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How to Prepare for Your Organization’s Single Audit

AuditIt’s time for your single audit: Is your organization prepared? If you are a recipient of federal funds, to maintain your organization’s funding you must comply with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, known as the Uniform Guidance. Your single audit provides the federal government with assurance of your compliance, and being well prepared for the audit can help the process be more efficient. In this blog post, several CPAs who are either with organizations subject to single audits or who perform these audits themselves reveal valuable best practices that can minimize your worries and set you on the road to success.

  1. Keep up to date on all the latest guidance and developments. That includes being aware of the changes that the Uniform Guidance introduced. CPA Randy Watkins, a partner of Anton Collins Mitchell, whose firm is a member of the AICPA Governmental Audit Quality Center (GAQC), notes that he advises his clients to take advantage of the numerous free tools related to the Uniform Guidance that the GAQC provides to auditees in its Auditee Resource Center. These single audit tools can be found at aicpa.org/auditeeresources and include articles, web events, practice aids and useful links. You can find a practice aid to assist you in preparing your schedule of expenditures of federal awards and another that helps you navigate the steps involved in procuring audit services. You also can view a two-hour archived web event where a panel of auditors provide detailed tips on how auditees should prepare for a single audit.

It’s important for auditees to ensure their auditors are up to date and ready to help auditees address concerns. “In the last year, we’ve identified many audit findings related to areas where the Uniform Guidance introduced change,” Watkins says. “We know our busy auditees are challenged to stay abreast of changes and sometimes rely on auditors’ knowledge to help them fill in the gaps. The GAQC also provides many resources that can help auditors.” Auditees should ask their auditors if they are GAQC members to ensure they have access to the GAQC’s comprehensive auditor resources.

CPA Jackie Mattinen, director of business services—department operations at the Kyrene Elementary School District in Tempe, Arizona, recommends vigilance about complying with new requirements under the Uniform Guidance by staying connected with your auditor. Her organization remains up to date by keeping in close contact with its audit firm, the state education agency, the state auditor’s office and other state school district organizations. “They are invaluable resources for support, communication and continuing education,” she says. Information received is shared with staff through emails, training, meetings and webinars.

Regular monitoring of changing guidance helps ensure timely compliance. “Typically, changes are effective at the beginning of the following fiscal year, so being proactive will allow adequate planning time and an opportunity to implement changes seamlessly,” Mattinen says.

  1. Get started on the right foot. Mattinen recommends getting your team organized from the get-go. “At the beginning of our fiscal year, the business department communicates with the other organizational departments that may be applying for federal funds,” Mattinen says. “Working together, we identify stakeholders’ roles and responsibilities, and communicate a timeline for the application process, fund draw-downs, applicable amendments and completion reports.” 

Establishing accountability is part of that process. “Our organization has implemented a system of internal control by layering the application, submittal and approval processes,” she says. Staff members are assigned responsibilities that include completing the grant applications, approving applications and revisions, entering the budgets, approving expenditures to ensure compliance, requesting funds and submitting the completion report. “While all employees work together, the duties are separate to ensure appropriate control and checks and balances,” she says.

  1. Offer targeted training to your staff. At the Tempe Union High School District in Tempe, Arizona, staff receive regular training so they can spot whether expenditures match what’s in the grant agreement. “We found ourselves doing a lot of cleanup at the back end when mistakes were made and expenses didn’t match the grants,” says CPA Roland Carranza, the district’s director of budget and finance. In response, the district reorganized its approach to better tie expenses to federal programs. When an expenditure is not covered in the grant agreement, “we get an amendment before allowing it to go through,” he says.

In addition, Carranza’s staff monitors their work to ensure accuracy and plans for any necessary amendments or adjustments.

  1. 4. Identify and address problem areas in advance. When staff are aware of potential trouble spots, it’s easier to monitor and ensure compliance. Based on past experience, Carranza has found that staffing expenditures in a school district can be unpredictable, and thus more likely to create challenges. “That’s one area that can easily fall out of compliance,” he says. Turnover is one reason, since, for example, a teacher may leave a position that was budgeted for $30,000 and will be replaced with a more seasoned person who is paid $40,000, causing a $10,000 differential. Ensuring that those gaps can be identified and addressed requires constant monitoring, Carranza says. “We maintain a good handle on proper coding and compliance for staff expenses,” he says.

The Broward County Housing Authority staff also spends time reviewing areas that have caused problems in the past and takes steps to prevent issues from reoccurring. The authority receives grants through the state’s Disaster Recovery Initiative to mitigate against storm damage in hurricane zones in Florida. Controller Peter Jannis reports that compliance with the program can be challenging, “requiring cancelled checks, evidence of drawdowns and a huge PDF file for the grantor agency.” Since his team is aware of the potential compliance challenges, they prepare to address them early on, cutting down on possible delays.

Tools for Auditees

With the right preparation and resources, your organization can comply with federal requirements and have a successful single audit. A recent addition to the GAQC’s Auditee Resource Center covering Uniform Guidance considerations at aicpa.org/auditeeresources features a wealth of information, including practice aids, useful links and other tools to help you prepare for your single audit. Using these resources will help your single audit process go smoothly. 

Mary Foelster, Senior Director-Governmental Auditing and Accounting, Association of International Certified Professional Accountants

Audit courtesy of Shutterstock.

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