Governmental Accounting and Auditing Update (2009-2010 Edition)

• Chapter 1 - Federal Government Activities
  • Introduction
  • The Report on National Single Audit Sampling Project
    • Misreporting of Audit Coverage of Major Federal Programs
    • Unreported Audit Findings
    • Compliance Testing Not Documented as Performed or Not Applicable
    • Deficiencies in Understanding\Testing Compliance Internal Controls
    • Deficiencies in Risk Assessments as Part of Major Program Determination
    • Missing Audit Finding Information
    • Deficiencies in Presentation and Auditing of the SEFA
    • Errors in Management Representations Related to Federal Awards
    • Audit Materiality at the Major Federal Program Level Not Documented
    • Other Kinds of Deficiencies
    • A Discussion Related to Audit Sampling
  • National Single Audit Sampling Project Responses
    • AICPA Responses
    • OIG & OMB Responses
    • GAO Responses
  • Tools to Avoid Single Audit Quality Problems
  • Federal Audit Clearinghouse Activities
    • The Role of the Federal Audit Clearinghouse
    • Important Data Collection Form Developments
  • Revisions to the OMB Compliance Supplement for Single Audits
    • The 2009 Compliance Supplement
    • The American Recovery and Reinvestment Act of 2009
  • HUD Developments
    • HUD Consolidated Audit Guide for Audits of HUD Programs
    • HUD Proposes an Independent Public Accountant Roster
  • The 2007 Revised Yellow Book
    • Purpose of the Yellow Book
    • 2007 Revised Yellow Book
    • GAO Tools Available Related to the Yellow Book
  • Yellow Book CPE Requirements
  • Summary
  • Exercise 1-1 Must I? Should I?
  • Exercise 1-2 SEFA Presentation
    • Directions
• Chapter 2 - GASB Activities
  • Introduction
  • GASB No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
  • Effective Date
  • GASB No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions
    • Summary of Standard
    • Effective Dates and Transition
    • Implementation Guidance for GASB No. 43 and No. 45
  • GASB No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations
    • Effective Date
  • GASB No. 51, Accounting and Financial Reporting for Intangible Assets
    • Effective Date
  • GASB No. 52, Land and Other Real Estate Held as Investments by Endowments
    • Effective Date
  • GASB No. 53, Accounting and Financial Reporting for Derivative Instruments
  • GASB No. 54, Fund Balance Reporting and Governmental Fund Type Definitions
    • Fund Balance Reporting
    • Encumbrances
    • Governmental Fund Type Definitions
    • Effective Date and Transition
  • GASB No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments
  • GASB No. 56, Codification of Accounting and Financial Reporting Guidance Contained in the AICPA Statements on Auditing Standards
  • Other GASB Developments
    • On the Horizon
  • Summary
  • Exercise 2-1 So where do I belong?
  • Exercise 2-2 Old or New?
• Chapter 3 - AICPA Activities
  • Introduction
  • Additional Risks Auditors Face in 2009-2010
    • AICPA Risk Alert on the Current Economic Crisis
    • AICPA Launches an Economic Crisis Resource Center
    • AICPA Governmental Audit Quality Center
  • Auditing Standards Board Clarity Project
  • SAS No. 115
  • SAS No. 116
  • SAS No. 74 Revision
  • Risk Assessment Standards Questions & Answers
  • Summary
  • Exercise 3-1 Assessing Control Deficiencies When Compensating Controls Exist
  • Exercise 3-2 So what changed?
• Chapter 4 - Latest Developments
• Appendix A - National Single Audit Sampling Project
• Appendix B - Compliance Supplement Excerpts
• Appendix C - GAO CPE Guidance
• Appendix D - Illustrative Reports
• Appendix E - 2007 Yellow Book
• Appendix F - Additional Materials

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Please note: The following content is from the previous edition and will be updated shortly. Please check back at a later date.

Federal Developments

Update on the National Single Audit Sampling Project
In 2007, the President’s Council on Integrity and Efficiency and the Executive Council on Integrity and Efficiency issued a report entitled Report on National Single Audit Sampling Project (the PCIE report). The PCIE report presented the results of a 2+ year effort to (1) assess the quality of single audits and establish a statistically based measure of audit quality; and (2) recommend changes in single audit requirements, standards and procedures to improve the quality of single audits.

• Misreporting of audit coverage of major federal programs.
• Unreported audit findings.
• Compliance testing not documented as performed or not applicable.
• Deficiencies in understanding and testing of internal control over compliance.
• Deficiencies in risk assessments as part of major program determination.
• Missing audit finding information.
• Deficiencies in presentation and auditing of the SEFA.
• Management representations related to federal awards missing or misdated.
• Consideration of audit materiality at the major federal program level not documented.
• Other kinds of deficiencies (described in Appendix A of the report).

Important Data Collection Form Developments
Beginning with fiscal year 2008 submissions, the Federal Audit Clearinghouse (FAC) has developed a revised data collection form and moved to a total electronic submission process. For 2008 fiscal year-end submissions and beyond, there will no longer be any paper copy submissions of the data collection form and reporting package to the FAC. At the FAC website the FAC has posted a helpful 2008 Single Audit Submission Questions and Answers section and the Internet Data Entry System (IDES) FYE 2008-2010 instruction document.

The following illustration summarizes the submission process described at the FAC website.

It is vital that all practitioners go to http://harvester.census.gov/fac/ and review the new requirements which were issued in August 2008.

Additional Revisions to the HUD Consolidated Audit Guide
In recent years, the HUD Office of Inspector General has been revising the Consolidated Audit Guide for Audits of HUD Programs on a chapter by chapter basis. In July 2008, HUD continued this project by:

• Issuing Chapter 3, HUD Multifamily Housing Programs; and
• Adjusting Chapter 4 (now entitled HUD Multifamily Hospital Program.)

HUD Proposes an Independent Public Accountant Roster
In February 2008, HUD released a proposed rule that would establish a roster of approved independent public accountants and public accounting firms (IPAs) that would be permitted to perform audits or related services required by participants in certain HUD programs and submitted to HUD. The proposed rule would also establish eligibility, application, and removal procedures for IPAs listed on the IPA Roster. HUD believes this proposed rule would implement an additional protection to ensure the accuracy of financial data submitted to HUD by its program participants. The comment period ended in April. To obtain more details and the status of the proposal go to www.aicpa.org/GAQC.

Developments Related to Audits of 403(b) Retirement Plans
Beginning with 2009 Form 5500 filings, employee benefit plans under section 403(b) of the Internal Revenue Code that are sponsored by charitable organizations and covered under the Employee Retirement Income Security Act of 1974 will be subject to the same reporting and audit requirements that currently exist for section 401(k) plans.

Many plans face significant challenges in establishing plan accounting records and proper controls, identifying all participant accounts to be included as plan assets, determining beginning account balances (i.e., comparative balances are also required as of December 31, 2008 for calendar year plans), obtaining other financial information to be included in the plan’s financial statements, and obtaining an unqualified opinion on the plan’s financial statements from the independent auditor.

A joint task force of the AICPA Employee Benefit Plan Audit Quality Center Executive Committee and the Employee Benefit Plan, Not-for-Profit and Health Care Expert Panels has developed resources to assist auditors of not-for-profits, charities, health care entities, and schools that sponsor 403(b) retirement plans in learning about the new requirements, see http://ebpaqc.aicpa.org/Resources/Accounting+and+
Auditing+Resource+Centers/403(b)+Plans.htm.

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