Report on National Single Audit Sampling Project

The 2009 edition of the AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits, (A-133 Guide) was recently released. The A-133 Guide includes a new chapter, “Audit Sampling Considerations of Circular A-133 Compliance Audits,” which provides practitioners with guidance regarding sampling in the single audit environment.  This guidance was issued primarily in response to the results of a federal study regarding the quality of audits performed in accordance with Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations (Circular A-133). 

The resulting Report on National Single Audit Sampling Project was issued in June 2007 by the President’s Council on Integrity and Efficiency (PCIE). Among the deficiencies noted in the PCIE report are deficiencies in:  understanding and testing of internal control over compliance; risk assessments as part of the major program determination; and the presentation and auditing of schedules of expenditures of federal awards.  The report recommended a three-pronged approach to improving audit quality, one of which was to revise and improve single audit criteria, standards, and guidance to address the identified deficiencies. As a result of the PCIE report, the AICPA Government Audit Quality Center (GAQC) established a task force, which included representatives of McGladrey & Pullen, LLP, to respond to those recommendations relating to sampling.  The new A-133 Guide chapter, which was cleared by the AICPA Auditing Standards Board and federal agency representatives, is a result of the work performed by the GAQC task force. 

The new chapter, “Audit Sampling Considerations of Circular A-133 Compliance Audits,” provides guidance about the application of sampling in a single audit; planning considerations; suggested minimum sample sizes; sample selection methods; evaluation considerations for control deviations and compliance exceptions; and documentation elements relating to sampling.  Although this guidance is aimed at practitioners, it is important that auditees understand the risk analysis process undertaken by their audit firm when determining the nature and extent of A-133 testing to be performed and the potential impact on the audit process.
Because auditing guidance contained in an AICPA Audit Guide is considered an interpretative publication, the

A-133 Guide was effective upon issuance.  However, many firms, including McGladrey & Pullen, LLP, have already adopted these provisions in anticipation of an earlier release of the Guide.  The GAQC has developed an executive summary of the new chapter.  Although the new chapter provides much more context and detail for sampling considerations, the executive summary serves as a good overview of the changes.

Single Audit Practice Guides
The executive summary, as well as additional information regarding the process and individuals involved in the new chapter, can be accessed on the GAQC’s Web site. The full A-133 Guide is available through the AICPA.