The Federal requirements for annual financial and compliance audits were revised on June 24, 1997. The revision to OMB Circular A-133 made sweeping changes in audit requirements for states, local governments and nonprofit organizations receiving Federal funding.

This circular rescinded Circular A-128, Audits of State and Local Governments, and superseded the prior OMB Circular A-133, Audits of Institutions of Higher Education and Other Nonprofit Institutions.The new circular applies to non-Federal entities whether they are recipients expending Federal awards received directly from Federal awarding agencies or are subrecipients expending Federal awards received from a pass-through entity.

The new audit requirements are effective for fiscal years ending on or after June 30, 1997. Some of the significant revisions to A-133 are listed here.

• Increased the Federal expenditure threshold that requires an A-133 audit from $50,000 to $300,000.
  
  
• Issued general guidelines to determine whether an organization receiving Federal funds is a subrecipient or a vendor (a vendor would not be required to have an A-133 audit).
  
  
• Detailed specific audit responsibilities for the auditee in preparing the financial statements and notes to the financial statements.
  
  
• Detailed specific auditor requirements.
  
  
• Changed the reporting due date to the lesser of 30 days after receipt of the auditor's report or nine months after the end of the audit period.
  
  
• Identified additional reports that must be prepared by the auditee and auditor and submitted to Federal funding sources. The reporting package includes:
  
  1. Auditor's report(s) (see §___.505)
  
  2. Summary schedule of prior audit findings (see §___.315(b))
  
  3. Corrective action plan (see §___.315(c))
  
  4. Financial statements and schedule of expenditures of Federal awards (see §___.310(a)(b))
  
  5. Data collection form (see §___.320(b))
  
  
• Revised the audit report format and the method for determining what constitutes a major Federal program. One of the biggest changes to A-133 is the requirement for the preparation and submission of the following additional items to accompany the audit report:

The summary schedule of prior audit findings is to report the status of all audit findings included in the prior audit's schedule of findings and questioned costs. The schedule should list the prior year's finding and indicate that corrective action was taken. If the finding has not been resolved, the corrective action taken (or not taken) should be explained.

Corrective Action Plan

At the completion of the audit, the auditee shall prepare a corrective plan to address each audit finding included in the current audit report. Among other things, the corrective action plan shall provide the name(s) of the contact person(s) responsible for corrective action, the corrective action planned and the anticipated completion date. If the auditee does not agree with an audit finding or believes corrective action is not required, the corrective action plan shall include an explanation and specific reasons.

Data Collection Form

The auditee shall submit a data collection form that includes information about the auditee, its Federal programs and the results of the audit. The data collection form shall include the following data elements:

1. The type of report the auditor issued on the financial statements of the auditee (i.e., unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion).
   
   
2. Where applicable, a statement that reportable conditions in internal control were disclosed by the audit of the financial statements and whether any such conditions were material weaknesses.
   
   
3. A statement as to whether the audit disclosed any noncompliance which is material to the financial statements of the auditee.
   
   
4. Where applicable, a statement that reportable conditions in internal control over major programs were disclosed by the audit and whether any such conditions were material weaknesses.
   
   
5. The type of report the auditor issued on compliance for major programs (i.e., unqualified opinion, qualified opinion, adverse opinion, or disclaimer of opinion).
6. A list of the Federal awarding agencies which will receive a copy of the reporting package pursuant to §___.320(d)(2) of OMB Circular A-133.
   
   
7. A yes or no statement as to whether the auditee qualified as a low-risk auditee under §___.530 of OMB Circular A-133.
   
   
8. The dollar threshold used to distinguish between Type A and Type B programs as defined in §___.520(b) of OMB Circular A-133.
   
   
9. The Catalog of Federal Domestic Assistance (CFDA) number for each Federal program, as applicable.
   
   
10. The name of each Federal program and identification of each major program. Individual programs within a cluster of programs should be listed in the same level of detail as they are listed in the schedule of expenditures of Federal awards.
    
    
11. The amount of expenditures in the schedule of expenditures of Federal awards associated with each Federal program.
    
    
12. For each Federal program, a yes or no statement as to whether there are audit findings in each of the types of compliance requirements and the total amount of any questioned costs.
    
    
13. Auditee name, employer identification number(s), name and title of certifying official, telephone number, signature, and date.
    
    
14. Auditor name, name and title of contact person, auditor address, auditor telephone number, signature, and date.
    
    
15. Whether the auditee has either a cognizant or oversight agency for audit.
    
    
16. The name of the cognizant or oversight agency for audit determined in accordance with §___.400(a) and §___.400(b), respectively.

A proposed data collection form was published for comment in the June 30, 1997 Federal Register.

Please contact us if you have questions regarding implementations of these revisions to OMB Circular A-133. If you would like a copy of the revised OMB Circular A-133 and/or the proposed data collection form, please contact Joan Hollis in Madison at (608) 274-1980, ext. 3244. If you are a member of our Internet Service for Grant-Funded Programs, you can view or download these documents at www.gfp.wya.com

Auditee Responsibilities Under OMB Circular A-133 (for fiscal years ending on or after June 30, 1997)

For easy reference, major auditee responsibilities are listed here in the form of an outline; however, this list is not all-inclusive. Please refer to OMB Circular A-133 or contact Williams Young, LLC for assistance.

The auditee shall:

• A. Identify, in its accounts, Federal awards received and expended (CFDA title and number, award number and year, Federal agency, and pass-through entity. (§___.300)
  
  
• B. Maintain internal control. (§___.300)
  
  
• C. Comply with laws, regulations, and award agreements. (§___.300)
  
  
• D. Prepare appropriate financial statements, including schedule of Federal awards. (§___.300)
  
  
• E. Ensure audits are properly performed and submitted when due. (§___.300)
  
  
• F. Follow-up and take corrective action on audit findings. (§___.300)
  
  
• G. Follow procurement standards prescribed by OMB. (§___.305)
  
  
• H. Prepare a schedule of expenditures of Federal awards. (§___.310)
  
  1. List programs by Federal agency
  2. List pass-through entity and number
  3. Provide expenditures by CFDA number
  4. Include notes regarding accounting policies
  5. Identify amount provided to subrecipients
  6. Include noncash assistance, loans, etc.
  
  
• I. Prepare a summary schedule of prior audit findings. (§___.315)
  
  
• J. Prepare an action plan for current audit findings. (§___.315)
  
  
• K. Submit audit package and data collection form by due date to Federal clearinghouse and to each pass-through entity. (§___.320)
  
  
• L. Sign and certify data collection form. (§___.320)
  
  
• M. Make copies available for public inspection (unless restricted by law or regulation. (§___.320)
  
  
• N. Submit copy of any management letters issued by auditors, if requested. (§___.320)
  
  
• O. Keep one copy of form and reporting package (financial statements and schedule of Federal expenditures, summary schedule of prior findings, auditor's reports, and corrective action plan) for three years from date of submission.
  
  
• P. Work with the auditor to take corrective action. (§___.400)