Changes Made To Audit Guide
The Guide for Auditing Child Development, Nutrition, and Adult Basic Education Programs (old guide), issued in the year 2002, is being replaced with the CDE Audit Guide (new guide), effective June 2010. The new guide excludes information that was contained in the old guide, such as standards, requirements, and guidance set forth in other publications, and obsolete material. Also, the new guide presents revised examples of audit reports and schedules, and updated references to laws, regulations, and Web site addresses.
The old guide had nine sections, numbered 100 through 900, and 13 appendices, numbered A1 through H.
The new guide introduces seven chapters, numbered 100 through 700, and five appendices, numbered A through E. Below is an explanation of how the new guide differs from the old guide.
Chapter 100 – Introduction
The old and new guides address the audit guide purpose, authority, objectives, and changes. Chapter 100 of the new guide adds auditor qualifications, auditing standards, and technical assistance (relocated from Section 200 of the old guide). Also, it adds a new segment about how to select an auditor.
Chapter 200 – General Reporting and Administration
Both old and new guides cover audit reporting requirements, audit submission, extensions, and delinquencies. Also, both guides address record retention, audit documentation, and reconciliation of fiscal years not ending on June 30. However, Chapter 200 of the new guide updates those areas, adds new areas that describe the responsibility for the contents of the audit report, and breaks out the reporting requirements by type of entity. Also, it incorporates the reporting requirements from the old guide on single audits (Section 300), for-profit audits (Section 500), and local governments (Section 600).
At the end of Chapter 200 of the new guide, Exhibit A, entitled Audit Report Contents, revises and condenses the old guide’s Schedule B, Matrix of Audit Report type and Reporting Requirements. The new guide adds as Exhibit B a new schedule, entitled Audit Due Dates, which identifies the due dates for the different types of audits and entities, based on an entity’s fiscal year-end. Also, the new guide adds as Exhibit C a new form, entitled Extension Request Form. Both the old and new guides provide an example reconciliation schedule, but Exhibit D of the new guide, entitled Reconciliation of Fiscal Year Not Ending on June 30, clarifies the reconciliation process and replaces Schedule C of the old guide. The old guide’s Schedule A, Evolutionary Process of Changes since “OEA” Audit Guide was considered obsolete, so was not retained.
Chapter 300 – Reporting Child Care and Development Programs
Chapter 300 of the new guide expands the reporting procedures from Section 400 of the old guide, explaining how to report supplementary information required for child development programs and how to complete the supplementary schedules, including each section of the AUD forms. Also, it addresses how to report start-up expenses, administrative costs, subcontracts (note that AUD forms are required in subcontractor audits), equipment expenditures, other capital outlays, and reserve accounts. In addition, Chapter 300 of the new guide incorporates the reporting elements for local governments that were previously addressed in Section 600 of the old guide.
Chapter 400 – Reporting Nutrition Programs
Chapter 400 of the new guide incorporates Sections 220 and 221 of the old guide on audit cost reimbursement and Section 700 of the old guide on reporting requirements, reorganizing the nutrition programs to eliminate duplication. Also, nutrition reporting requirements were updated and references to Web sites were added for program background and reimbursement instructions.
Chapter 500 – Reporting Adult Education Programs
Chapter 500 of the new guide provides basic reporting requirements and program descriptions. The requirements for this program were not addressed in the old guide.
Chapter 600 – Reporting No Child Left Behind Programs
Chapter 600 of the new guide provides basic reporting requirements and program descriptions for the Even Start Family Literacy and 21st Century Community Learning Centers Programs. These programs were not addressed in the old guide.
Chapter 700 – Auditing Compliance with Program Requirements
Chapter 700 of the new guide incorporates the program compliance aspects from Section 400 of the old guide. Chapter 700 addresses compliance audit procedures in all programs: Child Care and Development, Nutrition, Adult Education, and No Child Left Behind. It also discusses materiality and extent of compliance testing, and reporting audit findings. In addition, it incorporates Section 900 of the old guide on Indirect Cost Allocation Plans and incorporates applicable eligibility guidance from Appendix H of the old guide.Chapter 700, Exhibit A, entitled Quick Reference Guide, provides references to general laws, regulations, and other guidance; references for each program area; and references for applicable standards. It is based, in part, on information from Section 200 of the old guide. Chapter 700, Exhibit B, entitled Cost Allocation Guidance, addresses cost allocation methodology, some of which was described in Section 900 of the old guide.
Appendix A – Illustrative Contractor Audit
(Addresses Single Audit Reporting Requirements)
Appendix A of the new guide replaces Appendix A1 of the old guide, addressing current auditing standards and program requirements. It includes two new audit report schedules: (1) Reconciliation of CDE and GAAP Expense Reporting, which accounts for the differences in reporting when CDE requirements differ from GAAP, such as for reporting depreciation; and (2) Schedule of Reimbursable Start-Up Expenses, which meets a reporting requirement under the contract funding terms and conditions. Also, it provides examples of several completed Audited Attendance and Fiscal Reports, including one for a Child Development Program subcontract.
Appendices B through E
Appendices B through E of the new guide are examples of schedules that, under certain conditions, are required in audits of nutrition programs. They are revisions that replace Appendices A2.1.1, A2.1.2, A2.1.3, and A.2.3 from the old guide. The use of these appendices is discussed in Chapter 400 of the new guide.
All other appendices from the old guide are considered obsolete and are not retained, including:
Appendix A2.2 – Commodity Distribution Program, Sponsor of Adult Correctional Rehabilitation Institutions
Appendix A2.4 – Summer Food Service Program for Children
Appendix A2.5 – Reserved
Appendix A3.1 – Illustrative Contractor Audit for Local Government, Child Development Fund
Appendices A3.2 through A3.7 – Illustrative Contractor Audit for Local Government, Component Unit and Reconciliation
Appendix A4 – Illustrative Independent Accountant’s Report on Applying Agreed-on Procedures
Appendices B through D – Reserved
Appendix E – Single Audit Desk Review Questionnaire and Checklist
Appendix F – Reserved
Appendix G – Illustrative Management Representative Letter for Agreed-Upon Procedures Engagement
Appendix H – CACFP Eligibility Guidance for Daycare Homes (see Chapter 700)