Presentation Title on MasterPage 1 Single Audit Changes – Recovery Act Compliance Supplement...

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Single Audit Changes – Recovery Act

► Compliance Supplement► Appendix VII devoted to ARRA

► CFDA numbers► Clarification of Low-Risk Auditee Criteria► Schedule of Expenditures of Federal Awards (SEFA)► Effect of Expenditures of ARRA Awards on Major Program

Determination

► Part III, Section L – §1512 Reporting



► Compliance Supplement (continued)► CFDA Numbers

► Federal agencies are required to specifically identify ARRA awards► New programs: new CFDA numbers will be issued for “new ARRA

programs or for existing programs for which the compliance requirements are significantly different for the ARRA funding”

► Existing programs: may or may not use a new CFDA number



► Compliance Supplement (continued)► Schedule of Expenditures of Federal Awards (SEFA)

► Expenditures under ARRA should be separately identified on the SEFA and the Data Collection Form► Should include the prefix “ARRA-” in identifying the name of the program

► For each subrecipient, recipients agree to separately identify the following: the Federal award number, CFDA number and amount of ARRA funds

► New level of detail for research and development


Single Audits for Periods Ending on/after June 30, 2010

► Impact of Recovery Act on 2010 Compliance Supplement:► Guidance from 2009 CS Addendum #1 incorporated (e.g., in

Part 3)► Updated Appendix VII

► Low-Risk Auditee Status► Extensions► Loans► Major program determination for ARRA funded awards

► Parts 3, 4, and 5


Low Risk Auditee and Extensions

► M-10-14, Updated Guidance on the American Recovery and Reinvestment Act (March 22, 2010) – See also GAQC Alert #141

“Due to the importance of the Single Audits and the reliance of Federal agencies on the audit results to monitor the accountability of Recovery Act programs, agencies should not grant any extension request to grantees for fiscal years 2009 through 2011. In order to meet the criteria for a low-risk auditee (OMB Circular A-133 §__.530) in the current year, the prior two years audits must have met the requirements of OMB Circular A-133, including report submission to the FAC by the due date (OMB Circular A-133 § __.320).”


Impact of Loan Programs

► When applying the risk-based approach to determine which Federal programs are major programs: ► The inclusion of large loan and loan guarantees (loans) should not

result in the exclusion of other programs as Type A programs. ► When a Federal program providing loans significantly affects the

number or size of Type A programs, the auditor shall consider this Federal program as a Type A program and exclude its values in determining other Type A programs.


Impact of Loan Programs

► Safe Harbor for Treatment of a Large Loan and Loan Guarantee Programs in Type A Program Determination► Each individual loan and loan guarantee program that does not

exceed four times the largest non-loan program is not considered to be large.


Effect of ARRA Awards on Major Program Determination – Clusters

► Clusters of programs specifically listed in the Supplement with a new ARRA CFDA number added during the current year that also has current year expenditures, should be considered a new program and would not qualify as a low-risk Type A program► Cluster will not meet the requirement of having been audited as a major

program in at least one of the two most recent audit periods as the Federal program funded under the ARRA did not previously exist.

► The Research and Development cluster (R&D) is not subject to this guidance due to its nature (e.g., CFDA numbers are not listed in Supplement for R&D and in some cases R&D is not assigned a CFDA number).

► The Student Financial Assistance (SFA) Cluster is also not subject to this guidance


Effect of ARRA Awards on Major Program Determination – Type A Programs

► Even though a Type A program otherwise meets the criteria as low-risk under Section 520(c) of OMB Circular A-133, due to the inherent risk associated with the transparency and accountability requirements governing expenditures of ARRA awards, any program or cluster with expenditures of ARRA awards would not qualify as a low-risk Type A. ► Even a de minimus amount of ARRA expenditures would not

support identifying the program as low risk.► See next slide for exception.► However SFA is excluded from this guidance


Effect of ARRA Awards on Major Program Determination – Type A Programs

Exception► However, the auditor may consider a Type A program or

cluster to be low-risk if all of the following conditions are met:

1. the program or cluster had ARRA expenditures in the prior audit period

2. the program or cluster was audited as a major program in the prior audit period

3. the ARRA expenditures in the current audit period are less than 20% of the total program or cluster expenditures; and

4. the auditor has followed §___.520(c) and §___.525 of OMB Circular A-133 and determined that the program or cluster is otherwise low-risk


Effect of ARRA Awards on Major Program Determination – Type B Programs

► The auditor should consider all Type B programs and clusters with expenditures of ARRA awards to be programs of higher risk in accordance with Section 525(d) of OMB Circular A-133.

► The presumption is that Type B programs or clusters with ARRA expenditures would be audited as major when applying the provisions of Section 520(e)(2).

► However, the auditor is not precluded from selecting an especially risky Type B program that does not contain ARRA expenditures to audit as a major program in lieu of a Type B program or cluster with ARRA expenditures.


Appendix VII: SFA and Major Program Determination

► Appendix VII section: Effect of Expenditures of ARRA Awards on Major Program Determination► Clusters of Programs – SFA Excluded► Type A Programs With ARRA Expenditures – SFA Excluded► Use pre-ARRA rules for risk assessment


2010 Compliance Supplement – Part 3 Changes

► Reporting► Testing1512 reports

► Subrecipient monitoring► Verification of subrecipients filing their A-133’s with Clearinghouse► Strong push on identifying pass-through entity information on

SEFA and amounts passed-through in SEFA footnotes


Auditor Association with 1512 Reports

► No involvement with jobs reported data► Scope of auditor involvement to be determined in the

2010 OMB Circular A-133 Compliance Supplement Addendum and expected to be focused on the quarter as of the auditee year end► Award Number► Amount of Award► Total Federal Amount ARRA Funds Received/Invoiced► Total Federal Amount of ARRA Expenditures


2010 Compliance Supplement – Parts 4 and 5 Changes

Part 4► Incorporated information from 2009 Addendum #1

Part 5► Many new clusters and additions to existing clusters

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