The number of businesses that received financial assistance from the federal government in 2020 and 2021 is unprecedented. As such, the topic of single audits has been circulating for some time, alongside some confusion regarding who needs a single audit, what guidelines should be followed and how auditors and practitioners can best prepare to assist their clients. As the end of the year approaches, the MICPA is working closely with experts and others to gather critical resources and offer assistance where possible, including tips for working with first-time single audit clients, CPE course offerings and available single audit guidance.
For many businesses, this will be their first time being exposed to a single audit. On the other side of that coin, many practitioners, firms and auditors may require additional assistance and training of their own to contend with the sheer number of clients subject to single audits this tax season. Review these tips for working with first-time single audit clients, including how to communicate with your clients on audit cost and where you can find continuing education courses to ensure your knowledge is up to date.
A huge part will be understanding what kind of funding a client received, as some assistance provided is exempt. The Paycheck Protection Program (PPP), for example, made the most headlines these last 18 months, but is not subjected to single audit, the Journal of Accountancy reports. However, there were several other forms of aid that could trigger a single audit, such as the Economic Injury Disaster Loan (EIDL) and Higher Education Emergency Relief Fund (HEERF) to name a few1. To review the types of funding and their single audit implications, MICPA members can refer to this Single Audit Deck. This free PowerPoint offers insight into the types of funds, entities and situations which are potentially subject to single audits and the key elements of each.
Those familiar with performing single audits know that they are often prone to audit quality issues. The influx of first-time federal aid recipients coupled with some first-time exposure to single audits on the practitioner side all leads to the potential of increased risk. Luckily, multiple resources are currently available to help practitioners, auditors and their respective clients mitigate as much of that risk as possible.
Finally, if your firm is asked to perform a single audit, focus on engagement acceptance to ensure your firm has the right experience, training, and sufficient resources. If your firm’s experience in single audits is not sufficient, the AICPA recommends you decline the engagement or partner with another firm that has single audit experience.
Continue to follow the MICPA’s channels for further developments in the coming weeks and don’t forget to leverage the many resources available through your MICPA membership, including these 55 different options for single audit and yellow book training, including webinars, and our Governmental Accounting & Auditing Conference, to expand your knowledge. For additional support from experts and professionals, members can also log in to MICPA Connect to exchange ideas, tips and insight on this topic and others.
References:
Amato, Neil. “Why Single-Audit Demand is Rising…” Journal of Accountancy. 08 Jul 2021. Accessed on 23 Sept 2021.