Federal Single Audit Case

• In Event: Breakfast/Research Roundtable Session
  In Roundtable Session: Table 3

Abstract

This educational case focuses on the planning stage of a Federal Single Audit to develop an understanding of the applicability and requirements it entails. Federal funding continues to be a major source of revenue for most Not-For-Profit organizations, as well as state governments. Outside of a brief mention in some governmental accounting textbooks accounting majors receive little preparation for this important audit market. The recent AICPA report “Enhancing Audit Quality: 2017 Highlights and Progress” cites the continuing deficiencies in Federal Single Audits by CPAs due to inadequate testing of compliance provisions.
This case requires students to understand the differences between Governmental (GAGAS) and Federal Single Audits and traditional (GAAS) financial statement audits. By focusing on the additional requirements, specifically evaluation of internal controls and specific compliance requirements students gain an understanding of CPA’s responsibility for assessing the quality of and reporting on deficiencies internal controls required under GAGAS. The case requires students to determine if an entity falls under the requirements of Federal Single Audit, and thus subject to its numerous compliance provisions. The case develops familiarity with Curricular A-133 program matrix and then specific program compliance provisions and suggested audit procedures.
The case is flexible in the amount of complexity and thus time required to complete. For example completion of just initial planning requires just 4 to 6 hours while the development of a detailed audit program can involve 10 to 15 hours depending on the number of programs and their respective requirements. My experience over the past decade using the case in a senior level audit course has been very successful at developing both an understanding of the Federal Single Audit’s requirements as well as knowledge about its applicability and specific audit requirements. In fact, numerous alumni have commented how valuable having this early exposure to the Federal Single Audit has been to their professional careers.

Author

• Charles Sparks, University of Alaska-Fairbanks