Federal Auditing Information Service for Higher Education

Published by NACUBO

Federal Auditing Information Service for Higher Education

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Federal Auditing Information Service for Higher Education

Annual Subscription Includes:
• Web access to 22 narrative chapters, newsletter archives, and pertinent government documents
• Monthly print newsletters (10 issues)

Annual Subscription Price:
NACUBO Member: $419
Non-Member: $519

ISBN: 1-933801-50-6

Pub code: FAS

The higher education community has always been vitally concerned with accuracy and accountability in financial reporting. But today's pressures on auditors — and in fact everyone involved in the auditing process — are more intense than ever and come from every direction possible, including the Office of Inspector General (OIG), the media, the GAO, Congress, community and political leaders, and accounting and consulting firms themselves, to name a few. Federal Auditing Information Service for Higher Education provides timely, authoritative information to help you prepare for and manage audits mandated by the federal government.

Published by NACUBO in conjunction with AIS, Federal Auditing Information Service for Higher Education is an easy-to-use information system designed especially for college and university business officers. It provides the practical assistance you need to:

Prepare for and manage your institution's annual OMB Circular A-133 examination of its expenditure of federal funds;
Deal with IRS audits related to quarterly and annual returns, tax-exempt status, unrelated business income, employee vs. independent contractor issues, FICA and other student-employment related issues;
Handle unexpected visits or requests from representatives of federal OIGs, the GAO, the Defense Contract Audit Agency and other agencies;
Manage audits of federally sponsored student financial aid programs;
Have easy access to all federal auditing requirements; and
Deal with the ongoing revolution in the auditing profession.

As a subscriber to Federal Auditing Information Service for Higher Education, you'll receive:

Web Site: Access to the password-protected Web site that gives you 24/7 access to:
- 22 narrative chapters of A Guide to Federal Auditing for Colleges and Universities (see table of contents below)
- Archives of the monthly Federal Auditing News
- A well-organized system for accessing all pertinent government documents from OMB, IRS and GAO, including: OMB Circulars A-133, A-21, A-110, A-50, A-122, and A-102; GAO's Government Auditing Standards ("Yellow Book"); the annual OMB Compliance Supplement; and the IRS College and University Examination Guidelines.
Monthly Newsletter: 10 times a year (monthly with combined issues in July/August and December/January) you will receive Federal Auditing News, an informative newsletter that tracks major developments with a direct impact on you and your institution. You'll stay on top of what auditors are focusing on, "hot button" areas the IRS may scrutinize next, new government rules and audit activity, the decisions of courts and appeals boards, and much more.

Federal Auditing Information Service for Higher Education is the most timely and authoritative information available to college and university business officers on single audits, IRS audits and audits of student financial assistance. Subscribe today!

Written For

Financial VPs and business officers
Internal auditors
Legal counsel
Department heads

Table of Contents — A Guide to Federal Auditing for Colleges and Universities

SECTION I: Single Audits and OMB Circular A-133

Chapter 1: Single Audits: Background and History

The Single Audit Act * Revisions to Circular A-133 * The Structure of Circular A-133 * ‘Non-Federal Entity’ * National Single Audit Sampling Project

Chapter 2: The A-133 Audit Requirement

The Basic Audit Requirement * Federal Awards * Frequency of Audits * Relation to Other Audit Requirements * Allowability of Audit Costs * Sanctions

Chapter 3: Auditee Responsibilities

Identifying Federal Awards Received * Maintaining Internal Controls * Complying with Applicable Laws and Regulations * Preparation of Financial Statements and the Schedule of Expenditures of Federal Awards * Arranging for Audits: Circular A-110 Requirements * Follow-Up on Audit Findings * Report Submission

Chapter 4: The Federal Role

The Cognizant Agency for Audit * Awarding Agency Responsibilities * The Role of the Federal Audit Clearinghouse * The Management Decision

Chapter 5: Roles and Responsibilities of Pass-through Entities

Identify Source of Federal Funds * Legal and Other Grant Requirements * Monitor Activities * Ensure A-133 Requirements Are Met * Issue Management Decisions * Adjust Records * Access to Records

Chapter 6: The Role of the Auditor

Financial Audits * Compliance Auditing * Auditing Internal Controls * Major Federal Programs

Chapter 7: The Single Audit Report

The Auditor’s Report * Nature of Audit Findings * National Single Audit Sampling Project: Completeness of Reports

Chapter 8: Selecting and Engaging an Auditor

Responsibilities of the Auditee * The Role of the Institution’s Audit Committee * The Auditor Selection Team * Federal Requirements for Auditor Procurement * The Audit Procurement Process * Selecting an Audit Firm to Bid on Audit Work * The Request for Proposal * Evaluating the Auditor Proposal * Auditor Engagement * Additional Protections to Consider * Procuring an Audit Firm for Both Audit and Nonaudit Services

Chapter 9: Preparing for and Managing an A-133 Audit

Preparing for an A-133 Audit * What Will Take Place During the Audit * The Role of the OMB A-133 Compliance Supplement * Managing the Audit * Dealing with Adverse Findings * Public Disclosure of Audit Results * The Management Representation Letter * The Lawyer’s Letter

Chapter 10: The Fourteen Compliance Requirements

Internal Control and Improper Payments * (A) Activities Allowed or Unallowed * (B) Allowable Costs/Cost Principles * (C) Cash Management * (D) Davis-Bacon Act * (E) Eligibility * (F) Equipment and Real Property Management * (G) Matching, Level of Effort, Earmarking * (H) Period of Availability of Federal Funds * (I) Procurement, Suspension, and Debarment * (J) Program Income * (K) Real Property Acquisition and Relocation Assistance * (L) Reporting * (M) Subrecipient Monitoring * (N) Special Tests and Provisions

Chapter 11: Detailed Guidance on Auditing Direct and Indirect Costs

Compensation for Personal Services * Equipment Acquisitions * Consultants and Purchased Services * Scholarships, Fellowships, and Training * Service Centers and Shared Costs * Operation and Maintenance Expenses * General Administration Expenses * Sponsored Projects Administration Expenses * Library Expenses * Departmental Administration * Student Administration and Services * Application of Research Rate

Chapter 12: Avoiding Potential Problems with Subrecipients and Subcontractors

Requirements Concerning Subcontractors * Requirements Relating to Subrecipients

Chapter 13: Resolving Post-Audit Disputes

The Federal Government’s Audit Review Process: An Overview * Reviewing Audit Reports: Reaching a Final Decision * Arguments to Be Advanced by Institutions * Sanctions * Appeals of Final Management Decisions * Appeals Bodies and Mechanisms * Obtaining Due Process in Grant Disputes Where No Appeals Mechanism Exists * Other Appeals * Legal References

Chapter 14: Inspector General Audits

The OIG Audit Process * Identifying OIG Audit Targets * NSF and HHS OIG Audits

Section II: IRS Audits of Colleges and Universities

Chapter 15: Preparing for and Managing an IRS Audit 307

Introduction * The IRS Structure of Audits for Exempt Organizations * Establishing a Tax Compliance Program * Types of IRS Audits * How the IRS Selects Institutions and Prepares for the Audit * Initial IRS Contact * Preparing for an IRS Audit * The Pre-Examination Conference * What Records to Expect the IRS to Request * Financial Statements * Completion of the Examination * The Appeal of an Adverse Determination * Post-Audit Procedures

Chapter 16: Guidance on Common Issues in IRS Audits of Colleges and Universities

Employment Tax Audit Issues * Scholarships and Fellowships * Taxes Applicable to Foreign Students * Charitable Purposes, Private Inurement, and Intermediate Sanctions * Executive Compensation and Expenses * Unrelated Business Income Tax (UBIT) * Fund Raising and Other Contributions * Donor Advised Funds, Sponsoring and Supporting Organizations * Corporate Sponsorships * Political Activity * Debt Structure * Tax-Exempt Bonds * Determining Taxability of Research and Development Projects * Joint Ventures * Abusive Tax Shelters

Section III: Student Financial Aid Audits

Chapter 17: Current Developments in Audits of Federal Student Financial Aid Programs

Introduction * HEA Reauthorization * Recent Final Regulations Amending Student Loan Regulations * A-133 Compliance Supplement, March 2008, Part V Revisions * eZ-Audit

Chapter 18: Audits of Federal Student Financial Aid Programs

How to Use This Audit Program * Summary of Compliance Determinations

Part I: Common SFA Compliance Requirements

Chapter 19: SFA Compliance Requirements — Common

Compliance Requirement: Institutional Eligibility and Participation * Compliance Requirement: Cash Management * Compliance Requirement: Financial Reporting * Compliance Requirement: Student Eligibility * Compliance Requirement: Disbursements * Compliance Requirements: Return of Title IV Funds

Part II: SFA Compliance — by Program

Chapter 20: Federal Pell Grant—SFA Compliance Requirements

Program Objectives * Program Procedures * Compliance Requirement: Types of Expenditures Allowed * Compliance Requirement: Program Performance * Compliance Requirement: Financial Reports

Chapter 21: Campus-Based Programs—SFA Compliance Requirements 519

General * Federal Perkins Loan * Federal Work-Study * Federal Supplemental Educational Opportunity Grant

Chapter 22: Federal Family Education Loan and Federal Direct Loan

Federal Family Education Loan * Federal Direct Loan * FFEL and FDL: Program Procedures * Compliance Requirements: Program Performance * Compliance Requirement: FFEL and FDL Status Reporting

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