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New federal award regulations for government, nonprofit entities

10/28/2015

By Bob Durak, CPA, CGMA, Director of AICPA Center for Plain English Accounting

The Office of Management and Budget has issued information about new regulations related to entities and audits of entities that expend federal awards.

magnifying glass over financial statement

In addition, there is information about the most frequent violations found in the financial statements of governments and not-for-profit entities.

New Uniform Grant Guidance Effective

The Office of Management and Budget (OMB) has issued final guidance, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Grant Guidance). The guidance establishes uniform cost principles and audit requirements for federal awards to nonfederal entities and administrative requirements for all federal grants and cooperative agreements.

Upon the effective date of this guidance, a number of OMB circulars will be superseded, including OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations (OMB Circular A-133).

Effective Date and Timing for Nonfederal Entities. Nonfederal entities will need to implement the new administrative requirements and cost principles for all new federal awards and additional funding to existing awards (referred to as funding increments) made after Dec. 26, 2014.

Changes Affecting Audit Requirements. The changes affecting the auditor performing, and the auditee undergoing, a single audit are numerous. The requirements of OMB Circular A-133 are now found in Subpart F, Audit Requirements, of the Uniform Grant Guidance. Some of the more significant changes found in Subpart F relate to the following:

A number of other revisions that affect reporting by the auditor or auditee in a single audit have been made as well, including:

Frequent Violations Found in Financial Statements of Governments and Not-for-Profits

The following information is based on investigations conducted by the AICPA Professional Ethics Division of governmental and not-for-profit audits over the last two years. Financial statement preparers and auditors of those statements are well-advised to pay careful attention to these matters:

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