 Welcome, happy Monday for those of you joining us live or any any day as you watch the recording so glad to have you back here. Another episode of the nonprofit show. Today, we're nerding out with Eric Wilson CPA and manager at your part time controller, and Eric joined us to talk to us about auditing tips for nonprofits that have federal grants so stay with us as we dive deep into this. We're nerdy, but very important topic so I'm really excited to have you here with us Eric. Again Julie is taking some much deserved time off we wish her well, and I'm Jared ransom your nonprofit nerd CEO of the Raven group always grateful to be here for these amazing conversations with rock stars like the one that we have with us today. We also want to say thank you to our amazing presenting sponsors, they keep the show going and growing. And again, you know we're in our final stretch coming up on 700 episodes and we could not do it without these So a huge shout out to blooming American nonprofit Academy fundraising Academy at the National University be generous, your part time controller staffing boutique nonprofit thought leader as well as the nonprofit nerd. Make yourself a favor check out these companies but not yet wait till we're done with our conversation with our guest Eric, but do you check them out because their mission is your mission and they're here to help you elevate your mission around the community and those that you serve. We are so grateful for their continued support. And thanks to them you can find almost all 700 of our episodes on Roku, YouTube, Amazon Fire TV as well as Vimeo, but wait, there's more just like a good old sham well commercial. We can also listen to the nonprofit show wherever you stream your podcast so Eric. I like to ask our guest, are you a podcast listener. Yes. Yes. Good. What are some of your favorites I know this is like, you know, off the cuff I'm throwing a curveball here but what are some things that you listen to on podcast. I'm big on the comedy podcast so I really like Conan O'Brien's podcast is really good. That's a good one I've not listened to it so maybe I'll maybe I'll need to queue that up. So welcome Eric and for those of you watching and listening Eric Wilson CPA and manager at your part time controller welcome my friend. Thank you. Thank you. Happy to be here. Yeah. Tell us a little bit about yourself your journey in the nonprofit community. And for those of those that might not be familiar with YPTC go ahead and tell us a little bit about YPTC as well. Sure. So I myself am a CPA spent nearly a decade in the nonprofit accounting sector at this point so prior to joining YPTC I did work at a CPA firm as an auditor myself I did a lot of single audits for nonprofits that had federal funding so I've seen that side of it and then since coming to YPTC have seen the other side as well working internally with nonprofits here at YPTC. I'm currently a manager and market leader for our Dallas Fort Worth office here in the great state of Texas. Nationwide as a firm we've got a little over 500 staff and 1300 clients we work with organizations kind of across the nonprofit sector across the country. All shapes and sizes and missions. Happy to support in their accounting department we don't do the audit we don't do the tax, but we'll work. I hope alongside your your team and give you the support that you need from a controller CFO at that level to help you execute and will handle the accounting so that you can focus on the mission. I love that and I love that you shared with us that you and your previous life were an auditor yourself so you're really bringing that perspective and that lens to us in this conversation which is going to be so extremely valuable. We've had a client in the Metro Phoenix area that just started taking federal funding and they two are dipping their toe for the first time into the single audit so this is this is great timing probably for many of our viewers. So let's start off. What is a single audit tell us about this. Right yeah from the name. It's not what it sounds like right you might think single audit one and done we never have to do this again. Not the case, not the case. It's called that's it's intended to be a single financial and compliance audit so it takes what many organizations may be familiar with on the financial statement audit where they're looking at your actual accounting and then layering more on top of that to cover your federal grants, both the financial and internal controls around those compliance functions. And so it is more than what you may be used to from a traditional audit experience. It's triggered when an organization expense $750,000 or more of those federal awards so making sure that you have a mechanism to track that and have some awareness on the front end goes a really long way. I mentioned maybe with your client getting into the federal funding knowing what you're up against knowing when this threshold would be triggered can help you plot that course a lot better on the front end rather than being a little reactive after the fact. Let's let's talk a little brass tacks and I'm curious if you can tell us like what kind of ballpark cost, are we thinking of when it comes to a single audit. You know it waxes and wanes and it probably depends. The answer is probably it depends but if you can just give us you know a ballpark what, what should we be considering here for a cost standpoint. Yeah, it really does vary, both in terms of localities firms you know they'll kind of regionalize their own pricing. It is more than your traditional financial statement audit, potentially 50% more but it really depends on the complexity of what you have on the financial audit side and how much that drives your costs from that perspective as well as how much you have going on on your grant side and the complexity that that's going to introduce from the auditor's perspective for them to then layer in a cost component on that so it's. It varies it depends as with anything in accounting and many other fields, but it is a specialized practice area and that's something that we see even the AI CPA has a governmental audit quality center. And single audits in particular are usually at the top of their list for common audit deficiencies and audit quality issues so going through like an RFP process to make sure that you're vetting the firm make sure that they even offer this service because not all of them do. And then you can also have those firms speak to their expertise and what experience they have on these specialized audits, and then also get those cost proposals so that you have a more quantifiable expectation going into the single audit process. Yeah, that sounds really good so it's it's different than our annual audit or annual review. So that's not a one and done but you're going to share some tips with us today. Let's start off with tip number one and we have here to make sure that our accounting is in order and with that I want to, you know, question, does why PTC do audits. We do not know a lot of us here come from public accounting background so we've been on the auditor perspective as a firm we don't do audits we don't do taxes we keep our hands clean of those but we're happy to. We're happy to work alongside our clients and their auditors or their tax preparers to kind of serve as that liaison provide the information helps speak the auditor's language and help coordinate the efforts on the client side to get all of the information over to them. There is more required in a single audit you know it's not it goes above and beyond financial but we'll start particularly with the accounting side right and focusing on being able to track these funds not maybe too differently from traditional restricted grants but there's more that gets layered in with federal funds so there is additional complexity for requirements like maybe matching funds or indirect cost rates, or you know cash management requirements so making sure that your accounting infrastructure is set up to appropriately handle these requirements on the front end will go a long way and being prepared, you know well before the audit comes to do that due diligence, even before the federal funding shows up really is to have those ducks in a row. That would be so good I know. So, I know many organizations that have like previous previous pandemic been 100% private funded and then decided to you know start playing in this federal funding, and it changes things considerably and so this tip number one of having our accounting in order and I wanted to ask about YPTC being an auditor, because I know that you're not, but I know that you're like the auditor's best friend, you know so you come in and you help to prepare the audits. You help to prepare the accounting and really make sure that the eyes are dotted the teaser cross when it comes to that accounting order and making sure that you know we are going to pass with flying colors because of our help and our support with YPTC so tip number one, make sure I want to say like make sure your house is in order but it's really your accounting house. That's a great tip and that's going to help everyone's life, you know just just become so much more easier. Moving into tip number two, we have here know what you're required to comply with so what are some of these compliance measures. Yeah, I mean this I think back to I think this was a quote from Driver Z where they said, not knowing the law doesn't excuse you from following the law and that's very much the case with our federal grants to so we need to know what we're really on the hook for when we accept these funds and there's a whole host of places that these requirements can be imposed. The first we start at probably maybe the lowest level would be the grant agreement itself right whatever is executed with that federal funding agency, potentially to include any reward documents related to that specific award. But, you know, like your ShamWow commercial but wait there's more. You can have a nice plug there Eric. It goes further up the chain so you may have, for example funding from let's say Head Start right so you'll have your individual grant award. In addition to that they're also program guidelines or policy handbooks specific to the Head Start program, but wait there's more. You can have additional requirements from the federal funding agency in that example the Department of Health and Human Services, and then again but wait there's more additional requirements imposed at the federal level across all federal funding sources through what's called the uniform guidance or two CFR 200 so there's a lot of homework to be done when accepting federal awards. There's a lot of homework and then what is what is the timeline for a single audit because I you had mentioned like it's not a one and done. So not only do you need to prepare for this get our accounting in order make sure we know what the requirements are. What is the timeline for this are we talking months are we talking weeks days. Oftentimes this will be performed by the same firm that does the financial statement audit and they can layer the procedures together and build that into your annual audit timeline with you know incorporating additional time because there are additional procedures and additional reports that have been generated as well as submitting the single audit itself so there is a due date of the earlier of either nine months after the end of your fiscal year, or I think it's 60 days after receiving or excuse me 30 days after receiving the final audit that it does need to be submitted to the federal government in their database so you've got a bit of a time requirement on that they had relaxed it a little bit during the pandemic and have since called that back so we're, we're back on that timeline and if you're following kind of our standard best practices for getting your financial statement audit done, meeting the nine month timeline on that shouldn't be too much of our hurdle is just building in the extra time for the extra stuff that the single audit introduces. That's a great point that you mentioned because a lot has shifted during the height I would say of the pandemic the coven 19 pandemic and a lot of that now has been put back into like normalcy, you know so just complying with the dates and the timelines is a really big tip because we need to get back to you know knowing our dates and when things have shifted when they become a little bit more lenient and flexible and now it's like nope. We're back to this very stringent deadline. So I think knowing that as you mentioned Eric is a really good additional tip maybe to be right right right along in there, moving us into tip number three we have build effective internal controls over compliance. What does this mean. At the top the auditors in a single audit not only are they testing to make sure that you are compliant but they're looking at the controls you have to ensure that you stay compliant so we're looking at putting things in place to either make sure that you're putting non compliance and or putting something in place that would detect non compliance so that you can self correct in real time so a big part of this is knowing what we need to comply with, and then building these controls around it so there's requirements around like reporting and getting timely, using something like a calendar, setting reminders, including multiple people on those so that someone with some authority can follow up and make sure you know did the preparer get this done is it in for review is it submitted. Put those reminders in advance of the due date so that there is enough time to turn that around, and then also have reviews on the on the backside as well to look back and make sure. Okay, well did this actually get submitted or do we need to do any self corrective action, and also layer in a little bit of redundancy just to have both sides of that equation to get a really strong internal control system in your organization. I have a question, and for those of you listening. These questions are very organic like they're coming just from conversation that we're having right now with Eric and if you have questions, make sure you use in the bottom we have the q amp a so if you want to ask. Eric live question if you're one of our live viewers today make sure that you use that component down below and i'll ask that allowed for Eric. I'm curious when it comes to this audit and it's come back. How do we share this information or do we share this information like does this go on our website does guide star pick it up. Where else do we share the single audit information. So it, it could be included as part of your annual audit package if you're making that available on your website which is one of the ways to get those seals of transparency from guide star. So there is a requirement to submit your single audit there's both what they call a data collection form and then also attaching essentially a PDF of your, your actual audit report to the federal government through what's called the federal audit clearinghouse so there's a formal submission process for that where they do accumulate that in a database that's public information. And so you can even go online now and pull. And then you can even look at just as your own due diligence maybe if you're looking at accepting some new funds, you can pull audit reports of other organizations that get that money and see, did they have findings what does it look like the pitfalls are for this particular award, and so that you can prevent those things on the front and go and well informed and well equipped when accepting those federal awards. That is such a nugget of information so like the 990s this is public information so is this audit public information and if so where do we find it from other organizations. Yeah, that same federal audit clearinghouse the website that you submitted to is where you can do a search for, again, the particular award and agency name. If you have different parameters, the, the PDF becomes public information that others can can download a copy of that and view it in addition to that form, which essentially summarizes the results of the audit, including if there were any findings or no compliance and issues in that regard. I love that one of the things that I'm big on is being resourceful right so like, how can we find information that's already out there, it's merely at our fingertips now right with the with the internet. So being smart and resourceful as we look into this. What are some other tips and tricks that you can share with our audience when it comes to the single audit, because what I'm thinking is there's probably many organizations that they're dipping their toe into the single audit for the very first time. It might be a little overwhelming like might be a little intimidating. So what are some things that you've seen again for those of you watching. Eric has been an auditor so he's coming to us with that lens as well and I just think it's it's so beneficial for us. So what are some other things that you can share with those that are dipping into the single audit. It's an incredible resource that the government puts out every year in the form of the annual they call it the compliance supplement. This is put out by OMB the Office of Management and Budget. Every year they put this document out. It includes a lot of detail for many but not all federal awards and it walks through details of what compliance requirements apply. There's a lot of great information in there. If your particular program that you're pursuing or that you've received the document is very large. It's over 1000 pages in PDF form but it's maybe don't print it. Maybe they'll print it but it's searchable right you can control F you can use the table of contents to find your award. There's also section six of that document is all about internal controls and how examples of ways to put that into practice. Things that you can implement in your organization in more practical terms right of just how you can layer in reviews and approvals and workflows that would help you accomplish those control activities and demystify that a little bit. And it's the same tool that auditors use in planning and preparing their audit so you can have that level of insight into kind of the measuring stick that they're they're going to use to guide their process. You can go in equipped with that same information and get off on the right foot. Gosh that is so good. Now when it comes to a single audit is this something that we need to consider every single year if we have that expand expenditure level. Yes, yes, so it is it's assessed annually so you do want to make sure going back to the accounting point right have have a system of tracking your federal awards and being able to keep an eye on that. And annually, you know, even if your awards amounts vary, you could spend really hard if your grant years don't align with your fiscal year and trigger it one year that you may not have otherwise expected. So it is. It's looked at annually with that $750,000 threshold. So as funding shifts, you know, maybe you replace some funds maybe you're pursuing some of the funding opportunities that have come out of the pandemic. You know, what all funds you have that are federally sourced, and then keeping an eye on those over the course of the year to project out are we going to hit this threshold. But whether you hit that audit requirement or not, you're still on the hook for complying with all the things in the grant agreement in the award documents, the federal guidelines, the agency guidelines. Any of the individual funding agencies can do their own desk reviews or monitoring reviews which were very prevalent during the pandemic and the remote work environment as they tried to keep their employees occupied so even if the audit compliant isn't triggered, you can still have those reviews and there's still consequences for for non compliance where costs could be disallowed. Funding could be delayed withheld, you could even potentially lose that grant and or even be disbarred from grants in the future so it is something to take very seriously and be very well prepared for just to know what you're getting yourself into. Yeah, I appreciate you mentioning that because I mentioned that often when it comes to a lot of the grant and grant or compliance is you know if you are if you are not in compliance the chances of you not receiving an award from them later and this is you know beyond the federal status. It's very unlikely right like if you don't stay in compliance it's there they're not going to want to fund you. So, so that's a big piece. We do have a viewer that wanted to get more information from you Eric remind us where can you find that annual compliance report that you mentioned. It's called the compliance supplement so it usually comes out around every year. The 2022 version is out if you just Google 2022 compliance supplement it's one of the first results. It's from technically the White House.gov website. Now that makes sense and I'm glad that that they asked for that confirmation because there's a lot of acronyms in our in our community you know in the nonprofit community I feel like we're all speaking kind of acronym soup and we all have our different language and vernacular and how we use it and so I'm really glad they asked that question. One of the questions that I like to ask as we move forward, you know, into next year and believe it or not it's coming here quickly, but Eric if you had a crystal ball, right this is kind of our, our question we like to ask everyone. If you had a course crystal ball, what are some things that you can forecast into the next year, as it pertains to the single audit or perhaps auditing in general. We know there's going to be more more that more of these that get triggered with the additional funds that have come out between all the pandemic related aid and just other eight packages that are out there. Even as organizations have tried to pursue funding streams maybe that they didn't before and are looking at federal funding as a way of diversifying those revenue streams. We're expecting a higher volume of single audits to be triggered and with that comes all those best practices are making sure that you're well prepared and knowing on the front end being being proactive instead of reactive. That's so important and I just want to reconfirm the tips that you shared today with us so tip number one make sure that your accounting is in order. Tip number two know the requirements in which you need to comply with and then three tip three was to build those in fact effective pardon me, internal controls over the compliance and I think that's so very important as we, you know, look to wrap up our finances again your financial control or always see is like the best friend of the auditors you know it's like you want to make sure that why PTC is on your team to help you prepare for these audits. So Eric Wilson CPA I know we've connected on LinkedIn you're pretty active on that platform as well. Why PTC is very active on LinkedIn they share tons of great information and insight. I've been on them often and so grateful to have them here in my community as well. The Greater Phoenix areas where I spend most of my time, but why PTC is national and they're here to help you with your mission, no matter where you are so I love the virtual network that you have. I also like to nerd out with your data visualization team. So, that's a really, really awesome team just so grateful to have all of your expertise in this, in this package company so thank you. Happy to be here. Thank you. So Eric Wilson joins us from the Dallas Fort Worth area again Eric in his previous life was an auditor so he's able to to bring that level of expertise and that lens of perspective to today's conversation when it comes to the single audit the federal government requirements and compliance that you need to pay attention to Eric also serves as the manager for your part time controller or a manager I'm assuming there's many managers there and different levels with your part time controller again for those of you watching and listening we encourage you to check them out yptc.com is where you can find more information about the services and the products that your part time controller can help you with. I'm such a wonderful conversation again we wish Julia well this week but I will be here all week. Hi, I'm Margaret Ransom your nonprofit nerd again huge shout out to our amazing presenting sponsors which include your part time controller and Eric here today but we also want to give a shout out to Bloomerang American nonprofit Academy fundraising Academy at National University be generous your part time controller staffing boutique nonprofit thought leader as well as the nonprofit nerd. These are the companies that I want to give you homework if you have not checked out these companies do yourself a favor do your mission a favor do your community a favor. Check them out because they are here for one sole purpose and that purpose is your mission. So do check them out they are all fantastic companies. We've embedded every single one of them. We believe wholeheartedly in what they provide to our community so, Eric, it's been such a pleasure, I know that we are graced with a professional from yptc each and every month as one of our presenting sponsors. So glad to have you here to talk about the single audits because that to me is a little bit of an enigma, and I'm just glad that you were able to shed some light on that. It's going to help you know there's a lot of information out there and we've at least scratched the surface. We've scratched the surface and a lot more and it's recorded so for those of you that are maybe you jumped on later you want to listen to it again make sure that you find us on many of our streaming platforms and Eric it's been such a pleasure as it is with all of the professionals at yptc. I hope that all of you will join us again tomorrow we have quite the lineup this week. And as we end every episode we ask you to stay well, so you can do well. Thanks again Eric I appreciate your time.