Report | Sept. 26, 2018

Quality Control Review of the Warren Averett, LLC, FY 2016 Single Audit of Civil Air Patrol DODIG-2018-156

 

 

Objective:

 

We conducted a quality control review of the Warren Averett, LLC (Warren Averett), FY 201 single audit of Civil Air Patrol to determine 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).

 

Background:

 

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 o f Federal awards. The Uniform Guidance sets forth the standards for the single audit of non-Federal entities expending Federal awards and requires a single audit reporting package to be submitted to the Federal Audit Clearinghouse. The single audit reporting package includes the auditee’sfinancial statements, schedule of expenditures of Federal awards, summary schedule of prior audit findings, auditor’s reports, and a corrective action plan. Civil Air Patrol is a private nonprofit corporation that provides the U.S. Government, state governments, and local government agencies assistance in meeting national and local emergencies; promotes aerospace education and training; and provides a Civil Air Patrol cadet training program. Civil Air Patrol expended $50.2 million in Federal funds in FY 2016. Warren Averett is an accounting and advisory firm that Civil Air Patrol engaged to perform the FY 2016 single audit.

 

Findings:

 

Warren Averett did not fully comply with auditing standards and Uniform Guidance requirements because the FY 2016 single audit reporting package did not include all of the required information, such as the definition of a significant deficiency or Other Matters paragraph for the identified noncompliance. Warren Averett also did not consistently identify findings as material weakness, significant deficiency, and noncompliance in the auditor’s reports and schedule of findings and questioned costs. 

 

In addition, Warren Averett did not:

 

  •  properly document the audit sampling plan for internal control testing, and
  •  adequately document the audit procedures performed to test internal controls and compliance with Federal requirements.

We had to obtain explanations from Warren Averett and review other documentation, such as supporting source documents obtained from Civil Air Patrol, to determine whether Warren Averett performed sufficient procedures to support the audit conclusions and overall opinion on compliance with requirements. Based on our review, we determined that Warren Averett performed sufficient audit procedures even though those procedures were not clearly documented.

 

Further, we also determined that Civil Air Patrol did not comply with Uniform Guidance single audit requirements for the FY 2016 single audit reporting package because it did not prepare the required summary schedule of prior audit findings and a corrective action plan.

 

Recommendations:

 

We recommend that, for future audits, the Warren Averett Member:

 

  • document a sampling plan that considers the sample size necessary to test internal controls separately from the sample size for compliance testing with Federal requirements, and
  • improve audit documentation to clearly describe the audit procedures performed and evidence obtained that supports conclusions on internal control and compliance with Federal requirements.

In addition, we recommend that the Warren Averett Member:

 

  • revise the Civil Air Patrol FY 2016 single audit reporting package to accurately present the information required by auditing standards and the Uniform Guidance, and
  •  perform an assessment of other single audits performed by Warren Averett to determine whether additional training or changes to quality control procedures are necessary   to ensure adequate documentation in future  single audits.

We also recommend that the Civil Air Patrol Chief Financial Officer prepare the required corrective action plan and summary schedule of prior audit findings for inclusion in the revised FY 2016 single audit reporting package.

 

Management Comments and Our response:

 

Warren Averett and the Civil Air Patrol Chief Financial Officer agreed with our recommendations.

 

Warren Averett agreed to adequately document the sampling plan and improve the audit documentation. Therefore, this recommendation is resolved but remains open. We will close this recommendation once we verify that Warren Averett has implemented the corrective actions.

 

In addition, Warren Averett agreed to revise the FY 2016 single audit reporting package to accurately present the required information and has submitted a corrected reporting package to the Federal Audit Clearinghouse. Warren Averett stated that it reassessed the identification of the findings presented in the single audit reporting package. Therefore, the recommendation is resolved but remains open. We will close this recommendation once we verify the revised single audit reporting package accurately includes all required information.

 

Warren Averett also agreed to perform an assessment of its other single audits to determine whether additional training or changes to quality control procedures are necessary. Therefore, the recommendation is resolved but remains open. We will close this recommendation once we verify the assessment of single audits has been completed.

 

The Civil Air Patrol Chief Financial Officer agreed to prepare the required corrective action plan and summary schedule of prior audit findings in the revised FY 2016 single audit reporting package. We confirmed that Civil Air Patrol, in coordination with Warren Averett, submitted a revised reporting package to the Federal Audit Clearinghouse containing the required corrective action plan and summary schedule of prior audit findings. Therefore, this recommendation is closed.

 

This report is a result of Project No. D2018-DAPOSA-0074.000.