Changes in Compliance Auditing: Three Exposure Drafts

By Sauter, Douglas R. | The CPA Journal, December 1991 | Go to article overview

Changes in Compliance Auditing: Three Exposure Drafts


Sauter, Douglas R., The CPA Journal


Recent efforts by the General Accounting Office (GAO), the Office of Management and Budget (OMB), and the AICPA to improve the quality of compliance audits have resulted in a flurry of new requirements and guidance. For example, the AICPA recently issued three exposure drafts of proposed guidance for compliance audits that total over 250 pages. The first exposure draft describes proposed revisions to SAS 63, "Compliance Auditing Applicable to Governmental Entities and Other Recipients of Governmental Financial Assistance." The second exposure draft, "Audits of State and Local Governmental Entities Receiving Federal Financial Assistance," addresses single audits (audits in accordance with OMB Circular A-128), which are the third basic type of engagement covered in SAS 63. The third exposure draft, "Audits of Not-for-Profit Organizations Receiving Federal Awards," provides guidance on the "twin" of Circular A-128, OMB Circular A-133, Audits of Institutions of Higherher Education and Other Nonprofit Institutions.

Revisions to SAS 63

SAS 63 provides guidance on compliance auditing responsibilities in three basic types of engagements:

* Audits in accordance with generally accepted auditing standards;

* Audits in accordance with Government Auditing Standards, commonly reffered to as the "Yellow Book;" and

* Single audits, which are in accordance with OMB Circular A-128, Audits of State and Local Governments.

Even though SAS 63 was only issued a few years ago, recent developments occurred that required changes to the guidance provided in the statement. The exposure draft, issued in April, proposes certain changes to conform the SAS to recently issued federal requirements, such as the revised Compliance Supplement for State and Local Governments and the newly issued Circular A-133. For example, when finalized, revised SAS 63 will include a new section that describes the auditor's responsibilities under Circular A-133. Another proposed change is to add guidance on what the auditor should do if he or she finds out that the entity being audited is subject to additional audit requirements. Other changes were editorial in nature, such as certain minor wording changes in the illustrative audit reports.

Guidance on A-133 Audits

Circular A-128 was issued in 1985 to implement the Single Audit Act and many auditors are already familiar with its requirements. The revised SAS 63 states that the guidance presented in the statement about Circular A-128 audits is "generally applicable to audits in accordance with OMB Circular A-133." However, there are differences between the circulars. The revision points out two significant differences: the definition of a major program and the communication of immaterial findings.

Major Program Definitions. Both circulars distinguish between "major" and "nonmajor" federal programs. What constitutes a major program is based upon the relative size of the entity's federal programs. Any program that doesn't meet the definition of a major program is a nonmajor program. Whether a program is major or nonmajor dictates the type of audit work and reports required.

Under Circular A-128, a major program is defined as the larger of 3% of total federal expenditures or $300,000. Circular A-133 defines a major program as one in which federal expenditures total the larger of 3% of total federal funds expended or $100,000. By changing the fixed dollar amount from $300,000 to $100,000, Circular A-133 lowers the threshold of what qualifies as a major program.

Immaterial Findings. Circular A-133 permits, but doesn't require, immaterial noncompliance to be described in the audit reports. However, immaterial noncompliance, if not included in the audit reports, is required by Circular A-133 to be communicated to management in a separate letter, which is in turn submitted to the appropriate federal agency by the organization.

Report on General Requirements. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Changes in Compliance Auditing: Three Exposure Drafts
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.