What We Did:
The objective of this quality control review was to determine whether Warren Averett, LLC (Warren Averett) performed the FY 2019 single audit of DEFENSEWERX, Inc. (DWX) in accordance with generally accepted government auditing standards and Federal requirements for single audits.
What We Found:
The Warren Averett auditors did not comply with auditing standards and Uniform Guidance requirements when performing the FY 2019 single audit of DWX because the Warren Averett auditors did not:
• obtain sufficient, appropriate evidence to support conclusions that the following compliance requirements were not direct and material to the major program being audited: Cash Management, Equipment and Real Property Management, Procurement and Suspension and Debarment, and Special Tests and Provisions;
• prepare sufficient, appropriate evidence of the procedures they performed and the audit evidence they obtained for the following compliance requirements: the Activities Allowed or Unallowed, Allowable Costs/Cost Principles, and Period of Performance; and
• include the correct Schedule of Expenditures of Federal Awards (SEFA) in the reporting package to reflect the adjustments made to DWX’s financial statements. As a result, Federal agencies cannot rely on the FY 2019 single audit because the audit documentation did not provide sufficient, appropriate evidence to support the audit conclusions and the audit opinion on DWX’s compliance with Federal requirements. In addition, Federal agencies cannot use the SEFA to adequately monitor DWX Federal awards.
What We Recommend:
We recommend that the Warren Averett, LLC Partner:
• perform and document additional audit procedures to determine whether the Cash Management, Equipment, Procurement, and Special Tests compliance requirements are direct and material to the FY 2019 single audit, and perform any additional audit procedures necessary for the requirements determined to be direct and material;
• update the FY 2019 single audit documentation to provide a clear and accurate description of the procedures performed and to identify the evidence that supports the auditor’s conclusions on the Allowable Costs and Period of Performance compliance requirements; and
• coordinate with DEFENSEWERX, Inc. to update and reissue the FY 2019 reporting package, including the correct Schedule of Expenditures of Federal Awards and the results of the additional audit procedures performed in response to our recommendations.