Single Audits M8

Question 1

What type of opinion is expressed in Single Audit Act Reports?

Answer 1

When a CPA has detected noncompliance with requirements that have a material effect on that program, the auditor should express a qualified or adverse opinion ONLY.

Question 2

What is the risk-based approach designed to do in a Single Audit Act?

Answer 2

• Is designed to focus the auditor’s tests of federal financial assistance on the programs with the highest risk.

Question 3

How to determine materiality under Single Audit act vs. GAAS, vs. GAGAs?

Answer 3

SINGLE AUDIT

• Materiality is determined separately for each major federal financial assistance program, the auditor should express either a qualified or adverse opinion on compliance.
• Reasonable assurance (in the form of an opinion) is provided on the
  compliance requirements for major programs.

GAAS

• Materiality is determined in relation to the financial statements taken as a whole.

GAGAS

• Materiality levels may be lower due to the public accountability of the entity, the various legal requirements, and the visibility and sensitivity of governmental programs, activities, and functions.

Question 4

Which cognizant agency is most likely to be assigned to a auditee?

Answer 4

A cognizant agency for the audit is typically the federal awarding agency that provides the most amount of direct funding to a nonfederal entity.

Question 5

What is a sub-recipient?

Answer 5

• A nonfederal entity that expends (receives) federal financial assistance administered by another entity to carry out a federal program. (For example, a state might receive federal funds and in turn provides those funds to a not-for-profit organization to accomplish an objective (e.g., mental health care, homeless relief, etc.). The not-for-profit organization would be the sub recipient.
• A nonfederal entity that receives a grant award and, in turn, contracts or provides that award to another entity to carry out the program would be a sub-recipient.

Question 6

What is the difference in a internal control over compliance audit vs. internal control over compliance in major programs?

Answer 6

• No opinion is issued for the internl control audit over financial reporting.
• There IS an OPINION on internal control over compliance on major programs - Single Audit.