The Uniform Guidance Audit Requirements 2 CFR Part 200 Subpart F Learning Objectives By the end of this presentation you should Understand the role of audits in accountability Get an overview of how Single Audits are conducted and what they include ID: 733795
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Slide1
U.S. Department of Education
The Uniform GuidanceAudit Requirements – 2 CFR Part 200 Subpart FSlide2
Learning Objectives
By the end of this presentation, you should:
Understand the role of audits in accountability
Get an overview of how Single Audits are conducted, and what they include
Learn the key changes in the Uniform Guidance relating to Single Audits, and their implications for ED and grantees
Know the timeline for implementation of changes
Be aware of available resources and trainingSlide3
Overview
AUDITS and SINGLE AUDITS
Current Requirements
I
ssues relating to audits
KEY CHANGES
Overview
Key Changes and their Impact
Timeline
RESOURCES
Slide4
Audits and Accountability
Audits are one of several tools available for assessing grantees’ performance and ensuring accountability. The information they yield is valuable because it is based on a
systematic process of objectively obtaining and assessing evidence to determine if
grantees’ actual programs or operations meet established criteria.
The
use of audit data is an important aspect of implementing the Department’s goal of improving program efficacy through comprehensive risk management and grant monitoringSlide5
Single Audits: Current Requirements, Basic Structure
Single Audits are the most widespread type of audits of Federal government programs.
Entities
that
expend a minimum (“threshold”) level of Federal
funds are subject to audit requirements that are commonly referred to as
Single Audits.
Single Audits:
Are authorized under the Single Audit Act, as amended in 1996, and OMB guidance
Use a risk-based approach to determine which Federal programs are covered
Combine a financial audit and a compliance audit into one reportSlide6
Single Audit Requirements: Threshold Determinations
Single Audits follow a specific approach in assessing compliance, using OMB guidance in Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and its Compliance Supplement. The audit has several steps:
Which programs to test. E
ach program is classified as major or not, depending on a sliding scale that is related to the total level of Federal expenditures, and a minimum threshold amount per program.
What is the risk level for each program
. The auditor determines what is the risk of noncompliance that could be material to the Federal program.
How much to test.
The extent of expenditures tested varies, according to the auditee’s risk level. Slide7
Single Audit Requirements: Audit Findings
Auditors are required to:Report instances of noncompliance relating to major programs identified in the OMB Compliance Supplement.
Report
questioned costs above a threshold.
Provide in their findings sufficient detail for the auditee to prepare a corrective action plan and implement it, and for Federal agencies and pass-through-entities to arrive at a management decision. Slide8
Single Audit Requirements: Audit Submission
The audit report is due to the Federal Audit Clearinghouse (FAC) within nine months after the end of the entity’s fiscal period, or 30 days after the auditor provides the report to it, whichever is earlier.
The complete report package has several parts:
The Single Audit Data Collection Form
The Financial Statements and a supplementary Schedule of Expenditures of Financial Assistance (SEFA)
Auditor’s Report(s)
A Summary Schedule of Prior Audit Findings
A Corrective Action PlanSlide9
Single Audit Requirements: Audit Follow-Up
Federal agencies are required to
issue timely management decisions on findings
related to their
programs and to
ensure that grantees correct problems, and, as necessary, reimburse unallowable charges.
Non-federal entities passing through Federal funds to other organizations are also responsible for following up on findings in audits of their
subgrantees
.
A management decision on audit findings is due within
six months
after the audit report has been received by the FAC. Slide10
Single Audits: Common Issues
Over the years, the audit community and Federal agencies have been interested in: Improving the quality of Single Audits
Eliminating the
recurrence of findings among some auditees
Encouraging effective techniques in following up on audit findings and using audit
data in administering
grants
The Uniform Guidance address these issues.Slide11
Uniform Guidance: Key Changes
Four Broad Types of Changes in Audit Requirementsand their impact at ED and its granteesSlide12
Uniform Guidance: Overview
Prior to the issuance of the Uniform Guidance, the audit requirements relating to Single Audits were set forth in OMB Circular A-50, Audit Follow-up, OMB Circular A-133, and the Compliance Supplement to that Circular.
The audit requirements resulting from the Uniform Guidance are found at 2 CFR 200, Subpart F, and Appendix XI. Slide13
Uniform Guidance: 4 Key Changes and Their Impact
1. Strengthen oversight by focusing audits where
there is
greatest
risk of waste, fraud, and abuse of taxpayer dollars
.
Increases audit
threshold from $
500,000
to $
750,000 (
2 CFR 200.501)
.
Gives more weight, in testing, to programs with high-risk audit findings in prior years (
2 CFR 200.518).
Raises
questioned cost threshold from $
10,000
to $
25,000
(
2 CFR 200.516).
Lowers audit burden further by reducing percentage of expenditures tested.Slide14
Uniform Guidance: 4 Key Changes and Their Impact
Across the Federal government, raising the threshold to $750,000 is expected to maintain Single Audit oversight over 99.7 percent of the dollars currently subject to the requirement and 87.1 percent of the entities that are currently subject to the requirement. This eliminates the requirement for about 5,000 out of the 37,500 entities currently receiving a Single Audit. The impact will vary by
state and
program. A preliminary ED analysis of prior year audits indicates a decline of more than 10 percent in Single Audits received by its pass-through-entities.
Lower value findings are reduced because of the increase in the questioned cost threshold.
Some grantees, who rely on Single Audits for monitoring,
may need to
use other audit techniques
, such as agreed-upon procedures (
2 CFR 200.506
).
Auditees should discuss with auditors their implementation of significant changes in such requirements as
subrecipient
monitoring, internal controls, and procurement.
Slide15
Uniform Guidance: 4 Key Changes and Their Impact
2. Provide for greater transparency of audit results by making Single Audit reports available to the public online, removing impediments to their distribution, and increasing information in audit reports. Complete reports will be available at the FAC website, with some exceptions, related to Indian Tribes
Subgrantees
are no longer required to submit their reporting package to the pass-through agency. FAC
will be the source of
subgrantees
’ reports (
2 CFR 200.512)
FAC submission process will be changed to require that audits be in text-based PDF and unlocked to improve accessibility.
More information available on audit findings and Federal expenditures.Slide16
Uniform Guidance: 4 Key Changes and Their Impact
The FAC responsibility for receiving and accepting audit reports will require changes in how agencies monitor submission of Single AuditsChanges in what audit findings should include, and reports should present, will increase data about compliance.
Starting with reports for FY 2015, and beyond, audit follow-up capacity at Federal
agencies
and
pass-through
entities should improve through:
Targeting audit findings of highest
risk, including whether a finding has recurred and the prior year‘s audit finding reference number
Expedited processing of lower risk audit findings
Increased opportunities for automated text analysis
Reports will be disseminated on the Internet and available to the public. Slide17
Uniform Guidance: 4 Key Changes and Their Impact
3. Audit follow-up will focus more on higher questioned costs, with greater attention to timely issuance of management decisions, and ensuring quality of audits resolved, and avoiding the recurrence of audit findings. 2CFR 200.513Higher threshold for reporting questioned costs means fewer, but more significant, findings resolved
Six-months clock for issuing Management Decisions starts when FAC accepts Subpart F audits; prior to Uniform Guidance it started when the agency resolving the audit received it
Federal agencies are to take part
every six
years in an
audit quality evaluation projects
.
By using Cooperative Audit Resolution practices Federal agencies are expected to significantly reduce the recurrence of audit findings among grantees. Slide18
Uniform Guidance: 4 Key Changes and Their Impact
ED has long used, and will continue to apply, Cooperative Audit Resolution techniques so audit findings don’t recur. This approach:
Is effective with
systemic
,
cross-cutting findings over several fiscal years
Involves a collaborative process, where participants -- including grantees, program, legal, and audit resolution staff -- share ideas and information to focus on root causes of problems and address underlying causes of findings
Often requires coordination across programs, in reaching lasting agreement on solutions, providing technical assistance, conducting site visits, and monitoring corrective actions plans Slide19
Uniform Guidance: 4 Key Changes and Their Impact
4. Strengthen Federal agencies’ use of the Single Audit process to support more efficient and effective grants management. 2 CFR 200.513
Agencies
are to develop a baseline, metrics, and targets to track effectiveness of agencies’ processes to follow up on audit findings and how they use Single Audits in awarding grants and improving accountability by grantees
.
Federal agencies must establish two new positions: (1) a
Single Audit
Accountable Official
to link the Single Audit process to improved program outcomes, including accountability by grantees, and (2) a
Key Management Single Audit
Liaison,
over operational issues, ranging from training to cooperative audit resolution.
Slide20
How ED already uses Single Audits to Improve M
onitoring and Program Outcomes
ED already uses Single Audit data to:
Assess the risk of making new and continuing grant awards, if audits are late or missing, or if serious findings are involved or are recurrent
Provide technical assistance to its grantees and impose special conditions, as necessary
Identify compliance trends and develop program-wide monitoring plans
In resolving complex findings underlying problems are addressed, which may require more time to correct than the 180 days resolution period. In issuing program determination letters on such findings, ED staff must coordinate with program offices responsible for the award and monitoring of grants, in order to
Ensure timely and consistent corrective measures, thereby improving grant outcomes
Provide audit follow-up data to assess grantee performance and make awards Slide21
When Do New Audit Requirements Go into Effect ?Slide22
Timeline
Uniform Guidance (2 CFR Part 200) applies to:
New and continuation grants awarded on
or after December 26,
2014
Audit and indirect
costs, at the start of the next
fiscal year
on or after
December 26,
2014Slide23
Timeline: Audits
Beginning of Grantee’s Fiscal Year
Uniform Guidance Audit Requirements
Apply
The First
Audit Period Subject
to 2 CFR Part 200, Subpart F,
Ends
on
First Audit that is
Subject
to the 2 CFR Part 200, Subpart F,
Must
be
Submitted by
January 1, 2015
January 1, 2015
December 31, 2015
September 30, 2016
July 1, 2015
July 1, 2015
June 30, 2016
March 31, 2017
October 1, 2015
October 1, 2015
September 30, 2016
June 30, 2017Slide24
ResourcesSlide25
Resources
Program Office - main point of contact
The
Department’s one-stop shop for information:
Uniform Guidance Technical Assistance for ED Grantees
Includes links to
Council on Financial Assistance Reform (COFAR)
and OMB, including
FAQs
Includes links to Uniform Guidance and EDGAR, including matrix comparing present requirements with former Parts 74 and 80
Includes the Department’s FAQs
Email questions to:
uniformgrantguidanceimplementation@ed.gov
For questions on the Uniform Guidance related to audit follow-up,
contact Charles.Laster@ed.gov.Slide26
Resources
The Department is developing additional training
on the Uniform Guidance, at
no
cost, on these topics:
Cost Principles
Internal Controls
Indirect
Cost Requirements
Procurement
Requirements
Risk and Subaward Management