April 4, 2018 —
We conducted a quality control review of the Baker Tilly Virchow Krause, LLP (Baker Tilly), FY 2016 single audit of National Marrow Donor Program (the Donor Program). Specifically, we determined whether the single audit was conducted in accordance with auditing standards and the requirements of Title 2 Code of Federal Regulations Part 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (Uniform Guidance).
Public Law 104-156, “Single Audit Act Amendments of 1996,” was enacted to promote sound financial management of Federal awards administered by non- Federal entities and to establish uniform requirements for audits of Federal awards. The Uniform Guidance sets forth the standards for the audit of non-Federal entities expending Federal awards.
We determined that Baker Tully did not fully comply with auditing standards and Uniform Guidance requirements. Specifically, the Baker Tilly auditors:
- did not perform sufficient audit procedures, for the FY 2016 single audit, to support conclusions on the Donor Program’s compliance with cash management requirements,
- did not adequately document the audit sampling performed to test compliance with procurement requirements, and
- did not adequately document the audit procedures performed that supported conclusions on the special tests and provisions; allowable costs/ cost principles; procurement, suspension, and debarment; and reporting compliance requirements.
We recommend that, for the FY 2016 audit, the Baker Tilly Partner,
- perform additional audit procedures to determine the Donor Program’s compliance with cash management requirements.
In addition, we recommend that, for future audits, the Baker Tilly Partner:
- properly document audit sampling performed, including the population of transactions and sample items reviewed, that is sufficient to support audit conclusions on the Donor Program’s compliance with procurement requirements, and
- improve audit documentation for the internal control and compliance testing performed on the special tests and provisions compliance requirement and the compliance testing performed on the allowable costs/cost principles; procurement, suspension and debarment; and reporting compliance requirements.
Management Comments and Our Response:
The Baker Tilly Partner agreed to the recommendations, and no further comments are required. The Baker Tilly Partner agreed that the auditors will perform the additional testing of the Donor Program’s requirement to minimize the time elapsed between the transfer of funds from the Government and the disbursement of those funds. In addition, the Baker Tilly Partner agreed to include additional information in future single audits to address our findings and recommendations. Specifically, the auditors will identify the population, sample size, and sample items for procurement testing. In addition, the auditors will expand the audit documentation for the internal control and compliance testing of key personnel requirements. Finally, the auditors will improve the audit documentation to ensure that there is a clear connection between the audit program procedures and the testing performed.
The recommendations are resolved but remain open. We will close the recommendations once we perform followup procedures to verify the corrective actions taken fully address our recommendations.
This report is a result of Project No. D2017-DAPOSA-0175.000.