Presenting a live 110-minute teleconference with interactive Q&A Circular A-133 Audits for Non-Profits Receiving Grants Preparing for Audits and Protecting Grant Eligibility Given Current Government Priorities WEDNESDAY, MARCH 13, 2013 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Lisa Hilling, Assurance Services Partner LLP , Bruner-Cox , Akron, Ohio Paul Preziotti, Manager, Johnson Lambert , Falls Church, Va. Andrea Wright, Partner, Johnson Lambert , Arlington Heights, Ill. For this program, attendees must listen to the audio over the telephone. Please refer to the instructions emailed to the registrant for the dial-in information. Attendees can still view the presentation slides online. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Circular A-133 Audits for Non-Profits Receiving Grants Seminar March 13, 2013 Paul Preziotti, Johnson Lambert Angela Wright, Johnson Lambert ppreziotti@johnsonlambert.com awright@johnsonlambert.com Lisa Hilling, Bruner-Cox LLP lisa.hilling@brunercox.com
Today’s Program Overview Of Circular A-133, Related Laws And Guidance Slide 8 – Slide 23 [Andrea Wright and Paul Preziotti] Experiences With Single Audits Slide 24 – Slide 37 [Lisa Hilling, Andrea Wright and Paul Preziotti] Leading Issues For Auditees To Anticipate Slide 38 – Slide 40 [Paul Preziotti, Andrea Wright and Lisa Hilling]
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Andrea Wright, Johnson Lambert Paul Preziotti, Johnson Lambert OVERVIEW OF CIRCULAR A- 133, RELATED LAWS AND GUIDANCE
Background • Single audit, AKA A-133 audit • Audits of entities that expend $500,000 or more in federal funds • Objective: To provide assurance that recipients are managing federal awards appropriately and in accordance with program requirements 9
Ways To Receive Federal Funds Federal Agency Non-Profit State Agency Organization Non-Profit Organization 10
Single Audit Changes In 2012 • AICPA clarity standards • Yellow Book independence • Compliance supplement 11
AICPA Clarity Standards • Effective for audit periods ending on or after Dec. 15, 2012 • Specific sections related to compliance audits • Experts analyzing effects of group audit standards in relation to compliance audits • New wording in opinions related to compliance audits 12
Independence Under Yellow Book • Defines independence of mind and in appearance • Requires new documentation for auditors – Identify non-audit services – Determine if prohibited – Evaluate and document skill, knowledge, experience – Assess whether threats are significant – Identify and apply safeguards 13
Non-Audit Services • Financial statement preparation, including footnote preparation • Preparation of Form 990 • Bookkeeping services – Cash-to-accrual adjustments 14
Non-Audit Services: Prohibited • Management responsibilities – Leading and directing the organization – Control over human, physical and intangible resources • Assuming management responsibilities impair independence; there are no safeguards to eliminate or reduce threats 15
2012 A-133 Compliance Supplement: Key Points • Updates to ARRA high-risk determination (Appendix VII) • FFATA reporting • Sub-recipient monitoring • Other minor administrative changes • Full list of changes at www.whitehouse.gov/omb/circulars/A- 133_compliance_supplement_2012 16
Appendix VII • Effect of Recovery Act awards on major program determination • Lists Recovery Act awards not covered in Parts 4 or 5 but that could be subject to a single audit, and the list of Recovery Act awards that are NOT subject to single audit • Late-filing and low-risk auditee (no waivers) • Treatment of large loan and loan guarantee programs 17
What Is FFATA? • Federal Funding Accountability and Transparency Act of 2006 • Federal award reporting requirement for all direct recipients of non- Recovery Act awards • Direct recipients required to report certain first-tier sub-awards • Became effective in October 2011 • Q&A incorporated in compliance supplement 18
Proposed Changes To OMB Circular A-133 • Issued Jan. 31 by the U.S. Office of Management and Budget (OMB) • Proposes broad revisions to OMB Circular A-133 • Also includes a number of other key grant reforms 19
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Increase In Single Audit Threshold • Entities that expend less than $750,000 in federal awards would not be required to undergo a single audit. • Represents an increase from the current $500,000 threshold, which was established in 2003 21
Proposed Auditing Changes • Affect what programs your auditors are required to audit • Change in Type A/B program determination • Percentage of coverage changes • Criteria for low-risk auditee status • Increased reporting surrounding findings 22
Other Proposed Changes • Consolidation of cost principles into a single document, in order to avoid variations of application • Changes to indirect costs • Potential alternatives to time and expense reporting for salaries and wages 23
Lisa Hilling, Bruner-Cox LLP Andrea Wright, Johnson Lambert Paul Preziotti, Johnson Lambert EXPERIENCES WITH SINGLE AUDITS
Pre Audit: Auditee’s Responsibilities And Best Practices • Ask for a “PBC” list - Provided by auditor - Shows what documents will be needed from you - Begin gathering information sooner vs. later • Know your funding sources - Federal dollars may be hidden. - Is the program considered high-risk? • Engage your grant writer - Can be a great resource for ensuring all programs are accounted for - Aware of program requirements 25
Pre Audit: Auditee’s Responsibilities And Best Practices (Cont.) • Know the history of the federal funds - Investigate whether they are new to your entity - Have they been tested by your auditors in the past? • Review OMB Web site - http://www.whitehouse.gov/omb - Provides a wealth of information on each program - Can provide insights into what the federal government is looking for 26
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Pre Audit: Auditor’s Responsibilities And Best Practices • Review prior-year SEFA • Communicate with clients • Review GAQC Web site http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality • Obtain contracts and compliance supplement from OMB Web site to plan/design tests 28
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