MRD 07-PPD-026 - Audit Guidance and Related Audit Program Changes for OMB Circular A-133 Audits

DEFENSE CONTRACT AUDIT AGENCY DEPARTMENT OF DEFENSE 8725 JOHN J. KINGMAN ROAD, SUITE 2135 FORT BELVOIR, VA 22060-6219 IN REPLY REFER TO PPD 730.5.5.1 August 15, 2007 07-PPD-026(R) MEMORANDUM FOR REGIONAL DIRECTORS, DCAA DIRECTOR, FIELD DETACHMENT, DCAA SUBJECT: Audit Guidance and Related Audit Program Changes for OMB Circular A-133 Audits SUMMARY This MRD discusses the significant revisions made to the Agency’s policy and audit program for OMB Circular A-133 audits. Effective immediately, FAOs performing OMB Circular A-133 compliance audits are no longer required to perform cyclical internal control audits, except for the Control Environment and Overall Accounting Controls (Code 11070) and Billing System (Code 11010) audits. In addition, the major incurred cost audit steps have been incorporated into the OMB Circular A-133 program for testing compliance with Compliance Requirements B (Allowable Costs/Cost Principles). These audit policy changes are reflected in the current audit program available through APPS. BACKGROUND DCAA participation in OMB Circular A-133 audits represent an annual, comprehensive audit of an entity’s major Federal award program(s) that requires the auditor to obtain an understanding of the auditee’s internal controls over Federal programs, and appropriately test the controls to assess control risk for each compliance requirement that has a direct and significant effect on the Federal ...