Corrective action plans, the summary schedule of prior findings and audit follow-up

• Identify the required content of a corrective action plan under 200.511(c)
• Report the status of prior findings in the summary schedule under 200.511(b)
• Apply the three conditions for treating a prior finding as no longer warranting action
• Perform audit follow-up and report a materially misrepresented summary schedule

The auditee's two documents

2 CFR 200.511(a) makes the auditee responsible for follow-up and corrective action on all audit findings. It prepares two documents, both carrying the reference numbers the auditor assigned, and both covering financial statement findings that GAGAS required the auditor to report as well as federal award findings.

Corrective action plan

At the completion of the audit, the auditee prepares a corrective action plan addressing each finding in the current-year report (200.511(c)). It must be separate from the auditor's findings and must give:

• the name of the contact person or persons responsible for the corrective action;
• the corrective action to be taken; and
• the anticipated completion date.

If the auditee disagrees with a finding or believes corrective action is not required, the plan must include a detailed explanation. A plan that says "management will review the process" with no owner or date does not meet the rule. The corrective action plan guide has model language.

Summary schedule of prior audit findings

The summary schedule reports the status of every finding in the prior audit's schedule of findings and questioned costs, plus findings carried in the prior summary schedule that were not yet resolved (200.511(b)). Because it may include findings from several years, it shows the fiscal year in which each finding first occurred. For each finding:

• Fully corrected: list it and state that corrective action was taken.
• Not corrected or partially corrected: describe the reasons the finding recurred, the planned corrective action and any partial action taken. Explain any significant difference from the action previously reported or from the management decision.
• No longer valid or not warranting further action: describe the reasons. A valid reason exists when all three conditions are met: two years have passed since the audit report in which the finding occurred was submitted to the FAC; the federal agency or pass-through entity is not currently following up; and no management decision was issued (200.511(b)(3)).

A finding listed as corrected drops off the next summary schedule. Use the summary schedule template.

Auditor follow-up

The auditor must follow up on prior audit findings regardless of whether the prior finding relates to a current-year major program (200.514(e)). Follow-up includes procedures to assess the reasonableness of the summary schedule. If the summary schedule materially misrepresents the status of any prior finding, the auditor reports that as a current-year finding (200.514(e) and 200.516(a)(7)).

Practical procedures:

• Agree the summary schedule's list to the prior-year schedule of findings and the prior summary schedule. Nothing should be missing.
• For findings reported as corrected, obtain evidence: a redesigned control operating this year, a repaid questioned cost, a revised policy in use.
• For findings on nonmajor programs, perform enough work to assess the status claimed, even though you are not giving an opinion on that program.
• Compare the current-year results: a finding labeled corrected that recurs in this year's testing is a repeat finding and a misrepresentation question.
• Check management decisions received since the last audit.

Management decisions

The federal agency or pass-through entity must issue a management decision within six months of the FAC's acceptance of the audit report (200.521(d)). It states whether the finding is sustained, the reasons and the expected auditee action. The auditee should begin corrective action no later than receipt of the audit report. See the management decisions guide.

Common file mistakes

• Prior findings on nonmajor programs not followed up.
• "Corrected" accepted on management's say-so with no evidence.
• Repeat findings not cross-referenced to the prior reference number.
• Corrective action plans with no named contact or completion date.

Fairhaven Arts Council: is the summary schedule reasonable?