Single Audits for State Grants

By Colleen Cullari, Cullari Carrico LLC  – November 12, 2019
Single Audits for State Grants

Many CPAs are now are approaching their fourth year under the State Single Audit Requirements of New Jersey 15-08-OMB (which, for the most part, followed the changes of the Federal “Uniform Guid­ance”). Also by now, many CPAs have received a slew of correspondence from various state departments requiring information in addition to their reports or even at times contradicting the statute. For example, two years ago, our firm had a client that took a step down in service from a State Single Audit to a Yellow Book Audit (under $750,000 but greater than $100,000 in state expenditures), due to a transition of their clients from contract basis funded by the Department of Health to fee for service basis funded by Medicaid. Accord­ingly, under the Yellow Book standards, our firm did not issue a Schedule of Expendi­tures of State Financial Assistance. Later, we were sent a letter attached to a memo whereby the Department of Health stated that all auditors are required to still provide a Supplemental Schedule of Expenditures of State Financial Assistance. Consequent­ly, and about $500 later, we amended our report and audit workpapers.  

It was difficult at times for our firm to stay up to date on all of the changes, inter­pretations and varying information that each individual state department newly instituted or still required to be included in the financial reports we were issuing. We thought that the change in statute and increase in threshold would be less work, but, ultimately, we were faced with a different level of burden and uncertainty. Luckily some of the state departments have recognized the challenges CPAs are facing and have enhanced communication and guidance. The following information is what our firm has tuned into at the state level that we find most advantageous and useful during our audit process. 

GN-06 Report 

Our firm relies on the New Jersey Depart­ment of Treasury GN-06 Report to assist in the preparation of the Schedule of Expenditures of Federal Awards (SEFA) and Schedule of Expenditures of State Financial Assistance (SESFA). This report is pro­vided as a courtesy to clients as part of the annual audit process. It provides a detail of cash payments made to the auditee by state agency name and program description. It helps our firm ensure that the SEFA/SESFA is complete and accurate. It does have its downfalls in that it isn’t a perfect match to the audit process; it is prepared on a cash basis and does not contain federal grants that are directly given to the organization (i.e., it only contains pass-through funding). None­theless, it does serve as a state confirmation and helps us perform an analysis of revenue by funding source.

Audit-Targeted Guidebooks

Various state departments have recently released specific guidance for grants given by their agencies to help address many of the inconsistencies in state statute versus state agency reporting requests. In the past, guidance was passed down via memo or letter format which was hard to keep track of. Now the state agencies are issuing comprehensive audit-targeted guidebooks, which are concise and easy to understand. For example, this year the Department of Health (DHS) issued “Terms and Con­ditions for Administration of Grants” for project periods beginning on or after July 1, 2019. The publication is intended to provide a common understanding of the framework for the administration of DHS grants. It’s a 54-page document outlined by each of the 12 compliance requirements contained in the matrix, so it speaks to auditors in our language. Among other things, it clarifies that the DHS, even for Yellow Book audits, requires supplemental SEFA and SESFA schedules. Further it details exactly how each of those schedules should look (since various state depart­ments have made their own tweaks to the overall guidance over the years).

With so many things to keep track of these days, it is nice to see that the state is working with auditors and taking effective approaches to manage the type of reporting we can all benefit from. By reviewing the verbiage in contracts and performing quick Google searches or New Jersey OMB site visits, the state is offering easy-to-access information in a concise format.  


Colleen  Cullari

Colleen Cullari

Colleen Cullari, MBA, is an audit manager at Cullari Carrico LLC. She is a member of the NJCPA Accounting & Auditing Standards and Nonprofit interest groups. Colleen can be reached at ccullari@cullaricarrico.com.

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This article appeared in the November/December 2019 issue of New Jersey CPA magazine. Read the full issue.