Federal Funding: Are you ready for the upcoming A-133 audit?
By: Daria Rainieri, CPA
If your non-profit or governmental entity is in receipt of federal funding, you may be required to undergo a compliance audit in accordance with the U.S. Office of Management and Budget (OMB) Circular A-133. This article is designed to ensure that your organization is ready for the upcoming changes, effective for A-133 audits (single audits) for the fiscal year ending June 30, 2011.
A single audit is required when an organization expends more than $500,000 of federal funding during a reporting year. As a result of the American Recovery and Reinvestment Act of 2009 (ARRA), even stricter audit requirements have been enacted. A single audit will be required for any dollar amount of ARRA funding expended (the typical dollar threshold does not apply). It is important to note that even if an organization receives this funding through the State or other pass-through organization; the funding will be treated as a federal program and needs to be audited in accordance with OMB Circular A-133.
The Compliance Supplement discusses many changes for the upcoming 2011 audit, including increased testing in five of the 14 general compliance requirements. There are steps that your organization can take to ensure that you are in compliance with these new testing procedures.
How can your organization prepare for the upcoming 2011 single audit?
· Cash Management – The expenditures related to federal funding need to be expended in a timely fashion. Effective for the 2011 audit year, expenditures need to be incurred within 72 hours of receipt of federal funding. If your organization receives funding on an advance basis, this means that the expenses are expected to be incurred within 72 hours upon receipt of the funding.
· Reporting – Be sure that your organization is accurately completing all of the required reports and that they are submitted in a timely fashion. This includes the Data Collection Form, which must be filed within nine months of the fiscal year end date. Effective for the 2011 audit year, there are additional reporting requirements, including the completion of the Standard Form 425, Federal Financial Report.
· Federal Funding Accountability and Transparency Act of 2006 – If your organization is in receipt of $25,000 or more of federal funding, you are required to register information about your organization, including personnel compensation. This is a requirement that will be tested in your upcoming A-133 audit. To register in accordance with the Act, please visit https://www.fsrs.gov.
· ARRA Funding – There are additional audit requirements for this funding, including additional reporting requirements and separate identification of receipts and disbursements within the general ledger.
The Non-Profit and Governmental Team at YHB is prepared to help your organization remain in compliance with the current and upcoming rules and regulations. To learn more about the updates to the 2011 Compliance Supplement, ARRA funding, or reference materials, please contact one of our team members.