Question

Which of the following statements is not true about auditing colleges and universities?

A) Colleges and universities must have audits done by external auditors following generally accepted governmental auditing standards (GAS or GAGAS).
B) Universities that expend more than $500,000 in federal financial assistance in a year must have a single audit.
C) Guidance over spending federal money is provided in both Circular A-21 (Cost Principles) and A-110 (Administrative Requirements) from the Office of Management and Budget.
D) OMB Circular A-133 provides guidance for auditors performing a single audit for a college or university.

Answer 1

Statement B is not true about auditing practices for colleges and universities because the threshold for required single audits has been updated to $750,000, not the $500,000 mentioned, in accordance with the updated Uniform Guidance.

Step-by-step explanation:

The question is asking to identify the statement which is not true about auditing practices for colleges and universities. First, it is true that external auditors must conduct audits following generally accepted government auditing standards (GAS or GAGAS), providing a layer of independence and objectivity to the audit process. This lends credibility to the financial statements and reports of educational institutions.

The single audit requirement for universities that expend more than $500,000 in federal financial assistance is stipulated under OMB Circular A-133. This circular provides comprehensive standards for obtaining consistency and uniformity among federal agencies for the audit of states, local governments, and non-profit organizations. However, please note that the threshold for a single audit has been updated to $750,000 as per the Uniform Guidance revisions which replaced the stated circulars.

Regarding the guidance provided for the use of federal money, OMB Circulars A-21 (Cost Principles) and A-110 (Administrative Requirements) have indeed provided such guidance. Meanwhile, OMB Circular A-133 does provide guidance for auditors conducting a single audit, but it has been superseded by the Uniform Guidance which includes 2 CFR 200. Therefore, statement B is the one that is not true because it is outdated with regards to the threshold for required single audits.