OMB Circular A-133 (Single Audit)
Heather Perry, CPA
Amy Ring, CPA
@dozcpa
OMB Circular A-133 – Audits of
States, Local Governments
and Non-Profit Organizations
What is OMB Circular A-133 (Single Audit) and who does it apply to?
Created to standardize the audits of non-profit
organizations receiving at least $500,000 in federal
awards annually
• Prior to A-133, each federal agency was responsible
for its own audits
• Audits were not consistent
• Resulted in additional costs to the government
What is OMB Circular A-133 (Single Audit)
A Single audit consists of two main parts:
• Audit of basic financial statements
• Audit of the entity’s major federal awards program(s)
• Gaining an understanding of and testing the internal
controls over compliance
• Testing compliance with requirements over the
program(s)
• Understanding of internal control over financial
reporting
Single Audit Objectives
Express an opinion on:
• Financial statements in conformity with GAAP and
schedule of expenditures of federal awards is
presented fairly in relation to the financial
statements taken as a whole.
• Auditee complied with laws, regulations, and the
provisions of contracts or grant agreements on
each major program.
Single Audit Objectives (continued)
Does not express an opinion on:
• Internal control over the financial reporting and
compliance.
Who is Required to Follow OMB Circular A-133?
Any NFP receiving federal awards is subject
to this guide.
• Federal programs are identified by federal
program name, federal agency and CFDA
number
• If the federal award is included in the A-133
Compliance Supplement, specific audit risks are
identified
Who is Required to Follow OMB Circular A-133?
An A-133 audit includes examining an entity’s:
• Financial records
• Financial statements
• Federal award transactions and expenditures
• General management of its operations
• Internal control systems
• Federal assistance received during the audit
period
Who is Required to Follow OMB Circular A-133?
For fiscal years ending after December 31, 2003,
organizations that expend less than $500,000 in federal
awards during the year are exempt from single audit
requirements.
Total Federal
Awards Expended
One Program
More than One
Program
$0 - $499,999
No audit
No audit
$500,000 or more
Program-specific or A-133 Single Audit
A-133 Audit
Who is Required to Follow OMB Circular A-133?
Which of these examples require an A-133 audit:
1. Section 202 Mortgage of $750,000 and Section 8 of
$200,000
2. Section 202 Capital Advance of $900,000 and PRAC of
$125,000
3. Section 202 Mortgage of $200,000 and Section 8 of
$200,000
4. Section 202 Capital Advance of $400,000 and PRAC of
$150,000
OMB Circular A-133 (Single Audit)
Under A-133, non-profit organizations are required to:
• Maintain internal control for federal programs
• Comply with laws, regulations and the provisions of
contracts or grant agreements
• Prepare appropriate financial statements, including the
Schedule of Expenditures of Federal Awards (SEFA)
• Ensure that required single audits are properly performed
and submitted when due
• Follow up and take corrective actions on findings
Differences between an A-133 audit and a HUD audit
Determination of major programs
• HUD – over $500,000 = major
• A-133 – risk based approach
Compliance areas
• HUD – follow Chapter 3 of the HUD Audit Guide
• A-133 – follow Compliance Supplement
Differences between an A-133 audit and a HUD audit
Differences between an A-133 audit and a HUD audit
Schedule of Expenditures of Federal Awards (“SEFA”)
• Auditee’s responsibility to prepare
• Includes all Federal programs received and
expended, program title, CFDA number, award
number and year, name of the Federal agency, name
of pass-through entity (if applicable), and footnotes
• Auditor’s responsibility to opine on whether the SEFA
is presented fairly in all material respects
Differences between an A-133 audit and a HUD audit
Differences between an A-133 audit and a HUD audit
Internal Control
• Internal control testing for A-133 requires the auditor
to perform procedures to obtain an understanding of
internal control over Federal programs and plan and
perform tests of internal controls to support a low
assessed level of control risk for major programs; if
the auditor cannot do this, the auditor must report a
reportable condition
Differences between an A-133 audit and a HUD audit
Sampling
• HUD allows for sampling at the management
company level for properties that utilize the same
system of controls. A-133 does not have a sampling
provision, and compliance must be done on an
individual entity basis.
Reporting Package and Submission
Reporting package
• Financial statements and SEFA
• Schedule of prior audit findings
• Auditor’s opinion which must include either combined or
separately
• An opinion (or disclaimer) on whether the financial
statements are presented fairly in all material respects in
accordance w/ GAAP
• An opinion on whether the SEFA is presented fairly in all
material respects
• A report on compliance for major programs and internal
control over compliance
Reporting Package and Submission
Reporting package (continued)
• Auditor’s opinion (continued)
• A report on compliance with laws, regulations, and
provisions of contracts/grant agreements, noncompliance
that could have a material effect on the financial
statements as well as an opinion as to whether the entity
complied with laws, regulations, and provisions that could
have a direct and material effect on each of the major
programs
• If applicable, a schedule of findings and questioned costs
• Corrective action plan
Reporting Package and Submission
Report Submission
• Data Collection – each entity must submit the
reporting package with a data collection form to the
Federal Clearinghouse certified by both the auditee
and auditor
• Submission deadline is the earlier of 30 days after
receipt of the auditor’s report or 9 months after the
end of the audit period
Efforts to Bring A-133 and HUD Requirements Closer Together
Non-profit entities, regardless of which
federal agency provided the award, are
not required to have an audit unless the
entity receives at least $500,000 in federal
awards.
Efforts to Bring A-133 and HUD Requirements Closer Together
In August 2013, HUD released Notice 2013-23 –
Change in Annual Financial Statement Submission
for Some Multifamily Housing Projects
• HUD Notice 2013-23 applied this same rule to ForProfit entities
• Beginning with year ends of 12/31/2013 – entities
receiving less than $500,000 in federal awards are
not required by HUD to be audited and can submit
Owner Certified financial statements.
Proposed Changes To A-133 and How It Will Affect the Audits
In January 2013 OMB issued Proposed
OMB Uniform Guidance: Cost Principals,
Audit and Administrative Requirements for
Federal Awards which proposed broad
revisions to OMB Circular A-133.
Proposed Changes To A-133 and How It Will Affect the Audits
Key areas of proposed changes
• Increase the single audit threshold to $750,000
• Increase the single audit threshold for Type A/Type B
programs from $300,000 to $500,000
• For a Type A program to be high-risk it must have
failed to receive an unqualified opinion, had a material
weakness in internal control, or had questioned costs
exceeding 5% of the program’s expenditures
• Reduce the number of Type B programs that must be
tested as major programs
Proposed Changes To A-133 and How It Will Affect the Audits
Key areas of proposed changes (continued)
• Reduce the percentage of coverage of major
programs required in a single audit from 50%
(normal) and 25% (low-risk auditees) to 40% (normal)
and 20% (low-risk auditees)
• Criteria for low-risk auditee status would be revised to
included
• Timely submission of data collection forms
• Auditor did not report a substantial doubt about the
entity’s ability to continue as a going concern
Proposed Changes To A-133 and How It Will Affect the Audits
Key areas of proposed changes (continued)
• Reduction in the types of compliance areas to be
tested from 14 to 6
• Findings – more detail required, however questioned
costs could increase from $10,000 to $25,000.
Questions?
Heather Perry, hperry@doz.net
Amy Ring, aring@doz.net
@dozcpa
References
OMB Office of Federal and Financial Management, The
Single Audit
(http://www.whitehouse.gov/omb/financial/fin_single_audit.html)
American Institute of CPAs – GAQC Alert #211
(http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/NewsAndP
ublications/GAQCALERT/2013/Pages/GAQCAlertNo211.aspx)
Consolidated Audit Guide for Audits of HUD Programs
Handbook (2000.4)
(http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/
hudclips/handbooks/oigh/2000.4)