What's New With the AICPA Governmental Audit Quality Center ...

What's New With the AICPAGovernmental Audit Quality CenterSean M. Walker, CPA, CGFMClifton Gunderson LLPSeptember 24, 2010Objective of SessionIntroduce the Government Audit Quality CenterHelp you understand the latest activities and varioustools developed by the Center and other resourcesavailable to improve audit qualityGovernmental Audit Quality Center2Center Mission and HistoryOverall mission to improve governmental auditquality and to be a resource to membersWhy Center launched?• Indicators of problems with these audits from federal agencies,peer reviews, and ethics referrals• Expected federal study on single audit quality which began in2005 (report issued in 2007)Milestones• Council approved concept in 2003• Board approved GAQC membership requirements in 2004• Center launched September 2004Governmental Audit Quality Center3

Mission/Purpose of the GAQCHelps member firms and state auditororganizations achieve the highest standards inperforming quality governmental auditsMembers demonstrate commitment togovernmental audit quality (must adhere tomembership requirements which are available onthe GAQC Web site under the Membership tabalong with additional questions and answersabout the requirements)http://www.aicpa.org/GAQCGovernmental Audit Quality Center4Mission/Purpose of the GAQCCenter has almost 1,450 member firms and 15 stateauditor offices• Current SAOs include: DE, FL, GA, LA, MI, MN, ND, NH, OH, RI, SD,TX, VA, VT, UT39% of members perform 1-10 audits under the YellowBook and another 24% perform 11-25Members cover over 87% of the federal expenditurescovered in single audits performed by CPA firmsMembers audit almost 54% of the total number ofsingle audits performed by CPA firmsGovernmental Audit Quality Center5Resources to Members30 GAQC Alerts and 2 GAQC Update NewslettersMember web events with optional CPE (15 events offeredsince last year)Annual required Webcast with optional CPE for viewingeither the live or the archived versionComprehensive Web site (www.aicpa.org/GAQC) whichincludes:• Archives of GAQC Alerts and GAQC Updates, Web events, annualWebcast, illustrative auditor reports and other auditor tools, etc.• HUD information page• Some of this information is left open to the publicSavings on professional insuranceGovernmental Audit Quality Center6

Additional Technical ActivityDeveloped updated illustrative Yellow Book and singleaudit reports for SAS No. 115Participated in the development and review of importantAICPA governmental audit publications (e.g., GAS/A133Audit Guide, SLG Guide, various industry ARAs, etc.)GAQC involved in planning major AICPA conferences(NPO, GAAC, GNTP) and developed and presentednumerous conference sessionsParticipation on several ASB TFs (SAS Nos. 117 – 120)2010 OMB Compliance SupplementGovernmental Audit Quality Center7AdvocacyMet regularly with various federal agenciesto discuss matters of mutual interestSingle Audit RoundtableIssued numerous comment lettersAssist AICPA legislative team withCongressional interactions relating to singleaudit mattersGovernmental Audit Quality Center8Community and Awareness BuildingConferencesUse of Federal Audit Clearinghouse databaseto send GAQC information to auditors andauditees that are not membersContinued discussion of Center with federaland state stakeholdersOther bodies encouraging GAQCmembership (e.g., certain federal agencies,state auditors, RFPs)Governmental Audit Quality Center9

History of Single Audit Quality IssuesHistory of quality issues:• Federal Single Audit Quality Study Results• The Project issued a report titled, Report on National Single AuditSampling Project (the PCIE report), that was issued by the President’sCouncil on Integrity and Efficiency (PCIE) and can be accessed in itsentirety at : http://www.ignet.gov/pande/audit/natsamprojrptfinal2.pdfCategory # of Audits $$$ AuditedAcceptable 48.60% 92.9%Limited Reliability 16.00% 2.30%Unacceptable 35.50% 4.80%Governmental Audit Quality Center10Single Audit QualityContinued work to address the detailedfindings and recommendations in thefederal study on single audit qualityWork Completed• SAS No. 117• New sampling guidance for single audits• Issuance of auditor practice aids relating to InternalControl And Compliance Responsibilities In a single audit• Issuance of auditor practice aids relating to a keycomponent of a single audit – the Schedule OfExpenditures Federal AwardsStill Active• Reporting audit findings in a single audit• Single audit training needs• Peer reviewGovernmental Audit Quality Center11Sampling and MaterialityDeveloped sampling chapter in 2009 GAS/A133GuideIncludes suggested minimum sample sizes andmoreEffective nowExecutive summary of chapter available on GAQCWeb site under Resources tabGovernmental Audit Quality Center12

I/C Over Compliance and ComplianceTask Force ReponsesClarifying guidance added to 2008 GAS/A133GuideDeveloped practice aids to illustrate:• Documenting direct and material compliancerequirements (matrix)• Documenting internal control (narrative and checklist)• Dual-purpose testing of IC and ComplianceMember event archived on the GAQC Website (under the Resources tab) to furtherhelp you understand the I/C Practice AidsGovernmental Audit Quality Center13How to Get I/C and Compliance Toolsand AidsJust issued!• GAQC members – free access to word and excel versions• GAQC members and non-members – small fee forpurchase of PDF where responses can be input into form(order through CPA2BIZ)Go to:https://www.cpa2biz.com/AST/Main/CPA2BIZ_Primary/AuditAttest/IndustryspecificGuidance/Government/PRDOVR~PC-006662PDF/PC-006662PDF.jspGovernmental Audit Quality Center14GAQC SEFA Tools & AidsClarifying guidance added to 2008 GAS/A133 GuideSEFA Practice Aids (both for the auditor and auditee)issued and available on the GAQC Web site, under theResources tab (auditor tools also incorporated in theGAS/A133 Guide)• Audit Program and Disclosure Checklist for Auditors• Document for auditees to accumulate important information on federalawards and a Disclosure Checklist for AuditeesThe GAQC has provided a member event that has beenarchived on the GAQC Web site (under the Resourcestab) to further help you understand SEFA responsibilitiesand the Practice AidsGovernmental Audit Quality Center15

Peer ReviewPractice Monitoring Task Force (PMTF)Areas of Focus:• Establish consistent measures of A-133 deficiencies• Develop guidance and training materials for peer reviewersTask Force Activities:• Meeting with OIGs to discuss Peer Review process andcomparing to QCR process• Brainstorming session to consider comments andrecommendations received from IGsGovernmental Audit Quality Center16Peer ReviewInterpretation 63-1a revised to require selection ofan A-133 engagement• Effective for peer reviews commencing on or after September 1,2009• “Must-selects” must include A-133 engagements• No further modification to System Report “must-select”paragraphRevised Governmental and Not-For-Profit AuditEngagement Checklist (and Engagement Profiles)• PRP Manual Section 20, 500 and 20,600• Enhanced key A-133 Single Audit Data• Single Audit Major Program Determination worksheetGovernmental Audit Quality Center17Major Program DeterminationListen to a two hour archived GAQC Web Event titled“Single Audit Fundamentals Part II: The Mysteries ofMajor Program Determination”• Topics include:- Applying the Risk-Based Approach for Determining MajorPrograms- Low-Risk Auditee Determination and Distinguishing fromOther Risk Assessments Performed in a Single Audit- Communications with Cognizant or Oversight AgenciesVisit:http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/Resources/Pages/SAFundamentals—A4PartSeries.aspxGovernmental Audit Quality Center18

Ongoing GAQC GoalsGAQC continues its ongoing goals to:• Improve governmental audit quality• Continue improving single audit process• Grow membership and continue high member satisfaction andvalue delivery• Complete work of GAQC task forces• Develop additional auditor resources, guidance, training, andCPE• Collaborate with the AICPA peer review team to enhance thepeer review process with regard to single audits• Begin to address audit procurement issues that contribute tosingle audit quality problemsGovernmental Audit Quality Center19Looking ForwardYellow Book exposure draft (e.g., changes toindependence standards?)Continued effects from Recovery Act, including newreviews of auditor qualitySingle audit training requirements?Changes to single audit rules?• Threshold, Compliance requirements, Timing, etc.Continued support to membersGovernmental Audit Quality Center20GAQC Team• General Inquiries - gaqc@aicpa.org• Mary Foelster, Director- 202-434-9259 or mfoelster@aicpa.org• Laura Hyland, Technical Manager- 202-434-9233 or lhyland@aicpa.org• Rafael Roman, Technical Manager- 202-434-9272 or rroman@aicpa.orgGovernmental Audit Quality Center21

AICPA PublicationsTo purchase AICPA products• call AICPA Order Department at 888-777-7077• visit www.cpa2biz.com22The Recovery ActThe American Recovery andReinvestment Act of 2009(Pub. L. No. 111-5) (ARRA) and therelated OMB Guidance havesignificant implications for manyGAQC members.The ARRA imposes new transparency and accountabilityrequirements on Federal awarding agencies, their recipients, andauditors.Governmental Audit Quality Center23Other ToolsRecovery Act Resource Center (open to public)• Background• Tools- Archived events- Archived Alerts• Summary of OMB and other guidance• Other useful web sites, tools, informationhttp://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/Resources/Pages/Archived%20GAQC%20Conference%20Calls.aspxGovernmental Audit Quality Center24

Other ToolsSingle audit fundamentals series availablefor GAQC members on the GAQC Web site(free with no CPE)• Single Audit Fundamentals Part I: What is a Single Audit? ABasic Background & Overview• Single Audit Fundamentals Part II: The Mysteries of MajorProgram Determination• Single Audit Fundamentals Part III: Understanding and TestingCompliance Requirements and Related Internal Control overCompliance• Single Audit Fundamentals Part IV: Overview of Single AuditReporting Requirements and Available ResourcesSoon to be available with a CPE option (nextfew weeks)Governmental Audit Quality Center25Other ToolsAnnual Archived GAQC Webcast• Member-only free Webcast (no CPE) specifically designed to assistGAQC member firms in planning and improving their 2010governmental audit engagements.• Required viewing for each member firm's partner or state auditorganization's audit leader designated with responsibility for the qualityof governmental audits.• Includes a technical audit and accounting update• Visit:http://www.aicpa.org/interestareas/governmentalauditquality/resources/pages/2010gaqcannualupdatewebcast.aspx• Available with CPE option for viewing archiveGovernmental Audit Quality Center26Other ToolsAccess to illustrative auditor reports• Yellow Book reports• Circular A-133 reports (117 versions just issued!)• Links to HUD reports (which GAQC assisted HUD indeveloping)Governmental Audit Quality Center27

Other ToolsAchived web events – Single Audits• New Compliance Auditing SAS and an Update on OtherAuditing Standards• The Recovery Act: Information You Need to Plan and PerformYour 2010 Single Audits (open to public)• Sampling (both financial statement and single audit)• SEFA• Internal Control Considerations• And more!Governmental Audit Quality Center28Other ToolsArchived web events – financial statement and other• State and Local Government Financial Statement Audits: AnAudit Issues Rundown• GASB Fund Balance Standard: Now is the Time to Begin Talkingto Your Clients• The New Standards on Quality Control and PracticalImplementation Tips• Overcoming Implementation Issues with Fair ValueMeasurement: A Not-for-Profit Perspective• Essential Form 990 Considerations For Auditors• FSP 117-1 and UPMIFA: Separating Myth from RealityGovernmental Audit Quality Center29Other ToolsArchived GAQC Alerts and Updates• Periodically sent to members• All archived on GAQC Web site for later viewing• Some left open to the publichttp://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/NewsAndPublications/Pages/default.aspxGovernmental Audit Quality Center30

Other ToolsHUD Information Page (much of this page is open tothe public)• News• Archived member events (HUD multifamily housing audits)• Background• Status of each chapter of HUD Guidehttp://www.aicpa.org/INTERESTAREAS/GOVERNMENTALAUDITQUALITY/RESOURCES/HUDINFORMATION/Pages/default.aspxGovernmental Audit Quality Center31Other ToolsTrain your clients• Archived event titled Preparing for Your Single Audit: An AuditeePerspective• SEFA Practice Aids for auditees• Recovery Act Resource Center• GAQC hopes to do more in this area in the futureGovernmental Audit Quality Center32Other ToolsMarketing Toolkit for GAQC members• Archived member event on developing a niche practice• Client communications• Client talking points• GAQC logo usage instructions• Sample presentationGovernmental Audit Quality Center33

Other ToolsSelected for a Quality Control Review?• GAQC Member tool Tips for Getting Through a Quality ControlReview (a Non-Authoritative Practice Aid)• Tips to navigate the process• Links provided to AICPA peer review checklistsHow to Reissue A Single Audit ArticleGovernmental Audit Quality Center34Final Questions?Governmental Audit Quality Center35