Applicability and Overview of Key Components

    Applicability and Overview of Key Components 

    Entities that receive federal funds are subject to audit requirements that are commonly referred to as single audits.  Among other things, the Single Audit Act Amendments of 1996 (the Single Audit Act) (Public Law [P.L.]104-156) is intended to promote sound financial management, including effective internal control, with respect to federal awards administered by state and local governments and Not-for-Profit Organizations (NPO)s. Each year, over 35,000 single audits are performed. Under Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations (Circular A-133), those governments or organizations that expend $500,000 1or more in federal awards during the fiscal year must do the following:  

    1.   Maintain internal control for federal programs.

    2.   Comply with the laws, regulations, and the provisions of contracts or grant agreements.

    3.   Prepare appropriate financial statements, including the schedule of expenditures of federal awards (SEFA).

    4.       Ensure that the required single audits are properly performed and submitted when due.

    5.       Follow up and take corrective actions on audit findings.

    Circular A-133 also contains requirements for audits of individual federal programs known as program-specific audits.


     

    1. The June 27, 2003, revisions to Circular A-133 raised the threshold for the applicability of the Single Audit Act and Circular A-133 from $300,000 to $500,000 effective for audits of fiscal years ending after December 31, 2003, and early implementation was not permitted. 

    Copyright © 2004 by the American Institute of Certified Public Accountants, Inc., New York, New York.

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