Guide for Desk Reviews of Single Audit Reports

The Single Audit, often referred to as the OMB Single Audit, is a rigorous, organization-wide audit or examination of an entity that expends $750,000 or more of federal assistance received for its operations. Because these audits are critical for ensuring accountability for federal funds, the "desk review" process is a vital oversight mechanism. A desk review is a systematic examination of the audit reporting package to determine if it meets the reporting requirements established by the Office of Management and Budget (OMB) Uniform Guidance.

Purpose of the Desk Review

The primary objective of a desk review is to verify that the Single Audit reporting package is complete, accurate, and provides sufficient information for federal awarding agencies to fulfill their oversight responsibilities. It is not an audit of the auditors work papers; rather, it is a quality control check of the final reports submitted to the Federal Audit Clearinghouse (FAC).

Key Components of the Reporting Package

To conduct an effective desk review, the reviewer must ensure the following components are present and compliant:

• Financial Statements: Verification that the financial statements are prepared in accordance with Generally Accepted Accounting Principles (GAAP) or another comprehensive basis of accounting.
• Schedule of Expenditures of Federal Awards (SEFA): This is the cornerstone of the audit. The reviewer must ensure it lists all federal programs, includes the Catalog of Federal Domestic Assistance (CFDA) numbers, and accurately reflects total expenditures per program.
• Summary Schedule of Prior Audit Findings: This document tracks the status of previous findings, ensuring the auditee is actively addressing past issues.
• Auditors Reports: These include the report on the financial statements, the report on internal control over financial reporting, and the report on compliance for each major program.
• Schedule of Findings and Questioned Costs: This must detail any audit findings, including material weaknesses, significant deficiencies, and instances of non-compliance.
• Corrective Action Plan (CAP): The auditees formal plan to address each current-year finding.

Common Areas of Focus During Review

Reviewers typically look for specific "red flags" or common errors that signify a lack of compliance. These include:

Accuracy of the SEFA: Reviewers must reconcile the SEFA amounts against the internal records provided by the auditee. Mismatched or missing CFDA numbers are common errors that can lead to a rejection of the audit package.

Auditor Opinion Consistency: The audit opinion must clearly state whether the financial statements are presented fairly and whether the auditee complied with the requirements of major programs. Reviewers check to see if the opinion provided matches the findings reported; for example, a "clean" opinion on compliance is inconsistent with a finding of "material non-compliance."

Adequacy of the Corrective Action Plan: A CAP must be specific. It should include the name of the contact person responsible for the action, the corrective action planned, and the anticipated completion date. Vague or boilerplate language in a CAP is a common reason for a failed desk review.

Addressing Findings and Non-Compliance

If the desk review reveals missing information or technical errors, the reviewer typically issues a notice of deficiency. The auditee and their independent auditor are then required to provide clarifications or submit corrected documents. If significant issues are foundsuch as the auditor failing to test the required major programsthe entire audit may be deemed "unacceptable," requiring the audit to be re-performed or significantly amended.

Conclusion

The desk review process is an essential layer of federal financial oversight. By maintaining a high standard during these reviews, agencies ensure that federal resources are being managed responsibly. For organizations undergoing a Single Audit, maintaining high-quality documentation and ensuring clear communication with auditors are the best ways to facilitate a smooth review process and maintain continued eligibility for federal funding.