Posted By Christina Bell, CPA
On May 5, 2020, the Governmental Audit Quality Center (GAQC) issued GAQC Alert No. 404 which provides important governmental auditing updates related to COVID-19. GAQC Alert No. 404 included the following:
1) Guidance on SBA PPP Loans and Subjectivity to Uniform Guidance Single Audit Requirements
GAQC Alert No. 404 states that based on the GAQC’s discussions with the SBA, they have been informed that PPP loans, which are administered under the 7(a) guaranty loan program and provided to entities through local financial institutions, will NOT be subject to uniform guidance single audit requirements.
2) Guidance on SBA EIDL Program and Subjectivity to Uniform Guidance Single Audit Requirements
GAQC Alert No. 404 states that based on the GAQC’s discussions with the SBA, they have been informed that these loans disbursed from the SBA directly to loan recipients are considered federal financial assistance and ARE subject to uniform guidance single audit requirements. A single audit is an audit of a non-federal entity (typically a state, local government, Indian tribe, or nonprofit) that expends $750,000 or more in federal funds in one year. A single audit is intended to provide assurance to the Federal Government that a non-federal entity has adequate internal controls in place and is complying with program requirements.
3) Federal Audit Clearinghouse (FAC) Single Audit Reporting Package
Entities who had not filed their single audits with the FAC as of March 19, 2020, for fiscal year-end through June 30, 2020, were granted an automatic 6-month delay beyond their normal due date through an OMB Memorandum. The FAC is requesting that entities include a reference to the memorandum in their audit reporting packages so that Federal agencies and pass-through entities are informed of the extension. The GAQC has reached out to the OMB for confirmation of this request made by the FAC, as well as a question about where in the reporting package this notification should be placed.
4) HUD COVID-19 Extensions
HUD’s Real Estate Assessment Center (REAC) has further extended the due dates of all submissions originally due March 31, 2020, and April 30, 2020, to June 30, 2020.
5) Delay of Auditing Standards
In May 2020 SAS 141 was issued and provides a one year delay for implementing SAS Nos. 134-140 to provide relief to auditors amid the challenges created by the COVID-19 pandemic. SAS Nos. 134 -140 will now be effective for audits of financial statements for periods ending on or after December 15, 2021 (previously they would have been effective for periods ending on or after December 15, 2020).
- SAS 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, as amended
- SAS 135, Omnibus Statement on Auditing Standards—2019
- SAS 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA, as amended
- SAS 137, The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports SAS 138, Amendments to the Description of the Concept of Materiality
- SAS 139, Amendments to AU-C Sections 800, 805, and 810 to Incorporate Auditor Reporting Changes From SAS No. 134
- SAS 140, Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137
If you have any questions regarding these updates or how COVID-19 will directly impact the reporting requirements of your organization, visit our COVID-19 Resources Center or contact a member of our nonprofit team.