S1:E24 – Secrets to a Successful Single Audit
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What is a Single Audit? How can my organization help ensure a successful Single Audit? How do we prepare? Join CRI’s very own “Single Audit Empress” partner, Gwen Mansfield-Vogt and CRI New Orleans partner Becky Hammond as they detail the areas crucial to staging a smooth, positive Single Audit, as well as tips and resources to help ready your organization for the process.


Intro:

From Carr, Riggs & Ingram, this is It Figures: The CRI Podcast, an accounting, advisory and industry focused podcast for business and organization leaders, entrepreneurs, and anyone who is looking to go beyond the status quo.

Becky Hammond:

I’m Becky Hammond with Carr, Riggs & Ingram. I’m a partner in the New Orleans office and I primarily do, well actually now 100% governmental audits. Most of my governmental audits have single audits as well. And I’ve been doing this for almost 20 years. I’m going to introduce today Ms. Gwen Vogt. Gwen, why don’t you tell us a little bit about yourself?

Gwen Mansfield-Vogt:

Sure. I am a new partner with Carr, Riggs & Ingram in our Albuquerque office. I review every single audit that the firm puts out and have been doing so for about two years. I’ve also been a subject matter expert in single audit for the enhanced oversight program of the AICPA. And I assist in peer reviews with single audits as well.

Becky Hammond:

Now Gwen, don’t you have some kind of badge too?

Gwen Mansfield-Vogt:

I do. I have the AICPA Advanced Single Audit badge.

Becky Hammond:

And what does it take to get that?

Gwen Mansfield-Vogt:

It is a rather intensive online exam. It was honestly harder than I expected it to be when I took it. So it’s not a walk in the park to get that badge.

Becky Hammond:

How awesome. Well, we’re going to start off today by asking you a really hard question. What is a single audit?

Gwen Mansfield-Vogt:

Well, I could go on for hours, but a single audit in essence is a compliance audit of the funds that an entity spends when those funds are from a federal, or in some cases, state source. A few states do have their own single audit requirements. Think paramount, there would be Florida, North Carolina, Texas, and California. Within a single audit, your auditor will look at the compliance requirements as well as the controls an entity has in place over those requirements. At the end of a single audit, there will be a report on compliance issue along with the independent auditor’s report and a report on internal controls.

Becky Hammond:

So as a finance director, CFO program director, or grant management personnel, what concepts do I need to be familiar with when preparing for a single audit?

Gwen Mansfield-Vogt:

I think first and foremost is going to be your SEFA, your Schedule of Expenditures of Federal Awards. In addition, you’ll need to be familiar with the compliance requirements that come with the grants that you’re extending. In addition to the requirements that will be listed in the grant agreement, some of those requirements are available in resources online that we will discuss in a little bit. You also need to be familiar with internal control concepts from the green book, which is a resource from the federal government that’s kind of an overview of what they would expect to see in an internal control environment, as well as the COSO framework that again, it’s an overview of what internal control should mean and should be in place in an organization.

Becky Hammond:

So, what is the first step to ensuring that I have a successful single audit?

Gwen Mansfield-Vogt:

Your first step and one of the first documents that you’ll be providing to your auditors is your SEFA. This is a document that lists all of the federal awards that you’ve expended for the last for your fiscal year. And they’re all requirements as to what goes on that schedule as far as the timing of when those grants are considered to be extended. Certain items such as federally funded loans and items that may not come in the form of a cash advance or reimbursement such as non-cash commodities, food, interest, subsidies, items like that are also on your SEFA.

Other things to be aware of when preparing a SEFA is that any amounts that are considered local match or that may be funded partially by the state instead of the federal government do not belong on that schedule. Ensuring that every item on your SEFA is accurate is definitely going to be the first step. When you provide that to your auditors, that is what they base the single audit off.

Becky Hammond:

And I also need to include any sub-recipients in that on the face of my SEFA now as well, right?

Gwen Mansfield-Vogt:

Yes. And this, the determination of whether a funds being provided to another entity, whether that is actually a sub-recipient relationship, that is also something that you need to be aware. There are rules there as for what is a sub-recipient that will be shown on the SEFA versus what is merely a vendor or a contractor that would not be shown on the face of the SEFA. There are checklists available to help with that determination. It is rules-based, but there’s also a substance over form consideration there to whether you may have an agreement with somebody that calls it a sub-board or refers to them as a sub-recipient when it is not you substance that type of relationship. So you’re right, Becky. That is a very important distinction to make.

Becky Hammond:

And if I’m unsure at all, then I should reach out to my CRI or professional for help, because we definitely see a lot of those throughout all of the single audits that we do and can help to identify those. So what can be done now whenever that now is to get ready for the next single audit to make sure that the organization is prepared?

Gwen Mansfield-Vogt:

Well, it all comes down to how you’re managing and controlling the grants that you’re extending. You don’t want to leave this all at the end of the year. You want to have a process in place, preferably with one individual designated as kind of a repository of all the information required to ensure that you’re maintaining that SEFA throughout the year, you understand what needs to be on it, and that you’re provided with any new grants awarded or any new sources of funds throughout the years. You can understand if that needs to be on your SEFA and consider it a federal award or not.

In addition, it’s always a great idea to go through your policies and procedures periodically and just make sure that they do cover all areas that they need to. The uniform guidance, which is kind of the regulations governing the single audit as well as overall regulations for extending federal funds. Doing certain things that must be included in your written policies. And that’s another area when your CRI professional can sit down with you, go through those policies and just make sure that nothing’s been missed in those and that those policies and procedures will give you a good basis to monitor and manage those federal funds to ensure that you do have good controls over the compliance to make sure that your federal orders are been extended in compliance with all of the rules, laws, regulations that apply.

Becky Hammond:

And it’s very important whenever you get a new grant to make sure that all those things are in place from the beginning. A lot of times we’ll see where those thought processes weren’t looked at on the front end and that winds up being a finding on the back end. So you definitely want to avoid that. So it’s having that good process in place when you get a new grant that that central person knows all about it, and that there are plenty of policies and controls that have been put in place to make sure that your organization is managing that grant properly.

Gwen Mansfield-Vogt:

For sure. Nobody wants a surprise in the audit.

Becky Hammond:

Not at all. Talking about some surprises, there are several recent changes that have happened with the single audit. Can you tell us a little bit about some of those?

Gwen Mansfield-Vogt:

Correct. Now uniform guidance is still relatively new. It all came into effect around Christmas of 2014. But as I said before, it is a good idea just to make sure that your policies and procedures have been fully updated there. The procurement regulations in that were extended for a couple of years, delayed, but they are now fully in place. So everybody’s procurement guidelines do need to be in conformance with that for sure now.

Becky Hammond:

And that’s certain thresholds?

Gwen Mansfield-Vogt:

Correct. And they have also changed in certain circumstances over the last couple of years depending on the type of entity involved as well as certain other items, including what your federal agencies say. So that would be a great idea to reach out to your professional at CRI if you have any questions about that because it’s very individual to the organization.

Becky Hammond:

So if you have 10 different grants, you could technically have 10 different ways that they expect you to handle your procurement.

Gwen Mansfield-Vogt:

You could, as well as other items such as requesting reimbursement. And of course the actual costs allowed, well, it can get complicated. Some more new resources. The compliance supplement is the annual. It is a supplement to the uniform guidance. It’s issued every year. This year in 2019, it was actually reissued in August. So that is available online either through the White House website or the AICPA has it broken out conveniently into sections. That’s available to anybody.

Becky Hammond:

And what kind of information does that compliance supplement give our organizations out there.

Gwen Mansfield-Vogt:

From an organizational standpoint, it is great for determining what compliance requirements that are looked at in the single audit are important to your major programs. Part three of the compliance supplement is a general overview of a lot of compliance requirements. I would suggest starting in part four, which has descriptions of many programs as well as specific items applicable to those programs.

For example, if you have say the health centers cluster that are student department… They’re department of health. So you can go to that part of part four of the compliance supplement, search for the health centers cluster or the CFDA number in there. And there’s a general overview of the program, kind of the point of the program listed in there, as well as specific requirements that apply as far as what costs you’re allowed, what’s not allowed, and certain other things that apply to that program.

Becky Hammond:

So if you need ideas on what exactly the policies are that need to be put in place, what kind of controls need to be put in place, that compliance supplement is a great resource. Tell us a little bit about part six, which is new, that helps us with those controls.

Gwen Mansfield-Vogt:

Part six is a great resource. It’s newly activate this year. And part six comes, there’s actually two parts to part six. All of these parts get really confusing. The first part gives organizations great ideas for overall controls to the organization as a whole. Kind of your control environment, your tone at the top, types of policies and procedures. So I would definitely suggest reading through that just to get an idea of what an auditor is looking for for the organization as a whole, and also just great ideas to help manage your organization better.

Then part two of part six is more of a specific policies and procedures overview. It’ll say something like, well, for allowable costs, there are suggested policies and procedures to put into place that would help you manage allowable costs. And the great thing about part six is some of those are very easily implemented at smaller organizations as well as larger organizations. They give you suggestions for when it’s just not possible to have full segregation of duties. For example, if your finance department is one person, there are still policies and procedures that you can put into place to have controls over your funding.

Becky Hammond:

And it’s a great resource, especially when you think about your auditor’s actually going to be looking at that as well to get some ideas on what they should be looking for to try to test.

Gwen Mansfield-Vogt:

It’s kind of a cheat sheet for your exam that’s the audit.

Becky Hammond:

We also had some new changes to the data collection form this year. So tell us, one, what the data collection form is, and then what some of those changes are.

Gwen Mansfield-Vogt:

Okay. So the data collection form is a form that’s submitted to the Federal Audit Clearinghouse after the completion of a single audit. It has some general information about the entity. It includes the amounts that were on your SEFA, from which programs, et cetera. It also includes the findings that were included in your report if any. A big change this year is that the text of those findings is going to be required to be included in that upload. Also with the data collection form, a copy of the audit report and the financial statements as well as a schedule of findings and question costs does have to be uploaded in PDF format. Then in most cases that is available to the general public as well as granting organizations and really anybody who wants to look at it. So that’s another reason why the single audit is very important. It is out there and it is a reflection of your organization.

Becky Hammond:

Now, as far as once my auditor, if my auditor helps or if I submit my own data collection form, how quickly do we need to turn that around? Can’t that result in a finding or a problem in the future if we’re not timely?

Gwen Mansfield-Vogt:

It can. So the overall deadline for the data collection form is that it has to be accepted by OMB. I’m sorry, by the Federal Audit Clearinghouse within nine months of your year end. There’s also a requirement that it be accepted within 30 days of report release. So if your report is released very shortly after year end as opposed to waiting almost those nine months, you do need to make sure that that is done timely after that report release.

Becky Hammond:

Yep. So definitely something that you don’t want to wait to do.

Gwen Mansfield-Vogt:

For sure. So I’d also like to point out, now this is very specific to one type of funding, one cluster, the student financial assistance cluster, which is your Pell Grants and your student loans and that sort of funding any university. A new requirement this year is that certain information about the test work that the auditor performs has to be emailed to the department of education within 60 days after the data collection form. So your auditor may need some assistance in compiling that information at that point. And also you just might want to make sure that they are aware of that requirement because it kind of snuck in in that August, 2019 revision of the compliance supplement. So I think that’s just a good talking point for making sure that your audit will be completed successfully if you do have that type of funding, which is of course usually universities and some lower level school district.

Becky Hammond:

That’s a perfect reason for why you need to review the compliance supplement well to make sure because it does have some obscure requirements and things that are kind of hidden in there.

Gwen Mansfield-Vogt:

It does. And another good thing in the compliance supplement is every requirement in there will be cross referenced to the actual CFR, the Code of Federal Regulations, where that requirement is. So you can go back and refer to that requirement in context if you feel like you need to.

Becky Hammond:

Any final thoughts for our listeners.

Gwen Mansfield-Vogt:

I know that having a single audit, especially if this is your first one, can be very intimidating. But just keep in mind that your CRI professional is going to be on your side in this process overall. Of course as auditors, we do kind of have to test what you’re doing and make sure that everything’s above board and all of that, but we do want to make sure that your single audit is as comfortable for everybody involved as we can make it. So I’d just like to encourage you to reach out early and often with any questions. We would much rather get an email partway through the year saying, “Hey, this might come up, do you have any suggestions?” Than get blindsided with something about, “Hey, we’re there at the end…”

Becky Hammond:

And if there’s a problem, we definitely want to know about it ahead of time and as it’s happening so that we can help you. If you bring the problems to us, it generally won’t result in a finding, but if we find it, then it’s hard for us to not be able to write that up as a finding.

Gwen Mansfield-Vogt:

Exactly. Becky, that’s a very good point.

Becky Hammond:

All right. Well, thank you so much for joining us this morning, Gwen, and we’ve enjoyed our time together.

Gwen Mansfield-Vogt:

Well, thank you for having me. This has been great. Have a wonderful day.

Outro:

If you want more CRI insights or are interested in learning about our firm, please visit our website at cricpa.com. Thanks for listening to this episode of It Figures: The CRI Podcast. You can subscribe to It Figures on iTunes, Spotify, or wherever you prefer to listen to your podcasts. If you liked what you heard today, please leave us a review.