December 2007 Single Audit Information Service Newsletter

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Do You Really Know What You Want?By Leita Hart-FantaAll right, governments; enough is enough! It is not normal for a CPA firm to take on You really need to read the Government Au- a performance audit. It’s not impossible, but diting Standards before you put out a request not normal either. Performance audits are for proposal for audit services. You are caus- generally conducted by legislative auditors or Leita Hart-Fanta, CPA, ing a mess in the certified public accountant internal auditors, not by CPA firms, because CGFM, is the author of world because you don’t know what you are performance audit standards do not integrate “The Risk Assessment asking for. or refer to American Institute of Certified SASs,” and has been teaching Yellow Book Public Accountants requirements, which rule I had a long phone call recently with a standards for 10 years. the behavior of a CPA.partner from a national CPA firm who wanted During her five years with the Texas State to take on a project for one of her steady Different Types of Audits, EngagementsAuditor’s Office, she clients, but her technical advisors were CPAs are more comfortable doing work acted as both an auditor blocking her way. My CPA friend said it was for clients under AICPA rules for financial and communications unclear exactly what the client — a state specialist. Ms. Hart- audits, attestation engagements or consult-agency — was seeking in its RFP, which Fanta led the team that ing engagements. It is very ...

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• Publié par: Saum
• Nombre de lectures: 11
• Langue: English

Extrait

Leita Hart-Fanta, CPA, CGFM, is the author of “The Risk Assessment SASs,” and has been teaching Yellow Book standards for 10 years. During her five years with the Texas State Auditor’s Office, she acted as both an auditor and communications specialist. Ms. Hart- Fanta led the team that produced a national- award-winning report summarizing the financial condition of the state. She is a certified public accountant and a certified government financial manager and serves on the conference planning committees of the local chapters of the Institute of Internal Auditors and the Texas Society of CPAs. The views expressed in this article are the author’s own and do not necessarily reflect the views of theSingle Audit Information Service.

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Do You Really Know What You Want? By Leita Hart-Fanta

All right, governments; enough is enough! It is not normal for a CPA firm to take on You really need to read theGovernment Au- a performance audit. It’s not impossible, but diting Standards not normal either. Performance audits arebefore you put out a request for proposal for audit services. You are caus conducted by legislative auditors or- generally ing a mess in the certified public accountant internal auditors, not by CPA firms, because world because you don’t know what you are performance audit standards do not integrate asking for.  or refer to American Institute of Certified I had a long phone call recently with a Public Accountants requirements, which rule partner from a national CPA firm who wanted  the behavior of a CPA. to take on a project for one of her steady Different Types of Audits, Engagements clients, but her technical advisors were blocking her way. My CPA friend said it was  CPAs are more comfortable doing work unclear exactly what the client — a state f a o u r d   i c t l s i , e   n a t tt s e u st n a d ti e o r n A e I n C g P a A g   e ru m l e es n   t f s o o r r fi c n o a n n s c u i l a t l -   agency — was seeking in its RFP, which called for a performance audit of funds spent ing engagements. It is very important for the - by its subrecipients. However, what she read  CPA to name a project as the right type of en in the RFP did not sound like a performance g ea a c g h e t m y e p n e t .     b I e n c f a a u c s t, e     t t h h e e     C ru P l A e ’ s s     a c r h e o d i i c f e f   e w re il n l t     i f m r  - o audit to her. The state agency passed federal funds down to nonprofits. Those nonprofits pact his or her ability to perform other work reported their expenditures back to the state for the government in the future. and asked for reimbursement. The state agen- A CPA firm would be more comfortable cy wanted to make sure the costs were valid  performing this particular engagement as an but didn’t have the manpower to do its own attestation engagement. The Yellow Book reviews. So it sent out an RFP asking for a only dedicates one chapter to that type of performance audit of these payments. engagement because it is less involved and This doesn’t sound like a performance au- can defer to the very specific AICPAa CPA dit to me, either. It sounds like a very simple,  r ta u t l i e o s n f   o e r n i g t a . g T e h m e e A nt I s C a P r A e     r c u a l ll e e s d r   e th g e a   r S d t i a n t g e a m t e te n s ts  - cut-and-dried project. What the state agency calls this project can make a huge difference  on Standards for Attestation Engagements. in how much money they are going to spend  During such an attestation engagement, to get it done.  the CPA would attest to the truth of a simple A performance audit is a very involved  s b t y a   t t e he m   e s n u t b s r   e s c u i c p h i   e a n s, t   s “ a A c r c e u t r h at e e     c a o n st d s     p r r e o p p o e r r t l e y d     project and results in a high cost. TheGov- ernment Auditing Standards, also known woA CPe Th. ntmen dlu siasd?fiecldluo eb hT ”w sively ina relati  eneagegxeepsnvi - ot as the Yellow Book, devotes two lengthy  ask why reports are inaccurate, but would chapters to describing performance audits.   It requires extensive planning, understand- t si he m   p r l e y p   o v r e t r s i   f a y r   e w in h a e c th c e u r r   a t t h e e , y t   h a e r   e s   t o a r t   e a   r a e g n e ’ n t. c I y f     ing internal controls and conducting a risk assessment. A performance audit doesn’t  h w a o p u p l e d  n h e a d ve to follow up to find out what  simply stop at saying what the auditee is . or is not doing; a good performance audit What Are You Willing to Pay? will also tell you why it is happening. For If I had to estimate the cost for each of instance, if the subrecipient is not reporting  these services, I would say that a perfor- proper costs, the auditor would find out how mance audit might cost $45,000, an attes- that happened and then recommend correc- tive actions. tation engagement may cost $20,000 and SeeDo You Know, p. 5

May 2011 |Single Audit Information Service