Sneak Preview: Audit Groups Express Concerns About Proposed Uniform Guidance Changes
(The following was excerpted from a recent article in the Single Audit Information Service.) Organizations representing auditors and state financial officials, in recently submitted comments, expressed concern with the Office of Management and Budget’s (OMB) proposed revisions to the uniform guidance (2 C.F.R. Part 200), particularly in respect to topics such as internal controls, period of performance and reporting abuse of federal funds.
Another key issue of debate was a proposed provision to conduct a single audit quality evaluation project every six years starting with audits submitted in calendar year 2021.
OMB received a total of 215 comments as of the March 23 deadline date on the proposed revisions of the uniform guidance, as well as on other guidance in Title 2 of the Code of Federal Regulations, including 2 C.F.R. Parts 25 and 170 and the addition of a new 2 C.F.R. Part 183 on Never Contract with the Enemy. The comments were submitted by a wide range of stakeholders including individuals; consultants; federal, state and local officials; tribal organizations; universities and research university associations; auditors and other entities.
In a 16-page letter listing its many concerns, the American Institute of Certified Public Accountants (AICPA) addressed revisions proposed throughout the guidance. It particularly objected to OMB’s amended definitions in Subpart A for “internal controls” (changes in italics) that state, “internal controls for nonfederal entities means processes, designed and implemented by nonfederal entities, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: (1) effectiveness and efficiency of operations; (2) reliability of reporting for internal and external use; and (3) compliance with applicable laws and regulations. OMB would further change the definition of “internal control over compliance requirements for federal awards” to state that “federal awarding agencies are required to follow internal control compliance requirements located in OMB Circular A-123.”
“We strongly recommend that OMB not make the proposed changes to these definitions,” AICPA stated. “The changes that were made make ‘internal control’ apply to nonfederal entities and ‘internal control over compliance for federal awards’ apply to federal awarding agencies. The existing definitions relate both terms to internal control at the nonfederal entity level. In particular, the revision to the definition relating to internal control over compliance is problematic because ‘internal control over compliance’ is used elsewhere in the uniform guidance (e.g., §§200.514, 200.515) to describe auditor responsibilities over nonfederal entity internal control over compliance.”
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