Training Synopsis

[Training]

Subsequently, auditors need to document how they interpreted the clients’ conclusions, the rules followed, and the professional judgment applied. Blann said that because many of the rules for these new programs appear on federal agency websites and have changed over time, it’s not enough for an auditor to document that they looked up the rules online. The rules and the website links where they are posted may change. “It’s really important to pull that material down and put it in your workpapers and not just make a generic reference to a website and hope it will still be there when your peer review comes along,” Blann said. Forhan advises that auditors should carefully explain to clients the reason for any audit delays, what to expect, and what the client’s responsibilities are, especially when a recipient needs a single audit for the first time. Auditors should make sure they talk with client employees outside the finance team as well. “That comes into play especially when we’re talking about completeness of the SEFA,” Forhan said. “Because, again, the SEFA may look different this year. There may be new programs. The finance department may or may not know about them, but if the auditor is only talking to them, we may miss something.” Blann said it’s important for auditors to remind their clients to continue following all the rules for federal funding recipients, even in areas that auditors are not required to test this year. “Federal agencies may change which requirements are subject to audit each year, and we may not find out until the year is nearly over and it’s too late for them to go back and start following the rules,” he said. “They just need to be reminded that there is an expectation that they comply with all the rules year-round. We can do our clients a huge service by educating and reminding them of that.” The addendum included new requirements to test Federal Funding Accountability and Transparency Act (FFATA) subaward reporting for all COVID-19 programs included in the addendum where the auditor is instructed to test reporting, subject to certain restrictions. FFATA rules do not apply to the CRF program. The addendum also advises that auditors also will need to test FFATA reporting for all selected major programs where reporting is identified as subject to audit for audits of fiscal years after Sept. 30, 2020, regardless of whether COVID-19 funding is involved. However, auditors don’t have to conduct FFATA testing for clients who do not receive direct federal funding or do not make subawards over certain dollar thresholds. “Auditors haven’t had to look at it, but our clients have been subject to it all along, so it shouldn’t be new and uncharted territory from a client’s perspective,” Blann said. “Now there are some nuances. Just because they are administering federal awards and have a single audit doesn’t mean they are getting direct dollars from the feds. And even if they are getting direct dollars from the feds, it doesn’t mean that they’re subawarding it.

https://www.journalofaccountancy.com/news/2021/feb/single-audits-during-coronavirus-relief-funding-surge.html

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