Is this your first single audit? Did the American Rescue Plan funding push you over the threshold to require a single audit? You might be in luck!
The Governmental Audit Quality Center (GAQC) recently sent out guidance regarding smaller entities receiving federal funds for the first time. Federal agencies realize the burden that the additional funding puts on smaller entities to comply with the rigorous requirements of the Uniform Guidance. Roughly 10, 000 new entities have met the threshold for a single audit due to ARPA funding.
There has been a Federal Register (FR) notice sent out describing the following –
- Related to AL 93.498 Provider Relief funds – the updated compliance supplement removes Part 4 related to Special Tests and Provisions: out of network patient out of pocket expenses. Health and Human Services (HHS) has determined that the review requirements are no longer meaningful and applicable to the oversight of this program.
- Related to AL 21.027 State and Local Fiscal Recovery Funds (SLFRF) – the updated compliance supplement removes Part 4, Section IV-Other information, resulting in an alternative audit approach for eligible SLFRF recipients that would otherwise not be required to undergo an audit under 2 CFR part 200, subpart F, if it was not for the expenditures of SLFRF funds directly award by Treasury.
The SLFRF updated supplement Addenda 2 has alternative procedures to consider. Entities meeting the $750,000 threshold and meet both of the following criteria have the option to follow alternative SLFRF compliance examination engagement:
- The recipient’s total SLFRF award received directly from Treasury or received (through states) as a non-entitlement unit of local government is at or below $10 million; and
- Other federal award funds the recipient expended (not including their SLFRF award funds) are less than $750,000 during the recipient’s fiscal year.
An entity may still choose to have a single audit completed. If the entity chooses to complete the alternative – a compliance examination engagement – the entity (and the auditors) must follow compliance in accordance with the Government Accountability Office (GAO). This would follow attestation standards and reduce the requirements performed overall. Testing would focus mostly on the allowability of expenditures and ensure the entity has appropriate controls over specific functions in the finance department.
The alternative procedures would significantly reduce the testwork and requirements on both sides, the entity and the auditors. If you think you might qualify for this option, it might be worth asking your auditor.
If you have any questions, please contact your Henry+Horne advisor
See resource links below –
Federal Register notice
2021 Compliance Supplement Addenda 2 – 21.027