Federal Grants
Improvements Needed in Oversight and Accountability Processes Gao ID: GAO-11-773T June 23, 2011While federal grant funding has been increasing, long-standing concerns remain about the federal government's grants management and the lack of effective oversight tools to reasonably assure that grants are used for their intended purposes and that risks of fraud, waste, and abuse are minimized. GAO has issued a range of reports raising concerns about the risks and vulnerabilities related to grants management and oversight. The Administration recognizes these concerns. It included improving grants management as a part of its initiative to eliminate waste in the U.S. government and has various efforts underway to improve grants oversight and accountability. This testimony addresses the (1) significance of federal grant funding, (2) risks and vulnerabilities in key controls in the federal grant life cycle, and (3) improvements needed to make the single audit process an effective accountability mechanism. This testimony is primarily based on prior GAO work that reviewed grant accountability and the single audit process.
Grants Play a Significant Role in Implementing and Funding Federal Programs: The federal government's use of grants to achieve national objectives and to respond to emerging trends, such as changing demographics and changing threats to homeland security, has grown significantly in the last two decades. From fiscal years 1990 to 2010, federal grant outlays to states and local governments, increased from about $135 billion to over $600 billion--almost one-fifth of the fiscal year 2010 federal budget, according to the Office of Management and Budget (OMB). In fiscal year 2010, over 1,670 federal grant programs were offered by 23 federal grant-making departments and agencies. Risks and Vulnerabilities Exist in Key Controls in the Grant Life Cycle: Organizations that award and receive grants need effective internal control over the processes and funds involved. These controls are fundamental in assuring the proper and effective use of federal funds to achieve program goals and to ensure that funds are used for their intended purposes. Overall, our work on grant management has found weaknesses in the control systems of federal awarding agencies. We found vulnerabilities at different points in the grant life cycle: in the preaward, award, implementation, and closeout stages. Furthermore, we observed oversight issues that exist across the government. For example, in 2008 we reported that in 2006 about $1 billion remained in undisbursed funding in expired grant accounts in the largest civilian grant payment system, which was associated with thousands of grantees and over 325 different federal programs and could have been identified through improved oversight and grant tracking. In addition, federal agencies reported an estimated $125.4 billion in improper payments for fiscal year 2010. This estimate was attributable to over 70 programs spread across 20 agencies. Many of those programs reporting improper payments were federal grant programs, including Medicaid. Improvements Are Needed to Make Single Audits a More Effective Accountability Mechanism Over Grant Funding: The single audit process for organizations spending $500,000 or more in federal grant awards in a year is intended to play a key role in achieving accountability over federal grant resources. These audits report on the financial statements and internal controls over compliance with laws and grant provisions, among other things. GAO and others have identified and reported on significant concerns with the single audit process that diminish its effectiveness as an oversight accountability mechanism and concluded that improvements are needed. Through our work we found that (1) the federal oversight structure is not adequate to monitor the efficiency and effectiveness of the single audit process; (2) time frames of the single audit process do not facilitate the timely identification and correction of audit findings; and (3) single audit stakeholders have raised concerns about the complexity and relative costs and benefits of the single audit requirements, especially at smaller entities. Currently, OMB is conducting initiatives looking to improve the process, but time frames for implementing the results of ongoing studies are unclear. Through our body of work on federal grant accountability, GAO has made numerous recommendations directed at improving management and oversight. Our recommendations include a range of actions at the agency and governmentwide levels.
GAO-11-773T, Federal Grants: Improvements Needed in Oversight and Accountability Processes
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Technology, Information Policy,
Intergovernmental Relations and Procurement Reform, House of
Representatives:
For Release on Delivery:
Expected at 10:30 a.m. EDT:
Thursday, June 23, 2011:
Federal Grants:
Improvements Needed in Oversight and Accountability Processes:
Statement of Jeanette M. Franzel:
Managing Director:
Financial Management and Assurance:
GAO-11-773T:
GAO Highlights:
Highlights of GAO-11-773T, a testimony before the Subcommittee on
Technology, Information Policy, Intergovernmental Relations and
Procurement Reform, House of Representatives.
Why GAO Did This Study:
While federal grant funding has been increasing, long-standing
concerns remain about the federal government‘s grants management and
the lack of effective oversight tools to reasonably assure that grants
are used for their intended purposes and that risks of fraud, waste,
and abuse are minimized. GAO has issued a range of reports raising
concerns about the risks and vulnerabilities related to grants
management and oversight. The Administration recognizes these
concerns. It included improving grants management as a part of its
initiative to eliminate waste in the U.S. government and has various
efforts underway to improve grants oversight and accountability.
This testimony addresses the (1) significance of federal grant
funding, (2) risks and vulnerabilities in key controls in the federal
grant life cycle, and (3) improvements needed to make the single audit
process an effective accountability mechanism. This testimony is
primarily based on prior GAO work that reviewed grant accountability
and the single audit process.
What GAO Found:
Grants Play a Significant Role in Implementing and Funding Federal
Programs. The federal government‘s use of grants to achieve national
objectives and to respond to emerging trends, such as changing
demographics and changing threats to homeland security, has grown
significantly in the last two decades. From fiscal years 1990 to 2010,
federal grant outlays to states and local governments, increased from
about $135 billion to over $600 billion”almost one-fifth of the fiscal
year 2010 federal budget, according to the Office of Management and
Budget (OMB). In fiscal year 2010, over 1,670 federal grant programs
were offered by 23 federal grant-making departments and agencies.
Risks and Vulnerabilities Exist in Key Controls in the Grant Life
Cycle. Organizations that award and receive grants need effective
internal control over the processes and funds involved. These controls
are fundamental in assuring the proper and effective use of federal
funds to achieve program goals and to ensure that funds are used for
their intended purposes. Overall, our work on grant management has
found weaknesses in the control systems of federal awarding agencies.
We found vulnerabilities at different points in the grant life cycle:
in the preaward, award, implementation, and closeout stages.
Furthermore, we observed oversight issues that exist across the
government. For example, in 2008 we reported that in 2006 about $1
billion remained in undisbursed funding in expired grant accounts in
the largest civilian grant payment system, which was associated with
thousands of grantees and over 325 different federal programs and
could have been identified through improved oversight and grant
tracking. In addition, federal agencies reported an estimated $125.4
billion in improper payments for fiscal year 2010. This estimate was
attributable to over 70 programs spread across 20 agencies. Many of
those programs reporting improper payments were federal grant
programs, including Medicaid.
Improvements Are Needed to Make Single Audits a More Effective
Accountability Mechanism Over Grant Funding. The single audit process
for organizations spending $500,000 or more in federal grant awards in
a year is intended to play a key role in achieving accountability over
federal grant resources. These audits report on the financial
statements and internal controls over compliance with laws and grant
provisions, among other things. GAO and others have identified and
reported on significant concerns with the single audit process that
diminish its effectiveness as an oversight accountability mechanism
and concluded that improvements are needed. Through our work we found
that (1) the federal oversight structure is not adequate to monitor
the efficiency and effectiveness of the single audit process; (2) time
frames of the single audit process do not facilitate the timely
identification and correction of audit findings; and (3) single audit
stakeholders have raised concerns about the complexity and relative
costs and benefits of the single audit requirements, especially at
smaller entities. Currently, OMB is conducting initiatives looking to
improve the process, but time frames for implementing the results of
ongoing studies are unclear.
What GAO Recommends:
Through our body of work on federal grant accountability, GAO has made
numerous recommendations directed at improving management and
oversight. Our recommendations include a range of actions at the
agency and governmentwide levels.
View [hyperlink, http://www.gao.gov/products/GAO-11-773T] or key
components. For more information, contact Jeanette Franzel at (202)
512-9471 or franzelj@gao.gov.
[End of section]
Mr. Chairman, Ranking Member Connolly, and Other Members of the
Subcommittee:
Thank you for the opportunity to be here today to discuss the issues
that surround the federal grants management process and the need to
improve grants management and oversight to help ensure accountability
and the proper use of taxpayer dollars. While federal grant funding
has been increasing, long-standing concerns remain about the federal
government's grants management and the lack of effective oversight
tools to reasonably assure that federal funds are used for their
intended purposes and to minimize risks of fraud, waste, and abuse.
Today I will highlight a range of reports we have issued that raise
concerns about the risks and vulnerabilities related to the grants
management and oversight process including the single audit process
which is intended to be a key accountability mechanism.[Footnote 1]
The Administration also recognizes these concerns. It included
improving grants management as part of its initiative to eliminate
waste in the 2010 Financial Report of the U.S. Government and has
various efforts underway intended to improve grants oversight and
accountability.[Footnote 2]
Today, I will discuss the (1) significance of federal grant funding,
(2) risks and vulnerabilities in key controls in the federal grant
life cycle, and (3) improvements needed to make the single audit
process an effective accountability mechanism.
In preparing this testimony, we relied on our body of work on federal
grants management and oversight, including the single audit process.
More detail on our scope and methodology is included in each issued
product. We conducted our work in June 2011 in accordance with all
sections of GAO's Quality Assurance Framework that are relevant to our
objectives. The framework requires that we plan and perform the
engagement to meet our stated objectives and that we discuss any
limitations in our work. We believe that the information and data
obtained, and the analysis conducted, provide a reasonable basis for
our findings and conclusions.
Grants Play a Significant Role in Implementing and Funding Federal
Programs:
The federal government's use of grants to achieve national objectives
and respond to emerging trends, such changing demographics and
changing threats to homeland security, has grown significantly in the
last two decades. According to the Office of Management and Budget
(OMB), from fiscal years 1990 to 2010, federal outlays for grants to
state and local governments increased from $135 billion to $608
billion--almost one-fifth of the federal budget and a 350 percent
increase since fiscal year 1990 (see fig. 1).[Footnote 3] In fiscal
year 2010, OMB identified 23 federal grant-making departments and
agencies that offered over 1,670 federal grant programs.[Footnote 4]
The top three agencies in terms of grant dollars outlayed during
fiscal year 2010 were the Departments of Health and Human Services
(HHS), Transportation, and Education.[Footnote 5]
Figure 1: Total Federal Outlays for Grants to State and Local
Governments during Fiscal Years 1990 through 2010:
[Refer to PDF for image: line graph]
Fiscal year: 1990;
Federal outlays: $135.3 billion.
Fiscal year: 1991;
Federal outlays: $154.5 billion.
Fiscal year: 1992;
Federal outlays: $178.1 billion.
Fiscal year: 1993;
Federal outlays: $193.6 billion.
Fiscal year: 1994;
Federal outlays: $210.6 billion.
Fiscal year: 1995;
Federal outlays: $225.0 billion.
Fiscal year: 1996;
Federal outlays: $227.8 billion.
Fiscal year: 1997;
Federal outlays: $234.2 billion.
Fiscal year: 1998;
Federal outlays: $246.1 billion.
Fiscal year: 1999;
Federal outlays: $267.9 billion.
Fiscal year: 2000;
Federal outlays: $285.9 billion.
Fiscal year: 2001;
Federal outlays: $318.5 billion.
Fiscal year: 2002;
Federal outlays: $352.9 billion.
Fiscal year: 2003;
Federal outlays: $388.5 billion.
Fiscal year: 2004;
Federal outlays: $407.5 billion.
Fiscal year: 2005;
Federal outlays: $428.0 billion.
Fiscal year: 2006;
Federal outlays: $434.1 billion.
Fiscal year: 2007;
Federal outlays: $443.8 billion.
Fiscal year: 2008;
Federal outlays: $461.3 billion.
Fiscal year: 2009;
Federal outlays: $538.0 billion.
Fiscal year: 2010;
Federal outlays: $608.4 billion.
Source: Table 12.1 of the Historical Tables of the President‘s fiscal
year 2012 budget, [hyperlink,
http://www.whitehouse.gov/omb/budget/Historicals].
[End of figure]
The Catalog of Federal Domestic Assistance (CFDA),[Footnote 6]
administered by the General Services Administration, provides
information on grant programs within and across agencies. Our analysis
of federal assistance data from the CFDA indicates that, as of June
17, 2011, 1,432 project grant programs and 209 formula grant programs
were listed.[Footnote 7] In addition, there were 34 grant programs
that are categorized as a combination of both project and formula
grants. The top three agencies in terms of number of grant programs on
the CDFA Web site were the Departments of HHS, Interior, and
Agriculture. The CFDA Web site allows users to search the database for
grant programs on the basis of a range of factors, such as the
awarding federal agency or the general nature of a grant program, such
as health care or environmental quality. For example, our analysis
identified 128 grant programs that address environmental quality
issues.
Risks and Vulnerabilities Exist in Key Controls in the Grant Life
Cycle:
In awarding federal grants, effective oversight and internal control
is of fundamental importance in assuring the proper and effective use
of federal funds to achieve program goals. Effective internal control
systems provide reasonable assurance to taxpayers that grants are
awarded properly, recipients are eligible, and federal funds are used
as intended and in accordance with applicable laws and regulations.
[Footnote 8] In authorizing grant programs, federal laws identify the
types of activities that can be funded. OMB circulars specify how
grants are to be administered and the standards for determining
allowable costs.[Footnote 9]
In addition to the legal and regulatory underpinnings, each grant
program has stated purposes that guide what the grant is intended to
accomplish. Before awarding any grants, agencies' preaward processes
should ensure that potential recipients have the necessary
capabilities to effectively implement the program to comply with
relevant laws and regulations, and provide the necessary
accountability for federal resources. Once the agency has awarded the
grants, its monitoring of grantee performance is important to help
ensure that grantees are meeting program and accountability
requirements. Following grant completion, it is important for agencies
to evaluate the goals and measures established at the beginning of the
process against actual results, and to make any needed adjustments for
future grant efforts. At all stages of the process, it is essential
that effective internal control systems are in place. The grant life
cycle is shown in figure 2.[Footnote 10]
Figure 2: Grant Life Cycle of Federal Awarding Agency:
[Refer to PDF for image: illustration]
Stage: Preaward stage:
Agency processes:
* Announce opportunity:
- Provide administrative and technical support;
* Receive applications:
- Authenticate applicant, apply business rules, and ensure
administrative compliance;
* Review and decision:
- Conduct reviews (administrative, budget, policy, merit, business,
application, certifications, and assurances).
Stage: Award stage:
Agency process:
* Award notification:
- Notify the grantee and publicly announce the award.
Stage: Implementation stage:
Agency processes:
* Disburse payment:
- Process payments to grantee;
* Management and oversight:
- Review grantee reports and may choose to conduct site visits.
Stage: Closeout stage:
Agency process:
* Closeout:
- Review and reconcile final audit and other reports.
Source: GAO.
[End of figure]
Overall our work on grant management and oversight issues found
weaknesses in the control systems of the stages of the grant life
cycle: the preaward and award stages, implementation, and close out.
[Footnote 11] We have recommended actions to strengthen the internal
control framework for grant accountability in individual programs--
including developing and implementing formal and structured approaches
to conducting grant monitoring activities, and training grant program
staff. While agencies have taken actions to address our
recommendations in individual programs, more work is needed across the
government as well as from a governmentwide perspective to strengthen
internal controls and oversight for federal grant funds.
Key Controls in Agencies' Preaward and Award Processes Need
Improvement:
Our audits found that agencies awarded grants without adequately
documenting the grantee selection process.[Footnote 12] In some
instances, we found agencies did not perform preaward reviews until
after the grants had been awarded.[Footnote 13] Preaward reviews are
essential to determining that recipients possess, or have the ability
to obtain, the necessary competence to plan and carry out the program
before awarding a grant, thereby reducing the federal government's
risk that money may be wasted or projects may not achieve intended
results. For an effective preaward grant process, agencies need
effective procedures for:
* assessing applicant capability to account for funds,
* competing grants in a fair and effective manner for grant programs
that require competition,
* preparing good work plans to provide the framework for grant
accountability, and:
* including clear terms and conditions in award documents.
The award stage of grants management includes making award decisions
and committing funds. In a competitive award process, agencies can
increase assurance that recipients have the systems and resources to
efficiently and effectively use funds to meet grant goals. Evaluation
criteria, including having sufficient resources and sound management
practices, can help an agency focus its review on factors indicative
of success and provides information about grant applicants' ability to
fulfill grant requirements.
We found weaknesses throughout the award processes used by agencies we
reviewed. For example, in one review we found controls over the
agency's processes had weaknesses in (1) carrying out and documenting
management's review of grant applications, (2) documenting the grant
award decisions, and (3) using the automated recipient data available
in the agency's grants system. These deficiencies increased the risk
that the agency would not consistently consider all relevant
information--including key management discussions during evaluation--
before making a decision to award. Lack of documentation also limited
the agency's ability to explain the results of its award decisions,
and resulted in incomplete and inaccurate information in the agency's
grants and recipient-application evaluations. At the time of our
review, the agency's grant-application evaluation process and the
basis for the resulting decisions were not clearly documented.
[Footnote 14]
Another agency's decisions to award grants were based primarily on the
results of a peer review process that had weak internal controls for
ensuring that applications would be evaluated consistently. We found
weaknesses in the procedures the agency relied on to ensure that
evaluation criteria were applied consistently across reviewers and
across panels when evaluating the grant applications it received.
[Footnote 15]
Weaknesses in the Implementation Stage Expose Funds to the Risk of
Waste, Fraud, and Abuse:
While federal grant-awarding agencies are responsible for continued
oversight of the federal funds they award, grantees or recipients also
have key responsibilities to administer, manage, and account for the
use of grant funds. Federal agencies are dependent on the design and
implementation of recipients' grant management programs to ensure that
federal funds are used for their intended purposes and are
appropriately safeguarded.
Over the past several years, we have reported that agencies need to
improve oversight of grantee activities and management of federal
funds.[Footnote 16] Effective oversight procedures based on internal
control standards for monitoring the recipients' use of awarded funds
are key to ensuring that waste, fraud, and abuse are not overlooked
and that program funds are being spent appropriately. Such procedures
include (1) identifying the nature and extent of grant recipients'
risks and managing those risks, (2) having skilled staff to oversee
recipients to ensure they are using sound financial practices and
meeting program objectives and requirements, and (3) using and sharing
information about grant recipients throughout the organization. To
ensure that grant funds are used for intended purposes, agencies need
effective processes for:
* monitoring the financial management of grants,
* ensuring results through performance monitoring,
* using audits to provide valuable information about recipients, and:
* monitoring subrecipients as a critical element of grant success.
We have also reported the need for agencies to assist recipients in
improving subrecipient monitoring--the process of a recipient
assessing its subrecipients' quality of performance over time and
ensuring that the findings of audits and other reviews are promptly
resolved. It is important that recipients identify, prioritize, and
manage potential at-risk subrecipients to ensure that grant goals are
reached and resources are used properly. Additionally, recipients
should be (1) conducting site visits to subrecipients (early and
often); (2) reviewing financial and progress reports for accuracy,
completeness, and alignment with program objectives; and (3) and
strengthening policies and procedures related to subrecipients. GAO
has found that inadequate subrecipient monitoring often leads to the
misuse, abuse, and waste of federal funds.
Grant Closeout Procedures Represent One of the Final Opportunities to
Detect Unallowable Uses of Funds:
Past audits of federal agencies by GAO and Inspectors General and
annual performance reports by at least eight federal agencies in 2006
and 2007 suggest that grant management challenges, including grant
closeout procedures, are a long-standing problem.[Footnote 17]
Closeout processes can be used for detecting problems that have
occurred in areas such as recipient financial management and program
operations, accounting for any real and personal property acquired
with federal funds, making upward or downward adjustments to the
federal share of costs, and receiving refunds that the recipient is
not authorized to retain. Closeout procedures are intended to ensure
that recipients have met all financial requirements, provided final
reports, and returned any unused funds. When agencies do not conduct
closeout procedures in a timely manner, this prevents unused funds
from being used to help address the purpose of the grant and, at the
same time, increases risk that records will be lost or officials may
leave or not remember sufficient details, making it more difficult for
the agency to recoup appropriate funds.
Attention Is Needed To Address Governmentwide Issues:
Through our work, we found that weaknesses in grant oversight and
accountability issues that span the government. Specifically, we
identified long-standing challenges in oversight of undisbursed grant
award balances, and significant levels of improper payments in grant
programs.
Oversight of Undisbursed Balances in Federal Grant Programs:
We have found that undisbursed balances for expired grant accounts can
be significant and that agencies needed to improve how they track and
report on these funds.[Footnote 18] For example, in August 2008, we
reported that during calendar year 2006 about $1 billion in
undisbursed funding remained in expired grant accounts in the largest
civilian grant payment system. [Footnote 19] The expired but still
open grant accounts found were associated with thousands of recipients
and over 325 different federal programs. This figure illustrates the
potential financial benefits to be gained by improving oversight of
undisbursed grant funding, and we are currently starting follow-up
work in this area. The existence of undisbursed grant balances in
expired grant accounts may hinder the achievement of program
objectives, limit deobligating funding for other uses, and expose the
funding to improper spending or accounting.
Taken together, dozens of past audit reports we reviewed from multiple
agencies suggested that undisbursed balances in expired grant accounts
were a long-standing challenge and that these grants shared common
grants management problems. The audits generally attributed the
problems to inadequacies in the awarding agencies' grant management
processes, including closeouts as a low management priority,
inconsistent closeout procedures, poorly timed communications with
grantees, or insufficient compliance or enforcement. Yet when agencies
made concerted efforts to address the problem, Inspectors General and
auditors reported that those agencies were able to improve the
timeliness of grant closeouts and decrease the amount of undisbursed
funding in expired grant accounts. The approaches taken by the
agencies administering the grants generally focused on elevating
timely grant closeouts to a higher agency management priority and on
improving overall closeout processing.
Better tracking of grant accounts maintained in all federal payment
systems could identify the expired grants with undisbursed balances
and make funds available for other assistance projects or facilitate
the return of these funds to the Treasury. We recommended in August
2008 that the Director of OMB instruct executive departments and
independent agencies to annually track the amount of undisbursed grant
funding remaining in expired grant accounts and report on the status
and resolution of such funding in their annual performance plans and
Performance and Accountability Reports. As of April 2011, OMB had not
issued governmentwide guidance regarding undisbursed balances in
expired grant accounts.[Footnote 20]
Many Grant Programs Have Significant Levels of Improper Payments:
Federal agencies reported improper payments of an estimated $125.4
billion in fiscal year 2010. This $125.4 billion estimate comes from
over 70 programs spread among 20 federal agencies. Many of those
programs reporting improper payments were federal grant programs. A
majority of the $125.4 billion of reported improper payments is
accounted for by 10 programs. The 10 programs account for about $118
billion, or 94 percent, of the total estimated improper payments
reported for fiscal year 2010. Five of those top 10 programs were
grant programs, and included improper payment estimates for Medicaid
($22.5 billion), Unemployment Insurance ($17.5 billion), Supplemental
nutrition assistance programs ($2.2 billion), the National school
lunch program ($1.5 billion), and Pell Grants ($1 billion).
Recently, in July 2010, the Improper Payments Elimination and Recovery
Act (IPERA)[Footnote 21] was enacted to enhance reporting and
reduction of improper payments. In addition to amending the Improper
Payments Information Act's improper payment estimation requirements,
IPERA establishes additional requirements related to federal agency
management accountability, recovery auditing, and compliance and
noncompliance determinations and reporting. In addition, the
Administration is taking a number of actions in the area of improper
payments.
Establishing effective accountability measures to prevent and reduce
improper payments in grant programs becomes an even higher priority in
today's fiscal environment. In this regard, identifying and analyzing
causes of improper payments will be key to developing effective
corrective actions and accountability measures in order to reduce and
prevent improper payments in grant programs.
Improvements Are Needed to Make Single Audits a More Effective
Accountability Mechanism over Federal Grant Funding:
OMB has indicated that single audits play a key role in the
achievement of its accountability over federal grant funding. The
Single Audit Act, as amended, was enacted to promote, among other
things, sound financial management, including effective internal
controls, with respect to federal grant awards administered by
nonfederal entities. We and others have identified and reported on
significant concerns with the Single Audit process that diminish its
effectiveness as an oversight accountability mechanism and concluded
that improvements are needed.[Footnote 22] Accordingly, we have made
several recommendations for improving the Single Audit process. In
March 2009, we made recommendations to OMB for improving federal
oversight and the single audit process.[Footnote 23] In April 2009, we
started work on American Recovery and Reinvestment Act of 2009
(Recovery Act) programs relating to single audits and issued the first
of nine reports related to oversight and accountability mechanisms for
Recovery Act funds.[Footnote 24] [Footnote 25] We made additional
recommendations for improving single audits during the course of that
work. A summary of our findings and recommendations follows.
The Federal Oversight Structure Is Not Adequate to Monitor the
Efficiency and Effectiveness of the Single Audit Process:
We found that the federal oversight structure is not adequate to
monitor the efficiency and effectiveness of the single audit process.
Specifically, federal agencies do not systematically use audit
findings to identify and understand emerging and persistent issues
related to grant programs and grantee use of funds.[Footnote 26] We
identified variations in the federal oversight process in performing
key functions of the single audit process such as quality control
reviews by federal cognizant agencies which raised questions about how
federal agencies carry out their single audit responsibilities. The
federal oversight structure for the single audit process does not
include a designated function or entity to monitor whether or how well
federal awarding agencies are implementing single audit requirements.
Without a mechanism in place to monitor on an ongoing basis how the
single audit process is implemented governmentwide, OMB and federal
stakeholders are unable to measure the efficiency and effectiveness of
this process or its usefulness as an accountability tool over federal
grant awards. We recommended that OMB designate an entity or group to
(1) evaluate and comprehensively monitor the single audit process
governmentwide, (2) assess the efficiency and effectiveness of how
agencies carry out their single audit responsibilities, and (3)
identify additional guidance and resources needed to carry out single
audit requirements. OMB has developed workgroups which are currently
underway to review ways to improve the single audit process. In June
2010, the Single Audit Workgroup established by OMB pursuant to
Executive Order 13520 made recommendations to OMB in four areas to
enhance and streamline the single audit process to better support the
overall effort to improve federal program accountability and reduce
improper payments.[Footnote 27] However, as discussed in a later
section, the related decisions and planning for acting on these
recommendations are still in process. The four areas of
recommendations included:
(1) instilling federal leadership over the single audit process to
improve program accountability and reduce improper payments;
(2) managing risks by refocusing the single audit to include those
nonfederal entities that present the greatest risk of improper
payments;
(3) improving the access to information in single audit reports to
enhance federal agency follow-up of audit findings and to coordinate
single audit and improper payments analysis and results; and:
(4) amending the stated purposes of the Single Audit Act of 1984, as
amended, to emphasize the importance of acting on single audit
findings as a way to reduce the risk of improper payments.
More Timely Single Audit Reporting Is Needed, Especially in Internal
Control:
Time frames of the single audit process do not facilitate the timely
identification and correction of audit findings.[Footnote 28][Footnote
29] Under the current time frames for identifying and correcting audit
findings provided by the Single Audit Act and OMB Circular No. A-133,
it could take years to correct significant deficiencies and material
weaknesses that expose federal funds to misuse or fraud. For example,
in accordance with current requirements, a material weakness that has
been identified by the auditor for an entity that has a June 30, 2010,
fiscal year-end can possibly be reported in the Single Audit report to
be issued as late as March 31, 2011, along with the auditee's
corrective action plan. The federal awarding agency would have 6
months or until September 30, 2011, from receipt of the Single Audit
report to communicate a written management decision to the auditee. As
a result, it may take 15 months or more since the end of the fiscal
year in which the audit finding was initially identified before an
auditee's corrective action plan is approved by the federal agency.
Several state auditors have expressed frustration regarding single
audit findings that remain open years after they were initially
identified, without the auditee or the federal awarding agency taking
action. The lack of attention to ensuring prompt corrective action
impairs the federal government's ability to ensure that unallowable
costs have been repaid or that internal control deficiencies have been
corrected. Shortening the time frames required for issuing management
decisions by federal agencies, and monitoring the auditee's
implementation of timely corrective actions by the federal agency
would help to ensure that appropriate audit follow-up and resolution
are achieved, and that known internal control weaknesses are corrected.
In our work on Recovery Act funds, we reported our concern that the
single audit process would not provide the timely accountability and
focus needed to assist recipients in making necessary adjustments to
internal controls to provide assurances that the Recovery Act funding
was being spent as effectively as possible to meet program objectives.
We also reported that the Single Audit reporting deadline is too late
to provide audit results in time for the audited entity to take action
on internal control deficiencies noted in Recovery Act programs.
In response to several of our recommendations, in October 2009 OMB
implemented the Single Audit Internal Control project to encourage
earlier reporting and timely correction of internal control
deficiencies identified in single audits that included Recovery Act
programs. Although we found that the project met its original
objectives of (1) achieving more than 10 volunteer states
participating in the project, (2) having the participating auditors
issue interim internal control reports for the selected programs at
least 3 months earlier, and (3) having auditee management issue
corrective action plans to resolve internal control deficiencies at
least 2 months earlier than required by OMB Circular No. A-133, the
coverage of the project was limited, with 16 of the 50 states
participating. Furthermore, because most of the federal awarding
agencies did not issue their management decisions in a timely manner,
grant recipients were delayed in implementing corrective action plans.
We also identified concerns regarding the need for OMB to issue its
annual single audit guidance in a more timely manner. While OMB has
committed to issuing its guidance in a timely manner, it has yet to
achieve its target for issuance of its guidance. Specifically for
2009, OMB issued the guidance, Circular No. A-133 Compliance
Supplement, in two stages, the initial one in May 2009 and an addendum
in August 2009, after the single audits for entities with a June 30,
2009, fiscal year end were already under way.[Footnote 30] An OMB
official told us the delays in issuing the 2009 compliance supplement
were due to incorporating more specific guidance for Recovery Act
programs. For most of the largest nonfederal entities that are subject
to the single audit, the fiscal year ends on June 30 and thus the
timing of OMB's issuance of the audit guidance has been close to and
even after the fiscal year end close. Most of the auditors told us
that they needed the information as early as February or at least by
April to effectively plan their work for a June 30 year end audit.
Some of these auditors stated that the OMB guidance was issued too
late, causing inefficiencies and disruptions in the planning of audit
procedures. For 2010, OMB officials told us that they planned to issue
the 2010 Compliance Supplement in late May 2010. However, the guidance
was not issued until July 29, 2010. We recommended that OMB issue the
guidance by March 31st of each year. In January 2011, OMB officials
reported that the production of the 2011 Compliance Supplement was on
schedule for issuance by March 31, 2011; however, OMB issued the 2011
Compliance Supplement on June 1, 2011. The late guidance impacts the
auditors' ability to deliver timely results in what is already a
lengthy process.
Need to Focus on High-Risk Activities, Programs, and Recipients While
Potentially Streamlining, Simplifying, or Reducing Focus on Areas of
Low Risk:
Single audit stakeholders have raised concerns about the complexity
and relative costs and benefits of the audit requirements for single
audits, especially at the smaller entities.[Footnote 31] Specifically,
auditors of single audits are subject to similar audit requirements
and the same guidance in OMB Circular No. A-133 and the Compliance
Supplement when they are auditing an entity that has expended $500,000
of federal awards as they are when auditing one that expended $50
million or more. We found that there are opportunities to evaluate the
audit procedures being applied and determine whether there is a proper
balance between risk and cost-effective accountability from the
largest to the smallest of audited entities. Single audits of small
entities could be simplified while still meeting the accountability
objectives of the Single Audit Act. For audits of large entities,
opportunities could be explored to identify best practices and provide
guidance for achieving higher-quality single audits. Our analysis
shows significant disparities in the number of audits of small
entities versus the number of audits of large entities and their
respective coverage of federal award expenditures. The current one-
size-fits-all approach to single audits, combined with the fact that
less than 3 percent of audits cover about 85 percent of federal award
expenditures subject to a single audit, presents a convincing case for
reexamining the overall approach for performing single
audits.[Footnote 32] Because action had not been taken to address
concerns about complexity and the need for streamlining, we further
recommended during our Recovery Act work that OMB evaluate options for
providing relief related to audit requirements for low-risk programs
to balance new audit responsibilities associated with the Recovery Act.
OMB Has Implemented Some Recommendations but More Work Is Needed:
OMB has taken initiative and is conducting studies to improve the
Single Audit process but time frames for implementing the results of
these studies are unclear. OMB officials have created a workgroup that
combines two previous workgroups: the Executive Order 13520 - Reducing
Improper Payments Section 4 (b) Single Audit Recommendations Workgroup
(Single Audit Workgroup), and the Circular No. A-87 - Cost Principles
for State, Local, and Indian Tribal Governments Workgroup (Circular
No. A-87 Workgroup).
The Single Audit Workgroup comprises representatives from the federal
audit community; federal agency management officials involved in
overseeing the single audit process and programs subject to that
process; representatives from the state audit community; and staff
from OMB. OMB officials tasked the Single Audit Workgroup with
developing recommendations for improving the effectiveness of single
audits of nonfederal entities that expend federal funds to help
identify and reduce improper payments. In June 2010, the Single Audit
Workgroup developed recommendations, some of which are targeted
towards providing relief to auditors who audit recipients and grants
under the requirements of the Single Audit Act. OMB officials stated
that the recommendations warrant further study and that the workgroup
is continuing its work on the recommendations. OMB officials also
stated that the Circular No. A-87 Workgroup has also made
recommendations that could impact single audits and that the two
workgroups have been collaborating to ensure that the recommendations
related to single audit improvements are compatible and could improve
the single audit process. The combined workgroups plan to issue a
report to OMB by August 29, 2011. We will continue to monitor OMB's
progress to achieve this objective.
Conclusions:
With the growth of federal grant funding over the past two decades,
the increasing role of grants in achieving national objectives, and
constrained resources available to meet diverse needs, attention to
improving grants management and oversight can help ensure that
resources are targeted to the intended recipients and are used
effectively. Because many national objectives are now being carried
out through state, local, and nongovernmental organizations, enhancing
accountability and oversight at all levels is equally important, and
these efforts should be mindful of the scarce oversight and
accountability resources and shared responsibilities as improvements
are made. Also, the long-standing problems that impeded the
effectiveness of the single audit process as a key accountability
mechanism for ensuring that federal grant funds are spent
appropriately need to be addressed. Looking across the federal grants
management and oversight processes, there is great potential for
streamlining and simplifying while at the same time, improving
accountability for how our federal dollars are spent by addressing the
issues and weaknesses we have identified. We have been working with
OMB to identify specific actions that could help streamline
administrative processes and provide more flexibility for states in
the audit and cost allocation process. We stand ready to assist the
Subcommittee as it focuses attention on addressing these important
issues, and to work constructively with OMB and the agencies.
Mr. Chairman, this concludes my statement. I will be happy to answer
any questions you or the Subcommittee Members may have.
[End of section]
Related GAO Products:
Grants.Gov: Additional Action Needed To Address Persistent Governance
And Funding Challenges. [hyperlink,
http://www.gao.gov/products/GAO-11-478]. Washington, D.C.: May 6, 2011.
Recovery Act: Energy Efficiency and Conservation Block Grant
Recipients Face Challenges Meeting Legislative and Program Goals and
Requirements. [hyperlink, http://www.gao.gov/products/GAO-11-379].
Washington, D.C.: April 7, 2011.
Opportunities to Reduce Potential Duplication in Government Programs,
Save Tax Dollars, and Enhance Revenue. [hyperlink,
http://www.gao.gov/products/GAO-11-318SP]. Washington, D.C.: March 1,
2011.
Recovery Act: Department of Justice Could Better Assess Justice
Assistance Grant Program Impact. [hyperlink,
http://www.gao.gov/products/GAO-11-87]. Washington, D.C.: October 15,
2010.
Iraq and Afghanistan: DOD, State, And USAID Face Continued Challenges
In Tracking Contracts, Assistance Instruments, And Associated
Personnel. [hyperlink, http://www.gao.gov/products/GAO-11-1].
Washington, D.C.: October 1, 2010.
Recovery Act: Opportunities to Improve Management and Strengthen
Accountability over States' and Localities' Uses of Funds. [hyperlink,
http://www.gao.gov/products/GAO-10-999]. Washington, D.C.: September
20, 2010.
University Research: Policies for the Reimbursement of Indirect Costs
Need to Be Updated. [hyperlink,
http://www.gao.gov/products/GAO-10-937]. Washington, D.C.: September
8, 2010.
Hurricane Recovery: Federal Government Provided a Range of Assistance
to Nonprofits following Hurricanes Katrina and Rita. [hyperlink,
http://www.gao.gov/products/GAO-10-800]. Washington, D.C.: July 30,
2010.
Oversight of DOJ Funds for Recreational Activities. [hyperlink,
http://www.gao.gov/products/GAO-10-661R]. Washington, D.C.: June 18,
2010.
U.S. Insular Areas: Interior's Management and Oversight of Insular
Area Grants. [hyperlink, http://www.gao.gov/products/GAO-10-917T].
Washington, D.C.: July 15, 2010.
Legal Services Corporation: Improvements Needed in Controls over Grant
Awards and Grantee Program Effectiveness. [hyperlink,
http://www.gao.gov/products/GAO-10-540]. Washington, D.C.: June 11,
2010.
Low-Income and Minority Serving Institutions: Sustained Attention
Needed to Improve Education's Oversight of Grant Programs. [hyperlink,
http://www.gao.gov/products/GAO-10-659T]. Washington, D.C.: May 27,
2010.
Runaway and Homeless Youth Grants: Improvements Needed in the Grant
Award Process. [hyperlink, http://www.gao.gov/products/GAO-10-335].
Washington, D.C.: May 10, 2010.
Contingency Contracting: Improvements Needed in Management of
Contractors Supporting Contract and Grant Administration in Iraq and
Afghanistan. [hyperlink, http://www.gao.gov/products/GAO-10-357].
Washington, D.C.: April 12, 2010.
Vietnam Education Foundation: Recent Improvements Made in Internal
Controls, but Weaknesses Persist. [hyperlink,
http://www.gao.gov/products/GAO-10-442]. Washington, D.C.: April 7,
2010.
Surface Transportation: Competitive Grant Programs Could Benefit from
Increased Performance Focus and Better Documentation of Key Decisions.
[hyperlink, http://www.gao.gov/products/GAO-11-234]. Washington, D.C.:
March 30, 2011.
Iraq and Afghanistan: Agencies Face Challenges in Tracking Contracts,
Grants, Cooperative Agreements, and Associated Personnel. [hyperlink,
http://www.gao.gov/products/GAO-10-509T]. Washington, D.C.: March 23,
2010.
Intercity Passenger Rail: Recording Clearer Reasons for Awards
Decisions Would Improve Otherwise Good Grantmaking Practices.
[hyperlink, http://www.gao.gov/products/GAO-11-283]. Washington, D.C.:
March 10, 2011.
Grant Monitoring: Department of Education Could Improve Its Processes
with Greater Focus on Assessing Risks, Acquiring Financial Skills, and
Sharing Information. [hyperlink,
http://www.gao.gov/products/GAO-10-57]. Washington, D.C.: November 19,
2009.
UN Office For Project Services: Management Reforms Proceeding but
Effectiveness Not Assessed, and USAID's Oversight of Grants Has
Weaknesses. [hyperlink, http://www.gao.gov/products/GAO-10-168].
Washington, D.C.: November 19, 2009.
Fire Grants: FEMA Has Met Most Requirements for Awarding Fire Grants,
but Additional Actions Would Improve Its Grant Process. [hyperlink,
http://www.gao.gov/products/GAO-10-64]. Washington, D.C.: October 30,
2009.
Transit Security Grant Program: DHS Allocates Grants Based on Risk,
but Its Risk Methodology, Management Controls, and Grant Oversight Can
Be Strengthened. [hyperlink, http://www.gao.gov/products/GAO-09-491].
Washington, D.C.: June 8, 2009.
Single Audit: Opportunities Exist to Improve the Single Audit Process
and Oversight. [hyperlink, http://www.gao.gov/products/GAO-09-307R].
Washington, D.C.: March 13, 2009.
Foreign Assistance: Continued Efforts Needed to Strengthen USAID's
Oversight of U.S. Democracy Assistance for Cuba. [hyperlink,
http://www.gao.gov/products/GAO-09-165]. Washington, D.C.: November
24, 2008.
Healthy Marriage And Responsible Fatherhood Initiative: Further
Progress Is Needed in Developing a Risk-Based Monitoring Approach to
Help HHS Improve Program Oversight. [hyperlink,
http://www.gao.gov/products/GAO-08-1002]. Washington, D.C.: September
26, 2008.
Grants Management: Attention Needed to Address Undisbursed Balances in
Expired Grant Accounts. [hyperlink,
http://www.gao.gov/products/GAO-08-432]. Washington, D.C.: August 29,
2008.
Afghanistan Security: U.S. Efforts to Develop Capable Afghan Police
Forces Face Challenges and Need a Coordinated, Detailed Plan to Help
Ensure Accountability. [hyperlink,
http://www.gao.gov/products/GAO-08-883T]. Washington, D.C.: June 18,
2008.
Legal Services Corporation: Improved Internal Controls Needed in
Grants Management and Oversight. [hyperlink,
http://www.gao.gov/products/GAO-08-37]. Washington, D.C.: December 28,
2007.
Responses to Posthearing Questions Related to Improving Single Audit
Quality. [hyperlink, http://www.gao.gov/products/GAO-08-318R].
Washington, D.C.: December 7, 2007.
Single Audit Quality: Actions Needed to Address Persistent Audit
Quality Problems. [hyperlink,
http://www.gao.gov/products/GAO-08-213T]. Washington, D.C.: October
25, 2007.
Economic Development: Formal Monitoring Approaches Needed to Help
Ensure Compliance with Restrictions on Funding Employer Relocations.
[hyperlink, http://www.gao.gov/products/GAO-07-1005]. Washington,
D.C.: September 10, 2007.
Youthbuild Program: Analysis of Outcome Data Needed to Determine Long-
Term Benefits. [hyperlink, http://www.gao.gov/products/GAO-07-82].
Washington, D.C.: Feb. 28, 2007.
National Institutes Of Health Extramural Research Grants: Oversight of
Cost Reimbursements to Universities. [hyperlink,
http://www.gao.gov/products/GAO-07-294R]. Washington, D.C.: January
31, 2007.
Foreign Assistance: U.S. Democracy Assistance for Cuba Needs Better
Management and Oversight. [hyperlink,
http://www.gao.gov/products/GAO-07-147]. Washington, D.C.: November
15, 2006.
Grants Management: Enhancing Performance Accountability Provisions
Could Lead to Better Results, [hyperlink,
http://www.gao.gov/products/GAO-06-1046]. Washington, D.C.: September
29, 2006.
United Nations: Lessons Learned from Oil for Food Program Indicate the
Need to Strengthen UN Internal Controls and Oversight Activities.
[hyperlink, http://www.gao.gov/products/GAO-06-330]. Washington, D.C.:
April 25, 2006.
Compacts Of Free Association: Implementation of New Funding and
Accountability Requirements Is Well Under Way, but Planning Challenges
Remain. [hyperlink, http://www.gao.gov/products/GAO-05-633].
Washington, D.C.: July 11, 2005.
American Samoa: Accountability for Key Federal Grants Needs
Improvement. [hyperlink, http://www.gao.gov/products/GAO-05-41].
Washington, D.C.: December 17, 2004.
[End of section]
Footnotes:
[1] The Single Audit Act requires states, local governments, and
nonprofit organizations expending $500,000 or more in federal awards
in a year to obtain an audit in accordance with the requirements set
forth in the act. A single audit consists of (1) an audit and opinions
on the fair presentation of the financial statements and the Schedule
of Expenditures of Federal Awards; (2) gaining an understanding of and
testing internal control over financial reporting and the entity's
compliance with laws, regulations, and contract or grant provisions
that have a direct and material effect on certain federal programs
(i.e., the program requirements); and (3) an audit and an opinion on
compliance with applicable program requirements for certain federal
programs.
[2] U.S. Department of the Treasury, management's discussion and
analysis section of the 2010 Financial Report of the United States
Government, (Washington, D.C.: December 2010).
[3] These amounts include Medicaid. According to OMB budgetary
guidance and Pub. L. No. 107-300, Medicaid is the largest dollar
federal grant program. See OMB Circular A-133 Compliance Supplement
2011.
[4] The 23 listed agencies included a category for "all other
agencies."
[5] Outlay is the issuance of checks, disbursement of cash, or
electronic transfer of funds made to liquidate a federal obligation.
Outlays also occur when interest on Treasury debt held by the public
accrues and when the government issues bonds, notes, debentures,
monetary credits, or other cash-equivalent instruments in order to
liquidate obligations.
[6] The Catalog of Federal Domestic Assistance (CFDA) is the single
authoritative, governmentwide compendium and source document for
descriptions of federal programs that provide assistance or benefits
to the American public. The CFDA data are available on the Web at
[hyperlink, http://www.CFDA.gov].
[7] Formula grants allocate funds based on distribution formulas
prescribed by legislation or administrative regulation.
[8] A Domestic Working Group, Guide to Opportunities for Improving
Grant Accountability (Oct. 2005), available at [hyperlink,
http://www.ignet.gov/randp/rpts1.html].
[9] Such circulars include OMB Circular A-102, Grants and Cooperative
Agreements With State and Local Governments (Oct. 7, 1994; further
amended Aug. 29, 1997), and OMB Circular A-133, Audits of States,
Local Governments and Non-Profit Organizations (includes revisions
published in the Federal Register on June 27, 2003, and June 26, 2007).
[10] GAO, Grants Management: Enhancing Performance Accountability
Provisions Could Lead to Better Results, [hyperlink,
http://www.gao.gov/products/GAO-06-1046] (Washington, D.C.; Sept. 29,
2006).
[11] Despite substantial variation among grants, grants generally
follow a similar life cycle and include the preaward stage--potential
recipients submit applications for agency review; the award stage--the
agency identifies successful applicants or legislatively defined grant
recipients and awards funding; the implementation stage--includes
payment processing, agency monitoring, and recipient reporting, which
may include financial and performance information; and the closeout
phase--includes the preparation of final reports, financial
reconciliation, and any required accounting for property.
[12] GAO, Surface Transportation: Competitive Grant Programs Could
Benefit from Increased Performance Focus and Better Documentation of
Key Decisions, [hyperlink, http://www.gao.gov/products/GAO-11-234]
(Washington, D.C.: Mar. 30, 2011), and Intercity Passenger Rail:
Recording Clearer Reasons for Awards Decisions Would Improve Otherwise
Good Grantmaking Practices, GAO-11-283, (Washington, D.C.: Mar. 10,
2011).
[13] GAO, Foreign Assistance: U.S. Democracy Assistance for Cuba Needs
Better Management and Oversight, [hyperlink,
http://www.gao.gov/products/GAO-07-147] (Washington, D.C.: Nov. 15,
2006).
[14] GAO, Legal Services Corporation: Improvements Needed in Controls
over Grant Awards and Grantee Program Effectiveness, [hyperlink,
http://www.gao.gov/products/GAO-10-540] (Washington, D.C.: June 11,
2010).
[15] GAO, Runaway and Homeless Youth Grants: Improvements Needed in
the Grant Award Process, [hyperlink,
http://www.gao.gov/products/GAO-10-335] (Washington, D.C.: May 10,
2010).
[16] GAO, Legal Services Corporation: Improved Internal Controls
Needed in Grants Management and Oversight, [hyperlink,
http://www.gao.gov/products/GAO-08-37] (Washington, D.C.: Dec. 28,
2007), and GAO, Grant Monitoring: Department of Education Could
Improve Its Processes with Greater Focus on Assessing Risks, Acquiring
Financial Skills, and Sharing Information, [hyperlink,
http://www.gao.gov/products/GAO-10-57] (Washington, D.C.: Nov. 19,
2009).
[17] GAO, Grants Management: Attention Needed to Address Undisbursed
Balances in Expired Grant Accounts. [hyperlink,
http://www.gao.gov/products/GAO-08-432] (Washington, D.C.: Aug. 29,
2008); GAO, University Research: Policies for the Reimbursement of
Indirect Costs Need to Be Updated. [hyperlink,
http://www.gao.gov/products/GAO-10-937] (Washington, D.C.: Sept. 8,
2010); Youthbuild Program: Analysis of Outcome Data Needed to
Determine Long-Term Benefits. [hyperlink,
http://www.gao.gov/products/GAO-07-82] (Washington, D.C.: Feb. 28,
2007).
[18] GAO, Grants Management: Attention Needed to Address Undisbursed
Balances in Expired Grant Accounts. [hyperlink,
http://www.gao.gov/products/GAO-08-432] (Washington, D.C.: Aug. 29,
2008).
[19] In 2006, the system made grant payments for nine federal
departments and three other federal entities, accounting for about 70
percent of all federal grant disbursements.
[20] GAO, Managing for Results: GPRA Modernization Act Implementation
Provides Important Opportunities to Address Government Challenges,
[hyperlink, http://www.gao.gov/products/GAO-11-617T] (Washington,
D.C.: May 10, 2011).
[21] Pub.L.No. 111-204, 124 Stat. 2224 (July 22, 2010).
[22] The President's Council on Integrity and Efficiency (PCIE) issued
its Report on National Single Audit Sampling Project4 in June 2007,
which raised significant concerns about the quality of single audits
and made recommendations aimed at improving the quality of those
audits.
[23] GAO, Single Audit: Opportunities Exist to Improve the Single
Audit Process and Oversight, [hyperlink,
http://www.gao.gov/products/GAO-09-307R] (Washington, D.C.: Mar. 13,
2009).
[24] GAO, Recovery Act: As Initial Implementation Unfolds in States
and Localities, Continued Attention to Accountability Issues Is
Essential, [hyperlink, http://www.gao.gov/products/GAO-09-580]
(Washington, D.C. Apr. 23, 2009)
[25] Pub. L. No. 111-5, 123 Stat. 115 (February 17, 2009).
[26] GAO, Single Audit: Opportunities Exist to Improve the Single
Audit Process and Oversight, [hyperlink,
http://www.gao.gov/products/GAO-09-307R] (Washington, D.C.: Mar. 13,
2009).
[27] Executive Order 13520 - Reducing Improper Payments Section 4 (b)
Single Audit Workgroup Recommendations, June 4, 2010.
[28] The Single Audit Act requires that recipients submit their
financial reporting packages, including the Single Audit report, to
the federal government's audit clearinghouse 30 days after receipt of
the auditor's report or within 9 months after the end of the period
being audited, whichever comes first. As a result, an audited entity
may not receive feedback needed to correct an identified internal
control deficiency over compliance until the latter part of the
subsequent fiscal year.
[29] GAO, Recovery Act: Opportunities To Improve Management And
Strengthen Accountability Over States' And Localities' Uses Of Funds,
[hyperlink, http://www.gao.gov/products/GAO-10-999] (Washington, D.C.
Sept. 20, 2010).
[30] The compliance supplement is issued annually to guide auditors on
what program requirements should be tested for programs audited as
part of the single audit and has been the primary mechanism that OMB
has used to provide Recovery Act requirements to auditors.
[31] GAO, Single Audit: Opportunities Exist to Improve the Single
Audit Process and Oversight, [hyperlink,
http://www.gao.gov/products/GAO-09-307R] (Washington, D.C.: Mar. 13,
2009).
[32] GAO, Single Audit: Opportunities Exist to Improve the Single
Audit Process and Oversight, [hyperlink,
http://www.gao.gov/products/GAO-09-307R] (Washington, D.C.: Mar. 13,
2009).
[End of section]
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