News on Build America Bonds and Other Recovery Act Matters
The purpose of this GAQC Alert is to inform members about recent news out of the U.S. Office of Management and Budget (OMB) regarding the applicability of the single audit to Build America Bonds. Additionally, after reading this Alert you will receive an update on several other matters related to the American Recovery and Reinvestment Act of 2009 (Recovery Act) including:
A recently launched version of the www.recovery.gov Web site;
The availability the most recent GAQC member call on the Recovery Act in an archived format; and
A new OMB Recovery Act pilot project for volunteer state governments
Build America Bonds Excluded from the Scope of a Single Audit
Since the Recovery Act was issued, the GAQC has received numerous questions about whether Build America Bonds should be a federal award that would be subject to the single audit. In the last few days, the GAQC staff was informed by OMB that it has determined, after consideration with the various federal agencies involved, that the Build America Bonds Program is excluded from the provisions of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, Build America Bonds should not be presented by auditees on the Schedule of Expenditures of Federal Awards and should not be included in the scope of the single audit.
For those that may not be familiar with the Build America Bonds program, it was created by the Recovery Act to assist state and local governments in financing capital projects at lower borrowing costs and to stimulate the economy and create jobs. Basically, it authorizes state and local governments to issue taxable bonds to finance any capital expenditures for which they could otherwise issued tax-exempt governmental bonds. State and local governments then receive a direct federal subsidy payment for a portion of their borrowing costs on Build America Bonds equal to 35 percent of the total coupon interest paid to investors. The question surrounding the bonds from a single audit perspective was whether this subsidy payment should be included on the Schedule of Expenditures of Federal Awards and included in the scope of the single audit.
Click here to view additional guidance from the Internal Revenue Service on Build America Bonds.
Revisions Made to www.recovery.gov
The Recovery Accountability and Transparency Board (RATB), the independent Board set up by Congress to monitor Recovery Act spending, recently updated the official Web site for the Recovery Act (www.recovery.gov). This Web site was created shortly after passage of the Recovery Act to provide unprecedented transparency about how Recovery funds are being used, and increase accountability to help guard against fraud, waste, and abuse. The recent revision to the Web site now includes a series of interactive maps, charts, and graphs giving users of the Web site the ability to see how Recovery Act funds flow down from federal agencies via competitive contracts, grants and loans. Users will have the ability to type in their specific zip codes to learn what projects are nearest them. The revised Web site is also designed to help visitors navigate the Web site through a number of guides and tutorials. Click here to view a message from the Chairman of the RATB, Earl Devaney, regarding the new www.recovery.gov. One link that might be useful to GAQC members is the policy and guidance section of the www.recovery.gov Web site. It can be accessed by clicking here. Policy guidance can also be accessed directly on the OMB Web site by clicking here or at: http://www.whitehouse.gov/omb/recovery_default.
Archived Recovery Call Now Available
The GAQC recently held a member call, The Recovery Act: A Practitioner's Perspective , that is now available in an archived format on the GAQC Web site. The call was presented by a panel of CPA practitioners and provides your firm with another resource to help you better understand the implications of Recovery Act funds to your clients and your single audits. With so much information on the Recovery Act and the rate at which guidance is being issued, this call will give you the opportunity to hear how other practitioners with clients affected by the Recovery Act have been addressing some of the related challenges. Click here to download the presentation slides and to listen to the archived call.
OMB Launches Recovery Act Pilot Project for Volunteer State Governments
Just this week, OMB announced the parameters of a pilot project, which is a collaborative effort between volunteer state governments expending Recovery Act awards for the year ended June 30, 2009, their auditors, and the federal government. For state auditees that volunteer, the pilot project will require their auditors to issue to management an early written communication of significant deficiencies and material weaknesses in internal control over compliance at an interim date (i.e., November 30, 2009), prior to the completion of the single audit. Such communication will be based on internal control work performed on specified compliance requirements for two major programs with Recovery Act expenditures chosen from a list of approved Recovery Act pilot project programs. Management of the volunteer state auditees will be required to submit the interim communications to their federal funding agencies for follow-up and corrective action. While at this point the pilot project does not have applicability beyond volunteer state governments and their auditors, the GAQC has been working closely with OMB and others as the pilot parameters have been developed. We will be monitoring activities surrounding the pilot project and will communicate with members as we receive updated information.
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