OMB A-133 Audit Requirements
The Office of Management and Budget (OMB) has proposed revisions to OMB Circular A-133. OMB Circular A-133 requires institutions of higher education and nonprofit institutions that expend a specific threshold of federal funds to annually undergo a detailed, organization wide audit that complies with the criteria established in Circular A-133. On February 1, 2013, the OMB issued a proposal entitled Reform of Federal Policies Relating to Grants and Cooperative Agreements; Cost Principles and Administrative Requirements (Including Single Audit Act) for comment by the public.
The OMB proposed a number of changes to the Single Audit Act of 1996 which will affect the audit requirements for organizations subject to the OMB A-133 requirements, which include:
- Entities that expend less than $750,000 in federal awards will not be required to undergo a Single audit, an increase from the current threshold of $500,000. If an entity falls below the $750,000 threshold it will not be exempt from additional federal audits, and must make records available for review or audit by appropriate officials of the Federal agency, pass-through entity, and the Government Accountability Office.
- An increase of the minimum threshold to $500,000 for Type A/B program determination, from the current $300,000 threshold.
- Type A programs will be qualified as high-risk only if, in the most recent period, they have failed to receive an unqualified opinion; had a material weakness in internal control; or had questioned costs exceeding five percent of the program's expenditures.
- The number of high-risk Type B programs that must be tested as major programs has been reduced to as least one-fourth of the number of low-risk Type A programs, a decrease from the current rule of at least one-half. Small Type B programs would be considered those that are 25% of the Type A/B threshold.
- The percentage of coverage required in a single audit will be 40% (normal) and 20% (low-risk auditees), a decrease from the current 50% (normal) and 25% (low-risk auditees).
- The number of compliance requirements to be tested in a single audit will be reduced to 6 types of compliance requirements, from the current 14 types of compliance requirements. These requirements will include: (1) Activities Allowed or Unallowed and Allowable Costs/Cost Principles (the Proposed Guidance does note that this requirement could include some testing of Period of Availability and Matching); (2) Cash Management; (3) Eligibility; (4) Reporting; (5) Subrecipient Monitoring; and (6) Special Tests & Provisions. The proposal would permit the federal agencies to request that certain of the deleted types of compliance requirements be added to the Special Tests & Provisions requirement for programs where they could be considered essential to the oversight of the program.
- The questioned cost threshold for reporting auditor findings will be $25,000, an increase from the current $10,000.
- The Proposed Guidance will supersede and streamline OMB Circulars A21, A-87, A-89, A-102, A-110, A-122, A-133, and areas of A-50 related to Single Audits.
Under this proposal, organizations which were previously required to undergo an A-133 Single Audit may be exempt moving forward. We suggest that the Organization review its obligations under any programs in which federal funds are received to ensure that all such requirements are completely fulfilled, and to determine whether the proposed changes to the A-133 Single Audit will affect the Organization’s audit requirement in future years.
The OMB has not provided a timeline for the adoption of the proposed changes nor an effective date once the changes are adopted.
If you have any additional questions please contact Feeley & Driscoll by Email or call us at 1 (888) 875-9770.
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