Single Audit

The Single Audit Act of 1996, as amended, established the concept of replacing multiple grant audits with a single audit of a recipient as a whole. It focuses on the recipient's internal controls and its compliance with laws and regulations governing federal awards. The first two amendments--extending the law to cover all recipients of federal financial assistance and ensuring a more cost-beneficial threshold for requiring single audits--have largely been accomplished. Actions by single audit stakeholders have laid the foundation for effective implementation of the next four amendments: focusing audit work on programs that present the greatest financial risk to the federal government, providing for summary reporting of audit results, promoting better analyses of audit results through establishment of a federal clearinghouse and an automated data base, and providing for timely reporting of audit results--have laid the foundation for effective implementation of the next four amendments. It is still too soon to evaluate the prospects for achieving the objective of the seventh amendment--authorizing pilot projects to further streamline the audit process and make it more useful.

GAO noted that: (1) the intended objectives of the first two amendments have, for the most part, been accomplished; (2) the legislation and subsequent implementation guidance issued by the Office of Management and Budget (OMB) resulted in uniform audit requirements for state and local governments and nonprofit organizations and raised, to a more cost-beneficial level, the dollar threshold for determining which recipients are subject to audit; (3) federal agencies, state and local governments, and nonprofit organizations that are recipients of federal awards and their respective auditors are applying the audit guidance in meeting their single audit responsibilities; (4) actions by single audit stakeholders have laid the foundation for effective implementation of the next four amendments; (5) OMB has issued detailed criteria on how to apply the risk-based audit approach, and auditors are using the risk-based approach on their engagements; (6) single audit reports now include a summary of the auditor's results regarding the recipient's financial statements, internal controls, and compliance with laws and regulations; (7) users of single audit reports can now obtain and analyze information on more than 27,000 annual reports more quickly than ever before using the Internet to access a single audit automated database established by the Bureau of the Census; (8) recipients have recently begun submitting their audit reports under the 9-month reporting deadline instead of the previous 13 month deadline; (9) there is not yet enough experience to evaluate the prospects for achieving the objective of the seventh amendment; (10) OMB received two pilot project proposals and approved one, a proposal by the Washington State Auditor to combine 200 separate audits of state educational organizations into one audit; and (11) more experience with pilot projects is needed before their use as an alternative method for streamlining and improving single audits can be evaluated.