An unprecedented amount of federal funds has been allocated to governments, nonprofits, and other entities in the wake of the COVID-19 pandemic. Not only have federal awards been allocated in response to COVID-19, but you also may have received federal awards throughout the year from various federal agencies and/or a pass-through entity.
Whether you’re a first-time recipient of federal awards or have received many, the knowledge of ever-changing requirements and Uniform Guidance, advance preparation, and making deadline reminders are just a few things that can make the audit process less chaotic and more streamlined. In addition, these items can help to provide fewer or no findings and/or questioned costs. Be sure you and your organization prepare in advance and that you don’t miss the deadline for completing your Single Audit.
The Single Audit is the audit requirement that is now defined in 2 CFR 200.501 (a) as “A non-Federal entity that expends $750,000 or more during the non-Federal entity’s fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part.” Previously, this requirement was known as an “A-133 Audit.”
A Single Audit is due within nine months of the entity’s fiscal year-end or 30 days after the Single Audit is completed. This includes the submission of the reporting package to the Federal Audit Clearinghouse, including items such as the Data Collection Form and the Schedule of Federal Expenditures.
The Office of Management and Budget (OMB) Memo M-21-20 dated March 19, 2021 provided extensions to the Single Audit submission deadline. The only remaining year-end this applies to is a fiscal year-end of June 30, 2021. The original deadline was March 31, 2022 but has been extended to September 30, 2022. No further extensions have been announced, and none are expected.
Tips to Prepare for Your Single Audit
- Most importantly, build your internal organization to support habits that yield a good outcome on a Single Audit, including hiring and training personnel, establishing adequate systems, business processes, internal controls, policies, and procedures in key areas
- Understand what Uniform Guidance is and, more specifically, 2 CFR Part 200
- Review and adhere to the grant agreement and other applicable award documentation
- Download the latest Compliance Supplement that was issued May 11, 2022. The Compliance Supplement serves as a guide for auditors to audit federal awards. It outlines audit requirements by program, compliance requirements, and agency requirements
- Understand how to read the Matrix of Compliance Requirements in Part 2 of the Compliance Supplement
- Understand the Compliance Requirements that will be tested per program per Part 3 of the Compliance Supplement:
- Activities Allowed or Unallowed
- Allowable Costs/Cost Principles
- Cash Management
- Equipment and Real Property Management
- Matching, Level of Effort, Earmarking
- Period of Performance
- Procurement and Suspension and Debarment
- Program Income
- Subrecipient Monitoring
- Special Tests and Provisions
- Understand the specific requirements by agency program in Part 4 of the Compliance Supplement
- Understand what to do if your program isn’t listed in Part 7 of the Compliance Supplement
- Understand the Schedule of Expenditures of Federal Awards (SEFA). The SEFA is a supplemental schedule to an organization’s financial statements recapping the total amount of expenditures of federal awards during the organization’s fiscal year by federal agency and program. A more detailed definition is provided in the Uniform Guidance, CFR Section 200.510
- Create a detailed draft of a SEFA. It’s crucial that your SEFA is put together as accurately as possible prior to the audit. Reconcile the SEFA to accounting records used in the financial statements. Auditors are required to analyze the programs reported on the SEFA to determine which programs are “major” and will be tested in the audit. A best practice would be to draft the SEFA and reconcile the numbers to the general ledger on a periodic basis. Some other items to potentially include in the SEFA would be:
- List of awards by federal agency and program
- The name of any pass-through entities if applicable and the identifying award number for the pass-through entity
- Total of expenditures (pass-through also, if applicable)
- Period of performance
- Total of award
Please note there are instances with certain programs where the expenditures will not reconcile directly to the general ledger. There is a helpful guide on the American Institute of CPAs website you could reference to also see what to include in your SEFA
- Review written policies and procedures. Pay particular attention to allowability of costs, cash management, procurement, and subrecipient monitoring policies. For example, you may have procurement policies in place that aren’t compliant with the federal award thresholds outlined in the Uniform Guidance. It’s important to address these types of issues before the audit is performed. Be sure to review all policies in conjunction with the 12 compliance requirements specific to that program and agency
For more information or questions about how successful preparation prior to a Single Audit can impact your organization, please reach out to a professional at FORVIS or submit the Contact Us form below.