Until recently, Illinois recipients and subrecipients who expended less than $500,000 in federal funds (and now $750,000 under the new Uniform Grant Guidance) breathed a sigh of relief as they were exempt from the rigorous world of the Single Audit (now referred to as Uniform Guidance).
However, with the passing of the Illinois' Grant Accountability and Transparency Act (GATA) in 2014, that is no longer the case. Organizations that fall below the federal audit requirements outlined in Subpart F of the Uniform Guidance, or those that have previously only received state funding, are now finding themselves subject to much stricter rules than in the past. And, unfortunately, many of these organizations are completely unaware of the new requirements under GATA.
With the passing of GATA, the State of Illinois is, in essence, adopting the same federal rules of the Uniform Guidance for all state grants, including those grants that have no amount of federal funds. Fortunately, for the smaller grantees, GATA has rolled out a tiered audit requirement structure.
Effective for fiscal years beginning July 1, 2016, the new audit requirements under GATA are as follows:
- Recipients and subrecipients who expend less than $300,000 of state, federal and federal pass-through funding are exempt from specific audit requirements under GATA.
- Recipients and subrecipients who expend between $300,000 and $500,000 of state, federal and federal pass-through funding must have a financial statement audit conducted in accordance with Generally Accepted Government Auditing Standards (GAGAS).
- Recipients and subrecipients who expend between $500,000 and $749,999 of state, federal and federal pass-through funding must have a financial statement audit conducted in accordance with GAGAS. Additionally, those recipients and subrecipients that are deemed to be "high risk" are required to undergo an agreed-upon procedures (AUP) audit. It is important to note that the AUP audit is arranged and paid for by the grantor and/or pass-through agency, not the grantee. The AUP audit will be conducted in accordance with 2 CFR 200.425 (Uniform Guidance) for up to four of the compliance areas listed below:
- Activities Allowed or Unallowed;
- Allowable Costs/Cost Principles;
- Eligibility; and
- Reporting.
- Recipients and subrecipients who expend $750,000 or more of state, federal and federal pass-through funding are subject to following the audit requirements outlined in Subpart F of the Uniform Guidance (similar to an audit under the former OMB A-133 to which some organizations were previously subject).
It is critical that all organizations that receive funding from, or through, the State of Illinois, whether those funds are considered state, federal and/or federal pass-through funding, are aware of the new audit rules as the State of Illinois will be placing a higher reliance on the audit reports than ever before. Failure to comply could result in loss of future funding from the State of Illinois. Please make sure to contact your CPA to discuss your organization's audit requirements.
The new audit requirements are just one of many changes brought about by GATA.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
