GAQC Alert No. 222 

GAQC Alert
GAQC Comments on Single Audit Revisions; Guidance Issued for 2013 Clearinghouse Filings; HUD Revises Chapter 1 of the HUD Guide; and Upcoming AICPA Conferences
June 5, 2013
GAQC Alert #222
In This Alert
GAQC Comments on Single Audit Revisions
Guidance Issued for 2013 Clearinghouse Submission
Update to the HUD Guide Issued
Upcoming AICPA Industry Conferences
Register Now!
The next GAQC Web event, The 2013 OMB Compliance Supplement and Proposed Single Audit Reforms, will be held on Thursday, June 13, 2013, from 1:00 PM - 3:00 PM (Eastern Time). Read GAQC Alert #220 to learn more or click here to register with the Continuing Professional Education (CPE) or No-CPE options.
AICPA Governmental and NPO Resources Page
Access a Web page titled, AICPA Governmental Guidance, Tools and Resources, which includes CPE opportunities, publications, and conferences of interest to auditees and auditors of state and local governments and NPOs. It is intended to serve as a "one-stop" knowledge resource.
Additional Resources
GAQC Alerts

Archived GAQC Web Events

Audit Practice Aids and Tools

HUD Information
Dear Center Members
This GAQC Alert provides you with important updates in several key areas as follows:
The issuance of the Governmental Audit Quality Center (GAQC) comment letter on proposed changes to the single audit rules and other key grant reforms;
Guidance posted on the Federal Audit Clearinghouse (FAC) Web site regarding 2013 submissions in light of the new Data Collection Form (DCF) not yet being issued;
Another update to the U.S. Department of Housing and Urban Development (HUD) Consolidated Audit Guide for Audits of HUD Programs (HUD Guide); and
Upcoming AICPA industry conferences and GAQC member discount opportunities.
GAQC Comments on Proposed Single Audit Changes and Other Key Grant Reforms
On June 2nd, the GAQC issued its comment letter on the Office of Management and Budget (OMB) Proposed Rule, Reform of Federal Policies Relating to Grants and Cooperative Agreements: Cost Principles and Administrative Requirements (Proposed Rule), and the related, Proposed OMB Uniform Guidance: Cost Principles, Audit, and Administrative Requirements for Federal Awards (Proposed Guidance). GAQC Alert #211 provides a summary of the OMB proposals. Considerable time and effort was put into reviewing and analyzing these proposals by a task force of the GAQC Executive Committee. Feedback was also received from other AICPA volunteer committees, state CPA societies, GAQC members, as well as the broader AICPA membership. Thanks to all of the GAQC members that participated in the process by submitting feedback.

The GAQC letter indicates support for the overall direction of many of the changes proposed and expresses appreciation regarding OMB's responsiveness to the GAQC feedback provided on the previous Advance Notice. However, the letter does express significant concerns in a number of areas including the future effective date; federal capacity and coordination issues; and a lack of clarity around certain changes to the cost principles, indirect cost rules, and time and effort requirements.

The letter breaks the GAQC comments down into four main areas. Appendix A provides the detail behind each of the GAQC's significant comments. Appendix B describes a number of overarching observations, primarily on areas that are not specifically covered in the proposals but that need attention. Appendix C covers the detailed issues identified by the GAQC on various aspects of the proposal, many of which relate to the audit requirements. Finally, Appendix D identifies a number of editorial suggestions for OMB's consideration. We encourage all members to review the GAQC letter. Access the comment letter.

Finally, the GAQC event scheduled on June 13th titled, The 2013 OMB Compliance Supplement and Proposed Single Audit Reforms (see registration information in the left sidebar of this GAQC Alert) will, in part, cover the OMB proposals and the related GAQC comments. You may want to consider attending this event to become more familiar with the OMB proposals in the event your clients have questions during the upcoming audit season.
Temporary Guidance Issued for 2013 Clearinghouse Submissions
In GAQC Alert #221, we informed you about the OMB proposed changes to the DCF and guidance that was being developed for situations when 2013 single audits are completed prior to the final 2013 DCF being available. That guidance has been finalized and posted to the home page of the Federal Audit Clearinghouse and is as follows:

"If a single audit for a fiscal period ending in 2013 is due before the 2013 Form is available, auditees will not be able to meet the thirty day deadline for submission prescribed by OMB Circular A-133, section .320(a). Therefore, OMB has granted an extension until September 30, 2013 for reporting packages due to the Clearinghouse before that date. The extension is automatic and there is no approval required. The extension applies only to single audits for the fiscal periods ending in 2013."

Remember that if you have comments on the draft DCF you would like the GAQC to consider for the AICPA comment letter, please submit your comments to the GAQC at on or before June 17, 2013.
Another Update to the HUD Guide Issued
Late last week, HUD issued a revision to Chapter 1, General Audit Guidance, of the HUD Guide. The revised guidance applies to all entities required to undergo an audit under the HUD Guide and is effective for audits of entities with year ends ending on or after June 30, 2013. The transmittal letter for Chapter 1 indicates that the revision is intended to reflect changes in Government Auditing Standards and the clarified auditing standards issued by the AICPA.

The last time this chapter was significantly revised was in mid-2011. After the 2011 update, the GAQC communicated certain comments and questions to HUD about the chapter. Some of the new revisions to Chapter 1 are also addressing the previous GAQC feedback. In January 2013, a more directed change was made to Chapter 1 to eliminate the $2 million major program threshold for FHA-approved lenders (see GAQC Alert #210). That change continues to be reflected in the new chapter.

Some of the changes being made to Chapter 1 are as follows:
The chapter clarifies that the HUD Guide is mandatory for audits of for-profit entities that are subject to HUD's uniform financial reporting standards and related mortgagee letters. Additionally, it more clearly explains that the HUD Guide requires a financial statement audit and a compliance audit of the major HUD programs and that the HUD Guide is to be used for the compliance audit portion of the audit.
The chapter clarifies that audits of states, local governments and not-for-profit organizations (NPOs) are subject to Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations, and that auditors should use the OMB Compliance Supplement (Supplement) and not the HUD Guide for those audits. It goes on to state that the HUD Guide can be used to build an audit program in accordance with Part 7 of the Supplement when a program covered in the HUD Guide is not included in the Supplement. Finally, it removes the previous discussion in Chapter 1 of the submission of the single audit reporting package directly to HUD.
The auditor qualifications section of the previous chapter was removed. That section discussed matters such as peer review, licensing, and independence. Even though these items were removed from the chapter, auditors should keep in mind that Government Auditing Standards applies to these HUD audits and includes many of the same topic areas within its general standards. Note that HUD did add paragraph 1-8 to the new chapter to remind auditors about the Government Auditing Standards requirement for peer review and to emphasize that the peer review report does not need to be submitted by the auditor to HUD or HUD Office of Inspector General unless requested or provided for in another chapter of the HUD Guide.
The previous table that described major program threshold amounts has been deleted and the threshold requirements are now discussed in paragraph format. In general, the information provided on this topic area is unchanged.
The sampling requirements discussion has been enhanced. Additionally, the chapter now permits the auditor to follow the sampling approach in either Appendix A of Chapter 1 or the AICPA's Audit Guide, Government Auditing Standards and Circular A-133 Audits (GAS-A133 Guide). Note that Chapter 11 of the GAS-A133 Guide (which is the chapter that discusses attribute sampling in a single audit) will provide useful guidance to auditors even if they are using the sampling guidance in Chapter 1 of the HUD Guide. Finally, the Chapter 1, Appendix A, guidance on sampling was revised to define small populations as 250 items or fewer, to be more consistent with the AICPA GAS/A-133 Guide. The previous threshold for small items in the Chapter 1 Appendix was 200.
The chapter was updated to remove material that was duplicative or conflicting with other chapters. It was also streamlined to remove duplicative references to or restatements of requirements in Government Auditing Standards or generally accepted auditing standards. Auditors should closely look at paragraph 1-5, Planning the Audit, which includes a number of these types of "streamlining" changes.
Discussion regarding the corrective action plan and Fair Housing and Nondiscrimination requirements were removed from Chapter 1 as these topics are covered elsewhere in the HUD Guide.
Upcoming AICPA Industry Conferences
There are several AICPA industry conferences coming up between now and year-end that we believe may be of interest to our members. A description of each follows. GAQC member firms and state audit organizations (SAO) are eligible for a member discount by using the discount code (GAQC13) when registering. If you decide to attend, please look for the GAQC exhibitor booth and stop by to say hello. We hope you find this information useful as you plan your governmental CPE for the year.

AICPA National Not-for-Profit Industry Conference - This conference will be held in Washington, DC, on June 12 - 13, 2014, and provides participants with the latest information on the impact of tax, management, auditing, and accounting issues pertaining to not-for-profit organizations (NPO). The conference includes multiple sessions on Government Auditing Standards (the Yellow Book) and single audit topics. Click here to register and download the brochure. If you can't attend this conference live, there is a new virtual conference option. Using this option, you can sign up for some or all of the conference sessions and participate remotely online. Visit the Online Conference webpage for more details and registration information.

AICPA National Governmental Accounting and Auditing Update Conference - This conference will be held in two locations as follows: (1) August 11 - 12, 2014,  in Washington, DC; and (2) September 22 - 23, 2014, in Denver, CO. It provides participants in-depth training specific to the government arena and provides a forum for the discussion of new accounting & auditing standards and how they will affect governments and governmental audits; Yellow Book independence implementation issues; and the latest on single audits and other common compliance audits. Click here to register for the Washington, DC location and click here to register for the Denver location. We also understand that an online conference participation option is being developed for GAAC East only. Watch the conference registration pages for updates and how to register for the virtual option.

AICPA National Governmental and Not-for-Profit Training Program - This conference will be held in Las Vegas, NV, on October 20 - 22, 2014, and will provide participants with over 50 different concurrent "hands-on" workshop sessions on a broad range of topics, including developments in governmental and NPO accounting and auditing and financial statement reporting; Yellow Book and single audit issues, and the latest in proposed laws and regulations. Click here to register and download the brochure.
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AICPA Governmental Audit Quality Center

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