Jan 1, 2017
Posted Under: Advocacy
Deadline to respond is January 13, 2017.
All Alaska nonprofits that receive at least $500,000 in grant funds from the state in a fiscal year are required to file a State Single Audit. Foraker believes the current audit requirements are onerous and take time and money away from critical nonprofit missions. For the past two years, Foraker has prioritized the need for a change to this requirement. We have been urging the state to change the audit requirements in the following ways:
- To raise the State Single Audit threshold from its current $500,000 to at least $750,000 to match the federal government threshold.
- To build into regulations an automatic increase in the state threshold to reflect expected increases in the federal threshold. In other words, if the federal threshold goes to $1 million or more, the state threshold should match the federal level.
- To revise the concept of a “major program” as defined by state regulation.
- To move the audit process to one that is “risk-based” and more “nonprofit friendly” – only organizations that are deemed to be “at risk” would be required to submit a full audit. “At risk” translates to, among other factors, a new grantee, one that has had problems in the past, is experiencing capacity or competence issues, or, in the perception of the auditor, does not have sufficient internal controls.
How the state has responded so far. We are pleased that earlier this month the state released a proposed regulatory change that would raise the threshold to $750,000. Unfortunately, the proposed regulations do not address the other important issues Foraker and others have identified.
A call to action: While we welcome this change, we believe the proposed regulatory change does not go far enough to improve the ability of nonprofits to better meet their missions and improve their long-term resiliency. Below is a summary of the comments Foraker will submit:
- The increase to the State Single Audit threshold from $500,000 to $750,000 to match federal Uniform Guidance is good and overdue. It also puts the state in line with the federal threshold.
- The major program threshold is not set in regulation but is established in the Single Audit Guide that is adopted in regulation by reference. Most of the inefficiencies in the audit process come from a major program threshold that is both too low and doesn’t have any provision for risk weighting. State single audit also adds significantly to the cost of audits for small organizations (nonprofit organizations and governments) because many of the audit requirements are the same whether it is a small or large entity audit.
- The major program threshold should be set by regulation, not within the Single Audit Guide. There is not sufficient opportunity for public review and comment on the Single Audit Guide as exists when considering regulatory changes.
- The threshold for major programs has not changed in many years and is far too low. We know of many nonprofits in which MOST or ALL of the state programs are audited. This adds unneeded burden and cost to the audit process. The threshold should double at a minimum.
What your organization can do today: We urge Foraker Partners and any other interested nonprofits to join us in submitting public comments by the January 13, 2017 deadline. Send your comments to Colleen Campbell at single.audit@alaska.gov.
You are welcome to use the comments we are submitting, or to develop your own based on the specific needs of your organization.
If you have questions, or to receive a copy of the full text of Foraker’s comments, please contact Dr. Michael Walsh, Vice President and Director of Public Policy, at 907-388-5561 or by email at mwalsh@forakergroup.org.
We strongly encourage you to use your voice and speak out on this important public policy issue.
