More Effective Action Is Needed on Auditors' Findings:

Millions Can Be Collected or Saved

FGMSD-79-3: Published: Oct 25, 1978. Publicly Released: Oct 25, 1978.

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Under various programs, the government relies on audit as the basic tool for preventing unauthorized expenditures and seeing that the intent of Congress is carried out. GAO and the Office of Management and Budget (OMB) have formulated requirements for managers to take prompt action to decide what should be done and to complete corrective measures, as necessary, on auditors' findings.

The lack of a good system for resolving auditors' findings could be very costly. An examination disclosed that $4.3 billion in audit findings contained in nearly 14,000 audit reports of 34 agencies had not been resolved. About 80 percent of this amount involved potential recoveries from grantees and contractors, and the remainder involved potential savings in operating costs. Some of the findings were unresolved for as long as 10 years. Under the present system, the officer who has the final word on settlement of audit findings is usually an administrator of the program that was audited. These officials have given resolution of audit findings low priority, often decide not to pursue recoveries without adequate explanation or legal advice, and often do not aggressively seek collection or savings needed for final resolution. Few agencies have adequate systems for tracking and resolving audit findings, and many agencies have not followed OMB policy to establish timeframes for responding to audit recommendations.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: Agencies having audit staffs should establish the following system for resolving audit findings: (1) require agency auditors to keep accurate records of findings until a final disposition has been made; (2) give program administrators 6 months to reach decisions on the amount due from grantees or contractors as the result of audit findings and require written decisions signed by the program administrator to justify not seeking collection; (3) assign responsibility to an official independent of the program administrator for deciding whether to make recoveries on findings not decided on within the 6-month period and require justification of such decisions; (4) require such officials to issue quarterly reports to the agency head on the status of findings; (5) establish accounting and collection controls for amounts due as a result of audit findings; and (6) if the agency decides against collection, take action to resolve causes which resulted in the debt.

    Agency Affected:

 

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