Applying A-133 to Nonprofit and Governmental Organizations

Ideal for self-study or on-site training!

This course is a must for you if you are involved in single audits of governmental entities or nonprofit organizations. You will learn how to be more effective in planning and performing those audits in accordance with the requirements of Circular A-133 and the Single Audit Act Amendments. The 2008 version of the course also reviews the federal study on A-133 audit quality.

Objectives:

• Apply the audit requirements in the latest version of OMB Circular A-133
• Analyze the relationship of these requirements to GAAS, Government Auditing Standards and the Single Audit Act Amendments
• Plan for audits of governmental and nonprofit entities under A-133

Prerequisite: Background in not-for-profit or governmental accounting and auditing recommended

Videocourse Details

View the video clip

In the video, W.A. Broadus, Jr., CPA, CGFM, president of W.A. Broadus, Jr., CPA, PC, a respected consultant in the governmental and nonprofit area, employed for several years with the GAO, and author of many AICPA professional development courses, interviews Marcia Buchanan, CPA, CGFM, Assistant Director, GAO, Frank W. Crawford, CPA, president of Crawford and Associates in Oklahoma City, OK; John Fisher, CPA, Director–NEAR of the U. S. Department of Health and Human Services in Kansas City, MO; Mary Foelster, CPA, AICPA Director–Governmental Auditing and Accounting; Alicia M. Montgomery, CPA, MBA, audit manager of Brown Armstrong in Bakersfield, CA; and Christopher Stubbs, CPA, of the Office of Inspector General, Department of the Interior, in Reston, VA.

*(150-min. video) The DVD disk contains the video presentation and a viewable copy of the Manual.
**The Additional Manual is for group study training only. Unlike other formats, it has no exam answer sheet and cannot be used to earn self-study credit.

Chapter 1

Introduction Learning Objectives

• Understand the relationship of Office of Management and Budget (OMB) Circular A-133 to the Single Audit Act Amendments of 1996.
• Review the purpose and applicability of the revised Single Audit.
• Understand the key definitions included in the revised Single Audit.
• Understand the audit thresholds of the revised Single Audit.
• Perceive the audit scope and objectives of the revised Single Audit.
• Understand the responsibilities of those organizations administering federal awards under the revised Single Audit.
• Review the relationship of Single Audit requirements to other federal audit requirements.

This chapter provides a broad overview of the new revised Single Audit requirements included in the Single Audit Act Amendments of 1996 and the revised OMB Circular A-133.

Single Audit Act of 1984

The Single Audit Act of 1984 (the Act) established uniform audit requirements for state and local governments and Indian tribal governments receiving federal financial assistance. The Act did not apply to nonprofit organizations.

It built on earlier efforts to improve audits of federal awards. Before its passage, federal awards were audited on a grant-by-grant basis. There were also extensive duplication and overloading of audit effort.

The objectives of the original Act were to

• Improve financial management by state and local governments.
• Provide uniform audit requirements.
• Promote efficient and effective audit resource use.
• Ensure reliance on and use of audit work performed under the Single Audit.

The Act replaced the grant-by-grant audit approach with a single audit approach of federal awards, and it required the Director of the OMB to prescribe policies, procedures, and guidelines to implement it. Congress also directed the OMB to establish similar audit requirements, through regulation, for nonprofit organizations receiving federal awards.

OMB Circular A-128, Audits of State and Local Governments, was issued on April 12, 1985, pursuant to the Single Audit Act of 1984, and established audit requirements for state and local governments that received federal awards.

The Single Audit Act of 1984 and OMB Circular A-128 required a Single Audit when in any fiscal year federal assistance of $100,000 or more was received. Single Audits could also be elected when federal assistance of $25,000 or more but less than $100,000 was received. If the Single Audit was not selected, individual assistance audits were required. No audit was required when total federal assistance of less than $25,000 was received.

Under the Act and Circular A-128, the audit scope generally encompassed the entire financial operations of each applicable government. It included the financial statements, internal controls over compliance with federal assistance requirements, and compliance with laws and regulations that may have had a material effect on financial statements and each major federal program.

Major federal assistance program, for state and local governments having federal assistance expenditures between $100,000 and $100,000,000, meant any program for which federal expenditures during the applicable year exceed the larger of $300,000, or 3% of such total expenditures.

The Acts and Circular A-128 normally required annual audits but did permit biennial audits under certain circumstances.

The Act and Circular A-128 required reports on financial statements, the schedule of federal assistance, internal controls over compliance with laws and regulations, and compliance with federal laws and regulations.

In practice, up to eight separate reports were issued on

• Financial statements.
• Schedule of federal assistance.
• Entity's internal controls relative to the financial statements.
• Entity's compliance with laws and regulations relative to the financial statements.
• Internal controls over federal financial assistance.
• General compliance over federal financial assistance.
• Specific compliance over major federal programs.
• Specific compliance over non-major federal programs.

The amendments and the revised circular apply to audits of fiscal years ending on or after June 30, 1997.

You should be familiar with each circular definition including these key definitions:

Cluster of programs – A grouping of closely related programs that share common compliance requirements.

Federal award – Federal financial assistance and federal cost-reimbursement contracts that nonfederal entities receive directly from federal awarding agencies or indirectly from pass-through entities.

Federal financial assistance – Assistance that non-federal entities receive or administer in the form of grants, loans, loan guarantees, cooperative agreements, donated surplus property, property, interest subsidies, insurance, food commodities, direct appropriations, and other assistance.

Federal program – (1) All federal awards to a non-Federal entity assigned a single number in the Catalog of Federal Domestic Assistance (CFDA). (2) When no CFDA is assigned, all Federal awards from the same agency made for the same purpose should be combined and considered one program. (3) Notwithstanding (1) and (2) of this definition, a cluster of programs.

Internal controls – A process, effected by an entity's management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.

Internal controls over federal programs – A process effected by an entity's management and other personnel, designed to provide reasonable assurance regarding the achievement of the following objectives for federal programs:

• Transactions are properly recorded and accounted for to (a) permit the preparation of reliable financial statements and federal reports, (b) maintain accountability over assets, and (c) demonstrate compliance with laws, regulations, and other compliance requirements.
• Transactions are executed in compliance with (a) laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on a federal program, and (b) any other laws and regulations that are identified in the compliance supplements.

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