GAQC Alert No. 309

GAQC Alert
HUD Update, GAQC Web Event Rebroadcasts, and Updated SLG Practice Aid
June 1, 2016
GAQC Alert #309
In This Alert
HUD Notice on Uniform Guidance
GAQC CPE Rebroadcast Opportunities
Updated Special Purpose Frameworks Practice Aid
Register for Single Audit Web Event
The next GAQC Web event, 2016 OMB Compliance Supplement and Single Audit Update, is on Thursday, June 9, 2016, from 1:00 PM - 3:00 PM (Eastern Time). Register now.
Access Archived SLG Web Event
The GAQC Web event, 2016 State and Local Government Audit Planning Considerations, is now available. Access the archived event.
Single Audit Certificates
Consider participating in the AICPA's new exam-based intermediate and advanced single audit certificate programs, both of which are designed to help improve and demonstrate competency and quality. To learn more, read GAQC Alert #305 or go directly to the Single Audit Certificates Web page.
Additional Resources
GAQC Alerts

Archived GAQC Web Events

Audit Practice Aids and Tools

HUD Information
Dear Center Members
This GAQC Alert informs you about the following developments and continuing professional education (CPE) opportunities:
A new notice issued by the U.S. Department of Housing and Urban Development (HUD) which clarifies HUD's position on various aspects of the implementation of Office of Management and Budget (OMB), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at 2 CFR 200 (Uniform Guidance) to certain HUD programs and that may affect single audits already underway or in the planning phase;
Registration information for the Governmental Audit Quality Center (GAQC) "summer fun" week of CPE Web event rebroadcast opportunities (including the required GAQC Webcast); and
Updates to the AICPA's special purpose framework practice aid for state and local governments (SLGs)
HUD Notice on Uniform Guidance May Affect Current Single Audits

HUD's Office of Community Planning and Development (CPD) recently issued Notice CPD 16-04: Additional Transition and Implementation Guidance for Recipients of Community Planning and Development (CPD) Funds for 2 CFR Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (notice), which discusses, among other things, the timing of the effective date of the Uniform Guidance administrative requirements and cost principles to HUD recipients. This notice should be of interest to auditors performing single audits of HUD major programs since it addresses the compliance criteria that the auditor uses when testing compliance for an affected HUD program. Many of these single audits may already be in progress or are in the planning phase. The notice relates to the following HUD programs:
Community Development Block Grant (CDBG) Program.
CDBG Disaster Recovery Grants (CDBG-DR)
HOME Investment Partnerships (HOME) Program
Housing Trust Fund (HTF) Program
Housing Opportunities for Persons With AIDS (HOPWA)
Emergency Solutions Grants (ESG) Program
Continuum of Care (CoC) Program
CPD Programs awarded by Notice of Funding Availability (NOFA)
The notice discusses each of the above programs and explains when the Uniform Guidance became applicable to HUD recipients and other nuances of Uniform Guidance implementation including subawards, procurement, program income, and indirect costs. Auditors performing single audits that include HUD major programs should read the notice carefully to ensure that the appropriate criteria are being used to test compliance for each of the above programs.

The notice does not affect the timing of the implementation of the audit requirements contained in Subpart F of the Uniform Guidance, which generally became effective for single audits of December 31, 2015, year ends and later. However, the notice may affect the compliance criteria used by the auditor when testing one of the above programs. Unlike the effective date provisions for recipients in the Uniform Guidance that hinge on whether federal funds came from a new award or incremental funding, the HUD notice explains that for certain HUD programs, expenditures made on or after December 26, 2014, from existing HUD awards were also expected to comply with the Uniform Guidance administrative requirements and cost principles.

The notice indicates that HUD grant recipients should contact their Field Office or HUD Headquarters representatives for more information. Recipients and auditors with questions about the notice may also contact the HUD representatives identified in Appendix III, "Federal Agency Single Audit and Program Contacts," of the OMB Compliance Supplement.

To provide an example of how the notice may affect single audit compliance testing, the following paragraphs discuss the aspects of the notice for the CDBG, CDBG-DR, ESG, and HOME programs.

CDBG, CDBG-DR, ESG, and HOME Programs. The HUD notice states that there has been confusion about the timing of Uniform Guidance applicability for the CDBG, CDBG-DR, ESG, and HOME programs because the grant agreements for these programs contain language requiring compliance with the program regulations "as now in effect and as may be amended from time to time" or similar language. As a result of this language, the notice states that HUD's intent was that existing grant agreements for the CDBG, CDBG-DR, ESG, and HOME programs would automatically become subject to the Uniform Guidance requirements as of the December 26, 2014, Uniform Guidance effective date. So, for example, if HUD had entered into a CDBG grant agreement with a nonfederal entity in early 2014 that included the "program regulations as amended" language, HUD's expectation was that the nonfederal entity would have complied with the Uniform Guidance administrative requirements and cost principles for funds expended from that award on or after December 26, 2014.

In light of the confusion on the effective date, the notice states that HUD will not make findings of noncompliance if a grantee used CDBG, CDBG-DR, ESG, or HOME funds in accordance with comparable requirements under HUD regulation parts 84 or 85 (2013 edition) between December 26, 2014 and January 6, 2016. However, auditors should note that this aspect of the notice does not override the Uniform Guidance requirements for the auditor to report findings. That is, regardless of whether HUD pursues noncompliance found in this area, auditors should test compliance against the appropriate criteria and report findings if they find noncompliance.

Finally, the notice covers what HUD recipients participating in the CDBG, CDBG-DR, ESG, and HOME programs must include in any subawards made and the relating timing. Situations in which a recipient must amend an existing subrecipient or comparable agreement are also discussed. Auditors of HUD recipients that make subawards should pay close attention to this section of the notice when performing subrecipient monitoring testing that relates to determining what subawards must contain.
Registration Information for GAQC CPE Rebroadcasts
The GAQC is holding its annual "summer fun" week of CPE Web event rebroadcasts from June 21st – June 24th. Because members are not always able to make our live events, we have selected seven of our most popular events to rebroadcast. The timing of the "summer fun" week will also benefit members with a June 30th CPE measurement period that need to earn a few more CPE credits.

The following table includes the topic of each rebroadcast and provides corresponding dates and times. Each registration link provides you with registration information and group viewing options. We hope that you or any of your staff that might have missed the live events will take advantage of these CPE opportunities. Keep in mind that you always have the option of viewing previous GAQC Web events, including the annual required Webcast, with a no-CPE option. Access all previously held GAQC archived "no-CPE" Web events.

Of particular note is the CPE rebroadcast of the required 2016 GAQC Webcast, 2016 GAQC Annual Update Webcast, on Friday, June 24, 2016, from 1:00 PM – 3:00 PM (Eastern). Each firm designated audit quality partner (DAQP) or state audit organization designated audit quality leader (DAQL) must attend this annual Center-sponsored Webcast. If you serve as a DAQP or DAQL and missed the live event, we hope you can take advantage this important rebroadcast opportunity.
Date Time (all are Eastern Time) Web Event Title
21-Jun-16 1PM - 3PM The Continued Complexities of Auditing Governmental Pension Plans and Participating Employers

Covers the latest information on the complexities of governmental pension requirements for purposes of your 2016 audits. Register now.
22-Jun-16 11AM - 1PM Revenue Recognition in a State and Local Government Environment

Provides an overview of the various revenue streams governments have and addresses certain of the more complex and challenging areas. Register now.
22-Jun-16 1PM - 3PM Now is the Time for Auditors to Get Ready for the Uniform Guidance Audit Requirements

Provides an overview of the new Uniform Guidance audit requirements and practical application tips to assist you in your upcoming single audits. Register now.
23-Jun-16 11AM - 1PM Sampling in a Single Audit Environment

Covers the unique aspects of sampling in a single audit environment. Register now.
23-Jun-16 1PM - 3PM 2016 State and Local Government Audit Planning Considerations

Discusses key audit and accounting developments for SLG financial statement audits to assist with the audit planning process. Register now.
24-Jun-16 11AM - 1PM Avoiding Common Deficiencies in Yellow Book and Single Audits

Reviews key areas that auditors need to ensure they get right in their audits, as well as common deficiencies. Register now.
24-Jun-16 1PM - 3PM 2016 GAQC Annual Update Webcast

Provides a summary of the key issues that should be considered as part of planning for the 2016 audit season. Register now.
Note that the GAQC does not typically offer new Web events during the months of July and August because we are busy developing and confirming our event schedule for the next September through June timeframe. Look for a GAQC Alert in the late summer announcing our new slate of events for the 2016-2017 season!
Updated SLG Special Purpose Frameworks Practice Aid Issued
Auditors of SLGs that prepare financial statements using a special purpose framework (e.g., cash basis, modified cash basis, regulatory, etc.) should be aware that the AICPA has updated its Practice Aid, Applying Special Purpose Frameworks in State and Local Governmental Financial Statements. This Practice Aid provides accounting and auditing professionals with guidelines and best practices to promote consistency and for resolving the difficult questions of special purpose framework application by SLGs.

The practice aid has been updated to clarify and provide additional guidance and practice points in areas such as the treatment of defined benefit pension plan and other post-employment benefit plan costs. It has also been updated to provide additional practice points on accounting and reporting issues related to the timing of payroll payments and the impact of the use of special purpose frameworks on an entity's single audit low risk auditee status. Order the updated SPF practice aid.

As always, thank you for your membership and dedication to audit quality.
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AICPA Governmental Audit Quality Center
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