Federal government grant awards to state and local governments and nonprofit organizations have risen substantially from $7 billion in 1960 to $500 billion budgeted in fiscal year 2009. In constant dollars, federal grant awards rose from about $42 billion in 1960 to $500 billion in fiscal year 2009. The auditing of federal awards, including grant funds, administered by state and local governments and nonprofit organizations is intended to be a key accountability mechanism over the proper use of federal funding. The President's Council on Integrity and Efficiency (PCIE) issued its Report on National Single Audit Sampling Project in June 2007, which raised significant concerns about the quality of single audits and made recommendations aimed at improving the quality of those audits. The Single Audit Act, as amended, is intended to promote sound financial management, including effective internal controls over federal grant funds administered by state and local governments and nonprofit organizations. Congress asked GAO to conduct additional audit work and analysis to identify any further actions needed to improve federal oversight and accountability for federal grant funds. Specifically, Congress asked that we (1) determine whether the federal oversight structure is adequate to monitor the efficiency and effectiveness of the single audit process, (2) identify potential changes that can be made to the single audit process and relevant guidance to improve accountability for federal grant awards, and (3) determine the current status of actions being taken to address the recommendations made in the PCIE report.
Recommendations for Executive Action
|Office of Management and Budget||In order to monitor the risk, cost--benefit, and efficiency and effectiveness of the single audit process, OMB should 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.|
|Office of Management and Budget||In order to monitor the risk, cost--benefit, and efficiency and effectiveness of the single audit process, OMB should designate a federal workgroup such as its New and Improved Single Audit Process workgroup to evaluate the current single audit process to identify simplified alternatives for meeting the accountability objectives of the Single Audit Act for the audits of small entities, while achieving the proper balance between risk and cost-effective accountability for the smallest to the largest entities.|
|Office of Management and Budget||In order to monitor the risk, cost--benefit, and efficiency and effectiveness of the single audit process, OMB should monitor the status of OMB workgroups, AICPA task forces, and NASBA referral project activities, and evaluate completed actions and their impact on addressing the PCIE report recommendations to improve single audit quality.|