Note: The reports contained in this document are excerpts from the aicpa audit Guide




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Chapter 13

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NOTE: The reports contained in this document are excerpts from the AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits (GAS-A133 Guide). They have been updated for the 2011 edition of Government Auditing Standards, as well as the new clarity auditing standards. These reports will be incorporated into the 2013 GAS-A133 Guide when it is issued in late Spring 2013. That Guide will also include several additional examples (i.e., examples 13-4 through 13-6). References within this document to other sections/paragraphs of the GAS-A133 Guide will be updated upon being incorporated into the Guide.
uditor Reporting Requirements and Other Communication Considerations in a Single Audit

Appendix A — Illustrative Auditor's Reports Under Circular A-133



13.62 This appendix contains examples of the report on compliance with requirements that could have a direct and material effect on each major federal program and on internal control over compliance issued under Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations (Circular A-133), in various circumstances for a Circular A-133 compliance audit as discussed in this chapter. The following table lists the illustrative reports. Auditors, using professional judgment, may adapt these examples to other situations not specifically addressed in this guide.

Example No.

Title

13-1

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 (Unmodified Opinion on Compliance; No Material Weaknesses or Significant Deficiencies in Internal Control Over Compliance Identified)

13-2

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 (Unmodified Opinion on Compliance for Each Major Federal Program; Significant Deficiencies in Internal Control Over Compliance Identified)

13-3

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 (Qualified Opinion on Compliance for One Major Federal Program; Unmodified Opinion on Compliance on Each of the Other Major Federal Programs; Material Weaknesses and Significant Deficiencies in Internal Control Over Compliance Identified)

In a single audit, auditors also are required to issue (a) an opinion (or disclaimer of opinion) on the financial statements and on the supplementary schedule of expenditures of federal awards and (b) a report on internal control over financial reporting and on compliance and other matters based on an audit of financial statements performed in accordance with Government Auditing Standards. Appendix A in chapter 4, “Auditor Reporting Requirements and Other Communication Considerations of Government Auditing Standards,” of this guide and paragraphs 13.XX–.XX illustrate those reports. Appendix A in chapter 14, “Program-Specific Audits,” of this guide illustrates the reports issued for a program-specific audit.

Example 13-1



Report on Compliance For Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by OMB Circular A-133

(Unmodified Opinion on Compliance for Each Major Program; No Material Weaknesses or Significant Deficiencies in Internal Control Over Compliance Identified)1

Independent Auditor's Report

[Appropriate Addressee]



Report on Compliance for Each Major Federal Program

We have audited Example Entity’s compliance with the types of compliance requirements2 described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect3 on each of Example Entity’s major federal programs for the year ended June 30, 20X1. Example Entity’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.4



Management’s Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.



Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Example Entity’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Example Entity’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Example Entity’s compliance.

Opinion on Each Major Federal Program

In our opinion, Example Entity complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 20X1.



Other Matters5

The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example, 20X1-1 and 20X1-2].6 Our opinion on each major federal program is not modified with respect to these matters.

Example Entity’s response to the noncompliance findings identified in our audit are described in the accompanying [insert name of document containing management’s response to the auditor’s findings; for example, schedule of findings and questioned costs and/or corrective action plan]. Example Entity’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.7

Report on Internal Control Over Compliance 8

Management of Example Entity is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Example Entity’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Example Entity’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.9

Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-13310 11

We have audited the financial statements of Example Entity as of and for the year ended June 30, 20X1, and have issued our report thereon dated August 15, 20X1, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole.12

[Auditor’s signature]

[Auditor’s city and state]

[Date of the auditor’s report]13

Example 13-2

Report on Compliance For Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133

(Unmodified Opinion on Compliance for Each Major Federal Program; Significant Deficiencies in Internal Control Over Compliance Identified)14

Independent Auditor's Report

[Appropriate Addressee]



Report on Compliance for Each Major Federal Program

We have audited Example Entity’s compliance with the types of compliance requirements15 described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect16 on each of Example Entity’s major federal programs for the year ended June 30, 20X1. Example Entity’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.17



Management’s Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.



Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Example Entity’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Example Entity’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Example Entity’s compliance.

Opinion on Each Major Federal Program

In our opinion, Example Entity complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 20X1.



Other Matters18

The results of our auditing procedures disclosed instances of noncompliance, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example, 20X1-1 and 20X1-2]. 19 Our opinion on each major federal program is not modified with respect to these matters

Example Entity’s response to the noncompliance findings identified in our audit are described in the accompanying [insert name of document containing management’s response to the auditor’s findings; for example, schedule of findings and questioned costs and/or corrective action plan]. Example Entity’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.20

Report on Internal Control Over Compliance21

Management of Example Entity is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Example Entity’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Example Entity’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, we identified certain deficiencies in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example, 20X1-3, 20X1-4, and 20X1-5],22 that we consider to be significant deficiencies.

Example Entity’s response to the internal control over compliance findings identified in our audit are described in the accompanying [insert name of document containing management’s response to the auditor’s findings; for example, schedule of findings and questioned costs and/or corrective action plan]. Example Entity’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.23



Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-13324 25

We have audited the financial statements of Example Entity as of and for the year ended June 30, 20X1, and have issued our report thereon dated August 15, 20X1, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole.26

[Auditor’s signature]

[Auditor’s city and state]

[Date of the auditor’s report]27

Example 13-3

Report on Compliance For Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133

(Qualified Opinion on Compliance for One Major Federal Program; Unmodified Opinion on Compliance on Each of the Other Major Federal Programs; Material Weaknesses and Significant Deficiencies in Internal Control Over Compliance Identified) 28

Independent Auditor's Report

[Appropriate Addressee]



Report on Compliance for Each Major Federal Program

We have audited Example Entity’s compliance with the types of compliance requirements 29 described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect30 on each of Example Entity’s major federal programs for the year ended June 30, 20X1. Example Entity’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.31



Management’s Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs.



Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of Example Entity’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Example Entity’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of Example Entity’s compliance.

Basis for Qualified Opinion on [Identify Major Federal Program]32 33

As described in the accompanying schedule of findings and questioned costs, Example Entity did not comply with requirements regarding [identify the major federal program and associated finding number(s) matched to the type(s) of compliance requirements; for example, CFDA 93.600 Head Start as described in finding numbers 20X1-1 for Eligibility and 20X1-2 for Reporting]. Compliance with such requirements is necessary, in our opinion, for Example Entity to comply with the requirements applicable to that program.



Qualified Opinion on [Identify Major Federal Program]

In our opinion, except for the noncompliance described in the Basis for Qualified Opinion paragraph, Example Entity complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on [identify the major federal program] for the year ended June 30, 20X1.



Unmodified Opinion on Each of the Other Major Federal Programs34

In our opinion, Example Entity complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its other major federal programs identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs for the year ended June 30, 20X1.



Other Matters35

The results of our auditing procedures disclosed other instances of noncompliance, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example, 20X1-1 and 20X1-2].36 Our opinion on each major federal program is not modified with respect to these matters.

Example Entity’s response to the noncompliance findings identified in our audit are described in the accompanying [insert name of document containing management’s response to the auditor’s findings; for example, schedule of findings and questioned costs and/or corrective action plan]. Example Entity’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.37

Report on Internal Control Over Compliance38

Management of Example Entity is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Example Entity’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Example Entity’s internal control over compliance.

Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and significant deficiencies.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example 20X1-5 and 20X1-6]39 to be material weaknesses.

A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items [list the reference numbers of the related findings, for example 20X1-7 and 20X1-8]40 to be significant deficiencies.

Example Entity’s response to the internal control over compliance findings identified in our audit are described in the accompanying [insert name of document containing management’s response to the auditor’s findings; for example, schedule of findings and questioned costs and/or corrective action plan]. Example Entity’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose.41

Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-13342 43

We have audited the financial statements of Example Entity as of and for the year ended June 30, 20X1, and have issued our report thereon dated August 15, 20X1, which contained an unmodified opinion on those financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the financial statements as a whole.44

[Auditor’s signature]

[Auditor’s city and state]



[Date of the auditor’s report]45

1 Examples 13-1–13-3 are intended to provide illustrations for various situations. Auditors, using professional judgment, may adapt these examples to other situations not specifically addressed within the illustrations For example, if the auditor is expressing an unmodified opinion on compliance and has identified significant deficiencies, but no material weaknesses, the compliance section of this example may be used along with the internal control section of examples 13-2. See also paragraph 13.xx concerning the need to modify this report if the federal awards section of the schedule of findings and questioned costs includes abuse findings.




2 Under Section 510(a) of Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations (Circular A-133), the auditor's determination of whether a noncompliance with the provisions of laws, regulations, contracts, or grant agreements is material for the purpose of reporting an audit finding is in relation to a type of compliance requirement for a major program or an audit objective identified in the OMB Circular A-133 Compliance Supplement (Compliance Supplement). Further, the auditor’s determination of whether a deficiency in internal control over compliance is a significant deficiency or material weakness for the purpose of reporting an audit finding is also in relation to a type of compliance requirement for a major federal program or an audit objective identified in the Compliance Supplement. The reference to “type of compliance requirements” used here and elsewhere in this report illustration refers to the 14 types of compliance requirements (identified as “A” through “N”) described in part 3 of the Compliance Supplement. For purposes of reporting audit findings, auditors are alerted that certain of the types of compliance requirements may include multiple compliance requirements with multiple audit objectives (for example, compliance requirement “G” covers three separate requirements [matching, level of effort, and earmarking], and “N” covers separate requirements specific to each individual special test and provision).




3 AU-C section 935, Compliance Audits (AICPA, Professional Standards), defines applicable compliance requirements as the compliance requirements that are subject to the compliance audit. According to Section 505 of Circular A-133, the auditor’s report on compliance with laws, regulations, and the provisions of contracts or grant agreements should include an opinion (or disclaimer of opinion) regarding whether the auditee complied with laws, regulations, and the provisions of contracts or grant agreements that could have a direct and material effect on each major program. Therefore, in a Circular A-133 compliance audit, the applicable compliance requirements, as the term is used in AU-C section 935, are those that could have a direct and material effect on a major federal program. Accordingly, for the purpose of adapting AU-C section 935 to a Circular A-133 compliance audit, the term applicable has been replaced by direct and material when referencing such compliance requirements in this report. See also footnote 2 of this appendix for a discussion related to the determination of material noncompliance.


4 As discussed in paragraph 13.XX and in chapter 6, "Planning Considerations of Circular A-133," of this guide, there are situations in which the audit of federal awards may not encompass the entirety of the auditee's operations. In this case, the operations that are not included should be identified in a separate paragraph following the first paragraph of the report. An example of such a paragraph follows:

Example Entity's basic financial statements include the operations of the [identify component organization, such as a component unit or department], which received [include dollar amount] in federal awards which is not included in the schedule during the year ended June 30, 20X1. Our audit, described below, did not include the operations of [identify component organization] because [state the reason for the omission, such as the component unit engaged other auditors to perform an audit in accordance with Circular A-133].




5 When there are no findings that are required to be reported, and thus, no management response to findings, this “Other Matters” section of the report would be omitted.

6 The auditor may also consider adding a table to this section of the report, similar to the illustration provided in footnote 33, to more clearly communicate the other findings that are being reported and the programs and requirements to which they relate.


7 Although the auditor does not audit management’s response to identified findings, the auditor does have certain responsibilities related to reporting the views of responsible officials under Government Auditing Standards. As noted in paragraph 4.33 of Government Auditing Standards, auditors should obtain and report the views of responsible officials concerning the findings, conclusions, and recommendations, as well as planned corrective actions. See paragraphs 13.xx and 13.xx for further discussion.


8 Examples 13-1–13-3 illustrate combined reports that also include the reporting on internal control over compliance. If an auditor prefers to issue a separate report on internal control over compliance this section would be omitted from the report. AU-C section 935 includes required elements for separate reporting on internal control over compliance.

9 This paragraph has been adapted from AU-C section 905, Alert That Restricts the Use of the Auditor’s Written Communication (AICPA, Professional Standards) to relate to the reporting on internal control over compliance that is required in an audit of compliance in accordance with Circular A-133.


10 The wording of this report is based AU-C section 725, Supplementary Information in Relation to the Financial Statements as a Whole (AICPA, Professional Standards).


11 As noted in paragraph 13.xx, this guide recommends reporting on the schedule of expenditures of federal awards in the report on the financial statements. Chapter 4, “Auditor Reporting Requirements and Other Communication Considerations of Government Auditing Standards,” illustrates the reporting on the schedule when such reporting is included in the financial statement report. However, as noted in 13.xx, there may be certain circumstances when the auditor’s report on the schedule is incorporated into the report issued to meet the requirements of OMB Circular A-133. Therefore, the Examples 13-1–13-5 illustrate the inclusion of the auditor’s in-relation-to reporting on the schedule of expenditures of federal awards. Its inclusion in these examples is not intended to imply a best practice. If the in-relation-to reporting on the schedule is included in the report on the financial statements or in a separate report, this section would be omitted.


12The wording of this report on the schedule of expenditures of federal awards refers to the financial statements of a non-governmental entity. For audits of governmental entities, it would be replaced with the following:
Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133

We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Example Entity as of and for the year ended June 30, 20X1, and the related notes to the financial statements, which collectively comprise Example Entity’s basic financial statements. We issued our report thereon dated August 15, 20X1, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.






13 As noted in footnote 11, Examples 13-1–13-5 illustrate the inclusion of the in-relation-to opinion on the schedule of expenditures of federal awards. AU-C section 725 states that the date of the auditor’s report on supplementary information (e.g., the schedule of expenditures of federal awards in these illustrations) in-relation-to the financial statements as a whole should not be earlier than the date on which the auditor completed the required procedures required by AU-C section 725. Therefore, when the required procedures in AU-C section 725 are completed on an earlier date than that of the auditor’s “Report on Compliance for Each Major Federal Program,” the auditor would dual-date this report. See chapter 13 for further discussion of dating the in-relation-to reporting on the schedule of expenditures of federal awards. Illustrative wording when dual dating the report is as follows:
[Date], except for our report on the Schedule of Expenditures of Federal Awards, for which the date is [Date the in-relation-to procedures completed]

14 See footnote 1.




15 See footnote 2.


16 See footnote 3.


17 See footnote 4.


18 See footnote 5.


19 See footnote 6.




20 See footnote 7.




21 See footnote 8.


22 The auditor may also consider adding a table to this section of the report, similar to the illustration provided in footnote 33, to more clearly communicate any material weaknesses or significant deficiencies that were identified and the programs and requirements to which they relate.


23 See footnote 9.


24 See footnote 10.


25 See footnote 11.


26See footnote 12.


27 See footnote 13.




28 See footnote 1.




29 See footnote 2.


30 See footnote 3.


31 See footnote 4.




32 The heading to this section, and the qualified opinion paragraph that follows, illustrates identifying the specific major federal programs being referred to in each heading.



33 The auditor may also consider adding a table to more clearly communicate the basis for the qualified opinion such as the following:

As described in Findings 20X1-1 and 20X1-2 in the accompanying schedule of findings and questioned costs, Example Entity did not comply with requirements regarding the following:

Finding #

CFDA #


Program (or Cluster) Name

Compliance Requirement20X1-193.600Head StartEligibility 20X1-293.600Head StartReporting



Compliance with such requirements is necessary, in our opinion, for Example Entity to comply with the requirements applicable to that program.


34There is nothing to preclude an auditor from including the name(s) of the federal programs for which the auditor is providing an unmodified opinion in this heading or in the opinion paragraph itself. This example illustrates referencing the other major federal programs more generally in the unmodified opinion heading and in the opinion paragraph, along with a reference to the summary of auditor’s results section of the schedule of findings and questioned costs where the other major federal programs are specifically identified.



35 See footnote 5.


36 See footnote 6.


37 See footnote 7.


38 See footnote 8.


39 See footnote 22.


40 See footnote 22.


41 See footnote 9.


42 See footnote 10.


43 See footnote 11.


44 See footnote 12.




45 See footnote 13.

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