Which type of entity receives a government single audit?
Entities that receive ≥ $750,000 of federal assistance in a fiscal year.
True / False: Entities that expend <$750,000/yr in federal assistance are exempt from federal audit requirements for that year.
True
What are the 2 main objectives of the government single-audit?
Audit of the entity’s FS (how well did you do with your money) plus reporting on a separate schedule of expenditures of federal awards in relation to the FS (how well did you spend the taxpayer's money)
Audit of compliance regarding federal awards expended during the year (did you do it correctly)
What is the difference between a Type A vs Type B program?
Type A: A single program that received ≥ $750,000 /yr
Type B: All other programs
Define a major program
In general a Type A program that is not low risk, or a Type B program that is high risk.
How is a program identified as higher risk using a risk-based approach?
Multiple internal control structures
Weak monitoring systems for subrecipients
Programs not recently audited as a major program
Complex eligibility requirements to participate in the program
Being in the early phase (new or untested) of a program’s life cycle
How is a program identified as lower risk using a risk-based approach?
Single audits have been performed on an annual basis for 2 years OR as a major program for 1 of 2 years
The FS received an unmodified opinion
No material weaknesses were discovered in internal controls
No going concern contingencies were reported
And Type A programs with
** no material weaknesses over compliance
** questioned costs were <5% of the award expended
** no modified opinion on major programs
How is a program identified as a “major program”?
Step 1: Determine if Type A or Type B program
Step 2: For Type A, determine if low risk
Step 3: For Type B, determine if high risk
Step 4: Major programs are Type A that are not low risk, and Type B that are high risk
How is materiality under a single audit different from materiality under a GAAS or even a GAAS + GAGAS audit?
Single-Audit: Separate materiality is created for the FS as a whole and in relation to each major program.
GAAS or GAAS+GAGAS: Materiality is in relation to the FS being audited as a whole
Define a program-specific audit.
Expenditures are made under only one program, and the terms of the award do not require a FS audit.
The entity you're about to audit qualifies for a program-specific audit. What is the 1st thing you must do as the auditor?
Contact the Inspector General of the applicable federal agency and obtain a current program-specific audit guide.
A state receives funds from the federal Housing and Urban Development program (HUD), and gives some of that money to a local city for their HUD program. The state is labeled a ______________, while the city is labeled a ____________.
Recipient
Subrecipient
How are the audit procedures under a single audit different than those under a specific programs audit?
Single audits must include an audit of the FS as well as the specific programs while a specific programs audit does not include an audit of the FS as a whole.
What system is used by the auditee to select an auditor to perform a single-audit?
A competitive proposal process.
The auditor provides the audit report to the auditee. When must the auditee submit the audit report to the appropriate government agencies
Within 30 days of receipt, and
within 9 months after the end of the audit period
What are the format requirements for submitting the audit report?
Must be transmitted using a Data Collect Form as required by the OMB
Must be signed by a responsible official
Must include: FS, summary schedule of prior audit findings, auditor’s reports, corrective action plans
Must be submitted electronically
The entity of a single audit is responsible for creating what 3 type of reports?
The FS
A schedule of federal expenditures
A list of corrective actions
True / False: The auditor is responsible to understand and report on internal controls over compliance for all federal programs.
False
The auditor is not responsible for these items for any federal program deemed to be non-major.
True / False: The auditor is not required to test controls that are ineffective.
True
But then additional tests of compliance must be considered
The auditor of a single audit must render opinions in which areas?
The fair presentation of the FS
The fair presentation of the Schedule of Expenditures o Federal Awards (SEFA)
Major program (each one separately) internal controls over compliance with statutes, regulations, and terms and conditions of the related federal award
Summary schedule of prior audit findings
True / False: The auditor is required to follow-up on audit findings from previous audits and perform procedures to assess the reasonableness of the summary schedule of prior audit finds prepared by the auditee.
True
Which 5 reports (with a brief description) must be created by the auditor of a single audit?
FS Report: Express an opinion regarding the fair presentation of the FS in accordance with GAAP
SEFA Report: Express an opinion regarding the fair presentation of the Schedule of Expenditures of Federal Awards
GAGAS (Yellow Book) Report: The scope and results of tests of internal controls and compliance, with reference to a separate Schedule of Findings and Questioned Costs
Single Audit Report: A report for each major program with an opinion plus scope of testing regarding compliance, and internal controls over compliance, and a reference to a separate Schedule of Findings and Questioned Costs
Schedule of Findings and Questioned Costs: A summary document (see separate flashcard)
What information is contained in the Schedule of Findings and Questioned Costs
Whether the auditee qualified as a low-risk auditee
The type of opinion issued on the FS (unmodified, qualified, adverse)
Whether significant deficiencies or material weaknesses in internal control for the FS audit exist
GAGAS findings
Identification of any major programs
The dollar threshold used to distinguish between Type A and Type B programs
The type of opinion issued regarding compliance of each major program
Whether significant deficiencies or material weaknesses in internal control for each major program exist
Findings and questioned costs for federal awards
What percentage of total awards expended must be tested for (1) low risk vs (2) high risk
20%
40%
What audit findings is the auditor required to report?
Major Programs:
** significant deficiencies, material weaknesses, material noncompliance, and significant instances of abuse
** the reason if other than an unmodified opinion is given
Questioned costs of a given type of compliance requirement it those costs, in combination, exceed $25k.
Fraud affecting any federal award
Material misrepresentation, either of the deficiency or its implication, of the prior audit findings as prepared by the auditee
How long must single audit documentation be retained and by whom?
