Magazine article The CPA Journal

Seven Suggestions for a Successful Single Audit

Magazine article The CPA Journal

Seven Suggestions for a Successful Single Audit

Article excerpt

On December 26, 2013, the U.S. Office of Management and Budget (OMB) issued Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Code of Federal Regulations, Title 2, Part 200). Technical corrections to the guidance were made as of March 5, 2015. The unifonn guidance combines eight previous OMB circulars into one comprehensive document. Tlus article presents seven tips to meet the administrative requirements and cost principles of the new provisions, many of winch have already taken effect.

Suggestion One

The flint suggestion is to read the uniform guidance and see how it specifically applies to various organizations. (The U.S. Government Publishing Office's electronic code of federal regulations has a userfriendly indexed version at https:// www.ecfr.gov.) All grantees will need to understand the basic cost principles and administrative requirements that must be followed.

As a condition of making a federal award, a grantor is required to provide certain information to the awardee at the time of the grant. This includes the total amount of Hie federal award, the period that performance starts and ends, a budget that has been approved by the awarding agency, and other significant ternis of the award [e g., an identifier number from the Catalogue of Domestic Assistance (CFDA)]. Pass-through entities must ensure that eveiy sub-award includes the same information.

Suggestion Two

The second suggestion for a successful single audit is to proactively find out whether grants received contain federal awards. Even if a nonprofit does not have direct federal awards, state and local governments often provide pass-through federal funds in their grants. A grantee should review the original grant agreements to determine whether their grants contain federal passthrough funds or to find out their CFDA number. In the author's experience, however, tlus could be challenging because grantors often do not provide the required information in a timely maimer. If information about the original source of the grant funds is not contained within the grant agreement, as is now required, it is imperative to contact grantors at the beginning of the grant period. Compliance becomes more difficult if one waits until the audit is set to take place. After all, how can one comply without knowing the rules until after the grant period has expired?

Each year, the OMB issues a compliance supplement-a summary of selected programs that contains an auditors' gtude to specific recommended tests. The compliance supplement is sure to include many changes due to the first-year applicability of many of the provisions of the uniform guidance. Since this document is available to the general public, it provides the grantee with an opportunity to find out which provisions their grantors will consider important.

Suggestion Three

The tltird suggestion is to obtain the updated compliance supplement each year, have the grants management team review the areas that are likely to be tested under audit, and monitor compliance with all significant tenus of the grant.

The cost principles and administrative requirements apply to new grant awards made after December 26, 2014 (ultimately, 2015 grants) and to older grants that have been given new funds that significantly add to or change the tenus of the original grant.

Suggestion Four

The fourth suggestion for a successful single audit is to read the new procurement mies m detail and promptly update an organization's policies. Nonprofits that wait until next year may find themselves short on time. For a breakdown of the new procurement standards, see the sidebar, Procurement Policies.

Suggestion Five

Another big change relates to compensation of personal services. Tins includes all remuneration-paid currently or accrued-for services of employees rendered during the period of performance under a federal award, hi essence, tins relates to salaries and wages, but it could also include fringe benefits. …

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