BASIC (03-86)

DI 39554.205 The Audit Process Under OMB Circular A-133

Audits conducted under OMB Circular A-133 shall be made in accordance with the General Accounting Office, Standards for Audit of Governmental Organizations, Programs, Activities and Functions, the Guidelines for Financial and Compliance Audits of Federally Assisted Programs, any compliance supplements approved by OMB, and generally accepted auditing standards established by the American Institute of Certified Public Accountants. OMB Circular A-133 establishes audit requirements for State governments that receive federal assistance. Audits are to be made on an organization-wide basis rather than on a program basis. State governments must use their own procedures to arrange for independent audits. The State will prescribe the scope of audits as long as the audits include, at a minimum, an examination of the systems of internal control, systems established to insure compliance with laws and regulations affecting the expenditure of Federal funds, financial transactions and accounts, and financial statements and reports of recipient organizations.

Audits usually are to be made annually, but not less frequently than every two years.

An OMB Circular A-133 audit report shall include the following:

  1. Financial statements, including footnotes, of the recipient organization.

  2. The auditor's comments on the financial statements which should:

    1. identify the statements examined and the period covered;

    2. identify the various programs under which the organization received federal funds, and the amount of the awards received;

    3. state that the audit was done in accordance with the established standards; and

    4. express an opinion as to whether the financial statements are fairly presented in accordance with generally accepted accounting principles. If an unqualified opinion cannot be expressed, state the nature of the qualification.

  3. The auditor's comments on compliance and internal control should:

    1. include comments on weaknesses in and noncompliance with the systems of internal control, separately identifying material weaknesses;

    2. identify the nature and impact of any noted instances of noncompliance with those provisions of Federal law or regulations that could have a material effect on the financial statements and reports; and

    3. contain an expression of positive assurance with respect to compliance with requirements for tested items, and negative assurance for untested items.

  4. Comments on the accuracy and completeness of financial reports and claims for advances or reimbursement to Federal agencies.

  5. Comments on corrective actions taken or
    planned by the recipient.

    Work papers and reports shall be retained for a minimum of 3 years from the date of the audit report unless the auditor is notified in writing by HHS or SSA of the need to extend the retention period. The audit workpapers shall be made available upon request to HHS or its designees and the General Accounting Office or its designees.

  6. The final audit report will be issued directly to the State agency with concurrent issuance to the SSA regional and central offices as well as other interested Federal offices.

    The information contained in the audit report, as well as the audit recommendations, represent the findings and opinions of the auditors. However, the final determinations of the steps to be taken with respect to the recommendations will be made by the Social Security Administration.

    If there are recommendations that involve the DDS, the State components and DDS administrators will correspond only with the SSA Regional Commissioner on any OMB Circular A-133 audit recommendations that need action or resolution by the State. The State must also provide their comments to the Regional Commissioner within 30 days of receipt of the audit report. The components must provide a statement regarding concurrence or non-concurrence with each recommendation as well as the State or DDS “plan” for resolution of the recommendation. The RO will make all necessary contacts with other Federal agencies and act as liaison between the State, Federal agencies or independent auditors. The State will take no corrective action regarding an audit recommendation until so advised by the Regional Commissioner. The State will receive a written notice of the determination regarding the audit and will be given its appeal rights.

    See 20 CFR 404.1627(b) and 416.1027(b) regarding the resolution of appeal items that are questioned and reported in an audit report.