Guidance for single audits provided in OMB compliance addendum

Practitioners who perform single audits received some deadline relief Tuesday along with important information needed to complete their engagements.

New guidance on single audits was issued Tuesday by the Office of Management and Budget (OMB) in the form of an addendum to the 2020 OMB Compliance Supplement.

Due to the late issuance of audit guidance for the COVID-19 programs contained in the addendum, OMB is providing a three-month audit submission extension for single audits of 2020 year ends through Sept. 30, 2020, year ends only if the recipient received some form of COVID-19 funding.

For example, a single audit of a client with a June 30, 2020, year end that received COVID-19 funding is now due June 30, 2021, instead of March 31, 2021. There is no requirement for individual recipients or subrecipients to seek approval for the extension, but the addendum advises that recipients and subrecipients should maintain documentation of the reason for the delayed filing.

Other extensions previously granted by OMB for 2019 fiscal-year-end single audits affected by the coronavirus pandemic expire on Dec. 31, 2020.

The addendum answered other questions that single audit practitioners have been asking related to new COVID-19 funding, including those established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136.

Single audit practitioners have been eagerly awaiting this guidance to gain an understanding of federal expectations for the compliance requirements and suggested audit procedures to be considered by auditors relating to new COVID-19 funding received by their clients.

In an alert issued by the AICPA Governmental Audit Quality Center (GAQC) and posted on the GAQC website, the GAQC explains the following key addendum provisions:

• Provider Relief Fund expenditures and lost revenue will not be included on the Schedule of Expenditures and Federal Awards (SEFA) until Dec. 31, 2020, year ends and later. This timing only affects the Provider Relief Fund program and does not apply to other COVID-19 funding that health care entities may have received.
• Nonfederal entities that received donated personal protective equipment (PPE) should include the fair market value of the PPE at the time of receipt in a stand-alone footnote to the SEFA that can be marked “unaudited.” The auditor should not count the donated PPE for purposes of determining the threshold for a single audit or determining the Type A/B program threshold for major programs. Donated PPE is not required to be audited as a major program.
• The auditor is required to test Federal Funding Accountability and Transparency Act (FFATA) reporting for all the COVID-19 programs included in the addendum (except for the Coronavirus Relief Fund program) where:
  • The reporting type of compliance requirement is marked as a “Y” in the Part 2 Matrix, and the auditor determines reporting to be direct and material; and
  • The recipient makes first-tier subawards of $25,000 or more to report subaward data through the FFATA Subaward Reporting System.

  For more information on single audits, visit the GAQC’s webpage, as well as the GAQC’s Single Audit Resources webpage.

  — Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.