[AUD] Federal assistance programs, Compliance auditing

Mgt resp

1) identify the entity's government programs and compliance requirements

2) establish related controls

3) evaluate and monitor the entity's compliance

   id laws and regulations(direct/material effect FS) + understand possible effects on FS

4) take corrective action on audit findings of the compliance audit

 

Auditor's resp

sufficient appropriate audit evidence

whether the federal financial assistance has been administered in accordance with applicable laws and regulations

	Compliance auditing	Governmental auditing standards	Single audit act
	GAAS	GAAS + GAS	GAAS+GAS+SAA
Report	1) Report on the FS (Op)	1) Report on the FS (Op)    +add p: reports on IC and compiance	1) Report on the FS (Op)
	may	2) *IC over compliance(non -op)  - scope  - sufficient appropriate evidence, support opinion  - SD and MW reported	2) IC to FS and major program(non -op) - MW and other matter to specific legislative and regulatory bodies - provide assurance/opinion IC
	no compliance report	3) Compliance w (non -op) obtain reasonable assurance, noncompliance could have a material effect on the programs audited laws, regul and provisions of contracts or grant agreements  - scope  - sufficient appropriate evidence, support opinion  - Discovered     Fraud more than inconsequential     violation of provisions of contracts material abuse material     pertinent views of the entity's responsible officials concerning the auditor's findings      report directly to parties outside      mgt not satisfy legal requirements to report      mgt fail to take timely and appropriate steps	3) Compliance of major financial assistance program(op) - scope: compliance w gaas, gas, OMB circular a-133 - opinion: entity complied~each of its major programs
			4) schedule of expenditure  - expenditures for all programs - opinion in relation to FS
			5) summary report on audit results relating to FS, IC, compliance

* IC over compliance: express an opinion on compliance, not for effectiveness of IC over compliance

 

1. GAAS audit

  1) design to provide reasonable assurance of detecting MM that

                    - result from noncompliance with laws and regulations

                    - direct & material effect on the FS

 

  2) to id laws having a direct effect on FS

    - discuss w mgt, admin, government auditors

    - review grant, and loan agreements

    - review minutes

    - written rep letter about the completeness of laws ided

    - perform ST of compliance with laws

    > Objectives and results should be summarized in audit working papers

 

 

2.  Government auditing standards

 

issued by the Comptroller General of the US, General Accountability Office (GAO)

organization that receives federal/state financial assistance

auditor should design the audit to provide reasonable assurance that material errors and fraud are detected

* Fraud, IC deficiencies > audit committee > counterparty to the contract

 

 Written Representation from mgt

  - there are no violations or possible violations of laws or regulations

  - mgt resp for understanding and compliance with law & regulations applicable to it

  - mgt ided & disclosed in writing to the auditor all Law&Regulation direct & material to FS

  - mgt reps for corrective action

  - mgt have disclosed all known noncompliance or no noncompliance

 

 Documentation requirement

  risk assessment over internal control over compliance

  Materiality levels

  Responses to control assessments including both tests and test results

  Should contain sufficient information so that supplementary oral explanations are not required

  Procedures performed to evaluate compliance with laws and regulations that have a direct and material effect on the        Determination of financial statement amounts

3. Single audit

 

state & local gov receiving federal financial assistance(including sub-recipient)

Office of Management of Budget (OMB) through circular a-133

* sub-recipient: nonfederal Entity expands federal assistance received from another entity to carry out federal program

* Recipient: individual from passing through

 

Objective: efficient&effective use of audit resources,

                 uniform requirements for audits of federal assistance($750K)

 

Materiality: set at the program level

 

 

  Major programs(determined by auditor)

   subject to both general and specific compliance requirements

   the auditor is required to report on compliance and IC over compliance related to each major program

   A program may be deemed to be major if the auditor has not met minimum audit guidelines in terms of the percentage of coverage of the audit

 

   Determination(by auditor)

    risk-based approach

     - current and prior audit experience

     - oversight by federal agencies

     - inherent risks