DECD: Consolidated Audit Guide for Audits of DECD Programs / Main Page - State of Connecticut

Audit Guide for Audits of DECD Programs

Reference Materials

The purpose of this audit guide is to assist independent public accountants (IPAs) in performing financial audits of Department of Economic and Community Development (DECD) programs. These audits must be performed in accordance with generally accepted auditing standards (GAAS), Government Auditing Standards, issued by the Comptroller General of the United States, and the requirements of this audit guide. The objectives of a DECD program audit are to assist DECD program managers in determining whether:

(1) the auditee has provided financial data and reports to the Department of Economic and Community Development that can be relied upon;

(2) the auditee has internal control structure policies and procedures in place to provide reasonable assurance that it is managing DECD programs in compliance with applicable laws and regulations; and

(3) the auditee has complied with applicable laws, regulations, policies, procedures, and terms and conditions of the Assistance/Loan Agreement, and thus expended state funds properly and with supporting documentation.

DECD program audit reports are a primary tool used by DECD program managers to meet their stewardship responsibilities in overseeing these DECD programs and assuring the integrity of the funds. The areas of noncompliance and internal control weaknesses noted in these reports must be acted upon by program managers. To be of value, these reports must contain adequate information to give reported matters perspective and to allow the managers to take necessary corrective action.

DECD Audit Guide Applicability - Use of some or this entire guide is mandatory for all participants in the DECD programs. Exceptions are noted below. The distinction between whether all or parts of this guide should be followed depends on the different circumstances involved.

Auditees not subject to a Federal and/or State Single Audit

Use of this audit guide is mandatory for audits required by State Statute, Regulation or Contract of auditees administering DECD programs when the auditee is not subject to a Federal and/or State Single Audit. This guide must be followed for all program audits of DECD grant/loan contracts and all audits of DECD State Housing Administration Funds.

Auditees subject to a Federal and/or State Single Audit

If an auditee is audited under a Federal and/or State Single Audit, the only additional requirements of DECD are that the DECD programs be tested for compliance with laws and regulations using the DECD Compliance Supplement contained in Appendix A of this guide and that the financial statement format outlined in Exhibit 4-2 be followed. A cumulative statement of program cost must be presented for all DECD grant/loan contracts as either a financial statement, supplemental schedule or as a note to the financial statement. For any program not covered in the compliance supplement, the IPA may ascertain compliance requirements by researching the statutes, regulations, and agreements governing the particular program.

Exceptions to using the DECD Audit Guide

Exceptions include those participants who are authorized to follow HUD Handbook 2000.4 REV-2, Consolidated Audit Guide for Audits of HUD Programs. In addition, in lieu of using the DECD audit guide, an auditor on certain DECD grant/loan contracts may perform Agreed-upon procedures. Agreed-upon procedure requests must be made in writing to the DECD Audit and Asset Management Division. Agreed-upon procedures normally include procedures such as, examining a predetermined percentage of costs from certain cost categories and examining the supporting documentation to ensure that costs were in conformance with the contract/budget and physically inspecting evidence to determine that items and services contracted for were used on the project. Also, ascertaining that expenditures were made only for obligations permitted by the budget, incurred after the effective date of the budget but before the termination of the contract, and limited to those allowable deviations permitted without special authorization.

This guide is not intended to be a complete manual of procedures, nor is it intended to supplant the IPA's judgment of audit work required. Audit procedures contained herein may not cover all circumstances or conditions encountered in a particular audit. The IPA should use professional judgment to tailor the procedures so that the audit objectives may be achieved. However, all applicable compliance requirements contained in this guide must be addressed by the IPA. If the IPA desires technical assistance pertaining to DECD programs and their regulations and or operations, the IPA should contact the appropriate division or appropriate regional manager of the Department of Economic and Community Development.

For the purpose of this guide, an "auditee" means a local housing authority, municipality, limited equity cooperative, nonprofit corporation, private developer, company, regional development agency, economic development commission and any other entity that has contracted to receive State assistance in the form of a grant or loan with DECD to carry out a specific project or service.