United States Government Accountability Office

Washington, DC 20548 

 

March 13, 2009 

The Honorable Thomas R. Carper

Chairman 

The Honorable John McCain 

Acting Ranking Member 

Subcommittee on Federal Financial Management, Government Information, Federal 

Services, and International Security 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

The Honorable Tom Coburn, M.D. 

United States Senate 

Subject: Single Audit: Opportunities Exist to Improve the Single Audit Process and 

Oversight

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,1

 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. 2 The President’s Council on Integrity and Efficiency (PCIE)3

 issued

Page 1 GAO-09-307R Single Audit Improvements

 1

Constant dollar amounts reflect adjustments for inflation (e.g. the purchasing value of the $7 billion 

awarded in 1960 represents about $42 billion in today’s fiscal year 2009 dollars). 

2

The Single Audit Act, as amended, requires each reporting entity that expends $500,000 or more in

federal awards, including grants and other assistance, in a fiscal year to obtain an annual “single audit,”

which includes an audit of the entity’s financial statements and a schedule of the expenditure of

federal awards, and review of related internal controls. 

3

The President’s Council on Integrity and Efficiency (PCIE) and the Executive Council on Integrity and 

Efficiency (ECIE) were established by Executive Orders in 1981 and 1992, respectively, to continually 

identify, review, and discuss areas of weakness and vulnerability in Federal programs and operations 

to fraud, waste, and abuse. The councils were also established to develop plans for coordinated, governmentwide activities that address these problems and promote economy and efficiency in federal 

programs and operations.
 

its Report on National Single Audit Sampling Project4 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. Due to concerns surrounding the effectiveness of the single 

audit process, your subcommittee held a hearing on October 25, 2007, at which we 

provided (1) a preliminary analysis of the recommendations made in the PCIE report 

for improving audit quality, and (2) additional considerations for improving the 

quality of single audits.5

 

You asked us to conduct additional audit work and analysis to identify any further 

actions needed to improve federal oversight and accountability for federal grant 

funds. Specifically, you 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. On December 11, 2008, we briefed your staff on the results 

of our work. This letter summarizes the information provided during the briefing and 

the attached briefing slides have been updated with additional information as of 

January 23, 2009. Our scope and methodology are also discussed in the attached 

briefing slides. 

We conducted this performance audit from February 2008 through January 2009, in 

accordance with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate evidence 

to provide a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. 

Summary of Results 

Federal Oversight Process 

The federal oversight structure for the single audit process does not include a 

designated function or entity to monitor whether or how well federal awarding 

agencies are implementing single audit requirements. As a result, the Office of 

 4

PCIE Report on National Single Audit Sampling Project (June 2007). The project was conducted

under the auspices of the Audit Committee of the PCIE, as a collaborative effort involving PCIE 

member organizations, as well as a member of the ECIE and three State Auditors. The project was

performed to determine the quality of single audits using statistical methods and make

recommendations to address noted audit quality issues. 

5

GAO, Single Audit Quality: Actions Needed to Address Persistent Audit Quality Problems,

GAO-08-213T (Washington, D.C.: October 25, 2007).

Page 2 GAO-09-307R Single Audit Improvements
 

Management and Budget (OMB)6 and other single audit stakeholders are unable to 

identify pervasive and systemic single audit issues, determine the impact of the issues 

across federal programs to identify needed changes to the single audit process, and 

communicate results, best practices, and lessons learned. We also identified 

variations in the federal oversight process in performing key functions of the single 

audit process such as quality control reviews (QCR)7

 and use of the Federal Audit 

Clearinghouse (FAC)8

 to obtain single audit reports. These variations help to 

demonstrate the need to assess the efficiency and effectiveness of how federal 

agencies carry out their single audit responsibilities. GAO’s internal control standards 

require ongoing monitoring of programs to ensure that objectives and goals are being 

addressed efficiently and effectively.9

 

Potential Single Audit Improvements 

Single audit stakeholders have raised concerns about the complexity and relative 

costs and benefits of the audit requirements for single audits, especially at the smaller 

entities. Specifically, auditors of single audits are subject to similar audit 

requirements and the same guidance in OMB Circular No. A-133 and the Compliance 

Supplement when auditing an entity that expended $500,000 of federal awards as they 

are when reviewing one that expended $50 million or more. 

We found that opportunities exist to evaluate the audit procedures being applied and 

determine whether the proper balance exists between risk and cost–effective 

accountability from the largest to the smallest of audited entities. Single audits of

small entities could be simplified while still meeting the accountability objectives of 

the Single Audit Act. For audits of large entities, opportunities could be explored to 

identify best practices and provide guidance for achieving higher quality single audits. 

Our analysis shows significant disparities in the number of audits of small entities 

versus the number of audits of large entities and their respective coverage of federal 

award expenditures. The current one-size-fits-all approach to single audits, combined 

with the fact that less than 3 percent of audits cover about 85 percent of federal 

award expenditures subject to a single audit, presents a convincing case for reexamining the overall approach for performing single audits. 

 6

To assist the single audit community in carrying out their respective audit responsibilities, OMB 

performs several activities, including issuing guidance for implementing single audit requirements as

described in OMB Circular No. A-133, Audits of States, Local Governments, and Non-Profit 

Organizations, and the Compliance Supplement. 

7

Federal agencies are required by OMB to perform QCRs to evaluate the quality of selected single

audits of entities with expenditures of $50 million or more in federal awards to ensure that the audit 

(1) is conducted in accordance with applicable standards, (2) meets single audit requirements, (3) 

identifies any follow-up audit work needed, and (4) identifies issues that may require management 

attention. 

8

The Federal Audit Clearinghouse operates on behalf of OMB to disseminate single audit information 

to federal agencies and the public. 

9

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington,

D.C.: November 1999).

Page 3 GAO-09-307R Single Audit Improvements
 

Actions to Address PCIE Recommendations 

The PCIE report recommended that OMB work with other single audit stakeholders 

to address deficiencies and implement recommendations to improve single audit 

quality. As a result, OMB, the American Institute of Certified Public Accountants 

(AICPA), and the National Association of State Boards of Accountancy (NASBA)10

have several activities underway in response to the recommendations. OMB has 

established eight workgroups in areas such as audit findings, training, and 

compliance testing. According to OMB, one of the workgroups, the New and 

Improved Single Audit Process, will focus on identifying strategic improvements to 

the single audit process. OMB anticipates making revisions to OMB Circular No. A133, and the PCIE checklist for performing QCRs during 2009. AICPA also established 

seven task forces to address the PCIE report recommendations. According to the 

AICPA, it has issued a proposed revised auditing standard, included guidance in the 

2008 AICPA Audit Guide, and provided a white paper on continuing professional 

education (CPE) training to OMB for comment. The AICPA also anticipates finalizing 

revisions to applicable auditing standards and the 2009 AICPA Audit Guide, and is 

developing illustrative practice aids. NASBA has developed a process for tracking the 

status of federal agency referrals to state boards on poor performing auditors to 

ensure appropriate action and timely follow-up. NASBA plans to contact each federal 

grant awarding agency on a quarterly basis to inquire about outstanding referrals to 

determine whether the issue has been resolved. 

Conclusions

Without a mechanism in place to monitor on an ongoing basis how the single audit 

process is implemented governmentwide, OMB and federal stakeholders are unable 

to measure the efficiency and effectiveness of this process, as well as its usefulness 

as an accountability tool over federal grant awards. The variations we found on how 

federal agencies we reviewed perform key functions of the single audit process 

demonstrate the need to assess whether federal agencies carry out their single audit 

responsibilities in an efficient and effective manner. We also believe opportunities 

exist to address concerns about the complexity and relative costs and benefits of

audit requirements for single audits, while concurrently seeking the proper balance 

between risk and cost-effective accountability by (1) exploring a simplified approach 

for performing single audits of small entities, and (2) identifying best practices and 

providing guidance for achieving higher quality single audits of large entities. OMB, 

AICPA, and NASBA have initiated actions to address the PCIE report 

recommendations. However, most of these actions are not yet completed and their 

impact on (1) addressing longstanding single audit quality issues, and (2) identifying 

needed changes to the single audit process, is yet to be determined. Overall, we 

believe that a centralized federal effort would be beneficial in evaluating risk, cost–

 10NASBA is a voluntary membership association of the boards of accountancy in the 50 states of the 

United States, the District of Columbia, Guam, the Commonwealth of the Northern Mariana Islands, 

Puerto Rico, and the U.S. Virgin Islands. The purpose of the association is to protect, promote, foster, and advance the common interests and welfare of the various boards of accountancy. NASBA provides

programs and services primarily related to the testing and licensing of certified public accountants in 

compliance with the requirements of boards of accountancy.

Page 4 GAO-09-307R Single Audit Improvements
 

benefit, and efficiency and effectiveness of the single audit process, and in making 

adjustments to the process as necessary. 

Recommendations for Executive Action 

In order to monitor the risk, cost–-benefit, and efficiency and effectiveness of the 

single audit process, we recommend that OMB take the following three actions: 

• 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; 

• 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; and 

• 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. 

Agency Comments

We provided a draft of this report to OMB. The agency responded by e-mail that it 

concurred with our observations and recommendations, and provided a technical 

comment which we have incorporated into this report. We also met with agency 

officials from the top six federal awarding agencies which accounted collectively for 

94 percent ($422.2 billion) of federal grant outlays to state and local governments in 

fiscal year 2007. We obtained oral comments from the agency officials responsible for 

performing cognizant agency for audit responsibilities11 in accordance with OMB 

Circular No. A-133. They generally agreed with our observations and 

recommendations, and their comments have been incorporated as appropriate. 

- - - - - 

We are sending copies of this report to the subcommittee. As we agreed with your 

offices, unless you publicly announce the contents of this report earlier, we plan no 

further distribution of it until 30 days from the report date. At that time, we will send 

copies to the Director of the Office of Management and Budget. The report will also 

be available at no charge on GAO’s Web site at http://www.gao.gov. If you or your 

 11Each award recipient expending more than $50 million is assigned a cognizant agency for audit. 

Generally, the cognizant agency for audit is the federal awarding agency that provides the predominant 

amount of direct funding to a recipient unless OMB assigns this responsibility to another agency. 

Some of the responsibilities of the cognizant agency includes performing QCRs, considering auditee 

requests for extensions, and coordinating a management decision for audit findings that affect federal 

programs of more than one agency. 

Page 5 GAO-09-307R Single Audit Improvements
 

staff have any questions about this report, please contact me at (202) 512-2600 or 

franzelj@gao.gov. Contact points for our Offices of Congressional Relations and 

Public Affairs may be found on the last page of this report. Key contributors to this 

Jeanette M. Franzel 

report are listed in Enclosure II. 

nt and Assurance

nclosures (2)

Managing Director 

Financial Manageme

E

Page 6 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

Page 7 GAO-09-307R Single Audit Improvements

1

Single Audit

Opportunities Exist to Improve the Single Audit Process and Oversight

Briefing to the Staff of the Subcommittee on Federal Financial 

Management, Government Information, Federal Services, and International Security; Committee on Homeland Security and 

Governmental Affairs, United States Senate

December 11, 2008

[Updated as of January 23, 2009]

Enclosure I: Briefing Slides 
Enclosure I: Briefing Slides 

2

Contents

• Background

• Objectives 

• Scope and Methodology

• Summary of Results

• Federal Oversight Process

• Potential Single Audit Improvements

• Actions to Address the President’s Council on Integrity and Efficiency (PCIE) Recommendations

• Conclusions 

• Recommendations for Executive Action

Page 8 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

3

Background

• Federal government grant awards budgeted for state and local 

governments and nonprofit organizations have risen substantially

from fiscal year 1960 to fiscal year 2009 (see fig. on slide 4).

• The Single Audit Act, as amended, requires each reporting entity

that expends $500,000 or more in federal awards, including grants

and other assistance, in its fiscal year to obtain an annual “single 

audit.”1

• The single audit is intended to be an accountability mechanism for

the expenditure of federal awards by state and local governments, 

and nonprofit organizations.

1Entities that expend federal awards under only one federal program are not required to obtain a single audit but may elect to have a programspecific audit focused on financial expenditures, internal control, and compliance under that program. [31 U.S.C. § 7502(a)(1)(C)].

Page 9 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

4

Background (cont.)

Federal Funds Budgeted for Grants, 

Fiscal Year 1960 through Fiscal Year 2009

Page 10 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

5

Background (cont.)

• The Office of Management and Budget (OMB) performs several 

activities to assist the single audit community—federal awarding 

agencies, grantees, and the auditors—in carrying out their respective

single audit responsibilities as described in OMB Circular No. A-133, 

Audits of States, Local Governments, and Non-Profit Organizations,

and the related Compliance Supplement.2 OMB’s activities include 

• issuing and revising OMB Circular No. A-133 and the 

Compliance Supplement, 

• providing outreach and training through professional 

conferences on changes to OMB Circular No. A-133 and the 

Compliance Supplement, and 

• providing guidance for submitting single audit reports to the 

Federal Audit Clearinghouse (FAC), which is designed as a 

repository for single audit reports. 

2The Compliance Supplement provides auditors the information needed to understand federal programs’ objectives, procedures, and 

compliance requirements relevant to the single audit. It also provides auditors with guidance for determining whether federal programs are 

compliant with these requirements (laws, regulations, and provisions of contract or grant agreements).

Page 11 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

6

Background (cont.)

• In June 2007, PCIE issued its Report on National Single Audit 

Sampling Project, which raised concerns about the quality of single

audits and made recommendations. 

• PCIE reviewed a sample of 208 audits randomly selected from a 

universe of more than 38,000 single audits submitted and 

accepted into the FAC for the period April 1, 2003, through 

March 31, 2004. 

• The sample was split into two strata—audits of entities

expending $50 million or more of federal awards during their

fiscal year and entities expending at least $500,000 but less than

$50 million of federal awards (see slide 8).

Page 12 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

7

Background (cont.)

PCIE found that out of 208 single audits reviewed:

• About 51 percent of the audits had deficiencies that were severe

enough to classify the audits as unacceptable or limited in 

reliability. 

• About 49 percent were acceptable, including those with

deficiencies that did not require corrective action.

The breakout of acceptable audits between large and small entities

was as follows:

• Sixty-four percent of the large audits ($50 million or more in 

federal award expenditures) were acceptable, while

• Fourty-eight percent of the small audits (at least $500,000 but 

less than $50 million in federal award expenditures) were

acceptable.

Page 13 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

8

Background (cont.)

Summary of PCIE Study on Single Audit Quality

aStratum I – Included large audits of entities that expended $50 million or more of federal awards during their fiscal year.

Stratum II – Included audits of entities that expended at least $500,000 of federal awards, but less than $50 million during their fiscal year.

bAt the 90 percent confidence level, the margins of error range between plus or minus 5.3 and 7.8 percentage points.

c

The point estimates for the total were computed with formulas for a stratified random sample, which give more weight to Stratum II because it represents a 

much larger proportion of the universe. Due to rounding, these percentages do not add to exactly 100 percent.

dLimited reliability audits are categorized as having significant deficiencies with applicable auditing criteria noted, requiring corrective action to afford

unquestioned reliance on the audit.

eThe115 audits that were deemed acceptable represented about 93 percent of the federal awards reported in all 208 audits reviewed.

f

The 93 audits that were deemed to be unacceptable or of limited reliability represented about 7 percent of the federal awards reported in all 208 audits

reviewed. 

Source: PCIE’s Report on National Single Audit Sampling Project (June 2007).

51%c 93f 49%c 115e Total 38,523 208

II 37,671 112 54 48% 58 52%

I 852 96 61 64% 35 36%

Point

estimateb

Number

of audits

Point

estimateb

Number

of audits

Sample

size

Stratum Universe a

Unacceptable or 

limited reliabilityd

Acceptable

Page 14 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

9

Background (cont.)

• The PCIE report recommended that OMB work with the single audit 

community to implement a three-pronged approach to reduce the 

types of deficiencies found and to improve the quality of single

audits by 

• revising and improving single audit standards, criteria, and 

guidance;

• establishing minimum continuing professional education (CPE)

requirements as a prerequisite for auditors to be eligible to 

conduct and continue to perform single audits; and 

• reviewing and enhancing the disciplinary process to address

unacceptable audits and compliance with training and CPE 

requirements. 

Page 15 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

10

Background (cont.)

On October 25, 2007, GAO testified before this subcommittee and 

provided its perspective on the (1) Single Audit Act and underlying

principles, (2) a preliminary analysis of the recommendations made

in the PCIE report for improving audit quality, and (3) additional

considerations for improving single audit quality.

3

• At the hearing, GAO, OMB, and the American Institute of Certified 

Public Accountants (AICPA) agreed that actions are needed, and 

they continue to work on resolving the single audit quality issues

raised in the PCIE report. 

• The subcommittee asked GAO to conduct additional audit work and 

analysis as necessary to identify further actions to improve federal 

oversight and accountability for federal grant funds. 

3GAO, Single Audit Quality: Actions Needed to Address Persistent Audit Quality Problems, GAO-08-213T (Washington, D.C.: 

October 2007).

Page 16 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

11

Objectives

Our objectives were as follows:

• Determine whether the federal oversight structure is adequate to

monitor the efficiency and effectiveness of the single audit 

process. 

• Identify potential changes that can be made to the single audit 

process and relevant guidance to improve accountability for

federal grant awards. 

• Determine the current status of actions being taken to address the 

recommendations made in the PCIE report. 

Page 17 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

12

• To address objective 1: we analyzed documentation and interviewed 

officials from OMB to obtain an understanding of the single audit 

process and OMB’s role and responsibility in ensuring effective 

implementation of OMB Circular No. A-133 and related guidance. 

• We selected the top six federal awarding agencies, which accounted 

for 94 percent ($422.2 billion) of federal grant outlays to state and 

local governments in fiscal year 2007.4 The selected agencies were the Departments of

• Health and Human Services,

• Transportation,

• Education,

• Housing and Urban Development,

• Agriculture, and 

• Homeland Security.

• We also analyzed documentation and interviewed officials from these 

agencies on how they perform their “cognizant agency for audit”5

oversight responsibilities in accordance with OMB Circular No. A-133 

and related guidance. 

Scope and Methodology

4OMB Update, April 2008.

5Each award recipient expending more than $50 million is assigned a cognizant agency for audit. Generally, the cognizant agency for audit is the federal awarding

agency that provides the predominant amount of direct funding to a recipient unless OMB assigns oversight responsibility to another agency.

Page 18 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

13

• To address objective 2 we analyzed documentation and interviewed officials from the

top six federal awarding agencies, OMB, AICPA, the National Association of the State

Boards of Accountancy (NASBA),6 and Census Bureau officials responsible for the 

FAC to identify potential improvements to the overall single audit process. Using fiscal

year 2007 single audit data from the FAC, we compiled, stratified, and analyzed the 

total number of single audits completed to determine the coverage of single audits

performed by federal expenditure category. 

• To address objective 3 we analyzed documentation and interviewed officials from 

OMB, AICPA, and NASBA to determine the current status of actions being taken to

address the recommendations in the PCIE report.

• We conducted this performance audit from February 2008 through January 2009 in

accordance with generally accepted government auditing standards. Those standards

require that we plan and perform the audit to obtain sufficient, appropriate evidence to

provide a reasonable basis for our findings and conclusions based on our audit

objectives. We believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives.

Scope and Methodology (cont.)

6NASBA is a voluntary membership association of the boards of accountancy in the 50 states of the United States, the District of Columbia, Guam, the Commonwealth of the

Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. The purpose of the association is to protect, promote, foster, and advance the common interests and welfare 

of the various boards of accountancy. NASBA provides programs and services primarily related to the testing and licensing of certified public accountants in compliance with the 

requirements of boards of accountancy.

Page 19 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

14

Federal Oversight Process

• GAO’s internal control standards require ongoing monitoring of 

programs to ensure that objectives and goals are being addressed

efficiently and effectively.

7

• The current design of the federal oversight structure for the single

audit process does not include a designated function or entity for

monitoring whether or how federal awarding agencies are 

implementing single audit requirements.

• The current design of the single audit process has resulted in 

variations across federal agencies in performing key functions of 

the single audit process such as quality control reviews (QCR)8

and use of the FAC. 

7GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).

8QCRs are conducted to ensure that the audit (1) is conducted in accordance with applicable standards, (2) meets single audit

requirements, (3) identifies any follow-up audit work needed, and (4) identifies issues that may require management attention.

Page 20 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

15

Federal Oversight Process (cont.)

• The six agencies we reviewed had not consistently implemented 

the OMB Circular No. A-133 requirement to perform QCRs to 

evaluate the quality of audits for expenditures of $50 million or

more in federal awards. 

• Four of those six agencies had performed QCRs. Only two of 

the four had documented policies and procedures with criteria 

for determining which completed single audits to select in

performing a QCR.9 

• We also found that some agencies had elected to obtain single 

audit reports directly from their grant recipients rather than using 

the FAC.

9QCR data are as of fiscal year 2006, which were the most complete data available from the six federal agencies reviewed.

Page 21 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

16

Federal Oversight Process (cont.)

• Because there is no designated federal function or entity monitoring

the implementation of the single audit process, OMB and other single 

audit stakeholders are unable to 

• identify pervasive and systemic single audit issues,

• determine the impact of the issues across federal programs to

identify needed changes to the single audit process, and

• communicate results, best practices, and lessons learned. 

• As a result, there is a lack of assurance at the federal government 

level that the single audit process is being implemented 

governmentwide in an efficient and effective manner. 

Page 22 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

17

Potential Single Audit

Improvements

• Auditors of single audits are subject to similar audit requirements and the

same guidance in OMB Circular No. A-133 and the Compliance Supplement,

even if the amounts of federal awards expended by the audited entities vary

significantly. As a result, single audit stakeholders have raised concerns

about the complexity and relative cost—benefit of the requirements for

audits, especially for the smaller entities. 

• Our analysis of fiscal year 2007 single audit data reported in the FAC shows 

significant disparities in the number of audits of smaller entities versus the 

number of audits of large entities and their respective coverage of federal

award expenditures (see slide 18). Specifically, 

• 2.6 percent of the total number of single audits covered about 85 

percent of the total federal award expenditures subject to a single audit, and

• 52.1 percent of the total number of single audits covered over 2 percent

of the total federal award expenditures subject to a single audit.

Page 23 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

18

Potential Single Audit

Improvements (cont.)

Single Audits Completed for Fiscal Year 2007

Source: GAO analysis of fiscal year 2007 data from the FAC as of November 24, 2008.

aTotal federal expenditures in this analysis include some federal expenditures multiple times because some award dollars are 

passed through to subrecipients.

Total $944,270,964,593a 100.0% 35,465 100.0%

$50M or more 801,182,038,803 84.8% 927 2.6%

$10M < $50M 68,567,556,098 7.3% 3,395 9.6%

$5M < $10M 27,321,370,170 2.9% 3,938 11.1%

$2M < $5M 27,620,950,288 2.9% 8,723 24.6%

$500K < $2M $19,579,049,234 2.1% 18,482 52.1%

Percentage 

of total 

audits

Per

category

Percentage of total

federal award 

expenditures

Federal award 

expenditures

Total audits

Federal award 

expenditure

categories 

Page 24 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

19

Potential Single Audit 

Improvements (cont.)

• The current one-size-fits-all approach to single audits combined with 

the fact that less than 3 percent of audits cover about 85 percent of 

federal expenditures subject to a single audit presents a convincing

case for re-examining the overall approach for performing single 

audits. 

• Single audits of small entities could be simplified to achieve 

higher quality audits and more effective accountability for those 

audits. 

• Opportunities could be explored to identify best practices and 

provide guidance for achieving higher quality single audits of 

large entities. 

Page 25 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

20

Actions to Address the 

PCIE Recommendations

• OMB established eight work groups to address the PCIE report

recommendations. 

• According to OMB, it anticipates that revisions to OMB Circular No. 

A-133, and the PCIE checklist for performing QCRs will be 

completed during 2009 (see slide 21). 

Page 26 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

21

Actions to Address the

PCIE Recommendations (cont.)

Source: OMB.

Fall 2009

Continuous

Revisions to OMB Circular No. A-133 with proposals

for immediate improvements to the single audit

process

Identification of strategic improvements to the

single audit process 

8. New and Improved Single Audit

Process

Revised PCIE QCR Checklist with guidance Spring 2009

emphasizing the significance of performing QCRs

7. PCIE QCR Checklist Revision

6. Sanctions and Punitive Actions Monitoring of the activities of NASBA and AICPA Continuous

Revisions to OMB Circular No. A-133 which will Fall 2009

identify criteria for single audit procurement 

5. Suspension and Debarment

4. Training Revisions to OMB Circular No. A-133 Fall 2009

Comment on AICPA Audit Guide, Government Fall 2009

Auditing Standards and Circular No. A-133 

Audits

3. Audit Testing and Sampling

Revisions to OMB Circular No. A-133 Compliance Spring 2009 

Supplement

2. Compliance Testing

1. Audit Findings Revisions to OMB Circular No. A-133 Fall 2009

Work group Anticipated product(s) Proposed timeline(s)

Status of OMB Work Group Actions 

Page 27 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

22

Actions to Address the PCIE

Recommendations (cont.) 

• AICPA established seven task forces to address the PCIE report

recommendations. It issued a proposed revised auditing standard 

and provided clarifying guidance in the audit guide during 2008.

According to the AICPA, it anticipates finalizing revisions to 

applicable auditing standards and the AICPA Audit Guide, and 

developing illustrative practice aids in 2009 (see slide 23).

• AICPA developed a white paper that proposes a training

curriculum for auditors who perform single audits and provided it 

to OMB for consideration as they prescribe specific CPE 

requirements.

• According to AICPA, it has provided OMB with some drafts for

the anticipated products to be completed in 2009, as shown on 

slide 23. 

Page 28 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

23

Actions to Address the PCIE

Recommendations (con’t)

Source: AICPA.

Issued December 2008

Summer 2009

Exposure Draft of a new auditing standard titled Compliance Auditing issued and out for public comment. This

proposed standard would supersede Statement on Auditing Standards (SAS) No. 74, Compliance Auditing

Considerations of Governmental Entities and Recipients of Governmental Financial Assistance, which is the current

auditing standard in this area.

New compliance auditing standard

7. Compliance Auditing

Considerations in Audits of

Governmental Entities and 

Recipients of Governmental

Financial Assistance 

Spring 2009

To be determined

Recommendations to the AICPA Peer Review Board

Conduct periodic meetings with Inspector General community after recommendations from all the task forces are

completed to facilitate, enhance, and improve the effectiveness of the Peer Review Program 

6. Practice Monitoring in a Single

Audit Environment

Issued November 2008

Summer 2009

Summer 2009

Clarification to Chapter 7 “Schedule of Expenditures of Federal Awards” of the 2008 AICPA Audit Guide

Illustrative Audit Program for the SEFA

Illustrative Auditor Disclosure Checklist for the SEFA

5. Schedule of Expenditures of Federal

Awards (SEFA) Reporting Issues

4. Single Audit Training Needs and Single Audit Training Curriculum white paper issued to OMB for its consideration Issued July 2008

Continuing Professional Education

(CPE) Evaluation

Summer 2009

Fall 2009

Illustrative Findings Template Practice Aid

Examples of actual findings write-ups using the Illustrative Findings Template Practice Aid

3. Reporting Audit Findings in a Single

Audit

Issued November 2008

Summer 2009

Fall 2009

Clarification to Chapter 9 “Consideration of Internal Control Over Compliance for Major Programs” of the 2008 

AICPA Audit Guide

Practice Aid templates (both in a narrative and checklist format) to assist auditors in documenting their understanding 

and testing of internal control over compliance 

Examples of internal control and compliance documentation for certain A-133 compliance requirements using the

Practice Aids described above

2. Internal Control & Compliance

Responsibilities in a Single Audit

Environment

1. Sampling/Materiality Issues in a New chapter in AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits (Audit Guide) Fall 2009

Single Audit Environment

Completed/proposed

timeline(s)

Task force Completed/anticipated product(s)

Status of AICPA Task Force Actions

Page 29 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

24

Actions to Address the PCIE Recommendations (con’t) 

• NASBA developed a process in May 2008 for tracking the status of

federal agency referrals on poor-performing auditors to state boards

to ensure appropriate action and timely follow-up. 

• On a quarterly basis, NASBA stated it plans to contact each

federal grant awarding agency to inquire about outstanding

referrals.

• NASBA stated it will follow up with the agency 2 weeks after each

quarterly referral to determine whether the issue has been 

resolved. 

Page 30 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

25

Conclusions

• Without a mechanism in place to monitor on an ongoing basis how the single audit

process is implemented governmentwide, OMB and federal stakeholders are unable to

measure the efficiency and effectiveness of this process, as well as its usefulness as

an accountability tool over federal grant awards. Variations in how federal agencies we 

reviewed perform key functions of the single audit process demonstrate the need to

assess whether federal agencies carry out their single audit responsibilities in an 

efficient and effective manner.

• Opportunities exist to address concerns about the complexity and relative costs and 

benefits of audit requirements for single audits, while achieving a proper balance 

between risk and cost—effective accountability. This can be accomplished by

exploring a simplified approach for performing single audits of small entities, and 

identifying best practices and providing guidance for achieving higher quality single

audits of large entities. 

• OMB, AICPA, and NASBA have initiated actions to address the PCIE report

recommendations; however, most of these actions have yet to be completed and their

impact on (1) addressing long-standing single audit quality issues, and (2) identifying needed changes to the single audit process is yet to be determined. 

Page 31 GAO-09-307R Single Audit Improvements
Enclosure I: Briefing Slides 

26

Recommendations for 

Executive Action 

In order to monitor the risk, cost—benefit, and efficiency and effectiveness of

the single audit process, we recommend that OMB 

• designate an entity or group to (1) evaluate and comprehensively monitor the 

single audit process governmentwide, (2) assess agencies’ efficiency and

effectiveness in carrying out their single audit responsibilities, and (3) identify additional guidance and resources needed to carry out single audit 

requirements;

• designate a federal work group such as its “New and Improved Single Audit

Process” work group 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; and 

• monitor the status of OMB work groups, 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. 

Page 32 GAO-09-307R Single Audit Improvements
Enclosure II: GAO Contact and Staff Acknowledgements Enclosure II: GAO Contact and Staff 

Acknowledgements 

GAO Contact: 

Jeanette Franzel, (202) 512-2600 or franzelj@gao.gov

Staff Acknowledgements: 

In addition to the contact named above Sabrina Springfield, Assistant Director; 

Marcia Buchanan, Assistant Director; Abe Dymond, Assistant General Counsel; Sunny 

Chang; Emily Clancy; Maxine Hattery; Heather Keister; Jason Kirwan; Sandy Silzer; 

and Doris Yanger made key contributions to this report. 

(194749) Page 33 GAO-09-307R Single Audit Improvements
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately. 
GAO’s Mission The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability. 

The fastest and easiest way to obtain copies of GAO documents at no cost 

is through GAO’s Web site (www.gao.gov). Each weekday afternoon, GAO 

posts on its Web site newly released reports, testimony, and 

correspondence. To have GAO e-mail you a list of newly posted products, 

go to www.gao.gov and select “E-mail Updates.” 

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Phone The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s Web site, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information. 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470 

Ralph Dawn, Managing Director, dawnr@gao.gov, (202) 512-4400 

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, DC 20548 

To Report Fraud, 

Waste, and Abuse in 

Federal Programs 

Congressional 

Relations 

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800 

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548 

Public Affairs