Revised State Single Audit Act UpdateMay 12, 2010
By Gerald P. Paradis, CPA,CFE
The Office of Policy and Management has long sought changes to the Revised State Single Audit Act, with the goal of making it more in line with the Federal Single Audit rules. Recently, many of these changes were addressed in Public Act 09-7, which was passed in the September 2009 legislative session. The most significant changes deal with the selection of programs to be tested as well as audit thresholds. Additionally, a risk based approach will be implemented which will mirror the process used in federal single audits. Highlights of the changes are below:
A State Single Audit will be required when expenditures of assistance equal or exceed $300,000 in a fiscal year. Previously the limit was $100,000.
Major programs will be tested based on a risk assessment rather than on a numerical calculation. Similar to the federal process, programs will be separated into Type A and Type B and evaluated before testing. This method will allow for a rotation of programs being tested each year. Type A and B dollar amounts or calculations have not yet been finalized. They will be included in the revised Compliance Supplement expected to be issued in June.
Exempt programs will be determined based on ongoing evaluations and will be identified in the Compliance Supplement. It is anticipated that all existing exempt programs will continue to be exempt. Several new programs are also under consideration.
The Compliance Supplement will contain details of the risk-based approach, identification numbers, suggested audit requirements and other guidance for auditors.
Procedures for approving extensions have been modified to allow OPM to request data and conduct meetings prior to approving a request.
Outdated terminology has been replaced; significant deficiency replaces reportable condition.
Clarifies that responsibility for payment of audit fees rests with the auditee when OPM assigns an auditor.
- Allows for a single filing of audit reports with the cognizant agency rather than each state agency.
OPM is now in the process of writing regulations for implementing the new act, which will provide clarity and assist in implementing the legislation. Items being considered include:
- Requiring a Schedule of Prior Audit Findings in the audit report
- Auditor's responsibility for audit follow-up
- Reporting of questioned costs
- Raising the reporting level to $1,000
In addition, OPM is currently preparing a system to allow for electronic submission of reports, eliminating the need to file with each state agency, and creating a central filing with OPM. This will improve access by state agencies and reduce the number of paper reports produced.
It should also be noted that key differences with federal requirements do remain.
- The State Single Audit still requires major program testing coverage of 50% of non-exempt expenditures. There is no provision for being a "low risk auditee."
- Type A and B programs are determined using different criteria.
- The threshold for requiring audits is different ($300,000 vs. $500,000).
- State Single Audits are due six months after year-end.
The new act will provide relief to small entities, especially non-profits, who will no longer need to have an audit done. For some government entities there will be a decrease in the number of programs tested.
More information will be coming out over the next few months as the regulations are finalized and the Compliance Supplement is updated.
If you have questions related to your State Single Audit and implementation of the new law and regulations, please contact me at firstname.lastname@example.org 860.570.6371.