Academic journal article Journal of Accountancy

OMB Issues Final Audit Requirement for Federal Awards

Academic journal article Journal of Accountancy

OMB Issues Final Audit Requirement for Federal Awards

Article excerpt

The Office of Management and Budget released final audit requirements for not-for-profits and state and local governments that administer federal financial assistance. The revisions to Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, implement new rules under the Single Audit Act Amendments of 1996, which was passed last summer (see "President Signs Single Audit Act of 1996," JofA, Sept.96, page 15).

The 1996 act eased the auditing burdens on smaller entities that administer federal grants by increasing the threshold that triggers an audit requirement, and it improved the oversight of federal grants by focusing on programs that present the greatest risk to the government. the act also permitted the consolidation of OMB Circular A-128, audits of State and Local Government, with circular A-133, the final revisions to which encompass both sets of entities that administer federal awards.

Auditor musts

One of the most significant changes for the auditor in the revised A-133 is the new requirement to prepare and sign a data collection form. The form will be used by the federal government to develop a database on federal awards and by the federal clearing-house in lieu of sending the full single audit report. "The entity being audited is required to certify the entire form is complete and accurate," said Sheila O. Conley, OMB policy analyst. "For the first time the auditor must prepare certain section of the form and must sign the form at the end of every audit conducted in accordance with A-133."

Another significant change in A-133 includes an explanation of the types of procedures that qualify as limited-scope audits for purposes of monitoring subrecipients that spend less than $300,000 annually. Limited scope audits are defined to include only agree-upon procedures paid for and arranged by a pass-through entity. The procedures only can relate to activities allowed or unallowed; allowable costs/cost principles; eligibility; matching, level of effort earmarking; and reporting. …

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