Governmental Accounting and Auditing Update (2008–2009 Edition)

Ideal for self-study or on-site training!

Since GASB No. 34 was issued, the GASB has averaged two to three significant new pronouncements each year. What did the latest two or three pronouncements relate to? Find out in this update designed to help you understand the latest in governmental accounting and auditing.

Objectives: 

• Review GASB Statements 50, 51, 52, Concepts Statement 4, and more
• Plan for additional pronouncements issued or pending by the GASB
• Review the July 2007 Yellow Book and related GAO guidance that has subsequently been issued
• Review the federal study on A-133 audit quality and its potential ramifications on future A-133 audits
• Understand the effect of SAS No. 112 on Yellow Book and A-133 engagements
• Understand the latest standards issued by the AICPA relating to governments and also standards on the horizon

Prerequisite: Knowledge of government auditing and accounting

Videocourse Details

In the video, W.A. Broadus, Jr., CPA, CGFM, president of W.A. Broadus, Jr., CPA, PC, a respected consultant in the governmental and nonprofit area, employed for several years with the GAO, and author of many AICPA professional development courses, interviews David R. Bean, CPA, director of research and technical activities of the Governmental Accounting Standards Board in Norwalk, CT; Peter B. Bell, CPA, CGFM, consultant and trainer in Washington, DC, employed for several years with the Department of Housing and Urban Development; Marcia Buchanan, CPA, CGFM, Assistant Director, GAO; John Fisher, CPA, Director–NEAR of the U.S. Department of Health and Human Services in Kansas City, MO; Mary Foelster, CPA, AICPA Director–Governmental Auditing and Accounting; Charles Landes, CPA, AICPA Vice President–Professional Standards; and Jill R. O’Brien, project manager of the Federal Audit Clearinghouse of the U.S. Bureau of the Census in Washington, DC.

*(180-min. video) The DVD disk contains the video presentation and a viewable copy of the Manual.
**The Additional Manual is for group study training only. Unlike other formats, it has no exam answer sheet and cannot be used to earn self-study credit.

Federal Developments

Update on the National Single Audit Sampling Project
In 2007, the President’s Council on Integrity and Efficiency and the Executive Council on Integrity and Efficiency issued a report entitled Report on National Single Audit Sampling Project (the PCIE report). The PCIE report presented the results of a 2+ year effort to (1) assess the quality of single audits and establish a statistically based measure of audit quality; and (2) recommend changes in single audit requirements, standards and procedures to improve the quality of single audits.

The PCIE report identified deficiencies related to:

• Misreporting of audit coverage of major federal programs.
• Unreported audit findings.
• Compliance testing not documented as performed or not applicable.
• Deficiencies in understanding and testing of internal control over compliance.
• Deficiencies in risk assessments as part of major program determination.
• Missing audit finding information.
• Deficiencies in presentation and auditing of the SEFA.
• Management representations related to federal awards missing or misdated.
• Consideration of audit materiality at the major federal program level not documented.
• Other kinds of deficiencies (described in Appendix A of the report).

The PCIE report includes recommendations for reducing the deficiencies noted and to improve the quality of single audits. The recommendations in the report are directed to various organizations including the OMB and other federal agencies, the AICPA, and other single audit stakeholders. Specifically, the report proposes to:

• Revise and improve single audit criteria, standards, and guidance to address deficiencies noted in the report. Specific recommendations are described throughout Part II and the “Other Matters” sections of the PCIE report and include recommendations for revisions to Circular A-133 and, in some cases, additions or clarifications to AICPA auditing standards and the Government Auditing Standards and Circular A-133 Audits AICPA Audit Guide.
• Establish minimum requirements for completing comprehensive single audit training as a prerequisite for conducting such audits (the report suggests at least 16-24 hours) and thereafter, require single audit update training for continued performance of single audits.
• Review and enhance processes to address unacceptable audits and not meeting established training and continuing professional education requirements. This includes (a) reviewing the process of suspension and debarment; (b) identifying ways that the AICPA and State Boards of Accountancy can further the quality of single audits and address due professional care issues; and (c) identifying, reviewing, and evaluating the potential effectiveness of other ways to address unacceptable audits (these other ways could include sanctions to be applied to auditors or fines, or both).

In 2008 the OMB is looking at revising OMB Circular A-133 and is receiving comments from the AICPA and others. It is anticipated that revisions to the Circular may occur in fall 2008. To obtain the latest on these developments go to the AICPA Governmental Audit Quality Center website at www.aicpa.org/GAQC. The PCIE report is available at http://ignet.gov/.

Important Data Collection Form Developments
Beginning with fiscal year 2008 submissions, the Federal Audit Clearinghouse (FAC) has developed a revised data collection form and moved to a total electronic submission process. For 2008 fiscal year-end submissions and beyond, there will no longer be any paper copy submissions of the data collection form and reporting package to the FAC. At the FAC website the FAC has posted a helpful 2008 Single Audit Submission Questions and Answers section and the Internet Data Entry System (IDES) FYE 2008-2010 instruction document.

The following illustration summarizes the submission process described at the FAC website.

Summarized Method for Data Collection Form and Single Audit Reporting Package Submission for Fiscal Periods Ending in 2008 or Later Create online report ID — Complete the Data Collection Form — Upload the Single Audit — Certify the submission — Click “submit”

It is vital that all practitioners go to http://harvester.census.gov/fac/ and review the new requirements which were issued in August 2008.

Additional Revisions to the HUD Consolidated Audit Guide
In recent years, the HUD Office of Inspector General has been revising the Consolidated Audit Guide for Audits of HUD Programs on a chapter by chapter basis. In July 2008, HUD continued this project by:

• Issuing Chapter 3, HUD Multifamily Housing Programs; and
• Adjusting Chapter 4 (now entitled HUD Multifamily Hospital Program.)

Practitioners working in the HUD area will want to review these documents and the related transmittals describing them at www.hud.gov/offices/oig/.

HUD Proposes an Independent Public Accountant Roster
In February 2008, HUD released a proposed rule that would establish a roster of approved independent public accountants and public accounting firms (IPAs) that would be permitted to perform audits or related services required by participants in certain HUD programs and submitted to HUD. The proposed rule would also establish eligibility, application, and removal procedures for IPAs listed on the IPA Roster. HUD believes this proposed rule would implement an additional protection to ensure the accuracy of financial data submitted to HUD by its program participants. The comment period ended in April. To obtain more details and the status of the proposal go to www.aicpa.org/GAQC.

Developments Related to Audits of 403(b) Retirement Plans
Beginning with 2009 Form 5500 filings, employee benefit plans under section 403(b) of the Internal Revenue Code that are sponsored by charitable organizations and covered under the Employee Retirement Income Security Act of 1974 will be subject to the same reporting and audit requirements that currently exist for section 401(k) plans.

Many plans face significant challenges in establishing plan accounting records and proper controls, identifying all participant accounts to be included as plan assets, determining beginning account balances (i.e., comparative balances are also required as of December 31, 2008 for calendar year plans), obtaining other financial information to be included in the plan’s financial statements, and obtaining an unqualified opinion on the plan’s financial statements from the independent auditor.

A joint task force of the AICPA Employee Benefit Plan Audit Quality Center Executive Committee and the Employee Benefit Plan, Not-for-Profit and Health Care Expert Panels has developed resources to assist auditors of not-for-profits, charities, health care entities, and schools that sponsor 403(b) retirement plans in learning about the new requirements, see http://ebpaqc.aicpa.org/Resources/Accounting+and+Auditing+Resource+Centers/403(b)+Plans.htm.

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