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Highlights

In response to a congressional request, GAO reviewed the quality of audits performed by certified public accountants (CPA) to determine: (1) their compliance with professional standards; (2) the extent of quality problems on audits of federal funds; and (3) the causes of these problems.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Statutory Inspectors General 1. The Statutory Inspectors General should require regional IG (RIG) offices to report quality results to headquarters using consistent formats and terminology so that nationwide trends and patterns of quality problems can be identified.
Closed - Implemented
IG are planning various procedures to accomplish this recommendation.
Statutory Inspectors General 2. The Statutory Inspectors General should prepare and update program audit guides for nonfederal auditors to use in the conduct of their audits. Due to the passage of the Single Audit Act, all audit guides should be reviewed to determine how they can best assist the auditor in performing grant audits that build upon the single audit.
Closed - Not Implemented
IG are in the process of updating their audit guides where they would still be applicable.
Statutory Inspectors General 3. The Statutory Inspectors General should develop and require RIG offices to use standardized checklists that are annotated to generally accepted government auditing standards.
Closed - Implemented
IG have revised their checklists in accordance with the recommendations.
Statutory Inspectors General 4. The Statutory Inspectors General should require all RIG to conduct QCR on an established percentage of the audit reports they receive.
Closed - Implemented
IG have established guidelines to perform QCR on a set percentage of audits they receive.
Statutory Inspectors General 5. The Statutory Inspectors General should require RIG offices to collect, compile, analyze, and use data on the results of their QCR of individual audits to identify and correct trends or patterns of quality control problems.
Closed - Implemented
IG are developing systems to accomplish this recommendation.
Statutory Inspectors General 6. The Statutory Inspectors General should work with the American Institute of Certified Public Accountants (AICPA) and appropriate state boards of accountancy to expedite referrals to these bodies.
Closed - Implemented
IGs and AICPA decided on procedures to expedite referrals. IGs seem to be using these procedures and are continuing to refer poor quality audits to AICPA and state boards.
Statutory Inspectors General 7. The Statutory Inspectors General should clarify and, where necessary, revise policies on taking actions against CPA on unacceptable audits, even when the auditor ultimately provides an acceptable report. Policies should also include provisions for referring CPA to regulatory and professional bodies such as State Boards of Accountancy and AICPA, respectively.
Closed - Implemented
IG are currently revising their policies in this area.
Statutory Inspectors General 8. The Statutory Inspectors General should report problems identified and efforts to improve audit quality to agency heads and to Congress in their semiannual reports.
Closed - Implemented
IG have revised their policy to include this type of information in their semiannual reports.

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