Federal Single Audit
Congress passed the Single Audit Act of 1984, as amended by the Single Audit Act Amendments of 1996
("the Act"), to improve state and local governments' financial management of
Federal financial assistance programs, to establish uniform requirements for audits of
Federal financial assistance, to promote efficient and effective use of audit resources
and to ensure that Federal departments rely on and use the audit work performed under the
Act. The Act establishes requirements for audits of the entity's financial statements,
including the Schedule of Expenditures of Federal Awards (SEFA), and for testing and
reporting on internal controls and compliance with laws and regulations relevant to
Federal financial assistance. The Act requires independent auditors to perform the audit
according to Generally Accepted Government Auditing Standards (GAGAS) as published in the
GAO Yellow Book.
State and local governments must have a single audit according to the Act if they
receive Federal financial assistance of $300,000 or more. A single audit consists of an
audit of the financial statements (the General Purpose Financial Statements or GPFS), and
of the Federal Financial Assistance (FFA). Office of Management and Budget (OMB) Circular A-133 specifies
that FFA programs are to be classified as either "Type A" or "Type B"
depending on the total FFA expended by the entity and provides a general explanation of
how to determine the dollar threshold used to distinguish between the two types of
programs. All Type A and all Type B programs whose total expenditures exceed a cutoff
point, the calculation of which is also specified in A-133, will be subject
to a risk analysis that will determine major programs to be audited.
For major programs, the auditor is required to plan and perform tests of controls to
support a low assessed level of control risk regarding the operation of internal control
structure policies and procedures considered relevant in preventing or detecting material
noncompliance with the applicable Federal Financial Assistance (FFA) compliance
requirements. Additionally, the auditor must determine whether the auditee has complied
with laws, regulations, and the provisions of contracts or grant agreements that have a
direct and material effect on each of its major programs. The compliance requirements
applicable to FFA programs can be found in the "OMB Circular
A-133 Compliance Supplement" published by the Federal Office of Management and Budget
(OMB).
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