, which amends the standard used when performing compliance audits, including single audits; and
- The availability of the 2022 edition of the AICPA Audit Guide, Government Auditing Standards and Single Audits (GAS-SA Guide).
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New SVOG Guidance
SVOG Guidance and FAQs
SBA has updated the SVOG Post-Application Guidance and the Post-Award Frequently Asked Questions. These documents apply to both non-federal entity recipients and for-profit recipients. Among the updates of most interest to our members are updates to questions in both documents relating to the audit requirements.
For-Profit Entity Audit Requirements
The long-awaited SVOG audit requirements for for-profit entities have been issued in a new guidance document titled, Shuttered Venue Operators Grant Audit and Attestation Requirements for For-Profit Recipients (referred to herein as guidance document). Among other things, the guidance document formalizes a previous SBA Webcast announcement (see GAQC Alert #444) regarding the options for audit, the audit submission deadlines, and provides additional details. Read on for more about the guidance document and watch for future related updates from the GAQC.
Audit Submission Requirements. For-profit entities have the later of nine months from the release of the SVOG for-profit guidance, which was dated July 22, 2022, or nine months after the end of an entity's fiscal year to submit their audit packages to the SBA. For example, an audit of a for-profit entity's December 31, 2021, year-end would be due by April 22, 2023 (i.e., nine months after the SVOG for-profit guidance was issued because it is later than nine months after the for-profit entity's year-end). The SBA will utilize an Audit Reporting Action Item to collect audit report packages from for-profit entities regardless of which audit option is selected.
Revenue Audit Threshold Trigger for All Audit Options. Due to the nuances of the SVOG program, which allow for pre-award costs, the audit threshold trigger for a for-profit entity (for all audit options) is based on SVOG award revenue recognized during the entity's fiscal year rather than expenditures as is usual. In determining the audit threshold trigger, SVOG for-profit recipients can utilize the accrual or cash basis of accounting, but the guidance indicates the basis the entity uses is dependent on its ordinary business practices. We have already received questions from members about how this trigger is applied for both accrual and cash basis entities and have strongly encouraged SBA to post common scenario examples as a follow-up to the guidance document to ensure consistency in understanding. The guidance states that recipients should contact their Grants Management Specialist for additional clarification on how this guidance applies to their SVOG award and accounting practices. We encourage auditors to reach out to SBA at svogrant@sba.gov with any questions about the audit threshold trigger for individual client situations and to include in the audit documentation any response provided by SBA.
SVOG For-Profit Audit Options. For-profit entities, that received SVOG awards and meet the audit threshold requirements, can select one of four options described below to meet the SBA audit requirements. If an entity normally arranges for an audit of their financial statements, that is likely the easiest way to meet the audit requirement. Otherwise, for the reasons cited below, we believe the compliance examination engagement alternative will be utilized most frequently.
- Financial Statement Audit. A financial statement audit performed under generally accepted auditing standards (GAAS) is one option. Government Auditing Standards and the Uniform Guidance do not apply.
- Single Audit/Program-Specific Audit. These are two separate options identified in the guidance document and would follow the normal Uniform Guidance rules except that, as noted above, the audit threshold determination is based on revenues instead of expenditures.
- Compliance Examination Engagement. The last option that may be the most efficient option for a SVOG for-profit recipient is the compliance examination engagement option. For this reason, the SVOG guidance document spends the most time discussing it. The engagement is required to be performed in accordance with the AICPA Statements on Standards for Attestation Engagements (i.e., AT-C section 315, Compliance Attestation) and Government Auditing Standards. The engagement, which results in an opinion on compliance, focuses on three compliance requirements related to Activities Allowed and Unallowed, Allowable Cost/Cost Principles, and Period of Performance. Those compliance requirements are described in detail in the Appendix to the guidance document. The benefit of this option to for-profit entities is that there is no requirement for a financial statement audit and no required schedule of revenues of federal awards. Further, other more onerous provisions of the Uniform Guidance would not apply. For example, there would be no requirement to test internal control over compliance for operating effectiveness like in a single audit or program-specific audit.
FAC Transition to GSA Delayed
In GAQC Alert #444, we alerted you to guidance added to Appendix VII of the 2022 Office of Management and Budget (OMB) Compliance Supplement (Supplement) regarding the planned move of the FAC from the U.S. Census Bureau to GSA. That Appendix states that GSA was expected to take over the acceptance of fiscal year end 2022 single audits on October 1, 2022. However, OMB has recently announced that the FAC transition from Census to GSA has been delayed for one year. Thus, GSA will take over the FAC on October 1, 2023. The GAQC will continue to monitor this situation and report any new developments. In the meantime, here are some key points about this delay:
- The Census FAC continues to accept fiscal year 2021 single audits as they have been and will begin accepting fiscal year 2022 single audits on October 1, 2022.
- Before 2022 fiscal year end single audits can be submitted, a formal update to the Data Collection Form is needed to extend its use for 2022 audits. Census is in the process of making that update to the form right now. Expected updates include replacing the entity’s DUNS number with the new entity Unique Employer Identification (UEI) number and changes to permit the FAC to eventually accept the alternative compliance examination engagement for certain eligible recipients of the CSLFRF (see GAQC Alert #439 for more about this engagement).
- OMB has stated that the provision described in Appendix VII of the Supplement that temporarily suspends the 30-day aspect of the single audit submission deadline continues to apply even though the Supplement describes it in the context of a GSA delay. Thus, if it is not possible to meet the 30-day aspect of the single audit submission deadline due to the delay in the ability for the Census FAC to accept 2022 fiscal year end single audits, those audits will not be considered late if they are submitted within 9 months after the end of the audit period. The GAQC recommends that auditors and auditees develop policies to ensure submission occurs for completed 2022 audits once the Census begins accepting 2022 submissions.
CSLFRF Guidance
On August 11, 2022, the U.S. Department of Treasury issued a document titled, Alternative Compliance Examination Engagement Report User Guide. It provides information for eligible recipients to submit the CSLFRF alternative compliance examination engagements through a Treasury Portal. It is our understanding that the submission of completed engagements directly to Treasury is a temporary measure until such time that the Census FAC will be able to accept them in the future (see FAC section above which describes efforts of the FAC to update the DCF for this purpose). However, until Treasury states otherwise, these engagements should be submitted by recipients to Treasury as described in the User Guide. We will inform you as future developments arise.
Compliance Audit SAS
SAS No. 148 was issued in early August 2022 and makes conforming changes to AU-C section 935, Compliance Audits, to reflect the issuance of SAS No. 142, Audit Evidence, and 145, Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement. It also updates the appendix in AU-C section 935 that identifies the auditing standards that are not applicable to compliance audits. The standard is effective for fiscal periods ending on or after December 15, 2023, except for changes related to SAS No. 142 which are effective for fiscal periods ending on or after December 15, 2022. Access the new standard.
AICPA GAS-SA Guide
The 2022 edition of the GAS-SA Guide is now available in both paperback and e-book formats. This guide is a key resource for understanding both Government Auditing Standards and single audit rules. Changes in the 2022 edition are the inclusion of dual guidance to introduce SAS Nos. 142, 145, and 143, Auditing Accounting Estimates and Related Disclosures, and a new illustrative auditor’s report on compliance that includes a disclaimer of opinion on one major federal program. Although issuing a disclaimer of opinion on compliance is not common, we periodically get requests from members needing to issue such reports and this new report was developed to assist in those situations. Access purchase information for the 2022 GAS-SA Guide.* * * * *
Sincerely,
AICPA Governmental Audit Quality Center |
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| In This Alert |
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| Single Audit Fundamentals |
| Have new staff or staff that need a single audit refresher? The GAQC is offering a rebroadcast of its four-part single audit fundamentals series on September 19 – 20, 2022. Staff can sign up for all four parts or just the parts they need. Register for Part 1, Part 2, Part 3, and/or Part 4. |
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