In March 2011, the Office of Management and Budget (OMB) issued the 2011 edition of the A-133 Compliance Supplement. The supplement is effective for Single Audits of fiscal years beginning after June 30, 2010, and it supersedes the 2010 Compliance Supplement.
The 2011 Compliance Supplement contains several key changes that will impact most not-for-profit organizations, state and local governments, and colleges and universities receiving federal funding.
The most significant change in the 2011 Compliance Supplement relates to the Federal Funding Accountability and Transparency Act of 2006 (FFATA) and its 2008 amendments.
Under the provisions of FFATA, effective October 1, 2010, all direct recipients of federal non-Recovery Act grants and cooperative agreements must report certain subawards of federal funding within a newly created federal database. (Direct recipients of funding under the American Recovery and Reinvestment Act are subject to separate reporting requirements for subawards.)
For purposes of FFATA, subawards are defined as legal instruments to provide support for the performance of any portion of the substantive project or program for which a recipient received a grant or cooperative agreement. FFATA requires that any subaward of $25,000 or more, as well as any subsequent obligating actions of $25,000 or more, be entered into the FFATA Subaward Reporting System (FSRS) located at www.fsrs.gov.
Information required to be reported includes the date of the subaward, the subaward amount, and the subaward number. This information must be entered into FSRS by the end of the month following the month in which the subaward is made. Once entered, this information is then made available to the public at www.USASpending.gov in order to promote transparency in federal spending.
The 2011 Compliance Supplement mandates that, as part of testing for compliance with reporting requirements, auditors must test for compliance with the reporting requirements of FFATA. In order to assist auditors and auditees in determining whether the FFATA reporting requirements apply to a given federal program, Part 4 of the Compliance Supplement has been revised to indicate whether FFATA is applicable to each program listed.
It should be noted that even if Part 4 of the Compliance Supplement indicates that FFATA applies to a program, an entity may nevertheless be exempt from the reporting requirements because:
The entity was not a direct recipient of the federal funding OR
There were no subawards over the $25,000 threshold
Further Guidance on Recovery Act Programs
The 2011 Compliance Supplement also provides additional guidance on Single Audit requirements as they apply to programs funded by the Recovery Act. The 2010 Compliance indicated that Build America Bonds and extended unemployment benefits funded by the Recovery Act were not subject to Single Audit requirements.
The 2011 Compliance Supplement identifies several additional Recovery Act programs that are exempt from Single Audit requirements, including qualified school construction bonds, grants to states for low-income housing projects in lieu of low-income housing tax credits, payments for specified energy property in lieu of tax credits, and qualified therapeutic discovery projects.
Appendix 7 to the Compliance Supplement also contains a listing of numerous federal grant programs that contain Recovery Act funding (and are therefore subject to the additional Recovery Act compliance requirements) in order to assist auditors and auditees in identifying such programs.
Finally, the 2011 Compliance Supplement specifies that Single Audit findings related to activities funded by the Recovery Act must specifically identify the applicable Recovery Act programs.
Not-for-profit organizations, state and local governments, and colleges and universities receiving federal funding should familiarize themselves with the requirements of the 2011 Compliance Supplement and evaluate how these changes impact their organizations.
In particular, direct recipients of federal funding are strongly advised to ensure that they are adhering to the reporting requirements of FFATA in order to avoid Single Audit findings or other penalties for noncompliance.
Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.
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