Need for More Effective Audits of Federal Grants and Contracts Administered by Institutions of Higher Education

FGMSD-79-44: Published: Jul 19, 1979. Publicly Released: Jul 19, 1979.

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The Federal Government provided about $14.4 billion to over 2,500 colleges and universities during fiscal 1974 through 1976. The Department of Health, Education, and Welfare (HEW) is responsible for auditing these funds and for providing the results to the funding agencies. In order to determine the adequacy of the coverage of Federal grants and contracts made by the HEW audit agency, a review was made of the audit work performed during fiscal 1974 through 1976 at the 20 institutions which received the most Federal support during fiscal 1975.

It appeared that HEW was trying to do too much with too few audit resources. As a result, audits were not conducted as frequently as they should have been and were omitted entirely at a number of institutions. Some of the audits performed were not as effective as they could have been because they were not timely and because they lacked some characteristics of a quality audit with respect to such matters as: audit scope, sufficiency of evidence, completeness of reporting, and supervision of staff. In addition, because of inadequacies in university accounting systems, some of the reports did not include opinions on the allowability of a significant portion of the funds expended by some universities, thus giving the Government little certainty that valid charges were made to Government grants.

Recommendation for Executive Action

  1. Status: Closed

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

    Recommendation: The Secretary of HEW should direct the Inspector General of HEW to: reassess the priorities to which his audit staff is assigned to see if additional audit staff could be assigned to university audits; establish a cycle for auditing the institutions assigned to the audit agency; provide for audits of sufficient depth to establish the allowability or unallowability of costs claimed by institutions; and require that audits of institutions be conducted in accordance with the GAO standards.

    Agency Affected:


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