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The AICPA Governmental Audit Quality Center (GAQC or Center) recently completed its fourth year of operation since launching on September 27, 2004. This GAQC Update provides a brief summary of the year's activities and major milestones that the GAQC has achieved. We urge you to carefully review this newsletter to ensure you are aware of all of the resources that the Center has to offer your firm, as well as important updates on activities relating to the federal study on single audit quality.
The GAQC staff and GAQC Executive Committee have worked extensively with numerous regulators and stakeholders in the governmental audit community to address governmental audit quality issues, especially related to the single audit. These efforts have strengthened the GAQC's reputation as an organization committed to improving governmental audit quality. We appreciate our members' commitment to governmental audit quality and will continue to work on your behalf.
Resources
The Center continues to build value for member firms. We are pleased to report that during this past year we were able to offer continuing professional education (CPE) for our live member-only conference calls and our annual required Webcast in response to member feedback. We will continue to strive to deliver timely, relevant topics to our members that can be accessed as easily as possible.
We continue to develop resources and benefits for members to use in strengthening their governmental audit practices. The GAQC Web site is recognized as a single source for governmental audit resources by members and the audit community in general. We expanded the GAQC Web site to include a HUD Information Web page that summarizes U.S. Department of Housing and Urban Development (HUD) news, information about HUD programs, available HUD-related AICPA CPE, key Web links, and HUD points of contact. We have received a lot of great feedback from our members regarding this addition, as well as on the GAQC Web site as whole. We encourage you to take full advantage of it. Other governmental audit resources that are included on the GAQC Web site include the following:
· Archives of GAQC Alerts and GAQC Update newsletters
· HUD Information Web page
· Links to the various 2008 governmental audit peer review checklists.
Your firm should consider using the relevant checklists as part of your firm's Inspection and Quality Control Programs.
· A summary of the various AICPA events, conferences, and webcasts relating to governmental auditing
· Archived GAQC member-only conference calls and the required Center Webcast. We hosted 7 Center member calls, 5 of which provided optional CPE and also offered CPE for our annual required Webcast as follows (click here to see a listing of all previous calls):
1. Application of SAS No. 112 in a Single Audit
2. Schedule of Expenditures of Federal Awards – Reporting Improvements and Suggested Procedure
3. NPO Endowments: Enhanced Disclosures and UPMIFA Accounting Guidance
4. Implementing the Risk Assessment Standards in a State or Local Government Financial Statement Audit
5. Tax-Exempt Bonds – Accounting and Auditing Considerations in the Current Environment
6. OPEB Financial Reporting for Plans and Employers and Related Audit Issues
7. Sampling in a Single Audit Environment
8. 2008 Governmental Audit Quality Center Annual Webcast Update (as designated audit quality partner for your firm you are required to view this Webcast)
Member Communications. The Center continued to keep members informed through the issuance of 29 timely GAQC Alerts and 4 periodic GAQC Update newsletters. Alerts are designed to provide members with the very latest time sensitive information about governmental audit quality. For example, the GAQC issued Alerts announcing the issuance of the new Data Collection Form and required electronic submission process; revisions to the HUD Guide; the release of SAS 115; and recent GAO interim guidance on SAS No. 115 and SSAE No. 115.
GAQC Update newsletters are released periodically to provide more routine news, helpful information about governmental audit quality, and updates on Center activities. To view all previous archived GAQC Alerts and GAQC Update newsletters, click here.
Community Building. The Center encourages collaboration and community building through an exclusive online member discussion forum (you must log-in to the Center Web site to access the Forum). The Forum includes many topics under which members can exchange information on best practices, regulatory issues, and other matters in governmental accounting and auditing. Topics are organized into one of the following six categories: Yellow Book/Government Auditing Standards; Office of Management and Budget (OMB) Circular A-133 Audits; Specific Federal Agency Requirements; State & Local Accounting; Not for Profit; and GAQC Membership. We encourage member firms to consider posting questions to the Forum and periodically reviewing its contents.
Technical Guidance. The Center continues to develop tools and information to assist members with their governmental audit practices. For example, the GAQC member-only conference calls (listed above) are very popular tools for communicating guidance and information on how to improve various aspects of audit quality. These calls are archived and include speaker biographies and presentation slides. The archived calls are great tools for firms to use for internal firm training and to help new staff prepare and learn about governmental auditing. Additionally, the Center's 2008 annual required Webcast held on April 29, 2008, is available in an archived format on the GAQC Web site for access by all designated audit quality partners and member firms' staff. Further, the GAQC team routinely assists members with practice questions which are submitted to the GAQC mailbox.
Marketing Support. The Center staff, its Executive Committee, and fellow members help promote the Center and members firms via exhibits at various regulator meetings, conferences, and speaking engagements. Center member lists (see the "Awareness Building" section below) are on the GAQC Web site and paper copies are provided to the public at various venues.
We would like to remind our members to take advantage of the Marketing Toolkit and Marketing Resource Center in promoting their governmental audit practices. These resources provide tools to promote the benefits of your governmental and/or not-for-profit organizations (NPO) audit services and your membership in the GAQC to your staff, clients, and your community. Some of the tools include sample text intended for your Web site to promote your governmental and/or NPO audit services and to explain the benefits a client receives as a result of your GAQC membership; marketing strategies to assist in the growth of your firms' governmental and/or NPO audit practice; and networking strategies.
Another important aspect of the Toolkit is an archived GAQC hosted conference call titled, Developing a Successful Audit Niche Practice. The call will assist you in learning how to apply strategic insight and strong marketing execution to ensure the success of your niche governmental audit practice.
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Advocacy Efforts
The GAQC team and the GAQC Executive Committee routinely interact with standard setters, regulators, and other governmental stakeholders. Our team has devoted a great deal of effort over the last year responding to the federal study on single audit quality (PCIE report), as well as preparing comment letters to various entities to provide input on standards and regulations that will affect governmental auditing.
The GAQC also co-sponsors a semi-annual Single Audit Roundtable that brings Federal Inspectors General, state auditors, and practitioners together to discuss single audit practice issues, changes in guidance, and audit quality matters.
Single Audit Quality Activities. In response to the PCIE report, the AICPA has formed seven task forces to examine the PCIE report findings and recommendations which are described below. These task forces have been meeting since October, 2007 and are studying the relevant issues. The goal of the task forces is to develop solutions to the detailed findings in the PCIE report and to provide guidance for auditors. These task forces are working with the Auditing Standards Board (ASB), OMB, and other federal agencies as necessary to ensure that all relevant parties are involved.
Sampling and Materiality Issues in a Single Audit Environment. The purpose of this task force is to respond to the audit quality issues in the PCIE report that relate to sampling and materiality. This task force is developing a new chapter for the AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits (GAS and A-133 Guide) to address the many sampling considerations in a single audit environment. It will work closely with the ASB to ensure that any guidance issued is consistent with current auditing standards, as well as the AICPA Audit Guide, Audit Sampling. The current plan is for the new chapter to be added to the 2009 version of the GAS and A-133 Guide.
Internal Control over Compliance and Compliance Responsibilities in a Single Audit Environment. The purpose of this task force is to respond to the audit quality issues in the PCIE report that relate to the auditor's responsibilities for internal control over compliance—both in gaining an understanding and testing of internal control—and compliance testing. As a first step, changes were made to Chapter 9, Consideration of Internal Control Over Compliance for Major Programs, and Chapter 10, Compliance Auditing Applicable to Major Programs, of the 2008 GAS and A-133 Guide to enhance the discussion of the auditor's responsibilities for both internal control over compliance and compliance. Additionally, this task force is developing illustrative audit documentation to assist auditors in documenting their understanding of internal control over compliance and related testing of both internal control and compliance.
SEFA Reporting Issues. The purpose of this task force is to respond to the audit quality issues in the PCIE report that relate to the auditor's reporting on the Schedule of Expenditures of Federal Awards (SEFA). As a first step, changes were made to Chapter 7, Schedule of Expenditures of Federal Awards, of the 2008 GAS and A-133 Guide to enhance the discussion of the auditor's responsibilities for testing and reporting on the SEFA. Additionally, this task force is developing an illustrative audit program to assist auditors in documenting the procedures performed on the SEFA and an illustrative checklist to document that the SEFA contains all of the required elements.
Reporting Audit Findings in a Single Audit. The purpose of this task force is to respond to the audit quality issues in the PCIE report that relate to the auditor's reporting of findings. The task force is examining issues related to when audit findings must be reported and the elements to include in presenting findings. The task force is developing an illustrative findings template to assist auditors in documenting and evaluating their findings and ensuring that their finding write-ups include all required elements.
Single Audit Training Needs and CPE Evaluation. The purpose of this task force is twofold; both objectives are necessary in light of the recommendations in the PCIE report proposing that OMB consider requiring 16-24 hours of single audit training as a prerequisite to performing single audits. The first objective is to develop appropriate best practice training curriculums for auditors performing single audits at various staff levels. The second objective is to evaluate current AICPA CPE offerings relating to single audits from a number of perspectives to ensure high quality training is available. The task force has developed a white paper summarizing its recommendations relating to single audit training which it has submitted to OMB for its consideration as it determines whether to make a potential future change to Circular A-133 to add a single audit training requirement.
Practice Monitoring. This task force is studying the results of the PCIE report to determine ways in which the peer review process can aid in enhancing the quality and performance of Circular A-133 audits by member firms. The task force is in the first phase of its work, having recently met with the various federal agencies that perform quality control reviews (QCRs) to help the AICPA better understand the QCR processes across federal agencies and to assist the Inspectors General in better understanding the peer review process. The task force anticipates presenting specific recommendations for actions at the Peer Review Board's early 2009 meeting so that its recommendations can potentially be implemented in the performance of 2009 peer reviews.
SAS No. 74 Revisions. This task force is considering what revisions are needed to SAS No. 74, Compliance Auditing Considerations in Audits of Governmental Entities and Recipients of Governmental Financial Assistance, as a result of the PCIE report. Because this project will result in a number of clarifications and enhancements to SAS No. 74, formal due process is required. An exposure draft is expected to be issued in the next few weeks, with a final standard to be issued in 2009. Upon issuance, any appropriate changes needed to the GAS and A-133 Guide will be made as a conforming change.
You should watch the GAQC Web site for further updates and new developments relating to these AICPA task forces. Further, the federal community, through OMB, has launched its own task forces responding to the PCIE report. One or more of the OMB task forces could result in proposed revisions in Circular A-133 over the course of the next year. We will keep you informed about developments in this area through future GAQC Alerts and the GAQC Web site.
Comment Letters. The GAQC continuously monitors standard setting activities that may affect its constituents. Over the past year we have been involved in commenting on 3 GASB exposure drafts. Our comment letters to the GASB can be accessed by clicking here. We also provided comments to OMB on the proposed revisions to the Data Collection Form and the new required electronic submission process. We also notified our members of HUD's proposal to create an independent public accountant roster and provided our comprehensive feedback to HUD on the proposal. We are informally involved in reviewing many of the audit guides issued by federal regulators. We generally make our members aware of our various comment letters through GAQC Update newsletters.
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Membership Growth
The GAQC team is extremely pleased to report that Center membership stands at 1,105 firms from 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. This represents an increase of over 230 firms, or approximately 28%, from the same time last year. Using the Federal Audit Clearinghouse (FAC) database for the year 2006 (the latest year with complete submission data), the GAQC staff has determined that our Center member firms account for approximately 83% of the total federal expenditures covered in single audits performed by CPA firms.
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Awareness Building
Member Listing. All stakeholders, including purchasers of governmental audit services, are able to identify and locate current Center members by visiting the GAQC Web site through our online member listings sorted by both firm name and state.
Conference Presence and Other Promotion. We continue to work to increase awareness of the Center and the importance of governmental audit quality with key stakeholder groups including CPA firms, purchasers of governmental audit services, and the various federal and state regulatory agencies associated with governmental audits. GAQC staff and GAQC Executive Committee members participate in numerous AICPA and state CPA society conferences promoting Center membership and the importance of governmental audit quality to both auditors and purchasers of audit services. We presented sessions on audit quality and the role of the GAQC at over 15 state society conferences and 6 AICPA national conferences over the past year. The GAQC staff also manned our GAQC exhibitor booth and promoted the Center at various 2008 AICPA conferences. At those conferences, information on the Center and its members was provided, as well as information to educate purchasers of audit services about the importance of their role in obtaining a quality audit.
We also extended our reach into the government audit community by sending an Alert to every auditor of record in the FAC with tips to avoid the material reporting errors cited in the federal study on single audit quality, reaching over 15,000 firms.
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What Members Are Saying About the Center
Member feedback has been very positive when it comes to the perceived value of Center membership. Our members regularly tell us that they find GAQC Alerts and GAQC Update newsletters to be one of the best aspects of the Center, as well as the annual Webcast and periodic Center conference calls. Many also find the Center Web site to be a valuable resource. Below are just a few of the many comments members have shared with us.
I still think the Center is the greatest. You make it as easy as possible (in this complicated world) to try to stay on top of changes for a very reasonable fee. It's difficult in a small firm. You are my safety net. Just keep doing what you're doing Conference calls have been excellent! Keeping them on point and around two hours provides good information on current and relevant topics that have been identified.
I applaud all of the Center's efforts - it is unfortunate that more firms doing this type of work do not join.
I have never enjoyed a membership more than this one. Thank you for all that you do. I love the webcasts and conference calls and our auditors do as well.
We find the webcasts and conference calls to be very useful.
The information, tools, email updates/alerts and other information you provide are very good quality and informative for us in meeting our needs.
The webcasts, conference calls and illustrative A-133 report examples on the website are great.
You do an excellent job. You are a valuable source for a small firm like mine that does several audits.
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Looking Ahead
The next year will likely prove to be another active year. We welcome the new Chair of the GAQC Executive Committee, Corey Arvizu. Corey is a partner with Heinfeld, Meech & Co. P.C. and is located in Tucson, AZ. We would like to extend our sincere appreciation to Mandy Nelson of KPMG LLP, our outgoing Chair. Mandy has chaired the Executive Committee since the Center's inception in 2004 and has been an instrumental part of the Center's success.
A sampling of the activities that are on the horizon follow:
· Completion of many of our activities and task forces established in response to the PCIE report.
· Continued timely communication with Center members on the latest happenings, hot topics, and other governmental audit issues, including the outcomes of the various task forces established in response to the PCIE report.
· More conference calls, the annual required Webcast, tools, and articles on important audit quality topics.
· Assistance and guidance relating to the implementation of new AICPA auditing standards and the 2007 revision to Government Auditing Standards.
· Regular interaction with regulators and other governmental audit stakeholders.
· Representation of our members in the governmental audit quality arena, particularly as it relates to any potential future legislation or regulatory actions associated with governmental auditing.
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Take Advantage of Your Membership
The Center encourages each member firm to take advantage of the Center's resources and member benefits that are designed to enhance your firm's governmental audit practice. As a member of the GAQC community, we urge you to read our GAQC Alerts and GAQC Update newsletters, participate in the Center's required Webcasts and member-only conference calls, utilize the Center's Web site and online member discussion forum, attend AICPA Governmental and NPO conferences, and share your feedback with the Center staff at gaqc@aicpa.org. As a reminder, instructions for providing your staff with full access to the GAQC Web site are included in the Center membership Q&A document.
Further, remember that in recognition of our members' commitment to performing quality audits, the Center offers savings on professional liability insurance. The AICPA Professional Liability Insurance Program will award a new premium credit to firms that are members of the Center. Aon Insurance Services, CNA, and the AICPA have joined forces to offer firms a 5% premium credit for membership in either the GAQC or the Employee Benefit Plan Audit Quality Center (EBPAQC). Firms who are members of both Audit Quality Centers will receive up to a 10% premium credit (maximum amount of the credits is $400 per policy). For more information about the Premium Credit Program, click here or visit the GAQC Web site.
Thank you for joining the Center and demonstrating your commitment to improving governmental audit quality. We look forward to working with you in another prosperous year and helping your firm provide quality governmental audit services.
Sincerely,
AICPA Governmental Audit Quality Center
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