By William J. Hayes, managing editor, Pennsylvania CPA Journal

What are the most common deficiencies found by auditors while performing single audits? What deficiencies are most common when performing a peer review? Are there reliable ways that CPAs can improve the efficiency of their audits? Christopher N. Herr, CPA, principal with Maillie LLP in Mont Clare, Pa., will go in depth on these questions and more at the May 31, 2018, PICPA Pennsylvania School District Conference in Philadelphia. Here, he provides a preview of his presentation by answering some top-of-the-mind questions about single audits.

PICPA: What would you say are one or two of the more common deficiencies auditors find while performing a single audit?

Herr: When looking at all the federally funded programs that schools have, deficiencies regarding reporting requirements are by far the most prevalent. The issues can be broken down into two general areas: reports that are not completed accurately, and reports that are not appropriately filed. Inaccurate reports typically include differences between the amounts disclosed on the reports and the amounts on the underlying support, or they simply have no support to substantiate the amounts on the reports. Late or omitted reports account for most of the reports not appropriately filed.

What are one or two steps auditors can take to improve the efficiency of their single audit work?

From an auditor’s perspective, the importance of planning cannot be overstated. Before beginning the fieldwork stage of the audit, the auditor should already have obtained the Schedule of Expenditures of Federal Awards, determined which programs are major programs, and reviewed the grant documents and most recent OMB Compliance Supplement to ensure a complete understanding of the program and the compliance requirements that will need to be audited. At this point, the auditee can be provided with an outline of the programs to be audited and the records and documents that will be needed to conduct the audit. If everyone is prepared in advance, the audit should run much more efficiently.

Is the ability to perform single audits affected in any way by whether you are a larger firm or a smaller one?

So long as the audit firm is competent to perform the single audit, and the engagement team has the appropriate experience and single-audit-specific education, the size of the firm shouldn’t matter. Studies have shown that it’s the size of a firm’s single audit practice and the engagement partner’s qualifications that correlate to quality single audit performance. The overall size of the firm should not be an overriding consideration.

For peer reviewers who are reading this blog, what are some common single audit deficiencies?

A lot of deficiencies found during the peer review process come down to documentation. One common deficiency is an auditor failing to adequately document their understanding of internal controls over all direct and material compliance requirements. Another common deficiency is the auditor’s lack of documentation as to why a compliance requirement may not have been considered direct and material. Regarding the single audit testing, failure to adequately document how sample sizes were determined or to clearly document the actual procedures performed are frequently identified as areas requiring improvement. All the previously mentioned items should be areas of focus for any auditor performing a single audit.

For more information on single audit strategies, check out Christopher N. Herr’s presentation at the May 31, 2018, PICPA Pennsylvania School District Conference. Registration information can be found at www.picpa.org.