Application of SAS 112 in a Single Audit

January 22, 2008

NOTE: While SAS No. 115, Communication of Internal Control Related Matters Identified in an Audit (AICPA, Professional Standards, AU sec. 325), has superseded SAS No. 112 of the same name, the GAQC continues to make this event on SAS No. 112 available because we believe it continues to provide useful information about communicating internal control matters.  With that said, the primary changes from SAS No. 112 to SAS No. 115 were definitional changes in the terms significant deficiency and material weakness.  Auditors should be sure to listen to the event with these definitional changes in mind and refer to SAS No. 115 for the latest guidance.


The Governmental Audit Quality Center hosted a member-call on Tuesday, January 15, 2008 entitled,  Application of SAS 112 in a Single Audit.  There has been much focus on the application of Statement on Auditing Standards (SAS) No. 112, Communication of Internal Control Related Matters Identified in an Audit (AICPA, Professional Standards, AU sec. 325), in financial statement audits. We have selected the topic of this call because we have heard much less "buzz" from auditors on the implications and application of SAS No. 112 in a single audit. Therefore, we wanted to ensure that GAQC members are aware of all recently issued guidance and have an opportunity to hear first-hand the latest information on SAS No. 112 in a single audit.

The call provides an overview of and related discussion on the following items:

  • Office of Management and Budget (OMB) Federal Register Notice titled, Audits of States, Local Governments, and Non-Profit Organizations, Revisions to Circular A-133, issued on June 26, 2007, which revised the Circular to update internal control terminology as it relates to internal control over compliance to be consistent with the requirements of SAS No. 112.
  • AICPA Auditing Interpretation No. 1, "Communicating Deficiencies in Internal Control Over Compliance in an Office of Management and Budget Circular A-133 Audit" of SAS No. 112 (AICPA, Professional Standards, AU sec. 9325.01-.02) issued by the AICPA Auditing Standards Board (ASB), which defines the terms control deficiency, significant deficiency, and material weakness when an auditor reports on internal control over compliance in a single audit.
  • Illustrative Auditor's Reports from the 2007 AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits, which are SAS No. 112 compliant.
  • Guidance on Evaluating Control Deficiencies in a Single Audit developed by an AICPA Task Force (that George Rippey chaired and Mandy Nelson served as a member) which was developed to explain how the guidance in SAS No. 112, paragraphs .09–.19, on evaluating control deficiencies when reporting on internal control over financial reporting could be translated to reporting on internal control over compliance.
Remember that this call will not cover SAS No. 112 implications in a financial statement audit. That topic was covered in a previous Center member-only call titled, "Impact of SAS 112 on Governmental Financial Audits," and can be accessed here.

About the Presenters

Mandy Nelson, CPA,
 is a partner in KPMG's Department of Professional Practice. Mandy serves as KPMG’s liaison to federal agencies on Single Audit issues. She provides guidance to KPMG offices on not-for-profit accounting, performing audits in accordance with Government Auditing Standards, and performing single audits. Mandy is a frequent instructor for KPMG and AICPA courses. Mandy is currently the chairperson of the GAQC Executive Committee and a member of the AICPA Expert Panel for not-for-profit organizations. Mandy received her BS in Commerce from the University of Virginia and is a Certified Public Accountant.

George Rippey serves as Deputy Assistant Inspector General (IG) for Audit at the Department of Education where he assists the Assistant IG for Audit in leading the office of Audit Services. George recently completed a three-year term on the ASB and previously served on the AICPA's Government Accounting and Auditing Committee, Single Audit Working Group, and the Technical Standards Subcommittee of the Professional Ethics Executive Committee. George received a BBA in accounting from Temple University and is a Certified Public Accountant and a Certified Government Financial Manager.

You should print out and have available the following attached presentation materials for reference during the archived call:

Application of SAS 112 in a Single Audit Conference Call Slides ( PowerPoint)

The presenters addressed some of the questions within the time allotted for the call. However, all questions received are posted on the GAQC Member Discussion Forum. We encourage you to visit the forum to post additional follow-up questions.

Thank you for your interest in this GAQC conference call.

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