AUDIT UPDATE OCTOBER 2018

Transcription

1 AUDIT UPDATE OCTOBER 2018 APA Accounting and Finance Workshop BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

2 AGENDA RUS Audit update Uniform Guidance - threshold and procurement State Single Audit Impact of revenue recognition standard Audit data analytics guidance 1 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

3 RUS AUDIT UPDATE 2 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

4 RUS AUDIT UPDATE Updated April 2018 (previous version was 2001) Oversight responsibilities for borrowers Reporting requirements Compliance 3 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

5 RUS AUDIT UPDATE OVERSIGHT Approval of auditor upon initial selection or subsequent change (new) By formal board resolution within 90 days Auditor represents that it meets RUS qualifications Will enter audit engagement in accordance with Engagement letter must comply with Obtain Form AD-1048 regarding debarment Obtain Peer Review report 4 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

6 RUS AUDIT UPDATE REPORTING Notification of change in auditor By 90 days prior to audit date (year end) Submission of reporting package Must be comparative Due within 90 days Include corrective action, if applicable Fraud and illegal acts (by auditor, immediately, in writing) 5 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

7 RUS AUDIT UPDATE COMPLIANCE Must prepare schedules required to perform the audit Deferred debits and credits Detailed schedule of investments in subsidiaries and affiliates If subject to Uniform Guidance, notify RUS in writing within 30 days of audit date of total federal awards expended 6 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

8 UNIFORM GUIDANCE / STATE SINGLE AUDIT 7 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

9 UNIFORM GUIDANCE / STATE SINGLE AUDIT Federal Threshold now $750,000 Type A threshold is $750,000 if under $25mil in total expenditures Only required to have 40% coverage if high risk, 20% if low risk State Threshold now $750,000 No smaller than font size of 9-point 8 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

10 UNIFORM GUIDANCE Procurement Micropurchase raised to $10,000 Simplified acquisitions raised to $250,000 Should have a formal policy Only applies to federal funds Must follow your policy, even if it is more restrictive 9 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

11 REVENUE RECOGNITION 10 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

12 REVENUE RECOGNITION Core Principle: Recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services Steps to apply the core principle: 1. Identify the contracts with the customer 2. Identify the performance obligations 3. Determine the transaction price 4. Allocate the transaction price 5. Recognize revenue when (or as) a performance obligation is satisfied 11 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

13 AUDIT DATA ANALYTICS 12 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

14 THE PROFESSION IS CHANGING REGULATORY PERSPECTIVE Center for Audit Quality Symposium - ADA 13 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

15 AUDIT DATA ANALYTICS & THE PROFESSION Audit Data Analytics "...the science and art of discovering and analyzing patterns, identifying anomalies, and extracting other useful information in data underlying or related to the subject matter of an audit through analysis, modeling, and visualization for the purpose of planning or performing the audit. - AICPA Guide to Audit Data Analytics, December APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

16 ENABLING TECHNOLOGY JOURNAL ENTRY PLATFORM 15 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

17 BDO COMMON DATA MODEL OVERVIEW 16 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

18 ENABLING TECHNOLOGY PAYROLL TESTING 17 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

19 ENABLING TECHNOLOGY PAR & OPPORTUNITIES 18 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

20 5 Step Approach: PLAN THE ADA 1 Plan the ADA What is the ADA going to be used for? Access and Prepare data Consider the relevance and reliability of the data used Perform the ADA Evaluate the results and conclude What data is going to be used? Which ADA is appropriate? 19 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

21 5 Step Approach: ACCESS & PREPARE THE DATA 1 Plan the ADA Access and prepare the data for the purposes of the ADA Access and prepare data Consider the relevance and reliability of the data used Perform the ADA Evaluate the results and conclude Auditor format Timely nature Data security & integrity ETL guidance (see later) For DAT (resembling SAPs) obtain data to form expectation 20 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

22 5 Step Approach: CONSIDER DATA RELIABILITY 1 Plan the ADA Access and prepare data Consider the relevance and reliability of the data used Perform the ADA Evaluate the results and conclude Consider relevance of data (i.e. applicability) Differences between types of procedures (RADA vs DATs) Importance of reliability of data (i.e. source) 21 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

23 5 Step Approach: PERFORM THE ADAs Plan the ADA Access and prepare data Consider the relevance and reliability of the data used Perform the ADA Evaluate the results and conclude Applying some new concepts ADA Notable Items, ADA Anomalies, Grouping & Filtering Deciding on the extent of work to understand and deal with ADA Notable Items or Anomalies Importance of determining the SAP expectation and refining it Revising or re-performing the ADA 22 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

24 5 Step Approach: EVALUATE THE RESULTS Plan the ADA Access and prepare data Consider the relevance and reliability of the data used Perform the ADA Evaluate the results and conclude 23 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE Determine if difference between purpose or expectation and recorded amount is significant Investigate any significant differences Plan and perform different procedures to achieve objectives Determine if RMM or misstatement or impact on audit

25 VISUALIZATION 24 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE

26 DATA ANALYTICS CLIENT IMPACT ADA APPROACH INSTEAD NOT MORE! Will rely on reports and data that we may not traditionally obtain Involvement of IT personnel At least 2 years of data (or more) Fewer tests of transactions Identification of the real risk areas Can fully replace many traditional audit procedures 25 APA ACCOUNTING AND FINANCE WORKSHOP AUDIT UPDATE