Single Audit

In 1984, to deal with concern about a lack of accountability in federal financial aid provided to states and local entities, Congress passed the Single Audit Act to promote uniform, entitywide audit coverage of federal assistance. According to state and local government officials interviewed by GAO, the single audit process has contributed to improvements in financial management practices. State and local officials have installed new accounting systems, begun having annual comprehensive financial statement audits, adopted or accelerated the adoption of generally accepted accounting principles, improved systems for tracking federal funds, strengthened administrative controls, and increased oversight. Despite these improvements, a number of issues have created concerns and hinder the usefulness of single audit reports. GAO recommends changing the criteria for selecting which entities and programs should be subject to single audit; revising the form, content, and publication of single audit reports; and improving access to results of single audits by oversight officials and program managers.

GAO found that: (1) according to state and local government officials, the single audit process has contributed to improving their entities' financial management practices; (2) despite financial management improvements, a number of issues burden the single audit process, hinder the usefulness of audit reports, and limit its impact; (3) because of low dollar thresholds, many entities receiving relatively small amounts of federal assistance are subject to single audit, while many programs considered highly vulnerable to fraud, waste, and abuse are not; (4) the Office of Management and Budget's (OMB) audit guidance is not updated regularly; (5) the most important audit findings are not highlighted because single audit reports do not include summaries of auditors' conclusions; (6) the 13-month time frame for issuing single audit reports limits the usefulness of the reports to oversight officials and program managers; (7) accountability over controls is limited, since entity managers do not report on the adequacy of their internal control structures; (8) single audit reports include many findings that are clearly inconsequential; (9) the results of single audits are not summarized or compiled so that oversight officials and program managers can easily access and analyze them to identify leads for follow-on audit work or program oversight; and (10) the reports do not emphasize the federal government's strong and continuing interest in the results of single audits.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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