GA&A Chair Message

By Fausto Hinojosa, CPA, CFE

Several months ago I told our CalCPA Board that, as chair of the Fresno Chapter Government Accounting and Auditing Committee, one of the things I wanted to do was write an article for our chapter newsletter. Me and my big mouth! I spent quite a bit of time procrastinating, mostly because I didn’t want to bore you with technical stuff. In the end, I realized that no matter how we slice it, the technical stuff is our business. As long as it doesn’t become our whole life, we should be OK!

In October, I attended the AICPA National Governmental Accounting and Auditing Update Conference in Denver. The conference included various topics of interest to governmental accountants and auditors, but one area in particular was highlighted: Single Audit.

The GAO, OMB and AICPA presented joint sessions addressing concerns regarding Single Audit quality. As those of you who work in this area know, the recent study by the President’s Council on Integrity and Efficiency revealed some significant problems with the quality of these audits. To address some of these quality issues, the AICPA created various task forces dealing with internal controls, sampling, scheduling of federal awards expenditures, reporting findings, CPE and more. These task forces are moving ahead and will be rolling out various practice aids, tools and specific guidance to help auditors improve the quality of audits.

As we wait for the changes to come, the AICPA has already offered the following tips:

• Documentation related to determining major programs should be more robust than just indicating an “H” for high or an “L” for low.
• Documentation of the understanding of internal controls should address each applicable compliance requirement and should cover each COSO element. For example, if 10 of the 14 compliance requirements apply to a program, the auditor should have documentation for each of the five COSO requirements (control environment, risk assessment, information and communication, control activities and monitoring) in relation to each of the 10 compliance requirements.
• Work performed on the SEFA should be documented, possibly in the audit program. These questions should be considered: What audit procedures were performed to determine that the schedule is complete and includes all federal programs? What procedures were performed to determine that the schedule amounts are accurate and agree with the underlying accounting records?
• Each problem identified during testing must be reported as a finding or, if not reported, documentation must clearly indicate why the matter was not reported.
• Someone in the firm should double-check the wording and format of the findings, and the partner with final responsibility should take a step back during review to make sure the findings reflect the audit work performed and that the data collection form also agrees.
• All staff and partners’ mind-set must be that if the work is not documented, it was not done.

I imagine these tips aren’t new to you, but they are a good refresher and remind us of our responsibilities when performing single audits. As we know, a distinctive characteristic of a profession is that it enjoys a high level of public trust. The recent studies evaluating the quality of our work did not reflect well on our profession. Let us move forward and perform our work in an expert manner and by so doing, let us continue to enjoy the public’s trust.

I also want to take this opportunity to invite you to join me in kick-starting our local Governmental Accounting and Auditing Committee. I suggest that we meet for a roundtable discussion to identify topics that are of interest to our local government accounting and auditing community. If you have an interest in this, please e-mail me. Let me give you fair warning though. If you don’t contact me, I will contact you since I know who most of you are!

This entry was posted on Friday, December 12th, 2008 at 11:24 am and is filed under Chapter News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.