Audits of Federal Programs

Reasons for Disparities Between Costs Questioned by Auditors and Amounts Agencies Disallow Gao ID: AFMD-84-57 August 8, 1984

Pursuant to a congressional request, GAO determined the reasons for disparities between the amount of contract and grant costs questioned by auditors and the amount eventually disallowed by program managers.

GAO generally found that proper procedures are used in reaching decisions to allow costs. However, GAO questioned procedures used in instances representing $163 million in allowed costs at six agencies. Program managers are partially responsible because they do not: (1) hold auditees accountable for correcting program deficiencies identified by audits; (2) adequately address issues raised by auditors; or (3) adequately justify decisions in writing. Questionable procedures identified by GAO include: (1) allowing questioned costs because of a proposed future audit; (2) allowing questioned costs because the auditee submitted a plan to correct identified deficiencies; (3) using special provisions to allow questioned costs; (4) allowing questioned costs on the basis of administrative actions; (5) allowing questioned costs on the grounds the auditee provided certification that costs were appropriately incurred; and (6) allowing questioned costs without providing, as required by Office of Management and Budget (OMB) guidelines, written justification as to why program officials disagreed with auditors. GAO also found: (1) some problems with audit quality, but it was unable to determine the extent of auditing errors; (2) that auditors do not always follow up on audit recommendations; and (3) that auditors do not always provide accurate and complete information to Congress regarding audit resolution.


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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