Disappointing Progress in Improving Systems for Resolving Billions in Audit Findings

AFMD-81-27: Published: Jan 23, 1981. Publicly Released: Feb 23, 1981.

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The Federal Government is losing billions of dollars in unresolved audit findings. A study was made to see if agencies have implemented effective audit resolution systems that meet the Office of Management and Budget's (OMB) revised guidelines and GAO and House Committee on Government Operations recommendations.

Although agency systems for resolving audit findings have improved somewhat, the overall progress has been disappointing. An increase in the amount of unresolved findings indicates that the problem is worsening. Of the majority of audit findings examined, officials failed to act promptly or properly to correct problems or improve operations. The audit resolution systems of the agencies reviewed lacked provisions for: (1) maintaining accurate records of findings until final disposition; (2) establishing adequate accounting and collection controls over amounts determined to be due as a result of an audit; (3) elevating disagreements and delays to an independent arbiter; (4) providing complete and accurate reports to management; (5) applying OMB Circular A-73 to all audits; (6) deciding the disposition of audit findings within 6 months and establishing final resolution schedules; (7) ensuring that decisions to reject findings are consistent with laws and regulations; and (8) coordinating corrective action with other affected agencies.

Recommendations for Executive Action

  1. Status:

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

    Recommendation: The heads of Federal agencies should (1) further improve audit resolution policies, procedures, and practices to comply with the intent and spirit of Office of Management and Budget (OMB) guidelines, designating a top level manager to coordinate these efforts and prepare progress reports for OMB; (2) take legal or administrative actions against the parties involved whenever audit findings concern fraud, waste, or abuse of Federal funds; and (3) make the timeliness and quality of audit resolution a written performance standard and a factor in determining bonuses for Senior Executive Service members and merit pay for supervisors.

    Agency Affected: Heads of Federal Agencies

  2. Status:

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

    Recommendation: The Inspectors General and directors of audit agencies should develop internal organizational procedures and controls for efficient and effective planning, coordinating, reviewing, and reporting of audit work and audit followup activities in accordance with GAO and other professional standards.

    Agency Affected: All Inspectors General and Directors of Audit Organizations

  3. Status:

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

    Recommendation: The Director of the Office of Management and Budget should include oversight of agency audit resolution practices in the budget review process to provide (1) an assessment of progress in establishing, revising, and implementing resolution systems; (2) an adjustment of agency budget allowances where appropriate; and (3) a report to the chairpersons of the House and Senate Committees on Appropriations on progress and action plans. The Director should also clarify Circular A-73 so that (1) it provides that periodic reports to agency heads include complete details on the resolution of findings and on the age and amounts of unresolved findings; (2) it applies to all audit reports, including contract, subgrantee, and regulatory audits; and (3) written determinations and the legal basis for nonconcurrence with audit recommendations apply to both procedural and monetary findings.

    Agency Affected: Executive Office of the President: Office of Management and Budget

 

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