You’ve read our first blog, and you’ve determined that you do, indeed, require a Uniform Guidance Audit or UGA. Now what?
This blog, the 2nd in our UGA series, answers that question in detail.
Yes, that’s right. YOU are responsible for finding a CPA who specializes in government grant accounting, the Federal Acquisition Regulations and your funding agency’s supplemental regulations. The government will not allow the audit to be conducted by a CPA who doesn’t know their stuff. In fact, your auditor’s work papers are subject to inspection by the government to make sure that the audit was performed correctly and they can be thrown out if they are determined to be inadequate.
To make matters worse, you have to pay for this highly specialized CPA and they won’t be working for you; they’ll be working for the government.
We, at Jameson & Company, have performed hundreds, if not thousands of these UGA (fka OMB-A-133) audits. However, as you can imagine, being subject matter experts made us very good at finding problems, which caused headaches for our clients (who all thought they were clean). So, we made the decision to stop offering audit services and only work as our client’s internal resource – making sure that everything is clean and getting them through the audit unscathed. Far more rewarding for us and our clients.
After you’ve found the right CPA firm (or use us to hire them) and the engagement letter is squared away, your auditor will develop a plan for what he or she will test during the audit. In this planning phase, you’ll be asked a number of questions.
The auditor will want to know about your accounting system.
The auditor will want to know about company culture.
These questions help the auditor determine how much risk they assess to the overall project and how much they have to test.
Know that your auditor will also ask you a number of fraud-related questions. Don’t be offended; you are not being accused of doing anything wrong. This is a requirement on any audit and your answers determine whether there is potential for fraud.
Basically, your auditor needs to confirm to the government and your funding agency that you are spending your grant money as you proposed and that you have adequate internal controls in place.
Assume that they will ask—and you will have to demonstrate—the following:
Odds are, your direct categories will be very much like the following:
Your auditor will make several selections from each category, and they’ll have specific items or proof that they need to see for each.
What they examine: For direct materials and other similar items, your auditor will examine invoices.
Why: They want to see how the cost relates to your award.
What they want to know: Who authorized the purchase; who authorized its payment; how was it coded in your accounting records; do you have cancelled checks to verify that the costs were paid for in a timely manner and with proper approvals.
What they examine: You auditor will look at your labor distributions or how you allocated the amounts you paid the employees to your award.
Why: They want to make sure these are truly direct expenses and that you charged the government correctly
What they want to see: They will look at your time sheet and examine your personnel files for approved salaries and hourly wage rates.
What they examine: The auditor wants to see a signed consulting agreement
Why: They want to know that this was a very detailed, well thought out agreement and see how it relates to the award.
What they want to see:
What’s not okay: A generic entry with no detail, such as “Consulting retainer: $5k”
What they examine: The auditor wants to see a signed subcontractor agreement.
Why: Again, they want to know that this was a very detailed, well thought out agreement and see how it relates to the award.
What they want to see:
What they examine: Your auditor will expect to see all supporting invoices for a direct travel expense.
Why: They want to make sure that your trip directly relates to your grant and that all your expenses are allowable.
What they want to see: Supporting and dated invoices for hotel, restaurants, and conference costs. Note: They will compare the timing of the direct travel costs with that of direct labor to make sure time frames agree. They will compare the costs to published per diem rates and look for unallowable items, such as alcohol or seating upgrades
What they examine: Invoices for the equipment, a picture of the item or the item itself.
Why: Direct equipment, such as a special microscope, that is purchased with government funds belongs to the government and could be asked to be returned. They need to accurately assess value, condition, and reusability.
What they want to see: An inventory tag and a place on an inventory list
What they examine: “Other direct expenses” is a pretty broad category; it could be cloud costs, publication costs, or so on. You auditor will want to know exactly what this expense is and why you’ve incurred it.
Why: Your auditor will want to confirm that this expense directly relates to your award and is in agreement with your original award proposals.
What they want to see: This is very situational. It could be invoices, procurement schedules, contracts and so on.
If you’re worried about surviving a UGA, Contact Us to schedule a time to speak to one of our government funding experts, and we will follow up within 48 hours!
This is the second of our seven-part series about the Uniform Guidance Audit:
If you want to go deeper into the Uniform Guidance Audit, check out our webinar.
Not all government contracts and grants are the same. Your funding agency, type of award, and funding stage require unique accounting requirements. Provide your information below to schedule a time to speak with one of our government funding experts!
Writing A Government Funding Proposal
Received A Pre-Award Notification
Received A Funding Award
National Institute of Health / HHS
Department of Defense (DOD)
National Science Foundation
Department of Energy (DoE)
SBIR/STTR Phase I
SBIR/STTR Phase II
R01, U01, Carb-X, HEAL or Pioneer Grant
EERE or ARPA-E Award
One of our government funding experts will contact you within 48 hours to schedule a phone call.