Federal Auditing Information Service for Higher Education

Sponsored by NACUBO and Managed by AIS

Federal Auditing Information Service for Higher Education

FEDERAL AUDITING INFORMATION SERVICE for Higher Education is a comprehensive resource with guidance, news and tools that can help anyone with accountability for auditing and financial reporting on campus avoid serious audit problems and the adverse consequences that an institution can face when they surface. An annual subscription includes:

  • A Guide to Federal Auditing for Colleges and Universities 2011, a comprehensive softbound book with practical overviews, checklists, decision trees and other how-to materials on A-133 audits, IRS audits and more.
  • A password-protected subscriber-only website that organizes — and updates instantly — thousands of pages of OMB Circulars, the GAO’s Government Auditing Standards (“Yellow Book”), CIGIE Guides, the OIG audits … and links to other important resources, such as the COSO internal control framework for smaller companies.
  • Federal Auditing News, an informative monthly newsletter written especially for NACUBO members — with all the referenced documents posted on the website for easy access.

Click on the features above to review free samples

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The impetus for auditing reform and a desire to bolster public confidence are driving the public accounting profession and government auditors to a new level of vigilance. This increased rigor translates into an urgent need for colleges and universities to beef up their audit readiness.

To help NACUBO members with these challenges, FEDERAL AUDITING INFORMATION SERVICE for Higher Education provides timely, authoritative information to help you prepare for and manage audits mandated by the federal government. Designed to fit the unique needs of busy managers in higher education, a subscription includes three components that work together to form a well-integrated information system:

  • A Guide to Federal Auditing for Colleges and Universities 2011, a comprehensive softbound book with practical overviews, checklists, decision trees and other how-to materials on A-133 audits, IRS audits and more. See Table of Contents below.
  • Access to a password-protected website featuring:
    • 16 easily searchable narrative chapters of A Guide to Federal Auditing for Colleges and Universities (click here to view a free sample chapter)
    • 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.
    • “New on the Site” — an update feature that allows you to quickly see what changes have recently been made so you know if you need to adapt your procedures due to regulatory and interpretive changes.
  • Federal Auditing News newsletter: delivered by First Class Mail and by e-mail 10 times a year (monthly with combined issues in July/August and December/January), this informative newsletter tracks major developments in 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.

Plus, the website is fully searchable to facilitate research and updated with new and revised content regularly.


Written For

  • Financial and Business officers
  • Internal Auditors
  • In-house Legal Counsel
  • CPA Firms


Table of ContentsA 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 * ARRA * FFATA

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 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 * ARRA Reviews

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 for the Audit * How the IRS Prepares for the Audit * Preparing for an IRS Audit * The Examination Meeting * The IRS Document Request * 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, Fellowships, and Research Stipends * Taxation of Payments to Foreign Students and Other Foreign Nationals * Reporting Foreign Bank Accounts * Private Inurement, Excess Benefit Transactions, and Intermediate Sanctions * Unrelated Business Income Tax (UBIT) * Fundraising and Other Contributions * Corporate Sponsorships * Political Activity * Debt Structure * Tax-Exempt Bonds * Determining Taxability of Research and Development Projects * Joint Ventures



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A temporary username and password to access the website will be e-mailed to you after your subscription is processed. (You can change the username and password the first time you log onto the site.)

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For further information call 800-521-4323 or e-mail [email protected]


Copyright © 2012 by the National Council of University Research Administrators,
the National Association of College and University Business Officers and
Atlantic Information Services, Inc. 1100 17th Street, NW, Suite 300, Washington, D.C. 20036
Phone 202-775-9008 or 800-521-4323; E-mail [email protected]