Part 2
Applicable requirements for several programs have been modified this year.
Where there have been changes, Part 2 states that it identifies those requirements in the matrix in bold and yellow highlighting.
The 6-requirement mandate and its related rules and exceptions continue for 2022.
In addition, new programs previously added in Addendums 1 and 2 to the 2021 Supplement have been identified with one and two asterisks, respectively.
Note that SVOG has been in existence for well over a year now, but this is the first year that it was included in the Supplement. As a result, a note was added at the top of this program section emphasizing there is nothing to preclude an auditor from using this 2022 Supplement section as a resource when developing the audit approach in a single audit subject to the 2021 Supplement (in conjunction with the use of Part 7 of the Supplement). However, it goes on to state there is also no requirement or expectation that auditors refer to or use this 2022 Supplement section for auditing this program for periods subject to the 2021 Supplement.
Many programs with significant changes
Key Changes in Certain Programs. The following describe certain programmatic changes in several programs:
CSLFRF
Updates were made to revise the section for the CSLFRF Final Rule.
Includes the changes announced in the recent Technical Update to the 2021 Supplement which introduced an alternative compliance examination engagement for certain recipients. See GAQC Alert #439 for more information on this Technical Update.
SVOG
This Supplement section states that it is to be used for audits of non-federal entities with SVOG funding. However, for-profit entities and their auditors should be aware that the Small Business Administration will soon be issuing separate audit requirements and guidance for audits of for-profit entities with SVOG funding which will be posted upon completion at: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/shuttered-venue-operators-grant/manage-your-svog-grant. Watch for future GAQC Alerts with updates on the for-profit SVOG developments.
PRF
The formal title of this program was revised to "Provider Relief Fund (PRF) and American Rescue Plan (ARP) Rural Distribution" (referred to herein as PRF).
Adds information and requirements for funding provided to this program from the ARP Act.
The "Other Information" section of the program removes the previous Special Tests and Provisions requirement (as per the recently issued Technical Update – see GAQC Alert #439) and clarifies the amount of PRF expenditures and lost revenue to be reported on the schedule of expenditures of federal awards and the timing of when such expenditures and lost revenue are to be reported for Period 5 PRF payments.
Many other programs were updated related to COVID-19 funding and to reflect provisions from the ARP Act.
Part 5, Student Financial Assistance Cluster. This program has several changes, clarifications, and updates for 2022 to reflect regulatory changes and other updates. These changes relate primarily to various Special Tests and Provisions such as Disbursements to or on Behalf of Students, Return of Title IV Funds, Enrollment Reporting, Program Eligibility, and Distance Education.
As a result of the COVID-19 pandemic, many new federal programs have been established and funding has been added to existing federal programs from the following Acts:
Funding arising from these sources, both to new and existing programs, is referred to as “COVID-19 funding,” or “COVID-19 programs.”
Appendix IV – Internal Reference Tables
• Updated the list of programs currently designated as high risk.
• List updated with new programs with requirements defined in IV, “Other Information.”
Appendix IV, Internal Reference Tables. This section of the 2022 Supplement identifies higher risk programs and has been updated to include a complete list of programs with the higher risk designation. The list includes all programs identified in the 2021 Supplement as higher risk except for the Coronavirus Relief Fund program, which has been removed from the list. Additionally, rather than referring auditors to a separate list to identify programs established by the ARP Act that are higher risk (which was the approach taken in the 2021 Supplement), OMB now just lists the specific ARP programs that are higher risk in this Appendix. The Appendix also explains the meaning of the higher risk designation in a similar manner to the 2021 Supplement which is critical for auditors to understand as it has major program determination implications. Finally, the section now identifies which of the higher risk programs are 100% COVID-19 funding which is an important distinction in determining whether a higher risk program should be audited in the current year.
Major updates sections, including…
Alternative Compliance Examination Engagement for Eligible CSLFRF Recipients. The Appendix emphasizes that the use of an alternative compliance examination in accordance with Government Auditing Standards (and the AICPA attestation standards) is authorized for certain eligible CLSFRF recipients in addition to the general options of single audit or program-specific audit. The alternative examination option was added with the goal to reduce the burden on the eligible CSLFRF recipients and their auditors.
Federal Audit Clearinghouse Transition from Census to the General Services Administration. The Appendix includes information on the upcoming Federal Audit Clearinghouse (FAC) transition from Census to the General Services Administration (GSA). It explains that the Census FAC will accept single audits for fiscal years in 2021 and that GSA will begin accepting fiscal year 2022 submissions on October 1, 2022. Guidance is also included for how the single audit submission deadline is to be addressed for fiscal year 2022 audits that are completed prior to the new GSA portal being available.
§200.518(c) of the Uniform Guidance
For a Type A program to be considered low-risk, it must have been audited as a major program in at least one of the two most recent audit periods (in the most recent audit period in the case of a biennial audit), and, in the most recent audit period, the program must have not had: (i) Internal control deficiencies which were identified as material weaknesses in the auditor's report on internal control for major programs as required under § 200.515(c); (ii) A modified opinion on the program in the auditor's report on major programs as required under § 200.515(c); or (iii) Known or likely questioned costs that exceed five percent of the total Federal awards expended for the program.
Not required to prioritize the assessment of risk for “higher risk” type B programs over other type B programs.
Needs to consider all criteria and use judgment to determine if the type B program is high risk.
Type B risk assessment for higher risk programs is likely to be assessed as a higher risk program as these programs will meet 5 or more risk assessment factors.
Ensure to stop assessing B programs beyond what is required (a least ¼ of the number of low risk A’s). If the auditor performs risk assessments on Type B programs beyond what is required, those additional high-risk B programs must be audited as major programs.
SEFA – If the auditor determines major programs during interim phase of audit, recalculate at the end. Determine percentage of coverage at the end of the process.
Testing completeness of SEFA will be especially important this year
Programs and amounts may be harder to identify for SEFA purposes
Follow these schedule of expenditures of federal awards (SEFA) reminders:
Review the client’s SEFA draft before you start;
confirm it is accurate and complete.
Access the Governmental Audit Quality Center (GAQC) practice aid GAQC Nonauthoritative Guidance on the Reporting of Certain COVID-19 Awards on an Accrual Basis SEFA to learn about certain COVID-19 SEFA nuances.
Remember that auditees should separately identify COVID-19 funding.
Stephen
Many new programs provide for a period of performance and allow for application of costs (or lost revenue, as applicable) incurred in periods both before and after the award existed and often spanning more than one fiscal year of the nonfederal entity
Also may want to mention that many COVID-19 programs cover overlapping allowable costs and organizations can’t DOUBLE DIP
Lost Revenue item. Emphasize this when discussing this slide as it isn’t covered anywhere else. Lost revenue: Provider Relief Fund vs. Education Stabilization Fund – very different definitions. Also not a concept we are used to dealing with as auditors, recipients….and even the federal government.
If the dollar amount of a compliance requirement is less than materiality over the major program, do not test unless there is a specific risk that you have determined exists (i.e.., noncompliance with the requirement from a grantor review, analytically it does not make sense.) If the dollar amount is more than program materiality, then the compliance requirement should be tested.
In several cases the major programs we selected may have individually significant items. The AICPA Audit Guide, and CLA’s Single Audit Sampling – Questions and Answers Template (in SA Template binder) have guidance over testing individually significant items.
