Auditing / government

New guidelines unveiled by the Office of Management and Budget (OMB) raise a key threshold for compliance audits of entities that receive federal award money from $500,000 per fiscal year to $750,000 per fiscal year.

Among other things, the new rules raise the federal awards threshold that triggers compliance audits currently performed under OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, which are also referred to as single audits or Circular A-133 audits.

As a result of the new rules, states, local governments, and not-for-profit entities will be required to undergo a single audit if they spend $750,000 or more in federal awards in a fiscal year.

Nonfederal entities that spend less than $750,000 in a fiscal year will be required to make records available for review or audit by appropriate officials of the federal agency, passthrough entity, and the U.S. Government Accountability Office.

Approximately 5,000 nonfederal entities will be relieved of the single-audit requirement as a result of the higher threshold. The guidelines are available at tinyurl.com/ncprlw8.

The comprehensive new rules also contain numerous other changes to the requirements for entities spending federal awards and their auditors.

Raising the threshold is part of a larger federal effort to reduce administrative burden, waste, fraud, and abuse. The new rules combine eight previously separate sets of OMB guidance into one for entities that receive a portion of the $600 billion in federal grants that are awarded annually.

The new rules are expected to take effect for single audits of fiscal years beginning on or after Jan. 1, 2015, according to an alert from the AICPA Governmental Audit Quality Center to its members.