The single audit reports: what 2 CFR 200.515 and AU-C 935 require

• Identify each report required by 2 CFR 200.515
• Explain how the in-relation-to opinion on the SEFA works
• Determine the elements of the summary of auditor’s results
• Decide when the compliance opinion on a major program is modified

The package of reports

2 CFR 200.515 lets the auditor issue combined or separate reports, organized as the auditor chooses, but they must state that the audit was conducted in accordance with Part 200 and include:

1. An opinion (or disclaimer) on the financial statements, plus the auditor's determination of whether the SEFA is stated fairly in all material respects in relation to the financial statements as a whole (200.515(a)).
2. A report on internal control over financial reporting and on compliance with laws, regulations, contracts and award agreements whose noncompliance could have a material effect on the financial statements. It describes the scope and results of testing and refers to the schedule of findings and questioned costs where applicable (200.515(b)). This is the GAGAS report.
3. A report on compliance for each major program and on internal control over compliance, describing the scope of control testing and giving an opinion (or disclaimer) on whether the auditee complied with requirements that could have a direct and material effect on each major program (200.515(c)).
4. A schedule of findings and questioned costs (200.515(d)).

The SEFA opinion

The SEFA is supplementary information. The auditor reports on it in relation to the financial statements as a whole, applying AU-C 725. That means the SEFA is tested at financial statement materiality for the in-relation-to conclusion, while its program totals also feed major program determination. Firms often place the in-relation-to paragraph in the financial statement opinion.

The major program report under AU-C 935

AU-C 935 governs the compliance opinion. The opinion is given separately on each major program, so one program can receive a qualified or adverse opinion while others are unmodified. The report also describes the auditor's responsibilities for internal control over compliance and reports any significant deficiencies and material weaknesses over compliance identified.

Modify the compliance opinion when noncompliance is material to a major program, or when you cannot obtain sufficient appropriate evidence for a requirement. Under 200.516(a)(5), the circumstances behind any opinion other than unmodified are reported in the schedule unless already reported as findings.

The schedule of findings and questioned costs

200.515(d) requires three components.

Section I, summary of the auditor's results:

• type of opinion on the financial statements;
• whether significant deficiencies or material weaknesses in internal control were disclosed by the financial statement audit;
• whether noncompliance material to the financial statements was disclosed;
• whether significant deficiencies or material weaknesses over major programs were disclosed;
• type of opinion on compliance for major programs;
• whether there were findings required to be reported under 200.516(a);
• each major program (clusters by cluster name);
• the dollar threshold used to distinguish Type A and Type B programs; and
• whether the auditee qualified as low-risk.

Section II: financial statement findings required by GAGAS.

Section III: federal award findings and questioned costs under 200.516(a). Findings that relate to both the financial statements and federal awards appear in both sections, one of which may be a summary with a cross-reference.

Consistency checks before you sign

The reports, the schedule, the data collection form and the auditee's corrective action plan must agree. Before release:

• the Type A threshold in Section I matches the major program workpaper;
• the major program list matches the compliance report and the data collection form;
• every finding number in the schedule appears in the corrective action plan; and
• opinion types in Section I match the opinions issued.

The GAGAS reports guide and AU-C 935 page have more on report content.

Common file mistakes

• Section I lists a different Type A threshold from the worksheet.
• The low-risk auditee statement contradicts the coverage percentage used.
• A program receives a modified opinion with no matching finding.
• The compliance report omits a major program cluster member listed separately on the SEFA.

Elmstead University: one qualified program among four