Mission Matters Insights
3 Changes for Nonprofits in the A-133 RequirementsDecember 11, 2014
Office of Management and Budget’s (OMB’s) sweeping changes to its rules for single audits is right around the corner.
The effective date for the Office of Management and Budget’s (OMB’s) sweeping changes to its rules for single audits is right around the corner: fiscal years beginning on or after Jan. 1, 2015.
The changes are included in the “Omni Circular” (or “Super Circular”), which supersedes and streamlines requirements from eight existing circulars that have applied to federal awards, including Circular No. A-133, Audits of States, Local Governments, and Non-Profit Organizations.
Here are three significant audit-related changes nonprofits that receive federal funding need to be aware of:
- Threshold for Single Audits- The new rules increase the federal award spending threshold that triggers compliance audits to $750,000 (from $500,000). Nonprofits that spend less are required only to make their records available for review or audit by the federal awarding agency, any pass-through agency and the U.S. Government Accountability Office.
- Major Program Determination- Auditors will continue to use a risk-based approach to determine which programs are “major programs,” but the minimum threshold for the Type A/B program determination will jump to $750,000 from $300,000 for most organizations. Higher thresholds apply as the amount of federal awards expended increases.
- Major Program Audits- All Type A programs that aren’t deemed low-risk must be audited. To be considered low-risk, a Type A program must have been audited in at least one of the two most recent audit periods and, in the most recent period, must not have had:
- Internal control deficiencies identified as material weaknesses,
- A modified auditor’s opinion on compliance, or
- Questioned costs exceeding 5% of the total federal awards expended for the program.
The number of high-risk Type B programs that must be audited will be reduced to at least one-fourth (from at least one-half) of the number of low-risk Type A programs. Risk assessments are required for Type B programs only if they exceed 25% of the applicable Type A threshold.
Stay tuned for additional information on these changes. Until then, if you have any questions about the changes going into effect in 2015 and how they affect your organization, please contact us.