By Christine A. Torres, CPA, and John C. Weber, CPA
Entities that receive federal funds are subject to audit requirements in accordance with the Office of Management and Budget (OMB) Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations.” Circular A-133 requires that the auditee submit a data collection form (Form SF-SAC) through the Federal Audit Clearinghouse (FAC). The form typically is revised every three years. A revision was due for the 2013 form, but its release was delayed due to the government shutdown.
The updated form was finally issued in early January. The new version comes with significant changes intended to increase transparency by providing in one easily accessible location more information on grantees that receive federal funding. Failure to comply with the form’s requirements could lead to delayed or blocked funding and even a demand for the return of funding. Here are four of the most important changes grantees should know about and plan for accordingly.
- New Login Procedures
The new FAC login page requires individual personal accounts for all users. Each auditor and auditee must set up a personal account (by entering first name, last name, and email address) before being able to access the system. Previously, every report had its own password, so users needed a separate password for each form they wanted to access. Now, a user has his or her own password and, upon entering it, will find on the account home page links to every form the user is authorized to access. While the requirements for passwords are more complicated (a password must have 12 characters, including an uppercase letter, a lowercase letter, a number, and a special character such as a dollar sign), users will need only a single password to access multiple forms.
- More Information Required for Audit Findings
Each audit finding related to a federal award must be listed on the new Federal Awards Findings page. Moreover, the revised data collection form requires greater detail on audit findings, including specific identification of material weaknesses, significant deficiencies, modification of opinions, and questioned costs. Because the forms are publicly available online, this change means stakeholders can discover more information on audit findings. Before this change, stakeholders could see that there was a finding but could not see the details. This new level of transparency comes with the possibility of negative repercussions such as damage to an entity or official’s reputation.
- Standardized Audit Finding Reference Numbers
Auditors must use a standard format for audit finding reference numbers. The required format is the four-digit audit year, a hyphen, and a three-digit sequence number (for example, 2013-001, 2013-002, up to 2013-999). Standard audit finding reference numbers will be required beginning with audit year 2014.
- Increased Searchability
Previously, many entities scanned their reports and submitted them in an encrypted PDF format, making the forms difficult to search. Beginning in 2014, uploaded audit reports must be unlocked, unencrypted, and at least 85 percent text searchable. As a result, users (as well as stakeholders) will find it much easier to search for and locate relevant information.
OMB’s Filing Extension for 2013
The data collection form is normally due nine months after an entity’s fiscal year-end, and missing the deadline can affect funding and lead to an audit finding. In light of the delayed release of the form, the OMB has granted an extension until Feb. 28, 2014, for all fiscal year 2013 audit packages that were due before that date. The extension is automatic, and no additional request to the OMB for approval is required.
Christine Torres is with Crowe in the Oak Brook, Ill., office. She can be reached at 630.706.2074 or firstname.lastname@example.org.
John Weber is a partner with Crowe in the Tampa, Fla., office. He can be reached at 813.209.2585 or email@example.com.