Source: https://www.aicpa.org/interestareas/governmentalauditquality/newsandpublications/gaqcalert/2019gaqcarchivedalerts/gaqcalertno387.html
Timestamp: 2019-12-14 02:55:52
Document Index: 83943098

Matched Legal Cases: ['art 2', 'art 4', 'art 5', 'art 2', 'art 4', 'art 4', 'art 4', 'art 5', 'art 6']

Corrected 2019 Compliance Supplement Issued by OMB
September 20, 2019 — GAQC Alert No. 387
A just-released correction edition of the 2019 OMB Compliance Supplement (2019 Supplement or correction edition);
GAQC plans for updating the 2019 Supplement posted on the GAQC Web site by section; and
Advice for auditors as it relates to the correction edition.
Corrected 2019 Supplement Issued
On September 20, 2019, the OMB issued a correction edition of the 2019 Supplement which replaces the previously released 2019 Supplement. OMB issued the correction edition in one large PDF file that can be accessed here. As noted in GAQC Alert #385, the correction edition was necessary due to a significant number of errors that had been identified by the GAQC and others.
An "Errata page" section, which is actually 4 pages long, was added by OMB after the Table of Contents to identify the corrections and changes that have been made. All pages of the correction edition now reflect an August 2019 date. However, to assist auditors in identifying changes made, OMB has included the term "revised" in the footer on those pages with changes. Most of the changes made are in Part 2, Matrix of Compliance Requirements, Part 4, Agency Program Requirements, and Part 5, Clusters of Programs.
The first thing you should do upon accessing the correction edition is to review the detailed Errata page to learn more about the specific changes made and which programs are affected. A high-level summary of the changes are as follows:
Corrections are made to the compliance requirements identified as subject to audit in the Part 2 and Part 4 matrices due to inconsistencies between the two sets of matrices in the original 2019 Supplement;
Compliance requirements are added as subject to audit for certain programs;
Certain program requirements are changed or updated;
In two cases (CFDA 10.766 and the Student Financial Assistance (SFA) cluster), auditors are instructed to treat the revised sections as completely new documents;
For several programs, Part 4 sections delete previously included narrative for requirements identified as not subject to audit and for several other programs, Part 4 sections add narrative that had erroneously been deleted for requirements identified as subject to audit.
Directives have been added in certain cross-cutting sections to address inconsistencies between cross-cutting sections and individual program sections in terms of the compliance requirements that are subject to audit. For situations where the identification of requirements subject to audit in a cross-cutting section is inconsistent with what appears in a program section, auditors are advised to use the program section as the final guidance and not the cross-cutting section for the purposes of the 2019 audit;
Significant changes are made to the SFA cluster. As noted above, the Errata page states that the revised SFA cluster "should be read as an entirely new document." A particular focus area for auditors should be the changes made to the required communication on sampling relating to the Pell Grant program and the Direct Loan program which broadens the requirement to all sampling procedures (regardless of whether there are findings) and has the auditor sending the information to the U.S. Department of Education via e-mail instead of as part of the Schedule of Findings and Questioned Costs.
Changes are made to several "other clusters" in Part 5; and
Revisions are made to correct typographical errors in Appendix 2 of Part 6, Internal Control, which is the section that provides illustrations of internal controls specific to each type of compliance requirement.
GAQC Plans for Posting Correction Edition
As a public service, the GAQC will make the correction edition of the 2019 Supplement broken down by individual section available on the GAQC 2019 OMB Compliance Supplement Web page which is the same location that the previous 2019 Supplement was posted. We will be working as quickly as possible to prepare excerpts of each section from the full PDF posted by OMB and hope to have the correction edition posted in the next few days. Watch for a follow-up GAQC Alert that will notify you once it is available on our Web site.
Supplement Advice for Auditors
We know that some June 30, 2019, single audits have been completed and that they may include major programs which now have been corrected or changed. We have asked OMB to issue definitive guidance as to the expectation for these completed audits and are advocating that the federal government accept the completed audits as is. However, at this point we are unsure as to whether OMB will take a formal position. Additionally, we have heard from many auditors that have completed single audit fieldwork or are near ready to issue compliance audit opinions and have been concerned about the timing of the corrected Supplement's issuance. To the extent you have one of these audits that includes a program that is now being corrected or changed and are looking for direction, we recommend you reach out to the relevant agency National Single Audit Coordinator (NSAC) using the contact information in Appendix VIII of the Supplement.
Additionally, certain errors or areas that we requested OMB provide clarification on may not have been addressed in the correction edition. If you identify errors or requirements or procedures that are unclear, our advice is to contact the NSAC for advice and to document that consultation.
Finally, keep in mind that the 2019 Supplement contains many more changes than usual, including a mandate that each agency limit the number of requirements identified as being subject to the compliance audit to six. That change, combined with the issuance of the correction edition, will make for a very challenging 2019 single audit season. Auditors should be diligent in keeping audit teams informed about the nature and extent of the changes made in the correction edition and ensuring quality control functions recognize and respond to the associated risks.
• Corrected 2019 Supplement
• GAQC Plans for Posting
• Advice for Auditors
Miss Anything Over the Summer?
We know summer is a time when members are away from the office more than usual. Check out our archived GAQC Alerts, as well as our archived GAQC Web events to make sure you did not miss anything while you were away.