The New Data Collection Form and Important Clearinghouse System Changes

(1)

The New Data Collection

Form and Important

Clearinghouse System

Changes

A Governmental Audit Quality Center Web Event

September 26, 2013

Governmental Audit Quality Center

Trouble Shooting

Troubleshooting Tips

No Audio?

• Ensure that your computer speakers are turned on that the volume is appropriately set

• Check to ensure that audio streaming is enabled on your computer

If the presentation slides stop advancing during the presentation

• Close out of the presentation and re-launch the webcast

If you are still having audio or other technical difficulty

• Check with your IT personnel at your firm to ensure that this event is not being blocked by a firewall

• Call the AICPA Service Center at 888.777.7077

2

Administrative Notes

We encourage you to submit your technical questions – please limit your questions to the content of today’s program

You can submit your questions at any time during this Web event by clicking on the “Q & A” tab on the lower right-hand side of your screen

You can also download slides in PDF or PowerPoint by clicking on “Handouts” tab

(2)

Continuing Professional Education

There will be random participation pop-up markers during the event

To obtain CPE, you must click “OK” on 75% of the participation pop-up markers

If you are not receiving CPE for this event, ignore the pop-up markers

4

Continuing Professional Education

At the end of today’s presentation we will provide steps for obtaining your CPE certificate

Contact the Service Center for help with obtaining CPE at 888.777.7077 or [email protected]

If you are not receiving CPE for this event, ignore the pop-up markers if they appear.

5

Presenters

Paul Fite

Federal Audit Clearinghouse

Eric Formberg, CPA

Plante & Moran PLLC

Tom Sneeringer, CPA

McGladrey LLP

Mark Swanhart

(3)

What we will cover

Overview and Background

Submission Process Changes at the Federal Audit Clearinghouse (FAC)

Changes to be Aware of in the Proposed 2013 Data Collection Form (DCF or the Form) Auditor Challenges Relating to the 2013 Form Issuance

Tips to Avoid Common Filing Errors Key Takeaways/To-Do List

7

Overview and Background

8

Overview and Background

DCF is a federal form that summarizes the results of audits performed under Office of Management and Budget (OMB) Circular A-133, Audits of States, Local

Governments, and Non-Profit Organizations

DCF required to be updated periodically

The FAC is the federal entity that collects the Forms and reporting packages and maintains the database of the completed audits

Today’s presentation to discuss the latest DCF and changes to the FAC system used to submit the Form Overarching Theme: Federal agencies heavily rely on the DCF – auditees and auditors need to get it right!

(4)

Overview and Background

2013 DCF

• Federal Register notice issued in May; comments

were due July 8, 2013

oAccess GAQC Comment Letter

• The new Form and instructions will be applicable for audit periods ending in 2013, 2014, and 2015 • Many significant changes proposed this time around

10

Overview and Background

Second Federal Register Notice expected by mid-October

• Required 30-day final comment period

• Not likely to be many changes as a result of final comment period

New Form expected to be finalized by late November (must be used for all 2013 audits)

11

Overview and Background

2013 DCF – Filing extension provided on FAC Web site

If a single audit for a fiscal period ending in 2013 is due before the 2013 Form is available, auditees will not be able to meet the thirty day deadline for submission prescribed

by OMB Circular A-133 §_.320(a). Therefore, OMB has

granted an extension until December 31, 2013, for reporting packages due to the Clearinghouse before that date. The extension is automatic and there is no approval required. The extension applies only to single audits for the fiscal periods ending in 2013.

(5)

Overview and Background

FAC Submission Web site changes

• New Internet Data Entry System (IDES)

coming

October 7, 2013!

Other Form-related and FAC

changes to look forward to

13

Submission Process

Changes at the FAC

14

New FAC Submission Website Update

Old IDES versus new IDES

New log-in page

Registration - new personal accounts New account home landing page

• Start form, revise form, review form, and view

New report home landing page Other Enhancements

Certification changes PDF requirements Future DCF planning

(6)

Old IDES

Shared Report ID and Password User 2 User 3 User 4 1 Report User 1 16

New IDES – Example 1

Account Login [email protected] Report 3 Report 2 Report

1 Report4

17 [email protected]

Account Login

Report

5

Report

6

New IDES

Example 2

GenericEmail@Auditor

.com Account Login Report 1 Report 2 Report 4 Report 3 [email protected] Account Login [email protected] Account Login

(7)

New Login Page

19

Registration - New Personal Accounts

Simply fill out the required

information, and you will

have access to all the

reports in our database

matched to your e‐mail

address. No more report

ID/password

Combinations

20

Registration - New Personal Accounts

E-mail address log-ins

• Each user must create one account using one e-mail address

• No report ID/password combinations • Previous submissions (2008-2012) are

available in each user account (matched by e-mail address on previous reports)

(8)

Registration - New Personal Accounts

Required Password Email

22

Registration - New Personal Accounts

New Account Passwords

• Must receive required password email (see prior slide) from [email protected] • Password cannot be re-used

• Expires every 60 days, or after 30 days of no activity

• Easy to reset

- Enter email address and follow link on password email

• Only one password reset allowed per day 23

Registration - New Personal Accounts

Password Requirements

• At least 12 characters long (e.g., Auditee2579!)

• Must contain at least one of the following categories:

o Upper case letters (A-Z)

o Lower case letters (a-z)

o Numbers (0-9)

o Special characters from !@#$%^&*()

o No character repeated more than 4 times

(9)

Account Home

25

Account Home - Start New Report

26

(10)

Certification officials are

requiredfor

the auditee

and auditor.

Up to 5

additional

contacts can be

entered for

both the

auditor and

auditee

Account Home - Start New Report

28

Enter the name and e-mail address of each person you want to have access to the report

New Report Home

Account logged

in at time of step

completion Time and date

stamp Only the designated “certifying official” can click certification

buttons. No more signature

codes.

29

Other Enhancements



Eliminated security questions and

answers

• Enter e-mail address to reset your password



Better error messages

• Downloadable list



More validation when submitting

• You must complete the Form before uploading the audit

(11)

Other Enhancements

Improved Spreadsheet Templates

• Templates are available for all pages where data upload is possible

• Download an Excel template customized for each report. Fill it out and upload it to the submission

• Data can be cut or copied from your data file and pasted easily into the Excel template

31

Other Enhancements - Spreadsheet

Templates

Fill out the template manually, or copy and

paste directly from

another database

source. No more .csv

files. Validationssubmission errors will prevent data

32

Certification Changes

No signature codes

Access to certification restricted to

accounts identified as “Certifying

Official” – see slide 27

“Completed by” column to identify

user who completed each step, along

with the date and time – see slide 29

(12)

PDF Requirement

ISSUE: Over 40% of the audits uploaded in 2010 were not text searchable

GOAL: 100% of FY 2014 audits are unlocked, unencrypted to allow copying and printing and 85% of the audit’s pages are text-searchable

Phase 1: Began testing audit uploads in August 2012

Phase 2: All FY 2014 audits must be unlocked, unencrypted and 85% of pages text searchable

34

PDF Requirement – Advance Pass or Fail

Notices with All Current Submissions

35

PDF Requirement

How to create a compliant PDF Single Audit Report Detailed instructions located at:

https://harvester.census.gov/fac/create_pdf.pdf • This document includes the following topics:

What will cause my PDF to be locked or not text searchable? oScanning a physical copy of your audit report oChanging the default security settings of your PDF

How do I create a compliant PDF? oUsing PDF software

oWord Processor, i.e., Microsoft Office 2007, 2010, etc.

Frequently Asked Questions

oHow do I sign a document electronically? How do I create an electronic letterhead?

(13)

Future DCF Planning

Comments on streamlined grants

process proposal may affect the next

Form

Comments on 2013 Form may affect

the next Form

Personally Identifiable Information

Certification (PII) Proposed

Long Term - make all reporting

packages available to the public

37

Changes to be Aware

of in the Proposed 2013

Form

38

Proposed 2013 Form Changes Part I – General Information

• Beginning with 2013 audits, all audit firms must report their Employer Identification Number (EIN)

• Secondary auditors must report their EIN on the secondary auditor contact information page

• Do not use social security numbers. Auditors must obtain EIN for FAC submission purposes

• Obtain EIN at

http://www.irs.gov/Businesses/Small- Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online

(14)

Proposed 2013 Form Changes Part III: Federal Programs

• Identify Loan/Loan Guarantee (Yes/No)

oCFDAs with Loan/Loan Guarantee components and non-Loan/Guarantee components – expenditure detail for each component listed on separate lines

• Standardized Audit Finding Reference Numbers: YYYY-###, (ex. 2014-001, 2014-002, etc.)

oWill not be required for 2013 – rather OMB requests that auditors begin using

oRequired to be implemented in 2014

oReference numbers should match Schedule of Findings and Questioned Costs (SFQC) and audit reports

• Number of Audit Findings on Each Federal Award

40

Proposed 2013 Form Changes – New Items in

Part III: Federal Programs

41

Proposed 2013 Form Changes

Part III, Item 7: Federal Awards Findings Summary

• Columns (a)-(c) automatically populated based on response to Part III, Item 6(k)

• Each federal award audit finding separately described • Type of compliance requirement to be indicated • Type of finding to be indicated:

- Compliance (Modified Opinion or Other Matters) - Internal Control (Material Weakness or Significant

Deficiency); or - Other

(15)

Proposed 2013 Form Changes – New Part III,

Item 7: Federal Awards Findings Summary

43

2014 New

Standard

Format for

2014

New information for

Compliance, Internal Control

and Other Findings

Costs New

Questioned

Costs

Proposed 2013 Form Changes

New Part III, Item 7: Federal Awards Findings Summary

44

There are 9 valid combinations of "Compliance Findings," "Internal Control Findings," and "Other Findings" for each Federal program with findings

Auditor Challenges

Relating to the 2013 Form

Issuance

(16)

Challenges

Obtaining an EIN, if you don’t have one Staff training

• Setting-up personal accounts

Client training

Dealing with the backlog of audits that have been completed prior to the 2013 DCF issuance

• Staffing • Timing • Extra hours/cost

Report timing

• Other audit reporting deadlines/requirements

46

Tips to Avoid Common

Filing Errors

47

Tips to Prepare and Review the Data Collection Form

Part I: General Information

Employer Identification Numbers (EIN)

Have firm EIN accessible Request EIN of secondary auditors

DUNS number:

Ask the client as early in the audit as possible to obtain DUNS number and EIN.

Note: a client may have multiple DUNS numbers Refer clients and staff to the FAC website for frequently asked questions concerning obtaining a DUNS number and other useful information.

(17)

Tips to Prepare and Review the Data Collection Form Part II: Financial Statements

Part II, Item 1 asks for “Type of Audit Report” which refers to the financial statement report (and not the internal control and compliance reports)

The person preparing Part II should be referring to the signed auditor reports to ensure this section is prepared using the final versions and reflects the actual results of the audit Note the clarified terminology in new Form, i.e., “modified” versus “qualified”

49

Tips to Prepare and Review the Data Collection Form Part III: Federal Programs

■

Read the instructions to the new DCF for very useful information

■

The person preparing Part III should be referring to the signed Circular A-133 report and SFQC to ensure this section is prepared using the final versions and reflects the actual results of the audit

■

Item 6(f): Ensure Loan/Loan Guarantees are identified and that CFDAs with loan and non-loan components are listed on separate lines 50

Tips to Prepare and Review the Data Collection Form Part III: Federal Programs

■

Common reconciling items include amounts that may be reported in the footnotes to the schedule of expenditures of federal awards. For example:

oStudent loan outstanding balances

oAdministrative cost allowances

oCommodities

oDonated property

oInterest subsidies

(18)

Red Flags Incorrect DCF Submissions Can Raise

Part I not fully completed The Form was prepared in a hasty and sloppy manner.

Part II wrong box checked The preparer does not understand the nature of the auditor report issued.

Part III items 1-7 wrong boxes checked

The Form was prepared in a hasty and sloppy manner. Auditor may not understand following concepts: low-risk auditee, type of report issued, major programs, or nature of findings reported.

BOTTOM LINE FROM FEDERAL PERSPECTIVE

BIG PROBLEM – FEDERAL AGENCIES RELYING ON INCORRECT INFORMATION!

52

Quality Control Tips for Submission Reviews

Consider using the database to perform a few quality checks

• Check type A program thresholds for your audits (Hint: if you find $500,000 you probably have a problem)

• See if doing any program-specific audits; if so, look at the DCF to determine if only one program or cluster noted

• Randomly drill down into some of your organization’s DCFs to see if any other trends noted

53

Quality Control Tips for Submission Reviews

– Drilling Down Further

Lack of identification of clusters

Improper application of definition of a federal program (awards with same CFDA #)

Missed major program based on type A program 2-year look back

Missed major program based on type A program with a prescribed prior year finding

Inadequate percentage of coverage

Improper determination of low-risk auditee status Type A program threshold calculation errors

(19)

FAC Search Tips

55

FAC Search Tips

56

Key Takeaways/

To-Do List

(20)

Key Takeaways/To Do List

Develop new internal policies for revised submission process and new DCF

Plan and schedule staff training and check with clients for training/information needs

Create personal accounts

Revisit/redefine DCF quality review process Address backlog of completed audits by 12/31/13 Consider completing a few submissions on paper for practice

Ensure ample time in schedules for new submission process and changes to DCF

Coordinate submissions with clients

Make sure information on DCF reflects actual audit results!

58

Questions

?????

59

How do I get my CPE certificate?

Just follow these steps:

1. Log on to CPA2Biz.com

2. Click on “My Account” at the top of the page and enter your CPA2Biz/AICPA username and password

3. Click on “My Web Events” tab

4. Click on “AICPA Learning Center Transcripts and Certificates” link (a new window or tab will open)

5. On the AICPA Learning Center, click on “My Transcript” in the left-hand menu

6. Locate your completed course and click on “Go” to retrieve your certificate.

Please note that it may take up to 24 hours for your certificate to be placed into your account.