Auditee Responsibilities in an OMB A-133 Audit

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Table of Contents

Auditees’ Responsibilities When a Finding is Identified
Auditees’ Reporting Responsibilities During the Year of Audit
Auditees’ Reporting Responsibilities in Subsequent Years
Conclusion
References

An A-133 audit is a requirement under the Office of Management and Budget (OMB) for all Non-Governmental Organizations (NGOs) that receive more than US$ 500,000 per year. Non-profit-making agencies eligible for United States of America government (USG) funds have specific responsibilities stipulated under OMB A-133. As revealed in this paper, understanding auditees’ reporting responsibilities, especially when an auditor identifies a finding, paves the way for a successful assessment. These obligations may be classified by two broad categories that span the year of an audit and the post-audit period.

Auditees’ Responsibilities When a Finding is Identified

According to Ashenfarb (2018), the most important obligation required of an auditee before an OMB A-133 review is the preparation of the Schedule of Expenditures of Federal Awards (SEFA). In line with the American administration regulation under the OMB circular A-133, non-profit-based companies are responsible for designing the SEFA framework. From the OMB viewpoint, since auditees are best placed to identify federal awards and any appropriate terms, they are obliged to share information on all USG grants under their care upon request by an auditor to substantiate the existence of a finding (Garven, Beck, & Parsons, 2018).

In addition to publishing crucial compliance requirements applicable to each of the awards, auditees are required to respond to the finding by accounting for all funds expended during the awarding process (Ashenfarb, 2018). They also identify any pass-through companies.

Auditees’ Reporting Responsibilities During the Year of Audit

Moreover, the auditee has a responsibility to prepare fiscal reports and footnotes, which accurately reflect the respective organization’s financial position, statement of activities, changes in net assets and cash flows for the year under review (Tysiac, 2016).

The auditee has a duty to justify the establishment of internal controls over federal awards and provide reasonable assurance that funds are managed in agreement with laws, regulations, and the provisions of contracts or grant pacts signed between USG and company being assessed (Ashenfarb, 2018). These checks seek to confirm that the auditee has complied with all policies that govern each program or contract. According to Tysiac (2016), it is the duty of the auditee to make adequate preparations before the inspection by informing concerned staff, appointing the lead team to meet the audit team, availing the required resources, and providing access to the premises.

Auditees’ Reporting Responsibilities in Subsequent Years

During the post-audit period, the auditee is responsible for writing management responses on any findings and recommendations made by the auditor. These replies should include suggested corrective actions and their respective execution timelines. The auditee will follow-up to ensure audit recommendations are implemented by taking corrective actions on all audit findings (Ashenfarb, 2018).

The auditee is obliged to prepare a summary schedule of prior audit queries and the measures put in place to ensure compliance in subsequent years. Further the auditee will provide a written acknowledgement of responsibility for the content of the Schedule of Expenditures of Federal Awards in accordance with OMB A-133 requirements, including expenses reported by its sub-awardees (Garven et al., 2018). They are also expected to electronically certify and submit the reporting package within a specified timeframe after the receipt of the auditor’s dossier.

Conclusion

An auditee has a crucial role to play during the year of audit findings and the subsequent period. As revealed above, in addition to presenting any requested documents, the auditee should cooperate with auditors for an efficient assessment. For any audit issue not resolved from prior audit, the auditee should provide a reasonable explanation indicating any plan of action to mitigate current risks.

References

Ashenfarb, D. C. (2018). Identifying deficiencies in single audits: Preparing for the audit quality study. The CPA Journal, 88(4), 34-38.

Garven, S. A., Beck, A. W., & Parsons, L. M. (2018). Are audit-related factors associated with financial reporting quality in nonprofit organizations? Auditing: A Journal of Practice & Theory, 37, 49-68. Web.

Tysiac, K. (2016). 11 tips for success with single audits: Extra care is essential as new guidelines take effect. Journal of Accountancy, 222(5), 40-45.

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Auditee Responsibilities in an OMB A-133 Audit

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