Financial Audits in Federal Executive Branch Agencies

Questionnaires were sent to 607 Federal governmental units to obtain information regarding financial audits, and responses were analyzed and summarized.

One hundred and thirty-three units, with annual funding in excess of $20 billion, said they did not receive financial audits of their accounts and records during fiscal years 1974 through 1976, but 58 of these units did receive nonfinancial audits. The negative responses do not necessarily mean that all of the units' funds had not been audited since many units serve as conduits for the flow of Federal assistance funds, and funds are audited at the State or local level. The most frequently reported questionable practices revealed by the audits were inadequacies in: internal control, records, accounting procedures, inventory controls, and compliance with laws and regulations. About 86% of the units said some form of followup action was taken to remedy deficiencies. About half of the 44 units which received audit services from private firms used noncompetitive methods to select firms. GAO has issued guidance to agencies on the performance of internal audits and the acquisition of management advisory services. It does not issue guidelines on the use of competitive bids for audit services but does have oversight responsibility. Improvements have been made in financial auditing in several agencies as a result of GAO reviews. (HTW)