By Oluchi Taylor
The new requirements under the Uniform Guidance became effective for audits of fiscal years that began after December 26, 2014. The following are some of the key audit-related changes to help keep your ducks in a row:
- The threshold for determining whether a Single Audit is required has increased from $500,000 to $750,000.
- $750,000 is also the minimum threshold for determining Type A programs. Any program with total federal expenditures less than $750,000 is a Type B program.
- Auditors are required to perform risk assessments only on Type B programs that exceed 25% of the Type A threshold.
- The percentage of coverage requirements is 40% for non-low-risk auditees and 20% for low-risk auditees.
- Previously, the threshold for reporting known questioned costs was $10,000. The threshold is now $25,000.
- The criteria for determining low-risk Type A programs were revised. For a Type A program to be considered low-risk, all of the following criteria must be met:
- The program must have been audited as a major program in one of the two most recent audit periods;
- In the most recent audit period, it did not have (a) internal control deficiencies identified as material weaknesses in the auditors’ report on internal control for major programs; (b) a modified opinion on the program in the auditors’ report on major programs; or (c) known or likely questioned costs exceeding 5% of the total federal awards expended for the program.
- Inherent risk is no longer used when determining whether a Type A program has a significantly increased risk.
- The criteria for determining low-risk auditee status have changed. A requirement was added that, for each of the two preceding audit periods, the auditor did not report substantial doubt about the entity’s ability to continue as a going concern. In addition, both the auditors’ opinions on whether the financial statements were prepared in accordance with GAAP and the in-relation-to opinion on the schedule of expenditures of federal awards must have been unmodified in each of the two preceding years.
- Both known and likely fraud affecting the federal awards must be reported.
- Each finding must include a reference number in the format required for data collection submission.
- Federal agencies cannot grant extensions of the due date for submitting reports.
- Both the auditee and the auditor must ensure that their respective parts of the reporting package do not include protected personally identifiable information.
- The use of must in the Uniform Guidance indicates a requirement. However, should is used throughout the Uniform Guidance to indicate a best practice or recommended approach, not a presumptively mandatory requirement.
The most current version of the Uniform Guidance can be accessed here.