Sneak Preview: Federal Work Group Discusses Compliance Requirement Review

Jerry Ashworth
November 30, 2018 at 09:32:46 ET
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(The following was excerpted from a recent article in the Single Audit Information Service.) One of the federal agency work groups established under the President’s Management Agenda’s grants accountability Cross-Agency Priority (CAP) goal is suggesting that federal agencies review their programs and, for each program, identify up to six of the 12 compliance requirements for auditors to test when assessing auditee compliance under the 2019 Office of Management and Budget (OMB) Compliance Supplement. Agencies then would identify from the remaining compliance requirements those for auditors to test when reviewing auditee programs under the 2020 Compliance Supplement.

OMB plans to provide more information and guidance to agencies and stakeholders on this issue.

The Compliance Supplement provides guidance for auditors to use in testing compliance with applicable laws, regulations, and the terms and conditions of federal awards in major programs. The supplement, in Part 3, identifies 12 types of compliance requirements to be tested in single audits, along with audit objectives and suggested audit procedures for internal control associated with each requirement.

For each federal program included in the supplement, Part 4 discusses program objectives, program procedures, and which of the 12 compliance requirements are appropriate to the program, as denoted by the awarding agency. For example, under the Department of Agriculture’s Public and Indian Housing Program (CFDA No. 14.850), 10 of the compliance requirements are applicable, excluding “Matching/Level of Effort/Earmarking” and “Subrecipient Monitoring.” In developing the audit procedures to test compliance for this program, an auditor must determine which of the 10 applicable requirements pertaining to this program are likely to have a direct and material effect on the auditee’s program

OMB Policy Analyst Nicole Waldeck recently told attendees at a National Grants Management Association meeting in Chevy Chase, Md., that a work group under the President’s Management Agenda focusing on developing a “new and improved” Compliance Supplement for 2019 is considering “streamlining” the document. For all programs in the supplement, agencies would identify up to six applicable compliance requirements for auditor testing under the 2019 supplement. Auditors would test the other up to six, if applicable, when performing testing under the 2020 Compliance Supplement. For each program, agencies would determine which of the six, at maximum, compliance requirements would be included for auditor testing in each year’s supplement, and the requirements could vary for each program.

(The full version of this story has now been made available to all for a limited time here.)

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