Dear Center Members: |
The purpose of this GAQC Alert is to inform you of the following matters that involve requests for comment:
- An exposure draft (ED) of proposed changes to Government Auditing Standards (also known as the Yellow Book) has been issued by the Government Accountability Office (GAO);
- The U.S. Office of Management and Budget (OMB) has issued a Notice of Request for Information (RFI) asking for ideas on future revisions to Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance); and
- The U.S. Department of Agriculture Rural Utilities Service (RUS) has issued a final rule in the Federal Register (FR) to its audit regulation for electric and telecommunications awardees, along with a request for comment.
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Yellow Book Changes
GAO's ED titled, Government Auditing Standards, 2023 Exposure Draft, primarily updates Chapter 5, Quality Control and Peer Review, to strengthen an audit organization’s framework for conducting high-quality government audits through its quality management system. The ED also proposes a change to Chapter 6, Standards for Financial Audits, to add application guidance to provide clarity as to when the concept of reporting key audit matters, previously introduced into the AICPA auditing standards, might apply for financial audits of government entities and entities that receive government financial assistance. There are no other changes proposed. The ED indicates that the effective date of the proposed revisions will be included when the final Yellow Book is issued. The GAQC will be reviewing and commenting on the ED. Members are also encouraged to review and comment. Feedback should be submitted no later than April 28, 2023, to YellowBookComments@gao.gov.
Relating to quality management, the proposed revision harmonizes with updated quality management standards issued by the AICPA Auditing Standards Board and the International Auditing and Assurance Standards Board (IAASB) while taking into account the potential impact on governmental audit organizations and Yellow Book engagements, including performance audits. Of most interest to our GAQC members is that the ED states that audit organizations subject to the quality management standards of the AICPA or IAASB should comply with those standards, as well as several specific proposed additional requirements. They include the establishment of several additional policies and procedures as part of designing and implementing responses to address quality risks and an additional quality objective related to ensuring auditors performing work under the Yellow Book meet its continuing professional education (CPE) requirements. Thus, the impact of the proposal is not expected to be significant for audit organizations subject to the AICPA standards. With that said, members should not lose sight of the coming effective date of the upcoming AICPA Quality Management Standards which will require updated systems of quality management to be designed and implemented by December 15, 2025.
Uniform Guidance Revisions
OMB is planning a complete update to the Uniform Guidance during 2023 with a full public exposure document expected sometime this summer. In advance of that, OMB would like to hear from various stakeholders about their ideas for changes needed to the Uniform Guidance. The RFI Notice is OMB's way of collecting that feedback. OMB indicates that the feedback provided should support its goals of the forthcoming revision which is to:
- Revise guidance to incorporate statutory requirements and administration priorities;
- Revise guidance to reduce agency and recipient burden;
- Clarify guidance by addressing sections that recipients or agencies have interpreted in different ways; and
- Clarify guidance by rewriting applicable sections in plain English, improving flow, and addressing inconsistent use of terms.
Comments are due to OMB by March 13, 2023, and the RFI includes specific questions for commenters to consider and parameters for the comments submitted. The GAQC will be submitting comments based on its extensive experience with the Uniform Guidance and previous comments submitted to OMB. Members are also encouraged to submit feedback to OMB. Comments can be submitted via the Federal e-Rulemaking Portal at https://www.regulations.gov which includes instructions on how to submit comments. Members can find the current version of the Uniform Guidance at https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200.
RUS FR Notice
RUS electric and telecommunications awardees are subject to audit requirements established by their loan contracts and grant agreements. Those audit requirements, which RUS is now proposing changes to, are defined in 7 Code of Federal Regulations (CFR) Part 1773, Policy on Audits of RUS Borrowers and Grantees. RUS is revising the requirements to change the title, remove an unnecessary report, update terminology, clarify agency contacts and filing requirements and update or remove any outdated references. The notice also makes conforming changes to other regulations. RUS states that these changes will provide uniformity and consistency for all RUS awardees. The final rule is effective on May 8, 2023, and comments are due to RUS on or before April 7, 2023. The GAQC will be commenting on these proposed changes. GAQC members that perform these types of engagements are also encouraged to comment. Feedback may be submitted, identified by docket number RUS–22–AGENCY–0053 and Regulatory Information Number (RIN) number 0572–AC61 through https://www.regulations.gov.
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Sincerely,
AICPA Governmental Audit Quality Center |
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