IIA Washington DC Chapter
November 16, 2012
1

Rafael Roman, CPA
Rafael is a Technical Manager at the American Institute of Certified
Public Accountants in Washington, DC, where his primary responsibility is to assist with governmental auditing and accounting matters. He manages the activities of the AICPA Governmental Audit
Quality Center and helps staff both the AICPA Governmental Audit
Quality Center Executive Committee and the State and Local
Government Expert Panel. Rafael joined the AICPA on March 2005.
Prior to joining the AICPA, Rafael was a manager at a large national firm working on Federal financial audits. However, the majority of his governmental audit experience was obtained as an internal auditor for the U.S. Marine Corps. Rafael is a graduate of Mary Washington
College and is a CPA, CGMA, CIA, CGAP, and CCSA.
Governmental Audit Quality Center 2

The history of Single Audit Quality
The latest on the auditing standards that apply to compliance audits
The 2012 Compliance Supplement
The status of the federal government’s efforts to revise the single audit rules
Activity of federal agencies that have compliance audit requirements outside of the single audit
GAQC update and available audit tools
Governmental Audit Quality Center 3

Governmental Audit Quality Center 4

History of quality issues:
• Federal Single Audit Quality Study Results
• The Project issued a report titled, Report on National Single Audit
Sampling Project (the PCIE report), that was issued by the President’s
Council on Integrity and Efficiency (PCIE) and can be accessed in its entirety at : http://www.ignet.gov/pande/audit/natsamprojrptfinal2.pdf
Category
Acceptable
Limited Reliability
Unacceptable
Governmental Audit Quality Center
# of Audits $$$ Audited
48.60% 92.9%
16.00%
35.50%
2.30%
4.80%
5

Improvements needed in many areas including:
• Internal Control: Lack of Understanding and Testing
• Documentation Issues
• Lack of Due Professional Care
• Sampling
• Compliance Testing Problems
• Lack of Testing of SEFA
• Unreported Findings
• Material Reporting Errors
Governmental Audit Quality Center 6

AICPA Task Forces
• Seven task forces to examine the study's detailed findings and recommendations for the AICPA as follows:
- Sampling/Materiality Issues In A Single Audit Environment
- Internal Control And Compliance Responsibilities In A Single
Audit Environment
- Schedule Of Expenditures Federal Awards Reporting Issues
- Reporting Audit Findings In A Single Audit
- Single Audit Training Needs And Continuing Professional
Education Evaluation
- Practice Monitoring In A Single Audit Environment
- Compliance Auditing Considerations In Audits Of
Governmental Entities And Recipients Of Governmental
Financial Assistance
Governmental Audit Quality Center 7

Overall mission to improve governmental audit quality and to be a resource to members
Why Center launched?
• Indicators of problems with these audits from federal agencies
(e.g., PCIE study), peer reviews, and ethics referrals
• Proactive launch in light of expected federal study on single audit quality which began in 2005 (report issued in 2007)
Milestones
• Council approved concept in 2003
• Board approved GAQC membership requirements in 2004
• Center launched September 2004
• Board approved state audit organization membership in 2009
Governmental Audit Quality Center 8

Governmental Audit Quality Center 9

Technical Matters Impacting Single Audits
AICPA
• SAS No. 119
• Clarity, including SAS No. 125
• AICPA GAS-A133 and other relevant Guides
2011 Government Auditing Standards
Office of Management and Budget
• 2012 Compliance Supplement
- Changes to various parts and sections
• Potential revisions to single audit related regulations
Federal Audit Clearinghouse
Governmental Audit Quality Center 10

Technical Update – AICPA
SAS No. 119, Supplementary Information in Relation to the Financial Statements as a Whole
Effective for audits of financial statements for periods beginning on or after 12/15/10.
Scope
• When the auditor is engaged to report on whether SI is fairly stated, in all material respects, in relation to the f/s as a whole
Affects SEFA in-relation-to opinion (related GAQC
Practice Aids have been updated for SAS 119)
Requires the auditor to determine certain conditions are met
Provides for specific management representation
Governmental Audit Quality Center 11

Technical Update – AICPA
SAS No. 119, Supplementary Information in Relation to the Financial Statements as a Whole
Specific procedures using the materiality level used in the audit of the F/S
• However, keep in mind that auditor has to perform procedures beyond SAS No. 119 due to the compliance audit
Consideration of subsequent events not required for
SI, however still have to consider any information related to the F/S
Reporting requirements under various scenarios
(some changes in report language)
Dating – not earlier than the date on which the auditor completed procedures on SI
Governmental Audit Quality Center 12

Standards Issued
• SAS No. 122, Statements on Auditing Standards: Clarification and Recodification
• SAS No. 123, Omnibus Statement on Auditing Standards –2011
• SAS No. 124, Financial Statements Prepared in Accordance
With a Financial Reporting Framework Generally Accepted in
Another Country
• SAS No. 125, Alert That Restricts the Use of the Auditor’s
Written Communication
Effective for audits of periods ending on or after
December 15, 2012; no early implementation
Includes revisions to SAS 117
• Appendix regarding what auditing standards do NOT apply to compliance audit to be revised
• Reporting changes
Governmental Audit Quality Center 13

Keep in mind that many of the clarity standards have “governmental consideration” paragraphs that are specific to the public sector
• May cover Yellow Book/compliance audit considerations
• May cover financial statement audit considerations
Group audits will be more challenging in financial statement arena
Still looking at impact of group audits on compliance audits
Governmental Audit Quality Center 14

SAS No. 125 - Government Auditing Standards reports (including A-133 reports) will contain purpose alert instead of restriction alert
Pay particular attention to effective date
• Effective for the auditor’s written communications related to audits of financial statements for periods ending on or after
12/15/12
• For all other engagements conducted in accordance with GAAS, this SAS is effective for the auditor’s written communications issued on or after 12/15/12
There has been a lot of discussion on how this effective date affects single audit reports issued after 12/15/12 (e.g., relating to 6/30/12 or 9/30/12)
ASB currently looking at issuing a question and answer addressing this
Governmental Audit Quality Center 15

Getting to Know the AICPA Clarity Standards
Standards
• Videos
• Mapping from extant to new standards
• More
Listen to archived GAQC member web events
• Implementing the Clarified SASs in a Governmental and Not-For
Profit Audit Environment: What, When, and How?
• Understanding the Potential Impacts of the New Group Audits SAS on Your Governmental and NPO Audit Engagements
Governmental Audit Quality Center 16

• Primary Focus
• Government Auditing Standards &
Circular A-133 Audits
• Other Industries Include
• State and Local Governments
• Not for Profit Entities
• Health Care Entities
• Gaming
• Sampling
• Audit Risk Alerts
• Checklists & Illustrative
Statements
Governmental Audit Quality Center 17

AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits
• 2012 edition issued in May
• SAS No 119 is fully incorporated into guide (including the illustrative reports and SEFA practice aids in chapter 7)
• Appendix added with a summary of 2011 Yellow Book revisions
• Two new “clarity” Appendixes
- Information on AU-C sections with substantive changes or significant clarifying changes resulting from clarity
- Table that maps current AU sections to the new AU-C section numbers
2012 GAS-A133 Audit Risk Alert also issued
Guide - Looking forward
• Clarity and new Yellow Book
Governmental Audit Quality Center 18

AICPA A&A Guide, State and Local Governments
• 2012 Edition issued in July 2012
• Incorporated GASB 62 (earlier than normal) but did so with appropriate footnotes to assist those that have not early implemented.
• Also updated for SAS Nos. 118, 119 & 120; illustrative reports updated for these statements and will also be posted on GAQC
Web site
• Plans for 2013 and 2014
SLG Audit Risk Alert
Other SLG Publications
• Updated SLG Practice Aid for Other Comprehensive Basis of
Accounting
Governmental Audit Quality Center 19

AICPA A&A Guide, Not-for-Profit Entities – Overhaul
• Overhaul in process; exposure draft posted for comment
• Some of the main areas being addressed
- Reporting relationships with other entities
- Reporting and measuring noncash gifts
- A new chapter on program-related investments and microfinance loans
- Reporting the expiration of donor-imposed restrictions
- Suggestions for audit procedures an auditor might consider as a supplement to the risk assessment procedures
AICPA A&A Guide, Not-for-Profit Entities –
Conforming Changes
• 2012 edition issued in May 2012
• Normal update changes for new standards
Governmental Audit Quality Center 20

Technical Update – Health Care A&A Guide
Covers governmental, not-for-profit, and for-profit health care entities
2012 edition expected in November 2012
Clarity standards to be incorporated
Governmental Audit Quality Center 21

Technical Update – Government Auditing
Standards
Final 2011 edition issued
• Main change relates to independence, especially when performing nonaudit services
• Very few changes made from interim version previously posted
Effective date same as AICPA clarity
• For financial audits for periods ending on or after 12/15/12
• No early implementation
However, auditors need to be independent for entire audit period
• New Yellow Book independence requirements for nonaudit services may need to be considered as early as 1/1/12
Governmental Audit Quality Center 22

Technical Update – Government Auditing
Standards
Resources for 2011 Yellow Book (should be referred to in other AICPA offerings – all open to the public)
• Archived GAQC Web event, The New 2011 Yellow Book:
What You Need to Know Now , provides a more in-depth discussion on 2011 Yellow Book
• GAQC practice aid titled, 2011 Yellow Book
Independence —Nonaudit Services Documentation
Practice Aid
• Archived GAQC Web event, Understanding the AICPA's
Yellow Book Independence Practice Aid for Performing
Nonaudit Services
• Ethics comparison of AICPA standards versus GAO
Governmental Audit Quality Center 23

Technical Update – Government Auditing
Standards
New! Yellow Book Independence Practice Aid
• New practice aid developed by GAQC, working with the
AICPA ethics and peer review teams, to assist auditors in meeting the Yellow Book requirements
• Federal agency representatives reviewed the practice aid and provided feedback
• Includes documentation template to illustrate one way to prepare required documentation in this area and many informative appendices
• Issued free to AICPA members in flat PDF version and also a for-sale version that permits input responses to the documentation template
Governmental Audit Quality Center 24

Technical Update – Government Auditing
Standards
Purpose of GAQC YB Practice Aid
• To assist auditors in:
- Applying the independence conceptual framework
- Identifying and evaluating threats to independence for nonaudit services
- Identifying safeguards where necessary
- A ssessing management’s Skills, Knowledge, or Experience
(SKE)
- Complying with YB documentation requirements
• Practice Aid highlights nonaudit services frequently performed for smaller entities:
- Preparing financial statements (F/S)
- Preparing journal entries other than proposed audit entries
- Preparing reconciliations
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Government Auditing Standards Practice Aid
Become familiar with the Practice Aid and its
Appendixes :
Governmental Audit Quality Center 28

Technical Update – GAO – 2011 Yellow Book
How to Obtain the Practice Aid
• Flat PDF Version. Free to AICPA members, including GAQC members. Access the free pdf version of the Practice Aid on the
GAQC Web site
• For Sale Version . Practice Aid Version Designed for Auditor
Documentation Input (Supplement) available for a small fee to
AICPA members, GAQC members, and non-members; order the for-sale Supplement
Can be saved and included as part of auditor’s documentation
Governmental Audit Quality Center 29

Governmental Audit Quality Center 30

Technical Update – OMB Compliance
Supplement
Final issuance Supplement issued in July 2012
Accessing the Final Supplement
• Upon issuance, go to OMB's Web site at "Grant
Management Circulars" link: www.whitehouse.gov/omb/grants/ (scroll down to the
"Audit Requirements" section)
• Both current and prior Supplements available (use the correct version!)
OMB previously provided a draft Supplement for
Audit “Planning” Purposes
• Previously posted on GAQC Web page
• Do not use the draft now that the final is issued
Governmental Audit Quality Center 31

Technical Update – OMB Compliance
Supplement
Program changes by the numbers
Review Appendix V for changes made
Don’t overlook Appendix VII
• Effect of Recovery Act Awards on major program determination
Guidance
• List of Recovery Act programs not covered by Parts 4 or 5 but that could be subject to a single audit and list of Recovery Act programs not subject to single audit
• Late Filings and Low-Risk Auditee Status
• Treatment of Large Loan and Loan Guarantee Programs
Governmental Audit Quality Center 32

Technical Update – OMB Compliance
Supplement
Part 3, Requirement I, “Procurement and
Suspension and Debarment”
• Addressed relationship between procurement requirements of A-102 common rule and change in federal simplified acquisition threshold
Part 3, Requirements L, "Reporting"
• Clarified subaward reporting under the Federal Funding
Accountability and Transparency Act of 2006 (FFATA)
• Removed timeliness as an element of financial reporting compliance requirement (change from draft Supplement)
Part 3, Requirement M, "Subrecipient Monitoring“
• Modified to add “subrecipient risk” as another factor for pass-through entities to consider when determining the nature, timing, and extent of during-the-award monitoring
Governmental Audit Quality Center 33

Technical Update – OMB Compliance
Supplement
What is FFATA?
• It is the federal award reporting requirements for direct recipients of non-Recovery Act federal awards
• Direct recipients required to report certain first-tier subawards
• Public view Web site: www.USASpending.gov
• Input version of Web site: www.fsrs.gov
• Some similarities to section 1512 reporting for Recovery Act awards but also several differences
Governmental Audit Quality Center 34

Technical Update – OMB Compliance
Supplement
When Does FFATA Apply?
• For grants and cooperative agreements, the effective date was October 1, 2010, for all discretionary and mandatory awards equal to or exceeding $25,000 made with a new FAIN on or after that date.
• Once the requirement applies, the recipient must report, for any subaward under that award with a value of $25,000 or more, each obligating action of
$25,000 or more in federal funds.
• For contracts, implementation was phased-in based on their total dollar value (Supplement describes staggered phase-in)
Governmental Audit Quality Center 35

Technical Update – OMB Compliance
Supplement
State makes subawards of federal funds to local governments
Local government expends direct federal funds but makes no subawards
Not-for-profit expends federal funds received from local government and makes no subawards
FFATA may apply to state (but not to local governments unless they receive other direct awards and make subawards)
Governmental Audit Quality Center
FFATA does not apply to local government
(makes no subawards)
FFATA does not apply to not-forprofit (not a direct recipient)
36

Technical Update – OMB Compliance
Supplement
Clarifying FFATA Guidance
• How to understand if there is a new FAIN
• Obligating actions versus funding
• Incorporation in Supplement of Q&A issued on www.fsrs.gov
in February 2011
- If direct recipient made best effort to comply and has documented evidence, no finding needs to be reported (assuming no other issues)
- Guidance on how prior year findings in this area affect current year major program determination
- Access the 2011 Q&A: https://www.fsrs.gov/#a-faqs
Governmental Audit Quality Center 37

Technical Update – OMB Compliance
Supplement
Part 5, Clusters of Programs,
• Student Financial Assistance (SFA) cluster has been modified
- Changed references to requirements associated with
Federal Family Education Loans,
- Numerous updates and deletions to various compliance requirements and procedures specific to SFA
• Research and Development (R&D) cluster
- Modified to reflect an update to the "Indirect Cost Limitation" based on the elimination of the requirement in 2011
- No change to NSF R&D (draft Supplement had indicated there would be a change but it was removed in final)
• The Other Clusters have been revised for:
- Program changes to certain clusters
Governmental Audit Quality Center 38

Technical Update – OMB Compliance
Supplement
Recovery Act
• Recovery Act funds dwindling but will still will affect many auditees
• Compliance Supplement guidance
- Clusters of programs with new Recovery Act CFDA number would fail 2-year lookback and have to be audited (excludes
R&D and SFA clusters)
- Type A programs having Recovery Act expenditures generally would not be low-risk unless meet defined exception (2012 Supplement revised exception – next slide)
- Type B programs still considered higher risk
Governmental Audit Quality Center 39

Technical Update – OMB Compliance
Supplement
Exception for Type A Recovery Act programs slightly revised
An auditor may consider a Type A program or cluster to be low-risk if all of the following conditions exist:
• Program or cluster had Recovery Act expenditures in the prior audit period;
• Program or cluster was audited as a major program in EITHER
OF THE TWO PRIOR AUDIT PERIODS ;
• Recovery Act expenditures in the current audit period are less than 20% of the total program or cluster expenditures; and
• Auditor has followed Section 520(c) and 525 of OMB Circular A-
133 and determined that the program or cluster is otherwise lowrisk
Governmental Audit Quality Center 40

Technical Update – OMB Compliance
Supplement
Other Tools
• GAQC issued GAQC Alert 198 to alert members of the release of the Supplement and how differed from the draft
• GAQC issued GAQC Alert 195 to alert members of the release of the draft Supplement and what it contained
Caution!
If you began planning or performing interim work using the draft Supplement, you need to check the final
Supplement
• GAQC member-only Web event on draft version of the 2012
Supplement held with two additional rebroadcasts – still useful
Governmental Audit Quality Center 41

Using the Compliance Supplement Correctly
Use all parts for a correct Single Audit
- 2: Matrix of Compliance Requirements
- 3: Compliance Requirements
- 4: Agency Program Requirements
- 5: Clusters of Programs
- 6: Internal Control
- 7: Guidance for Auditing Programs not Included in the
Supplement
Don’t forget Appendices – especially
Appendix 7 if auditee has Recovery Act funds
Use the correct year’s Supplement
Governmental Audit Quality Center 42

Technical Update – OMB – Continued Single
Audit Quality Issues
Major Program Determination, including improper clustering
Risk Assessment Documentation
Internal Control Understanding and Testing
Sampling
Schedule of Expenditures of Federal Awards
Summary of Prior Year Findings
Exception and deviation disposition
Finding Detail
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Governmental Audit Quality Center 44

Technical Update – OMB – Single Audit
Revisions
Various Executive Orders and Memorandums over last several years has partially led to the revisions being considered today.
OMB issued Memorandum 12-01 on October 27,
2011, creating Council on Financial Assistance
Reform (COFAR):
• Charged with creating a more streamlined and accountable structure to coordinate financial assistance
• COFAR is co-chaired by the Office of Federal Financial Management at OMB and includes the eight largest grant making agencies as well as one rotating member
• This group is leading the charge on single audit and other related revisions
Governmental Audit Quality Center 45

Technical Update – OMB – Advance Notice
OMB issued Advance Notice on potential reform
“ideas” on February 24, 2012
( http://www.whitehouse.gov/sites/default/files/omb/fi nancial/fr-notice-grant-reform-2012.pdf
)
Comments were due April 30 ( access the AICPA comment letter )
Specific regulatory proposed revisions next step
The reforms proposed are intended to improve the performance of federal grants and cooperative agreements ,while targeting waste, fraud, and abuse to ensure accountability in the use of funds
Governmental Audit Quality Center 46

Technical Update – OMB – Advance Notice
Increase audit threshold from $500K to $1M
Establish “limited scope” single audit for entities with expenditures between $1M and $3M:
• Test only two compliance requirements for a major program
- Allowable costs always tested
- Second requirement selected by federal agencies
- Target risk of improper payments, waste, fraud, and abuse
Require “full” single audit (with modifications) for entities with expenditures more than $3M
• Streamlined compliance requirements
Governmental Audit Quality Center 47

Technical Update – OMB – Advance Notice
Full single audit modifications
• Target subset of compliance requirements for increased testing, larger samples, and/or lower levels of materiality (e.g., Allowable or unallowable activities and costs, Eligibility, Period of availability, Reporting, Subrecipients)
• Reduce testing of other requirements by making them optional, smaller samples, and/or higher levels of materiality (e.g., Cash management, Davis-Bacon Act, Program income)
Governmental Audit Quality Center 48

Technical Update – OMB – Advance Notice
Other Ideas for Change in Advance Notice
• Strengthening audit follow-up
• More cross-agency coordination
• Combining and clarifying cost principles
• Modifications to administrative requirements
Governmental Audit Quality Center 49

Technical Update Circular A-133 – Status of Changes
Federal Register notice of proposed changes expected before year-end with revisions to:
• OMB Circular A-133
• Cost principles and administrative requirements
GAQC has heard:
• Financial statement audit for entities expending between $500K and $1M with in-relation to reporting on the SEFA
• Abandoned “limited scope single audit” between $1M and $3M
• A streamlined single audit for all above $1M (fewer compliance requirements)
• Other changes likely (e.g., change in major program and finding threshold. percentage of coverage, etc.)
• No word on proposed effective date
• No plans to amend Single Audit Act that we are aware of
Governmental Audit Quality Center 50

Potential Changes to Single Audit –
Impact of Tiered Approach
Number of Single Audits
$500K - $1 M: 10,724
$1M - $3 M: 16, 320
$3 M +: 17,376
Total Dollars Covered
$500K - $1M: $7.8B
$1M - 3M: $28.9B
$3M +: $1,384.3B
1%
2%
39%
24%
37% 97%
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Potential Changes to Single Audit – by Agency
Single Audits by
Agency
As Cognizant As Oversight
Agriculture
HUD
Labor
Transportation
NSF
Energy
Education
HHS
Homeland
Security
9
2
480
240
8
14
270
13
70
> $3 million
777
4,211
345
653
35
139
4,791
3,114
236
$1 – 3 million
1,196
4,881
239
537
38
148
4,401
2,721
323
< $1 million
776
2,848
134
391
37
68
2,894
1,880
303
Governmental Audit Quality Center 52

Impact on Firms of Raising Threshold to $1 million
Total firms in Federal Audit Clearinghouse doing single audits is 5,425
3,256 firms perform the 10,724 single audits that cover less than $1 million
• There are 711 firms that do only 1 single audit and it is less than
$1 million
• Another 200 do more than 1 single audit but none are over $1 million
• The remainder also have single audits that fall above $1 million
Governmental Audit Quality Center 53

Technical Update – 2013 Data Collection
Form (Federal Audit Clearinghouse)
Federal Register Notice with proposed changes likely before end of 2012
Significant increase in findings information on the
DCF
FAC planning to require unlocked pdf audit reporting to be uploaded in future
• Unencrypted, unlocked, and at least 85% text searchable
FAC working towards making all reporting packages transparent to the public
• Financial statements, SEFA
• Auditor reporting
• Schedule of Findings and Questioned Costs
Governmental Audit Quality Center 54

Use the Federal Audit Clearinghouse as a
Tool to Identify Audit Quality Issues
Consider using the database to perform a few quality checks
• Check type A program thresholds for your audits (if you find
$500,000 you probably have a problem)
• See if doing any program-specific audits; if so, look at the data collection form (DCF) to determine if only one program or cluster noted
• Randomly drill down into some of your organization’s DCFs to see if any other trends noted
Governmental Audit Quality Center 55

Be Cautious….
• Watch out for federal agency “interpretations” that conflict with requirements of Circular A-133 or
Compliance Supplement
• CPA certifications without following professional standards should not be signed
Governmental Audit Quality Center 56

Inspector General community has issued the following checklists for use by federal agencies
• Guide for Quality Control Reviews of OMB Circular A-133 Audits
• Guide for Desk Reviews of OMB Circular A-133 Audit Reports
Both can be found at: http://www.ignet.gov/pande/audit1.html#reports
(look under Single Audit Guides)
Consider using these checklists as an additional QC tool
Governmental Audit Quality Center 57

Review both Parts A and B of the peer review single audit checklists
Use the peer review checklists as a quality control tool (before, during, and at the completion of your engagements)
GAQC members can listen to an archived GAQC
Web event on the latest on peer review
Governmental Audit Quality Center 58

Governmental Audit Quality Center 59

HUD Consolidated Audit Guide
• Covers for-profits (e.g., housing partnerships)
• Different types of entities covered by each chapter
• History has been for HUD to update on chapter-by-chapter basis
• Chapters 1 (applicable to all audits) and 6 (GNMA) updated over course of last year and effective
HUD staff attempting to advance Guide revisions
• Chapter 2 (may move to report formats similar to Circular A-133 reports in future)
• Chapter 4 (hospitals with HUD-insured mortgages)
• Chapter 7 and 8 (supervised/nonsupervised mortgages to be combined and updated)
GAQC HUD Information Page:
• http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/R esources/HUDInformation/Pages/default.aspx
Governmental Audit Quality Center 60

Technical Update – Other For-Profit
Compliance Audits
Trend is for federal government to issue audit requirements similar to Circular A-133 for for-profit entities receiving federal funds
Examples of for-profit guides:
• Dept. of Energy Audit Guide
• Dept. of Commerce Broadband Technology Opportunities
Program
• Dept. of Education (lenders, lender servicers, proprietary schools, etc.)
• Department of Agriculture (Broadband)
GAQC recently issued a summary of “other” federal guides which includes current status on the GAQC
Web site
Governmental Audit Quality Center 61

Technical Update – Other For-Profit
Compliance Audits
Recent Activity During Past Year
• Department of Energy Audit Guide (2011 edition) issued in 2012
• Confusion over updated 2011 Energy Guide resulted in issuance of FAQ document
• Department of Commerce Broadband Technology Opportunities
Program Audit Guide to identify changes made in 2011 edition
Change document available that identifies what was revised
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Approximately 1,734 member firms representing 50 states, Puerto Rico, and US Virgin Islands
19 State Audit Organizations (SAO) have joined to date
• AR, CA, DE, FL, GA, IA, IL, LA, MI, MN, ND, NH, OH, RI, SD,
TX, UT, VA, WV
Member Coverage in the FAC 2010 Database
• 91% of federal dollars
• 61% of number of audits
Hear from current GAQC members on value of the
GAQC (click on AICPA TV link)
Governmental Audit Quality Center 64

Advocacy
• Regular interaction with federal regulators and other stakeholders
• OMB Advance Notice on single audit revisions
• 2012 Compliance Supplement and for-profit federal audit guides
• New 2011 Yellow Book
Communication with members (GAQC Alerts)
Offerings of GAQC Web events
Technical guidance (e.g., publications, conferences)
Resources and practice aids
• Yellow Book Independence practice aid
• SEFA practice aids (updated for SAS 119)
• Internal control practice aids
• Illustrative reports
GAQC Web site
Governmental Audit Quality Center 65

GAQC Web site (
)
Governmental Audit Quality Center 66

Auditee Resource Center – Open to the
Public
• Why quality audit important?
• Auditee resources – some existing resources for auditors and some new (single audit, Yellow Book, other compliance audits, and financial statements audits)
- Archived Web events
- Practice aids
- Articles
- Access to GAQC Alerts
• Links to Publications
• Link to Conferences and other training available
• Access the Auditee Resource Center
Governmental Audit Quality Center 67

SEFA Practice Aids (both for the auditor and auditee) issued and available on the GAQC Web site (auditor tools also incorporated in the GAS/A133 Guide)
• Audit Program and Disclosure Checklist for Auditors
• Document for auditees to accumulate important information on federal awards and a Disclosure Checklist for Auditees
Updated in past year to reflect changes needed due to SAS 119
• New auditor’s report checklist for in-relation-to reporting added
GAQC held a recent member event that has been archived on the GAQC Web site (to further help you understand SEFA responsibilities and the Practice
Aids)
Governmental Audit Quality Center 68

Practice aids illustrate:
• Documenting direct and material compliance requirements
• Documenting internal control
• Dual-purpose testing of IC and Compliance
How to Access
• GAQC members – free access to word and excel versions on
GAQC Web site
• GAQC members and non-members – small fee ($39.99) for purchase of electronic PDF product where responses can be input into form (order through CPA2BIZ at http://www.cpa2biz.com
)
• Product number: 006662PDF
Governmental Audit Quality Center 69

Utilize major program risk assessment software, if your firm has it
Utilize the AICPA Audit Guide, “Government Auditing
Standards and Circular A133 Audits”
Document thoroughly the risk analysis and the basis for assessing risk (they should be consistent!)
At the end of the audit – recheck the coverage achieved
Listen to archived GAQC Web events for more tips
Governmental Audit Quality Center 70

Separate AICPA Audit Guide for Sampling in a F/S audit environment
Separate chapter in GAS/A-133 Audit Guide to address single audit sampling
• Chapter includes suggested minimum sample sizes and more
Executive summary of chapter available on GAQC
Web site under Resources tab
HUD Consolidated Audit Guide contains sampling guidance for audits covered by that Guide
Governmental Audit Quality Center 71

GAQC HUD Resource Center (much of this page is open to the public)
• Latest news
• Archived member events (HUD multifamily housing audits)
• Background
• Status of each chapter of HUD Guide http://www.aicpa.org/INTERESTAREAS/GOVERNMENTALAUDITQUALITY/
RESOURCES/HUDINFORMATION/Pages/default.aspx
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GAQC Resources – Archived GAQC Web Events from
Past Year
OCBOA Practice Aids*
Understanding Indirect Costs*
The HHS Head Start Program*
* Open to the Public
GASB and FASB Updates
Challenges with Fair Value Measurements for NPOs*
New 2011 Yellow Book*
New Group Audit Standards Impact on
Governmental and NPO Audits
New HUD Rules for Banks*
Governmental Audit Quality Center 73

GAQC Resources – Archived GAQC Web Events from
Past Year
* Open to the Public
Understanding the Effect of the Clarified Auditing
Standards on Governmental and NPO Audits
Updated SEFA Practice Aids (for SAS 119)
Subrecipient Monitoring: An Auditee and Auditor
Perspective*
Understanding the New AICPA Yellow Book
Independence Practice Aid*
Annual GAQC Webcast on Planning for 2012
Governmental and NPO Audits
2012 Compliance Supplement and Related Best
Practices
Governmental Audit Quality Center 74


• Final 2012 Compliance Supplement Issued
• Advance Notice of Changes Being Considered for A-133 and Cost
Principles
• New Yellow Book Independence Nonaudit Services Practice Aid Issued
• Access Updated SEFA Practice Aids and Report Wording; SAS 119
Information
• HUD Issues Compliance Audit Waiver for Small Supervised Lenders
• News on the Governmental Accounting and Auditing Front
• Draft 2012 OMB Compliance Supplement Available for Review and
Comment
• New 2011 Yellow Book Issued by GAO
• Important News and Information for GAQC Members
• Audit Resources, Annual Webcast; and Upcoming Events
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General Inquiries - Best way to reach GAQC staff is to send an e-mail to: gaqc@aicpa.org
• Mary Foelster, Director
- 202-434-9259 or mfoelster@aicpa.org
• Teresa Bordeaux, Technical Manager
- 919-402-4959 or tbordeaux@aicpa.org
• Laura Hyland, Technical Manager
- 202-434-9233 or lhyland@aicpa.org
• Rafael Roman, Technical Manager
- 202-434-9272 or rroman@aicpa.org
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Implementation of Clarity and New Yellow Book
Changes to single audit rules?
Continued effects from Recovery Act?
Continued audit quality concerns
Continued look at how peer review can be enhanced
Continued advocacy
Continued GAQC support to members
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Governmental Audit Quality Center 78