GAQC Alert No. 341 


GAQC Alert
 
Final 2017 Compliance Supplement Issued and Updates Made to Uniform Guidance FAQs
   
  AICPA
August 17, 2017
GAQC Alert #341
 
In This Alert
2017 Compliance Supplement
Updated FAQ Document
2017 SLG Guide Available
The 2017 AICPA Audit Guide, State and Local Governments, is now available in all formats. Order your copy now. This is an important publication if you perform state and local government financial statement audits.
Additional Resources
GAQC Alerts

Archived GAQC Web Events

Audit Practice Aids and Tools

HUD Information
Dear Center Members
Today, the Office of Management (OMB) released the final 2017 OMB Audit Requirements, Appendix XI – Compliance Supplement (the Supplement). OMB also recently issued an updated Frequently Asked Questions (FAQ) document on topics relevant to implementation of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). After reading this GAQC Alert you will be aware of the following:
  • What you need to know about the new Supplement, how you can access it, and other related resources; and
  • What the updated FAQ document contains, where to find it, and a reminder about its authoritative status.
The 2017 Compliance Supplement

As noted in GAQC Alert #336, due to delays in the OMB clearance process, OMB asked the GAQC to post a draft of the 2017 Supplement to our Web site for use in audit planning purposes. Now that the final Supplement is available, it is important for you to stop using the draft Supplement. The GAQC is in the process of removing the draft from our Web site and you should replace any hard copy excerpts you may have printed out with information from the final Supplement. Per OMB staff, the final Supplement includes only one change from the previous draft which is an updated reference to the recently revised FAQ document discussed later in this GAQC Alert.

The 2017 Supplement includes several new pieces of guidance, as well as the normal types of changes made by OMB each year such as the addition, deletion, and modification of various federal programs. It supersedes the 2016 Supplement and applies to audits of fiscal years beginning after June 30, 2016. You should review Appendix V, List of Changes for the 2017 Compliance Supplement, to learn more about the type of changes made and the specific programmatic changes by Catalog of Federal Domestic Assistance (CFDA) number. You should also review GAQC Alert #336 to learn more about the key changes auditors should be aware of.

Access Information. You can currently find the 2017 Supplement in one large PDF file on the Office of Federal Financial Management section of the OMB's Web site and on the "Information for Agencies" section of the OMB Web site on the "Circulars" page. A PDF version, broken down by Supplement section, is also expected to be made available on the OMB Web site in the near term.

Importance of the Supplement. The Supplement identifies the existing important compliance requirements that the federal government expects to be considered as part of a single audit and is one of the most important pieces of guidance that you use in performing single audits. It provides a source of information for auditors to understand federal program objectives, procedures, and compliance requirements, as well as audit objectives and suggested audit procedures for determining compliance with these requirements. As the designated audit quality partner for your firm or designated audit quality leader for your state audit organization, you should give the 2017 Supplement your immediate attention and ensure that your staff has the information they need to help ensure single audit quality.

Give Us Your Feedback. OMB issued a Federal Register Notice announcing the Supplement's release. In that notice, OMB offers interested parties an opportunity to comment on the 2017 Supplement. The GAQC will be monitoring implementation of the Supplement and to the extent we receive common questions on particular areas, we will communicate that information back to OMB with a request for clarification. If you have any questions or clarifications that you think need to be addressed, please e-mail us at gaqc@aicpa.org so that we are aware of issues or problems our members are facing.

Related GAQC Web Event. The GAQC plans to rebroadcast the GAQC Web event, 2017 Compliance Supplement and Single Audit Update, for continuing professional education (CPE) on Thursday, September 14, 2017, from 1:00 PM – 3:00 PM (Eastern). This event provides participants with an overview of essential information in the 2017 Supplement and tips for avoiding common pitfalls associated with using the Supplement. Registration information will be provided in an upcoming GAQC Alert. Additionally, a no-CPE archive of this Web event is now available on the GAQC Web site.
Updated FAQ Document

In GAQC Alert #338 we informed you about the disbanding of COFAR and that the previously issued COFAR FAQs continue to exist with the same level of authority. OMB has since informed us that an update to these FAQs was issued in late July and can be accessed on the "Grants Initiatives" section of the Chief Financial Officers Council (CFOC) Web site (https://cfo.gov/). The July 2017 FAQ document contains 24 new FAQs and revisions to 4 previously issued FAQs. The table of contents identifies new questions with one asterisk and revised questions with two asterisks. The Supplement states that the FAQs are meant to provide additional context, background, and clarification of the policies described in the Uniform Guidance and should be considered in the single audit work plan and reviews. Therefore, both auditors and auditees should review the updated FAQ document.

Many of the new FAQs relate to indirect costs and other auditee topics such as subrecipient monitoring and risk assessment. These FAQs are also relevant to auditors from the perspective of the compliance and internal control over compliance work done in these areas. Additionally, several FAQs directly relate to the audit requirement section of the Uniform Guidance including the following:
  • .510-1 Organizing Content of Schedule of Expenditures of Federal Awards (SEFA). This FAQ concludes that an entity may organize the SEFA in an alternate way such as by state agency or departments of an organization and still be compliant with the requirement to list individual federal programs by federal agency. However, it cautions that entities should ensure that the SEFA is clear and organized.
  • .510-2 Subtotals by Agency in the Schedule of Expenditures of Federal Awards. This FAQ indicates that including subtotals of expenditures by federal agency on the SEFA is not an explicit requirement in the Uniform Guidance but that doing so is a best practice.
  • .510-3 Schedule of Expenditures of Federal Awards. Expenditures Occur in Only One Program Within a Cluster of Programs. This FAQ clarifies that the auditee should include the name of the cluster on the SEFA regardless of whether the expenditures were incurred under only one program or multiple programs within the cluster of programs.
  • .511-1 Auditee Responsibility for Preparing the Summary Schedule of Prior Audit Findings and Corrective Action Plan. This FAQ reiterates that the auditee is responsible for preparing both the Summary Schedule of Prior Audit Findings (SSPAF) and Corrective Action Plan (CAP) and states that the auditor should not prepare these documents for the auditee. It also indicates that the CAP must be on the letterhead of the auditee and clarifies that the "views of responsible officials" section of the auditor's finding does not fulfill the auditee's responsibility to prepare the CAP. See also a related GAQC practice article related to the topic of this FAQ.
  • .518-1 Auditing Low-Risk Type A Programs During Implementation of UG Audit Requirements. This FAQ reiterates guidance already provided in Appendix VII, Other Audit Advisories, of the Supplement regarding the opportunity for auditors to "smooth" the timing of auditing low-risk type A programs during the first three years of Uniform Guidance implementation.
We hope you find this information useful as you plan and perform your 2017 single audits. As always, thank you for your commitment to governmental audit quality.
*   *   *   *   *
Sincerely,

AICPA Governmental Audit Quality Center
 
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