Pub. 3 2021 Issue 2

21 nebraska society of cpas W W W . N E S C P A . O R G that a grantee will be required to obtain a single audit. Reporting COVID-19 Expenditures One of the factors that will determine whether a recipient of COVID-19 funds is subject to audit in a given fiscal year is the determination of when (and in which fiscal year(s)) to report the costs incurred on the Schedule of Expenditures of Federal Awards (SEFA). This can be a complicated mat ter considering some awards were made before terms and conditions were established, the period of performance sometimes allowed costs to be applied before awards existed, and the awards will cross multiple fiscal years. The AICPA Government Audit Quality Center issued a non-authoritative guide to reporting on an accrual-basis SEFA; the GAQC Nonauthoritative Guidance for Reporting on the SEFAmay be found at http://bit.ly/ GAQC-SEFA. Compliance Supplement and COVID-19 Addendum The Compliance Supplement (2 CFR 200, AppendixXI) assists auditors in performing single audits by identifying compliance requirements that federal agencies expect to be considered as part of a single audit. The 2020 Compliance Supplement, which was effective for audits of f iscal years ending June 30, 2020, came out in August 2020. Addit ional audit guidance for COVID-19-related programs funded under the CARESAct was issued in an addendum to the 2020 Compl iance Supplement on December 22, 2020. The addendum includes information on new COVID-19 programs and existing programs impacted by COVID-19, as well as a new subrecipient reporting requirement under the Federal Funding Accountability and Transparency Act (FFATA). Auditor s wi l l use t he addendum in conjunction with the 2020 Compliance Supplement to determine appropr iate audit procedures. For any programs being audited that are not in the Compliance Supplement or addendum, or for new COVID-19 programs being audited prior to issuance of the addendum, the auditor wi l l fol low guidance in Par t 7 of the Compliance Supplement to identify direct and material compliance requirements to test. The 2020 Compliance Supplement and addendum are available on the Office of Management and Budget’s (OMB) Office of Federal Financial Management website at ht tps://www.whitehouse.gov/omb/ office-federal-financial-management. Although many federal agencies issued implementing guidance for new and existing programs receiving COVID-19 funding, the addendum reminds auditors that guidance documents do not create new compliance requirementsandauditorsshouldthereforerefer toa statute, regulation, or terms andconditions of awards as criteria in audit findings. Federal agencies have already begun work on the 2021 Compliance Supplement which will be effective for audits of fiscal years ending June 30, 2021. Information included in the 2020 addendumwill be incorporated into the 2021 Compliance Supplement. Expect to see updates to audit guidance for COVID-19 related programs that were extended by or created under CRRSAA. Single Audit Due Dates Single audits are generally due within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period (2 CFR 200.512(a)). Due to the late issuance of the audit guidance for COVID-19 programs contained in the 2020 Compliance Supplement addendum, OMB included in Appendix VII to the addendum a three-month single audit extension for recipients and subrecipients that received COVID-19 funding with or iginal due dates from October 1, 2020, through June 30, 2021 (i.e., January 1, 2020, through September 30, 2020, fiscal year ends). Recent Changes to Requirements and Standards Single audits must be performed under generally accepted auditing standards, Government Auditing Standards, and the audit requirements of Uniform Guidance. Auditors should be familiar with recent changes to these requirements and whether the changes will impact the first single audits that include COVID-19 funding. For purposes of the single audit, the 2018 revision of Government Auditing Standards is effective for periods ending on or after June 30, 2020. Auditors performing single audits should be aware of the significant changes to the standards for evaluating threats to independence, especially if they perform non-audit services for their clients (i.e., preparing accounting records or financial statements, including the SEFA). Revisions to Uniform Guidance were published on August 13, 2020, with an effective date of November 12, 2020 (85 FR 49506, ht tp://bit.ly/85FR-49506) . Noteworthy changes were made to the procurement standards and closeout provisions, among others. These revisions are not applicable to federal awards issued pr ior to the ef fect ive date, including awards under the CARES Act issued prior to that date. Therefore, auditors evaluating their client’s compliance with the administrative requirements and cost principles in Uniform Guidance should pay close attention to the award date. Any awards made under CRRSAA would be subject to the UniformGuidance revisions, while those awards made under the CARES Act prior to November 12, 2020, will not be subject to those revisions. Recent changes to general ly accepted auditing standards weremade in Statements on Audit ing Standards No. 134–140, originally effective for periods ending on or after December 15, 2020. Statements on Auditing Standards No. 141 says that due Statements on Auditing Standards No. 141 says that due to the COVID-19 pandemic, the effective date of those standards has been delayed and will now take effect for audits of financial statements for periods ending on or after December 15, 2021, with early implementation permitted.