GAQC Alert No. 358

April 6, 2018

 

 

Proposed Changes to DCF, ED SFA Cluster News, and Other Single Audit Updates
       
 
April 6, 2018
GAQC Alert #358
 
In This Alert
Proposed DCF Revisions
President's Management Agenda
Yellow Book and Single Audit Quiz
SFA Cluster News
GAQC Resources
Required GAQC Webcast
Registration is open for our required annual GAQC Webcast which will be held on Tuesday, May 8, 2018, from 1:00 PM – 3:00 PM (Eastern Time). Register now!
SLG Audit Planning Web Event
Registration is open for a GAQC Web event, 2018 State and Local Government Audit Planning Considerations, which will be held on Tuesday, May 15, 2018, from 1:00 PM - 3:00 PM (Eastern Time). Register now!
Additional Resources
GAQC Alerts

Archived GAQC Web Events

Audit Practice Aids and Tools

HUD Information
Stay Informed
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Dear Center Members
The purpose of this GAQC Alert is to provide members with recent updates on several governmental auditing matters. After reading this GAQC Alert you will:
  •   Learn about proposed revisions to the Data Collection Form (DCF or the Form) issued by the U.S. Department of Commerce Federal Audit Clearinghouse (FAC) and how to comment;
  •   Gain information on a recent federal Management Agenda issued by the President which includes a goal relating to grants management, along with related strategies;
  •   Hear about a quiz prepared by the AICPA Professional Ethics Division to test your knowledge of governmental auditing topics with a focus on Government Auditing Standards (the Yellow Book) and single audits;
  •   Be aware of new guidance issued by the U.S. Department of Education (Education or ED) relating to the Student Financial Assistance (SFA) cluster in a single audit;
  •   Be reminded about the numerous Governmental Audit Quality Center (GAQC) resources available to members on key single audit topics.
Proposed DCF Revisions
The FAC has issued proposed revisions to the DCF in a Federal Register notice titled, Proposed Information Collection; Comment Request; Data Collection Form for Reporting on Audits of States, Local Governments, Indian Tribes, Institutions of Higher Education, and Non-Profit Organizations. This proposal will have no effect on your 2018 single audits since the final Form revision would not be effective until fiscal periods with ending dates in 2019, 2020, and 2021. However, members should review it to understand its future impact and to provide feedback and comment on the proposal.

You can access the FR notice now. The actual proposed Form and related instructions will be available on the FAC Web site at: https://harvester.census.gov/facweb sometime during the next week. Watch the FAC Web site for its posting. If you would like a copy of the draft Form and instructions sooner, you can send an e-mail to the GAQC at gaqc@aicpa.org or to the FAC at erd.fac@census.gov. Comments are due to the FAC on Monday, June 4, 2018. We encourage members to comment directly to the FAC. However, if you would also like your feedback to be considered as part of the GAQC response on the proposal, please submit your comments to gaqc@aicpa.org by Monday, May, 21, 2018.

The four main changes being proposed to the Form are as follows:
  •   The audit finding information currently required to be included in the Form by auditors would be expanded to include the actual text of the audit finding.
  •   Auditors would be asked to indicate whether there was communication to the auditee in a written document relating to any issues that were not an audit finding but warranted the attention with those charged with governance.
  •   Auditees would be required to include the text of their corrective action plans.
  •   Auditees would also be required to include the text of the notes to the schedule of expenditures of federal awards.
Additionally, the notice states that the FAC will allow non-federal entities who did not meet the threshold requiring submission of a single audit report to voluntarily notify the FAC that they did not meet the reporting threshold. The FAC also states that any voluntarily provided information in this regard would be posted to the FAC Web site.

The notice also includes an estimate of the number of hours it will take non-federal entities and their auditors to complete the Form, which is also subject to comment. The FAC estimates that it will take 70 hours for each of the 400 largest respondents to complete the Form and 21 hours for all other respondents.
President's Management Agenda
In late March, the President issued a Management Agenda which provides a long-term vision for (1) modernizing the federal government in key areas, (2) improving agencies' ability to deliver mission outcomes, (3) provide excellent service, and (4) effectively steward taxpayer dollars on behalf of the American people. The Management Agenda includes a number of Cross-Agency Priority (CAP) Goals to address government-wide challenges that cut across federal agencies, along with strategies for achieving those goals.

Of particular interest to GAQC members is the inclusion of a CAP goal titled, Results-Oriented Accountability for Grants, which is intended to improve the way the federal government delivers results to the American taxpayer. It states:

"This goal will: rebalance compliance efforts with a focus on results for the American taxpayer; standardize grant reporting data and improve data collection in ways that will increase efficiency, promote evaluation, reduce reporting burden, and benefit the American taxpayer; measure progress and share lessons learned and best practices to inform future efforts, and support innovation to achieve results."

A related strategy document has also been issued which covers three main components of the goal. Component 1 relates to the standardization of grant reporting data and digitized data collection. Component 2 relates to the development of digital tools to manage federal risk. Component 3 relates to the identification of practices and data tools to enable agencies to incorporate performance into their grant award operations. Within Component 3 is an action item that discusses streamlining the 2019 Office of Management and Budget (OMB) Compliance Supplement with an increased focus on compliance requirements that inform performance.

The agency leads for the grants-related CAP are OMB, Education, and the Department of Health and Human Services. The GAQC will be monitoring this federal effort closely to ensure that single audit considerations are kept in mind as the federal government embarks on achieving this CAP goal and moving towards a more results-oriented focus. We will report any significant activity in future GAQC Alerts.
Yellow Book and Single Audit Quiz
The AICPA Professional Ethics Division tracks the most common enforcement matters related to governmental auditing matters, including those relating to Government Auditing Standards and single audits performed under Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Recently, the Division developed a quiz that appeared in the Journal of Accountancy to test auditors' familiarity with requirements in this area that are commonly misunderstood. We encourage you and your staff to test your knowledge by seeing how many questions you can answer correctly. Take the quiz.
New ED Guidance Issued on SFA Cluster
As previously communicated to GAQC members, for several years now, Education has had a requirement (established through several Federal Student Aid (FSA) memorandums) for institutions participating in Title IV programs to notify their School Participation Division if the SFA cluster would not to be audited as a major program because it met the criteria in the Uniform Guidance for a low-risk program. Recently, ED issued an updated FSA memorandum stating that institutions participating in Title IV programs that submit a single audit that does not include the SFA cluster as a major program will no longer be required to notify their respective School Participation Division of the low-risk assessments. The memorandum reminds institutions that they must still submit (via the eZ-Audit system) their complete single audit each year by the due date regardless of whether the SFA cluster was audited as a major program. Finally, it states that ED will continue to review the impact on year three testing requirements (after two years of low risk assessments) for fiscal year 2019 audits and beyond. The GAQC will continue to monitor activity in this area and communicate any future developments.
GAQC Resources
As a member of the GAQC, your firm has access to numerous resources on the GAQC Web site. For example, you can access all of our archived GAQC Alerts. We also have an entire Web page established for Uniform Guidance resources. You can also direct your clients to our Auditee Resource Center. Finally, our archived GAQC Web events are one of our most valuable resources. For example, did you know you could access an entire library of archived events covering Uniform Guidance topics? Here is a partial list of topics that can be found on the archived single audit Web events page:
  •   Uniform Guidance Year 3: A Deeper Dive into Challenging Audit Areas
  •   Procurement Under the Uniform Guidance: The Time is Now!
  •   Single Audits: New Insights on Factors Driving Quality
  •   Developing and Reporting Audit Findings
  •   Uniform Guidance: Challenging Compliance Areas
  •   Crucial First Steps: The Schedule of Expenditures of Federal Awards and Major Program Determination
Accessing these resources on a regular basis will assist your firm in maximizing audit efficiency and effectiveness. We encourage you to remind staff of the availability of these resources and to take advantage of them on an ongoing basis.

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Sincerely,

AICPA Governmental Audit Quality Center
     
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