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The Single Audit Act Indian Self Determination and Educational Assistance Act OMB Circular A-133 Requirements Report Submission, Report Review, and Findings Resolution Process. Presentation Outline. Basic Information. Single Audit Act and other Criterion

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  1. The Single Audit ActIndian Self Determination and Educational Assistance Act OMB Circular A-133 RequirementsReport Submission, Report Review, and Findings Resolution Process

  2. Presentation Outline • Basic Information. • Single Audit Act and other Criterion • Responsibilities of Single Audit Partners • Single Audit Report Submission • Sanctions for Failing Timely Submission • Single Audit Report Resolution • BIA Policy for the Advanced Federal Funds • SA Risk Base Approach • GASB 34 • Single Audit General Information

  3. I. Basic Information • Office of Internal Evaluation and Assessment (IEA) • Staff • Responsibilities

  4. Office of Internal Evaluation and AssessmentAudit Liaison Office (ALO) Michael Oliva, Director Office of Internal Evaluation and Assessment Office of the Deputy Assistant Secretary – Management Indian Affairs Phone: (703) 390-6537 Fax: (703) 390-6325

  5. Michael Chatmon Sr. Management Analyst (703) 390-6473 TBD Management Analyst (703) 390-6XXX SherAli Basharat Management Analyst (703) 390-6338 Naomi Little Secretary (703) 390-6578 Office of Internal Evaluation and Assessment OMB Circular A-133 Team

  6. Office of Internal Evaluation and AssessmentStaff Responsibilities Authority: 5 IAM 2 Section 2.7 (A) • Works closely with the Awarding Officials in obtaining audit reports and advise them in imposing sanctions on delinquent tribes when necessary. • Reviews single audits and issues them to Awarding Officials. • Assists Awarding Officials in resolving and closing audits. • Maintains an automated tracking system to provide BIA & IA management with the status on a variety of activities related to all single audits. • Provide required reports to designated Departmental Officials on the status of unresolved audits findings and related debt.

  7. II.Single Audit Act and other Criterion • Single Audit Act of 1984 amended by Single Audit Amendments of 1996 (P.L.104-156 Chap. 75) • Indian Self Determination and Educational Assistance Act, (P.L. 93-638, as amended) • OMB Circular A-133 (Regulations for Single Audit Act) • 43 CFR Part 12, (Administrative and Audit Requirements and Cost Principles for DOI Programs) • 5 IAM 2 Indian Affairs Manual, Management Accountability, Single Audit

  8. Single Audit Act • What is an Audit • Single Audit Background • Single Audit Act 1984 • Single Audit Act Amendments 1996 • What is Included in A Single Audit Report • Three Types of Opinions

  9. What Is an Audit? • In general terms, an audit is independent and systematic assessment of an organization's financial position, accounting systems (including internal controls) and compliance with laws and regulations. • The auditor examines, on a test basis, transactions, supporting documents and disclosures to the financial statements. • The audit is meant to provide reasonable assurance that the financial statements are free of “material misstatements.”

  10. The Risk Standards Plus • Generally Accepted Auditing Standards • (GAAS, the size 8 shoebox) - AICPA • Government Auditing Standards • (Yellow Book, the size 12 shoebox) – GAO • Single Audit Standards • (A-133, the size 16 shoebox) - OMB

  11. AICPA (GAO) Audit Standards • SAS 102 Should = Must • SAS 103 Audit Documentation • SASs 104-111 (later) • SAS 112 Communication of Internal Control Matters • SAS 113 Omnibus Standard • SAS 114 Communications with those Charged with Governance • Title 18, Part 53, Section 1163

  12. AICPA (GAO) Audit Standards • SAS 88 – Service Organizations and Reporting Consistency • SAS 89 – Audit Adjustments • SAS 99 – Consideration of Fraud in a Financial Statement Audit (§ 68) • SAS 103 – Audit Documentation • SAS 104 – Due Professional Care • SAS 105 – Amendment to Statement on Auditing Standards #95, Generally Accepted Auditing Standards

  13. AICPA (GAO) Audit Standards • SAS 106 – Audit Evidence • SAS 107 – Audit Risk and Materiality in Conducting an Audit • SAS 108 – Audit Planning and Supervision • SAS 109 – Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement

  14. AICPA (GAO) Audit Standards • SAS 110 – Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained • SAS 111 – Amendments to SAS 39, Audit Sampling • SAS 112 – Communicating Internal Control Related Matters Identified in an Audit

  15. Example of 2008 Audit Guides

  16. Single Audit Background Approximately sixty percent of Bureau of Indian Affairs annual budget is expended through contracts, compacts, and grants with Indian tribes and tribal organizations. The single audit is the primary mechanism used by Federal agencies, including the Bureau of Indian Affairs, to ensure accountability for Federal awards.

  17. Single Audit Background (Contd.) • Before the Single Audit Act, organizations receiving federal funds were subject to numerous audits by each federal funding agency. • Such audits were generally program audits and thus not comprehensive.

  18. Single Audit Act 1984 • The Single Audit Act of 1984 reduced the burden of numerous audits. • Provided for at least one annual comprehensive audit. • Ensured that audits of federal programs were performed under uniform audit requirements such as Generally Accepted Auditing Standards, Government Auditing Standards.

  19. The Single Audit Act was also intended to promote discipline in the management of Federal awards by recipients. States, tribal governments and local governments knew: what was involved in the audit process what was expected of them as the recipient, and what the products of the audit would be. Single Audit Act 1984

  20. While the Single Audit Act of 1984 was an improvement in producing quality audits of Federal programs, experience demonstrated that improvement could be made. This led to the Single Audit Act Amendments of 1996. Single Audit Act 1984

  21. Single Audit Act Amendments1996 • The 1996 Amendments extended the statutory audit requirements to non-profit organization, placing state, tribal governments, local governments, universities, and non-profit organizations under the same process.

  22. Single Audit Act Amendments1996 • Under the Single Audit Act of 1984 recipients who received at least $25,000 in Federal awards were required to have an audit. • The 1996 Amendments reduced the burden on organizations by increasing the threshold to $300,000 in Federal financial assistance expended.

  23. Single Audit Act Amendments1996 • The amendments authorized OMB to re-assess and adjust the threshold amount periodically, provided that the amount was not less than $300,000. OMB has subsequently increased the threshold amount. For fiscal years beginning after December 31, 2003, the threshold increased to $500,000. • It allows OMB to conduct pilot studies to test alternative procedures.

  24. Single Audit Act Amendments1996 • Improved timeliness and content: • Report due date shortened from 13 months to 9 months after the close of a recipient’s fiscal year. • Requires a summary of audit results and a data collection form. • Requires a separate schedule of current year findings and questioned costs. • Requires a separate schedule on the status of prior year findings.

  25. Single Audit Act Amendments1996 • Provided incentives: • An organization can earn “low risk” status; The 25% rule (percentage of audit coverage) thus reduces the number of programs that must be audited and reduce the cost of the audit.

  26. Percentage of Coverage Rule • Under Circular A-133, 520 (f) auditors shall audit as major programs Federal programs with expenditures that total at least 50 percent of the total Federal awards expended by the recipient. Except that recipients who have met certain requirements may qualify as “low-risk auditees.” • For “low-risk auditees” the percentage of coverage is only 25 percent of the total Federal awards expended.

  27. ENTITY RISK EVALUATION CHECKLIST Authority: Section 530 of Circular A-133. In Order to be a low-risk auditee, the entity must meetALL of the criteria for each of the preceding two years (or, in the case of biennial audits, the preceding two audit periods; however, a biennial auditee will not qualify as low-risk auditee unless approved in advance by the cognizant or oversight agency). However, the auditor is still required to audit all Type A major programs that are not low risk.

  28. ENTITY RISK EVALUATION CHECKLIST • Single audits were performed on an annual basis. • Auditor’s opinion on the Financial Statements and the Schedule of Expenditures of Federal Awards was unqualified. (The cognizant or oversight agency may grant a waiver if the item does not affect management of federal awards.) • No material weaknesses were reported at the Financial Statements level. (The cognizant or oversight agency may grant a waiver if the item does not affect management of federal awards.)

  29. ENTITY RISK EVALUATION CHECKLIST • None of the federal programs had audit findings from any of the following in either of the two preceding years, in which they were classified as Type A programs. (If there were no Type A programs in either year, then this question does not need to be answered for Type A programs.) • Internal control weaknesses that were material weaknesses • Non-compliance that would have a direct and material effect on the Type A programs (i.e. Qualified Opinion) • Known or likely questioned costs that exceeded 5% of the total federal awards expended for a Type A program during the year.

  30. What is Included in a Single Audit Report • Auditor’s Opinion Over the General Financial Statements and Schedule of Expenditures of Federal Awards • Financial Statements and Footnotes • Internal Control Reports • Compliance Reports • Schedule of Expenditures of Federal Awards and Footnotes • Summary Schedule of Prior Year Audit Findings • Schedule of Current Year Audit Findings & Questioned Costs • Corrective Action Plan

  31. Three Types of Opinion Statements in the Single Audit Report • Auditors Opinion on the Financial Statements, e.g. Balance Sheet, Operating Statement, Notes, Schedule of Federal expenditures. • Auditors Report on the auditee’s systems of internal/management control over compliance with compliance requirements of major Federal assistance. • Auditors Opinion on auditee’s compliance with compliance of major Federal assistance programs.

  32. The Indian Self Determination and Educational Assistance Act (P.L. 93-638) • Audit and Examination Under P.L. 93-638 DOI/HHS Internal Agency Procedure Handbook Chapter 17 • Tribes are also required to submit their Single Audit Report to the Bureau. • Purpose of Standards for a Tribal Management Systems • Standards for a Tribal Management Systems • Difference Between A Standard & A System • Tribes to Draw Down Funds in Advance of Need

  33. Audit and Examination Under P.L. 93-638 Authority. P.L.93-638 Sec 450c.(b) The Comptroller General and the appropriate Secretary, or any of their duly authorized representatives, shall, until the expiration of three years after completion of the project or undertaking referred to in the preceding subsection of this section, have access (for the purpose of audit and examination) to any books, documents, papers, and records of such recipients which in the opinion of the Comptroller General or the appropriate Secretary may be related or pertinent to the grants, contracts, subcontracts, sub-grants, or other arrangements referred to in the preceding subsection.

  34. Tribes are also required to submit their Single Audit Report to the Bureau Authority: P.L. 93- 638 Section 450c (f). • For each fiscal year during which an Indian tribal organization receives or expends funds pursuant to a contract entered into, or grant made, under this subchapter, the tribal organization that requested such contract or grant shall submit to the appropriate secretary a Single Audit report required by chapter 75 of title 31, USC as amended.

  35. Purpose of Standards for a Tribal Management Systems Authority: 25 CFR 900 (F) • When carrying out self-determination contracts the Indian tribes or tribal organizations shall develop and maintain systems that meet these minimum standards for management. SEC 900-35 and 36 • These systems are evaluated by an independent auditor through the annual OMB Circular A-133 Single Audit. Sec 900-40 (b) • The minimum standards set for the Indian tribes or tribal organizations are: Sec 900-35

  36. Standards for Tribal Management Systems Authority: P.L. 93-638 Sec 900.45, 25 CFR 900.35 & 43 CFR 12.60 • Financial reporting: Accurate/Complete • Accounting Records: Adequately Maintained • Internal Control: Accountability/Safeguarded • Budget Controls: Expenditures compared to Budget • Allowable Costs: OMB Costs Principles • Source Documentation: Invoices, Payroll records, etc. • Cash Management: Accounting for Advances and disbursements.

  37. Difference Between A Standard & A System Authority: P.L. 93-638 and 25 CFR 900.39 • Standards are minimum baseline requirements for the performance of an activity and answers the question of “what” an activity should accomplish. • Systems are the procedural mechanisms and processes for the day-to-day conduct of an activity and it answers the question of “how” the activity will be accomplished.

  38. OMB Circulars OMB Circulars that affect Single Audits • A-133: Audits of States, Local Governments, and Non-Profit Organizations • A-87: Cost Principles for State, Local or Indian Tribal Governments • A-122: Cost Principles for Non-Profit Organization • A-21: Cost Principles for Education Institutions

  39. This Circular sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of States, local governments, non profit organizations expending Federal awards. OMB Circular A-133

  40. OMB Circular A-133 Compliance Supplement • In addition to OMB Circular A-133, there is an accompanying Compliance Supplement which is issued annually by OMB after input from the Federal Agencies. • The purpose of the supplement is to provide guidance to auditors regarding testing Federal program compliance requirements. • In addition to the generally applicable audit requirements for all Federal programs, there is also a chapter on Agency-Specific Requirements.

  41. OMB Circular A-133 Compliance Supplement (Contd.) • Key Components of the OMB Circular A-133 Compliance Supplement. • Describes how the program works • Identifies Key compliance requirements • Provide Guidance to the Auditors • Part 2 - Matrix of Compliance Requirements • Part 3 – Compliance Requirements • Part 4 – DOI Program Requirements

  42. OMB Circular A-133 Compliance Supplement (Contd.) • The Bureau of Indian Affairs has included agency-specific requirements in the Compliance Supplement because of the provisions of P.L. 93-638 and P.L.100-297 (the Tribally Controlled Schools Act.) • In testing BIA programs for compliance, auditors need to be aware of special requirements, Such as:

  43. OMB Circular A-133 Compliance Supplement (Contd.) • P.L. 93-638 and P.L.100-297 allow tribal organizations to draw down funds in advance of need. • Certain costs are allowable that are not identified in OMB Circular A-87. • Funds are available until expended. • There are investment and deposit requirements for advanced funds.

  44. 43 CFR Part 12 • Establishes uniform administrative rules for US Department of Interior grants and cooperative agreements and sub-awards to State, Local and Indian governments.

  45. III. Responsibilities of Participants III Responsibilities 2008IEA.ppt Presented By:

  46. IV. Single Audit Report - Submission IV Submission2008IEA.ppt Presented By:

  47. V. Sanctions for Failing Timely Submission V Sanctions2008IEA.ppt Presented By:

  48. VI. Single Audit Reports Review and Resolution VI Resolution2008IEA.ppt Presented By:

  49. VII. BIA Policy for the Advanced Federal Funds VII Advance F Funds2008IEA.ppt Presented By:

  50. VIII. Risk-Based Approach VIII SA Risk Base Appr 2008IEA.ppt Presented By:

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