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CHAPTER 15
PREPARING FOR AN OMB CIRCULAR A-133 AUDIT
TABLE OF CONTENTS
PAGE
DESCRIPTION
15-2
Overview
15-2
Auditee Responsibilities
15-3
Key Deadlines
15-4
Findings Related to Federal Awards
15-4
Audit Findings Follow-up
15-8
Schedule of Expenditures of Federal Awards
15-9
List of CSU Reports Commonly Utilized in the A-133 Audit
15-13
Changes to Federal Grant Policies and Single Audits
15-14
Single Audit A-133) PBC Lists
Higher Scope
Limited Scope
Exhibit 23
Sample Reconciliation of SEFA
Exhibit 24
Sample Single Audit Risk Assessment Questionnaire
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OVERVIEW
The Single Audit Act Amendments of 1996 was enacted to streamline and improve the
effectiveness of audits of federal awards and to reduce the audit burden on states, local
governments, and not-for-profit organizations (NPOs). Office of Management and Budget (OMB)
Circular A-133 states that nonfederal entities that expend $500,000 or more of federal awards in a
fiscal year should have a single audit.
This section of the manual is designed to provide the user with an understanding of how to prepare
for a successful A-133 audit and, in addition, describes the roles of the independent auditor and
campus personnel in the audit process.
AUDITEE RESPONSIBILITIES
OMB Circular A-133 establishes the following responsibilities for the campus/auditee:
 Identifying in its accounts all federal awards received and expended and the federal programs
under which they were received, including, as applicable, the CFDA title and number, the
award number and year, the name of the federal agency, and the name of the pass-through
entity.
 Establishing and maintaining effective internal control over compliance for federal programs
that provides reasonable assurance that the auditee is managing federal awards in compliance
with laws, regulations, and the provisions of contracts or grant agreements that could have a
material effect on each of its federal programs.
 Complying with laws, regulations, and the provisions of contracts or grant agreements related
to each of its federal programs.
 Following up and taking corrective action on audit findings (including the preparation of the
previously discussed summary schedule of prior audit findings and a corrective action plan);
A-133 recommends that corrective action should be initiated within six months after the receipt
of the audit report and proceed as rapidly as possible.
AUDITOR CONSIDERATION OF INTERNAL CONTROLS OVER COMPLIANCE FOR FEDERAL
PROGRAMS
OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations
(Circular A-133), establishes requirements for additional audit procedures and reporting relative
to the auditor's consideration of internal control over compliance for major programs. Those
requirements are beyond those of a financial statement audit conducted in accordance with
generally accepted auditing standards (GAAS) and Government Auditing Standards. Circular A133, states that the auditor should:
 Perform procedures to obtain an understanding of internal control over compliance for federal
programs that is sufficient to plan the audit to support a low assessed level of control risk for
major programs.
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Plan the testing of internal control over compliance for major programs to support a low
assessed level of control risk for the assertions relevant to the compliance requirements for
each major program.
Perform testing of internal control over compliance as planned.
Report on internal control over compliance describing the scope of the testing of internal
control and the results of the tests and, where applicable, referring to the separate schedule of
findings and questioned costs. This schedule includes, where applicable, a statement that
significant deficiencies in internal control over compliance for major programs were identified
in the audit and whether any such deficiencies were material weaknesses.
AUDITOR RESPONSIBILITIES FOR PERFORMING A COMPLIANCE AUDIT
In a Circular A-133 compliance audit, the auditor performs the following:
a) Identify the auditee's major programs to be tested and reported on for compliance
b) Identify the applicable compliance requirements for each major program
c) Determine which of the applicable compliance requirements identified in step b could have a
direct and material effect on each major program
d) Plan the engagement
e) Consider relevant portions of the auditee's internal control over compliance for each direct and
material compliance requirement for each major programs
f) Obtain sufficient appropriate audit evidence, which involves testing internal control and
compliance with direct and material compliance requirements for each major program
g) Consider indications of abuse
h) Consider subsequent events
i) Form an opinion about whether the auditee complied with the direct and material compliance
requirements
j) Perform follow-up procedures on previously identified findings
KEY DEADLINES
 Campus to submit preliminary schedule of expenditures of federal awards (SEFA) via YES
(TM1) – July 28, 2015
 Office of the Chancellor team reviews campus submissions of SEFA – July 28-August 7,
2015
 KPMG to be provided with preliminary SEFA – August 7, 2015
 Fieldwork for Higher Scope Student Financial Aid (SFA) Campuses – August – September,
2015
 Fieldwork for non-SFA Higher Scope procedures – TBD (based on selection of programs
and amounts included in the SEFA submissions)
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Higher Scope campuses to have completed PBCs ready prior to the start of final fieldwork and
arrival of their KPMG audit team – see PBC listing for specific dates associated with all
requests
Other campuses to have completed General A-133 PBCs ready prior to the start of final
fieldwork – see PBC listing for specific dates associated with all requests
KPMG campus teams have an exit meeting with campus president and submit FINAL A-133
findings to KPMG Systemwide team (single audit summary of deficiencies document) –
Varies by campus
Issue A-133 report – October 15, 2015
FINDINGS RELATED TO FEDERAL AWARDS
Circular A-133 states that the auditor should report as audit findings in the federal awards section
of the schedule of findings and questioned costs:
a) Significant deficiencies in the internal control over major programs. The auditor's
determination of whether a deficiency in internal control is a significant deficiency for the
purpose of reporting an audit finding is in relation to a type of compliance requirement for a
major program or to an audit objective identified in the Compliance Supplement. The auditor
should identify significant deficiencies that are individually or cumulatively material
weaknesses. (See Chapter 9 Preparing for the Financial Statements Audit for definitions of
significant deficiencies and material weaknesses in accordance with SAS 115).
b) Material noncompliance with the provisions of laws, regulations, contracts, or grant
agreements related to a major program. The auditor's determination of whether noncompliance
with the provisions of laws, regulations, contracts, or grant agreements is material for the
purpose of reporting an audit finding is in relation to a type of compliance requirement for a
major program or an audit objective identified in the Compliance Supplement.
c) Known questioned costs that are greater than $10,000 for a type of compliance requirement
for a major program. Known questioned costs are those specifically identified by the auditor.
In evaluating the effect of questioned costs on the opinion on compliance, the auditor should
consider the best estimate of the total costs questioned (likely questioned costs), not just the
questioned costs specifically identified (known questioned costs). The auditor also should
report (in the schedule of findings and questioned costs) known questioned costs when likely
questioned costs are greater than $10,000 for a type of compliance requirement for a major
program. For example, if the auditor specifically identifies $7,000 in questioned costs but,
based on his or her evaluation of the effect of questioned costs on the opinion on compliance,
estimates that the total questioned costs are in the $50,000 to $60,000 range, the auditor would
report a finding that identifies the known questioned costs of $7,000. Although the auditor is
not required to report his or her estimate of the total questioned costs, the auditor would include
information to provide proper perspective for judging the prevalence and consequences of the
questioned costs.
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d) Known questioned costs that are greater than $10,000 for programs that are not audited as
major. Because (except for audit follow-up) the auditor is not required to perform audit
procedures for federal programs that are not major, the auditor normally will not find
questioned costs. However, if the auditor does become aware of questioned costs for a federal
program that is not audited as a major program (for example, as part of audit follow-up or other
audit procedures) and the known questioned costs are greater than $10,000, then the auditor
should report this as an audit finding.
e) The circumstances concerning why the auditor's report on compliance for major programs is
other than an unqualified opinion, unless such circumstances are otherwise reported as audit
findings in the schedule of findings and questioned costs for federal awards (for example, a
scope limitation that is not otherwise reported as a finding).
f) Known fraud affecting a federal award, unless such fraud is otherwise reported as an audit
finding in the schedule of findings and questioned costs for federal awards. Circular A-133
does not require the auditor to make an additional reporting when the auditor confirms that the
fraud was reported outside of the auditor's reports under the direct reporting requirements of
Government Auditing Standards.
g) Instances where the results of audit follow-up procedures disclosed that the summary schedule
of prior audit findings prepared by the auditee in accordance with Section 315(b) of Circular
A-133 materially misrepresents the status of any prior audit finding.
h) Government Auditing Standards states that auditors should report, as applicable to the
objectives of the audit, abuse that is either quantitatively or qualitatively material. For abuse
involving federal awards that is material to the financial statement amounts, the auditor
typically would present the finding in the financial statement section of the schedule of findings
and questioned costs and refer to it from the Government Auditing Standards report. For abuse
involving federal awards that is material to a major program, the auditor typically would
present the finding in the federal awards section of the schedule of findings and questioned
costs and refer to it from the Circular A-133 report.
WHEN FINDINGS ARE REPORTED
All questioned costs that exceed or are expected to exceed $10,000 are required to be reported as
findings in the Independent Auditors’ Report on Compliance for Each Major Program;
Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of
Federal Awards Required by OMB Circular A-133, Audits of States, Local Governments, and
Non-Profit Organizations (Compliance and Control Report). In addition, such compliance
findings will generally be accompanied by a control deficiency in the Compliance and Control
Report, if it is determined that ineffective controls caused the errors noted. However, it is
uncommon to have a compliance finding that is not associated with a reported control deficiency.
Similarly, it is possible to have a control deficiency that is not associated with noncompliance. An
example of this would be a situation where no identified controls over a compliance requirement
were in place, yet the auditors’ sample did not yield any exceptions. Since the auditor is required
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to report on both compliance and controls over compliance, such a situation could result in a
reported control deficiency.
For findings not associated with a question cost, the determination as to whether it will be reported
in the Compliance and Control Report will generally be based on the following criteria:
a) Noncompliance at any one particular campus that constitutes an error rate greater than 10-20%
of the sample size depending on the particular compliance requirement
b) Combined noncompliance at more than one campus that constitutes an error rate greater than
5% of the sample size for any particular compliance requirement (for the system as a whole).
Sometimes a campus, on a stand alone basis, may have some noted exceptions that alone would
not warrant inclusion in the Compliance and Control Report. However, if there are exceptions in
a particular compliance requirement that cross several or more campuses, it may be considered a
systemic issue and may therefore be reported in the Compliance and Control Report. The auditor
generally can’t conclude on which findings will be included in the Compliance and Control Report
until all potential findings at all campuses are resolved.
AUDIT FINDING FOLLOW-UP
The campus is responsible for follow-up and corrective action on all audit findings. As part of this
responsibility, the campus shall prepare a summary schedule of prior audit findings. The campus
shall also prepare a corrective action plan for current year audit findings. The summary schedule
of prior audit findings and the corrective action plan shall include the reference numbers the auditor
assigns to audit findings. Since the summary schedule may include audit findings from multiple
years, it shall include the fiscal year in which the finding initially occurred.
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
The summary schedule of prior audit findings shall report the status of all audit findings included
in the prior audit (e.g., FY2014) relative to Federal awards. The summary schedule shall also
include audit findings reported in a prior audit (e.g., FY2013 and prior) where corrective action
was not fully implemented in the prior year.
(1) When audit findings were fully corrected, the summary schedule need only list the audit
findings and state that corrective action was taken.
(2) When audit findings were not corrected or were only partially corrected, the summary schedule
shall describe the planned corrective action as well as any partial corrective action taken.
(3) When corrective action taken is significantly different from corrective action previously
reported in a corrective action plan or in the federal agency's or pass-through entity's
management decision, the summary schedule shall provide an explanation.
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CORRECTIVE ACTION PLAN
At the completion of the audit, the campus shall prepare a corrective action plan to address each
audit finding included in the current year auditor's reports. The corrective action plan shall provide
the name(s) and contact information of the contact person(s) responsible for corrective action, the
corrective action planned, and the anticipated completion date. If the campus does not agree with
the audit findings or believes corrective action is not required, then the corrective action plan shall
include an explanation and specific reasons.
SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS (SEFA)
IDENTIFICATION OF FEDERAL AWARDS
The campus should identify in its accounts all federal awards received and expended, as well as
the federal programs under which they were received. Federal program and award identification
includes, as applicable, the CFDA title and number, the award number and year, the name of the
federal granting agency, and the name of the pass-through entity. Using this information, the
campus should be able to reconcile amounts presented in the financial statements to related
amounts in the SEFA.
BASIS FOR DETERMINING WHEN THE FEDERAL AWARD IS EXPENDED
FEDERAL AWARDS
BASIS FOR DETERMINING WHEN EXPENDED
Grants, cost reimbursement contracts, When the expenditure or expense transactions
cooperative agreements, and direct occur
appropriations
Amounts passed through to subrecipients
When the disbursement is made to the
subrecipient
Loan and loan guarantees
When the loan proceeds are used
Donated property,
surplus property
including
donated When the property is received
Food commodities
When the food commodities are distributed or
consumed
Interest subsidies
When amounts are disbursed entitling the
entity to the subsidy
Endowments
When federally restricted amounts are held
Program income
When received or used
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CFDA NUMBER NOT AVAILABLE
The campus may be unable to obtain the CFDA number, which is sometimes the case for new
federal programs and R&D programs. In addition, cost-type contracts normally will not have a
CFDA number. When the CFDA number is not available, the campus could indicate that the CFDA
number is not available and include, if available, another identifying number, such as a contract or
grant number. Specifically, if the program has a contract or grant number, the number shown as
the CFDA number could be the awarding agency's 2-digit prefix listed for the agency (i.e.,
Department of Education 84, Health and Human Services 93, etc.) from the www.CFDA.gov
website (or 99 if the agency is not listed) followed by the contract or grant number. If the program
does not have a contract or grant number, the number shown as the CFDA number could be the
awarding agency's 2-digit prefix (or 99) followed by "UNKNOWN."
TREATMENT OF PASS-THROUGH AWARDS
Circular A-133 defines a subrecipient as an entity that expends federal awards that are received
from a pass-through entity to carry out a federal program. Characteristics of a subrecipient include:
1. Determines who is eligible to receive federal financial assistance;
2. Has its performance measured against whether the objects of the federal program are met;
3. Has responsibility for programmatic decision making;
4. Has responsibility for adherence to applicable federal program compliance; and
5. Uses the federal funds to carry out a program of the organization as compared to providing
goods or services for a program or pass-through entity (which describes a vendor relationship).
State or local government redistributions of federal awards to subrecipients, known as "passthrough awards," should be treated by the subrecipient as though they were received directly from
the federal government. Circular A-133 states that the schedule should include the name of the
pass-through entity and the identifying number assigned by the pass-through entity for federal
awards received as a subrecipient.
SUPPORT FOR FEDERAL AWARDS REPORTED AS EXPENDED ON THE REPORTING PACKAGE
The auditors will need to test the accuracy of the amounts of federal awards reported as expended
on the campus reporting package page that is used to compile the systemwide SEFA for the fiscal
year 2014-15. These amounts reported are typically supported using SAM 07 reports that contain
all disbursements made between July 1, 2014 and June 30, 2015. The SAM 07 reports should be
provided to the auditors for each type of grant award expended.
SUPPORT FOR AMOUNTS REPORTED AS EXPENDED ON THE FISAP
The auditors will also need to test the accuracy of financial aid reported as expended on the FISAP
for the award year. Be prepared to provide the auditors with supporting documents for amounts
reported using such items as COD report queries, Direct Loan School Account Statements,
PeopleSoft queries, etc.
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RECONCILIATION SCHEDULE OF REPORTING PACKAGE SEFA TO FISAP AND GENERAL
LEDGER
Another procedure the auditors will perform is to test that the amounts reported on the SEFA are
reconcilable with other financial reports submitted for those same grant programs to federal
funding agencies. The most common example of this type of reconciliation would be to compare
the student financial aid amounts reported as expended on the reporting package to the amounts
reported as expended on the FISAP.
The amounts included in SEFA per the reporting package are to be based on amounts disbursed
during the campus fiscal year (July 1, 2014 and June 30, 2015). Conversely, the amounts reported
in the FISAP are based on amounts disbursed for a specified award year (all disbursements made
for 2014-15 awards granted). Thus, a reconciliation schedule is needed to bridge the gap. See
Exhibit 23 for an example of the reconciliation.
Given the difference in measurement periods stated above, the amounts presented in the SEFA per
the reporting package will not agree to amounts included in the FISAP.
The campus would need to provide supporting documentation for the various reconciling items.
For campuses that establish a unique general ledger reference code in PeopleSoft, a query
generated PeopleSoft that supports these timing differences in disbursements and award years
would provide adequate support.
CSU FUNDS FOR FEDERALLY FUNDED PROGRAMS COVERED BY THE A-133 AUDIT
State / CSU Fund
STUDENT
AID
0948
FINANCIAL 401, 403, 406, 407, 408, 409, 410, 411, 412, 413, 434, 436, 485
Non Financial Aid
465
PLANNING
Items on the PBC list must be centrally accumulated to be provided to the audit team on the first
day of fieldwork or sooner. All schedules must be clearly labeled and cross-referenced to the
PBC list. When posted in SharePoint for electronic delivery, please ensure that the campus name
as well as the PBC reference number is included in the title of the file. Additionally, please ensure
that any Personally Identifiable Information (PII) is removed from the files.
Although the PBC items will be prepared by Financial Aid, the respective campus GAAP
Coordinator should also be prepared to act as the point of delivery and liaison with the audit team.
AUDIT TERMINOLOGY
The terminology used by independent auditors may not be understood by the individuals
responsible for preparing audit schedules and thus they may be unable to provide the information
requested. Following are some key terms with their definitions used by independent auditors:
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Cognizant Agency – A Federal agency designed to carry out the federal responsibilities with regard
to a single audit. For recipients expending more than $50 million a year in federal awards, the
cognizant agency for audit will be the federal awarding agency that provides the predominant
amount of direct funding to the recipient unless the OMB makes a specific cognizant agency for
audit assignment.
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. It does not include procurement contracts, under grants or contracts, used to buy goods or
services from vendors.
Nonfederal entity A state, local government, or non-profit organization (NPO).
Recipient. A nonfederal entity that expends federal awards received directly from a federal
awarding agency to carry out a federal program.
Pass-through entity. A nonfederal entity that provides a federal award to a subrecipient to carry
out a federal program.
Subrecipient. A nonfederal entity that expends federal awards received from a pass-through entity
to carry out a federal program but does not include an individual who is a beneficiary of such a
program. A subrecipient may also be a recipient of other federal awards directly from a federal
awarding agency.
Vendor. A dealer, distributor, merchant, or other seller providing goods or services that is required
for the conduct of a federal program. These goods or services may be for an organization's own
use or for the use of beneficiaries of the federal program.
LIST OF CSU REPORTS COMMONLY USED DURING THE AUDIT
SAM 07 – Pre-closing or post-closing trial balance used to prepare legal basis balance sheet
accounts that support the GAAP conversion template. Commonly referred to as the general ledger
for the audit process.
OTHER REPORTS THAT HAVE PROVED VALUABLE FOR THE AUDIT PROCESS:
 The June 30th report from ECSI, third party loan service provider, regarding Perkins and
Nursing student loans receivable balances. This report can be used to determine entries needed
for accrued interest income and allowances for doubtful accounts. This report should also be
used to verify that the year-end GAAP balances for Perkins and Nursing loans receivable have
been accurately recorded.
CHANGES TO FEDERAL GRANT POLICIES AND SINGLE AUDITS
In December 2013, the OMB, issued Uniform Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards Final Rule (Uniform Guidance). The effective date of
the new Uniform Guidance is for years beginning after December 26, 2014. Accordingly, the
CSU will be subject to the Uniform Guidance for the fiscal year ending June 30, 2016. However,
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the Uniform Guidance will apply to funding or funding increments received after December 2014.
Accordingly, it is possible that the audit of the June 30, 2015, Federal Awards would be subject to
audit both under the old rules and the new Uniform Guidance. A summary of the changes is as
follows:
ADMINISTRATIVE REQUIREMENTS
1. Procurement – Will provide five prescriptive procurement methods
2. Pass through entities – Clarifies Federal expectations, including subrecipient monitoring
3. Internal Control – Clarifies Federal expectations about establishing and maintaining effective
internal control over compliance. Entities should comply with COSO
COST PRINCIPLES
1. Consolidates cost principles for higher education institutions, state and local governments and
other not-for-profits
2. Includes significant differences in time and effort documentation requirements
a. Emphasis on internal controls
b. Less prescriptive guidance on documentation
c. Changes related to indirect costs
CHANGES TO THE SINGLE AUDIT
1. Increases threshold from $500,000 to $750,000
2. Changes risk assessments for major program determination
3. Changes questioned costs threshold from $10,000 to $25,000
4. Decreases percentage of coverage to:
a. 40% for no low-risk auditees (currently 50%)
b. 20% for low-risk auditees (currently 25%)
c. Changes single audit reporting and requires a senior level representative certification upon
submission and makes single audit reports publically available
5. Other changes expected when new Compliance Supplement is released
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A-133 CONTACTS
 Office of the Chancellor
 Dean Kulju, Director, Director, Student Financial Aid
(562) 951-4737; dkulju@calstate.edu
 Sue DeRosa, Director, Director, Sponsored Programs Administration
(562) 951- 4213; sderosa@calstate.edu
 Sheralin Klinthong, Associate Director, Financial Reporting and Review
(562) 951-4548; sklinthong@calstate.edu
 KPMG
 Brett Burns, Manager
(213) 533-3039; bburns@kpmg.com
CERTIFICATION OF DATA
Beginning with fiscal year ended June 30, 2015, the certification previously required in connection
with the submission of the SCO GAAP templates has been superseded by a more all-encompassing
form now located in Chapter 11.03 of this manual and which is fully described in Chapter 11.02.
The new form is intended to include confirmation by each campus of the quality and completeness
of the data submitted on all templates required by this chapter. It remains important that the
campus management thoroughly review the schedules prepared by staff to ensure accuracy. The
CO has a very short period in which to consolidate the campus data and to prepare other required
schedules. It cannot perform in-depth reviews of the submissions and comparisons with other
available data. In the event the CO identifies an unacceptable level of errors, the submission will
be rejected and returned to the campus with those errors noted. Re-submissions, when necessary,
need to be given high priority by the campus so the CSU’s filing obligations with the SCO can be
met.
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REVISION CONTROL
Document Title:
CHAPTER 15 – PREPARING FOR AN OMB CIRCULAR A-133 AUDIT
REVISION AND APPROVAL HISTORY
Section(s)
Revised
Summary of Revisions
Revision Date
Changes to
Federal
Grant
Policies and
Single
Audits
Added discussion on the “upcoming changes to the Federal Grant Policies
and Single Audits” change in questioned costs threshold under the
Uniform Guidance
April 2015
Updated the Single Audit Risk Assessment Questionnaire
April 2015
Exhibit 24
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