Single Audit: Survey of CFO Act Agencies
Published: 2002-03-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The federal government awards $300 billion to state and local governments and nonprofit groups each year. The Single Audit Act promotes sound financial management, including effective internal controls, over these federal awards. Before the act, government relied on audits of individual grants to determine if the money was spent properly. The act replaced these grant audits with a single audit--one audit of an entity as a whole. GAO surveyed the 24 federal agencies subject to the Chief Financial Officers (CFO) Act and found that they have developed processes and assigned responsibilities to meet the requirements of the Single Audit Act.
section_title: What GAO Found
paragraphs: Agencies reported that they are using single audits to monitor compliance with administrative and programs requirements and to determine the adequacy of recipients' internal controls. One or more offices at 22 of the 24 agencies used single audits to monitor compliance with administrative and program requirements in the Circular A-133 Compliance Statement and to monitor recipients' compliance with internal controls. Eleven agencies reported that they routinely use the Federal Audit Clearinghouse database to identify recipients that incurred questionable costs or programs that have significant findings, to identify recipients with recurring findings, or to study subrecipient findings. Individuals at four agencies were unaware of the database or how to use it. Agencies that do not use the database rely on the Federal Audit Clearinghouse to send them the single audit report, which they review for information on their programs.

section_title: Letter
paragraphs: The auditing of more than $300 billion a year in federal awards  administered by state and local governments and nonprofit organizations is  a critical element in the federal government’s ability to ensure that these  federal funds are properly used. The Single Audit Act, as amended, is  intended to promote sound financial management, including effective  internal controls over these federal awards. Before passage of the act, the  federal government relied on audits of individual grants to help gain  assurance that state and local governments and nonprofit organizations  were properly spending federal awards. The concept of the single audit was  created to replace these grant audits with one audit of an entity as a whole.  Rather than a detailed review of individual grants or programs, often times  by multiple audit organizations where there was more than one federal  funding source, the single audit is an organizationwide audit that focuses  on accounting and administrative controls.
Single audits, as implemented by Office of Management and Budget (OMB)  Circular A-133, Audits of States, Local Governments, and Non-Profit  Organizations, provide a tool that federal agencies can use to identify  meaningful information on entities’ financial status, their management of  federal funds, and areas that need further audit or investigative work. Each  year, about 30,000 single audits are conducted, and several thousand of  them identify weaknesses in award recipients’ financial management and  internal control systems relating to these federally funded programs.
On February 19, 2002, we briefed you on the results of the initial phase of  the work done in response to your request for information on how federal  agencies use single audit results. As agreed with your office, this report  summarizes the matters discussed during that briefing. To assess how  agencies are using the results of single audits, we conducted a survey of the  24 agencies subject to the Chief Financial Officers (CFO) Act. (See  appendix I for a list of the CFO Act agencies.) The objectives of the survey  were to capture information on federal agency    single audit processes and responsibilities,    use of single audits, and    use of the Federal Audit Clearinghouse (FAC) database.
The briefing materials we used are included as appendix II to this letter.  Work is underway on the remaining segment of your request dealing with  what several agencies are doing to assure that recipients of federal awards  have corrected problems identified by single audits.
subsections: section_title: Objectives, Scope, and Methodology
paragraphs: To assess how agencies are using the results of single audits, we conducted  a survey of the 24 agencies subject to the CFO Act. We pretested our survey  with one federal agency, solicited comments from OMB, and modified the  survey based on the comments we received. The survey included two  sections. The first section captured background information on agency  federal awards programs, the single audit process from an agencywide  perspective, and the offices within the agency that are responsible for  fulfilling the task of implementing the various single audit responsibilities  defined under OMB Circular A-133. The second part of the survey captured  information on how agency CFO, IG, and program offices use the results of  single audits in each agency’s largest grant program. We distributed the  surveys to the agencies for completion. We then performed follow-up  interviews with representatives from CFO, IG, and program offices to  obtain, discuss, and clarify their survey responses.
Our survey results reflect the information provided by and the opinions of  the agency officials who participated in our survey. We did not  independently verify the responses to our questions. We received  responses from all of the CFO Act agencies. One of the 24 agencies  returned but did not complete the survey because it does not have grant- making authority, and, therefore, has no experience with single audits. As a  result, our survey results are based on responses from 23 agencies. We  conducted our work from July 2001 through December 2001, in accordance  with generally accepted government auditing standards. We discussed a  draft of this report with representatives from OMB and have incorporated  their comments and views where appropriate.
section_title: Background
paragraphs: According to OMB, federal awards for fiscal year 2001 totaled about $325  billion of the $1.8 trillion federal budget. The Departments of Agriculture,  Education, Health and Human Services, Housing and Urban Development,  and Transportation were responsible for managing about 86 percent of the  federal awards in fiscal year 2001. The Single Audit Act, as amended,  established the concept of the single audit to replace multiple grant audits  with one audit of the recipient as a whole. As such, a single audit is an  organizationwide audit that focuses on the recipient’s internal controls and  compliance with laws and regulations governing federal awards and should  be viewed as a tool that raises relevant or pertinent questions rather than as  a document that answers all questions. Federal awards include grants,  loans, loan guarantees, property, cooperative agreements, interest  subsidies, insurance, food commodities, and direct appropriations and  federal cost reimbursement contracts.
The objectives of the Single Audit Act, as amended, are to    promote sound financial management, including effective internal  controls, with respect to federal awards administered by nonfederal  entities;    establish uniform requirements for audits of federal awards  administered by nonfederal entities;    promote the efficient and effective use of audit resources;    reduce burdens on state and local governments, Indian tribes, and    ensure that federal departments and agencies, to the maximum extent  practicable, rely upon and use audit work done pursuant to the act.
Recipients of federal awards who expend $300,000 or more in a year are  required to comply with the Single Audit Act’s requirements. In general,  they must (1) maintain internal control over federal programs, (2) comply  with laws, regulations, and the provisions of contracts or grant agreements,  (3) prepare appropriate financial statements, including the Schedule of  Expenditures of Federal Awards, (4) ensure that the required audits are  properly performed and submitted when due, and (5) follow up and take  corrective actions on audit findings.
OMB Circular A-133 establishes policies for federal agency use in  implementing the Single Audit Act, as amended, and provides an  administrative foundation for consistent and uniform audit requirements  for nonfederal entities that administer federal awards. It details federal  responsibilities with respect to informing grantees of their responsibilities  under the act. A significant part of OMB Circular A-133 is the Compliance  Supplement. This document serves as a source of information to aid  auditors in understanding federal program objectives, procedures, and  compliance requirements relevant to the audit, and it identifies audit  objectives and suggested procedures for auditors’ use in determining  compliance with the requirements. For example, it includes guidance on  audit procedures applicable to 14 areas including allowable activities,  allowable costs, cash management, eligibility, and reporting. (Appendix III  lists and briefly describes the 14 areas.)
Organizations that must comply with the Single Audit Act, as amended, are  required to submit a reporting package to the FAC. The FAC serves as the  central collection point, repository, and distribution center for single audit  reports. Its primary functions are to    receive the SF-SAC Form—a data collection form that contains  summary information on the auditor, auditee and its federal programs,  and audit results—and the audit report from the auditee,    archive copies of the SF-SAC Form and audit report,    forward a copy of the audit report to each federal awarding agency that  has provided direct funding to the auditee when the report identifies a  finding relating to that agency’s awards, and    maintain an electronic database that is accessible through the Internet.
In our June 1994 report, Single Audit: Refinements Can Improve  Usefulness (GAO/AIMD-94-133), nearly two-thirds of the program  managers we interviewed said that a database of single audit information  would be a significant help in comparing information about entities  operating their programs. Eighty percent of the managers said they would  like to use the database to identify all entities operating their programs that  had serious internal control or noncompliance problems disclosed in single  audit reports.
The Single Audit Act Amendments of 1996 led to the establishment of an  automated database of single audit information—the FAC database. OMB  Circular A-133 requires all entities that must submit single audit reports to  the FAC to prepare and submit a data collection form (SF-SAC Form) with  the audit report. The FAC uses this form as the source of the information  for its automated, Internet-accessibledatabase of information contained in  single audit reports. The database contains about 4 years of information on  over 30,000 annual single audit reports. The various data query options  available provide potential users, including program managers, auditors,  and other interested parties, with significant amounts of readily available  information on grant recipient financial management and internal control  systems and on compliance with federal laws and regulations.
section_title: Single Audit Processes in Place but Use of Results Varies Significantly among Agencies
paragraphs: Our survey results indicated that the CFO Act agencies have generally  developed processes and assigned responsibilities to meet their  requirements under the Single Audit Act, as amended. The CFO, IG, and  program offices perform these activities either individually or in  coordination with each other. Federal agencies indicated that they use  single audit results for many purposes. The most common reported use  was as a tool to monitor auditee compliance with administrative and  program requirements and to monitor the adequacy of internal controls.  Although agencies have identified many uses for the single audit results,  our survey results show that they are generally not using the FAC  automated database to obtain summary information on the audit results or  the entities that are receiving funds under their programs. Rather, they  reported developing their own systems or methods to obtain information  from the reports.
subsections: section_title: Single Audit Processes and Awarding Agency Responsibilities
paragraphs: According to our survey results, agency program offices are primarily  responsible for ensuring the application of the provisions set forth in OMB  Circular A-133. For example, in completing the survey, program office  officials indicated that they (1) ensure that award recipients are given  information that describes the federal award, (2) advise recipients of other  applicable award requirements, (3) advise recipients of the requirement to  obtain a single audit when they expend $300,000 or more in federal awards  in a year, (4) ensure that single audits are completed and the reports are  received in a timely manner, and (5) follow up on issues identified in the  reports that require corrective action. Specifically,    20 agency program offices responded that they ensure recipients are  given the information necessary to describe the federal award and  advise recipients of other applicable award information,    19 responded that they advise recipients of the requirements to obtain a  single audit when they expend $300,000 or more in federal awards in a  year,    19 responded that they follow up on issues that are identified in the  reports that require corrective action,    17 responded that they provide information to auditors about the federal    10 responded that they ensure that single audits are completed and the  reports are received in a timely manner.
Additionally, at some agencies more than one office responded that they  are responsible for the application of the provisions of OMB Circular A-133.
The FAC distributes single audit reports to each federal awarding agency  that has provided direct funding and for which the report identifies an audit  finding related to an award managed by that agency. Based on our survey,  receipt of single audit reports from the FAC and distribution of the reports  to the applicable agency office is predominately the responsibility of the  OIG. Our results show that 18 OIGs responded that they receive the single  audit reports directly from the FAC and that they distribute them to  applicable agency offices.
Audits provide important information on recipient performance and are a  critical control that agencies can use to help ensure that entities that  receive federal funds use those funds in accordance with program rules  and regulations. Agency OIGs play a key role in this area by performing  quality control reviews (QCR) to ensure that the audit work performed  complies with auditing standards. Our survey results show that 10 of the  CFO Act agency OIGs performed 109 QCRs during fiscal year 2001,  although this total may be overstated since OIGs occasionally perform joint  QCRs and our survey did not capture information on the number of times  this occurred. Although the number of QCRs performed is small compared  to the approximately 30,000 single audits performed annually, several OIGs  conducting QCRs have identified problems with the audit work performed.  For example, 7 OIGs noted problems with the internal control and/or  compliance testing performed by the auditors, and 3 OIGs reported  problems relating to auditor compliance with generally accepted  government auditing standards.
Audit follow-up is an integral part of good management and is a shared  responsibility of agency management officials and auditors. Corrective  action taken by the recipient on audit findings and recommendations is  essential to improving the effectiveness and efficiency of government  operations. In addition, federal agencies need to ensure that recipients take  timely and effective corrective action. OMB Circular A-133 notes that audit  follow-up is the responsibility of the federal awarding agency. The Circular  requires agencies to issue a management decision on audit findings within  6 months after receipt of the recipient’s audit report and to ensure that the  recipient takes appropriate and timely corrective action.
Analysis of our survey results indicates that both the IG and program  offices have a role in the audit follow-up process. For example, 15 IG and 9  program offices responded that they are responsible for reviewing reports  to verify that the report contains agency program-specific information.  When single audit reports do not have enough information, both IG and  program offices indicated that they follow up with either the recipient or  the auditor. Thirteen IG and 14 program offices stated that they follow up  with the recipient, and 13 IG and 10 program offices stated they follow up  with the auditor.
Program offices, on the other hand, are responsible for evaluating the  corrective action plans filed by recipients to determine whether they  address the audit findings. Sixteen program offices responded that they are  responsible for evaluating the corrective action plans to determine whether  the issues are valid and what corrective action is necessary. Furthermore,  the program offices at 10 agencies stated that they rely on subsequent  audits to determine whether corrective actions have been taken.
section_title: Agency Uses of Single Audits
paragraphs: At 22 of the agencies, officials in at least one of the CFO, IG, and/or  program offices responded that they use single audits as a tool to monitor  compliance with administrative and program requirements addressed in  the OMB Circular A-133 Compliance Supplement and to monitor the  adequacy of internal controls. Six agencies reported that the CFO, IG, and  program offices all perform this function. Six agencies reported that some  combination of CFO, IG, and program offices perform this function. Ten  agencies reported that one office performs the function, and that office  varies across the 10 agencies.
The next most frequent uses reported were for identifying leads for  additional audits (18 agencies) and as a preaward check for determining  how recipients managed previous awards (14 agencies). Further, they  reported that the single audit reports are used in preaward checks to  identify findings that may affect the program area of operations and  identify questioned or unallowable costs incurred by the recipient. agencies reported that these checks may affect future awards.
Additionally, the survey results indicated that between 6 and 12 agencies  use single audit results    to identify leads for program office site visits (12 agencies),    as support for closeout of the award (12 agencies),    to hold agency program offices accountable for administrative and  program compliance (12 agencies),    to support the agency’s financial statements (10 agencies), and    as a source of program information for the agency’s performance plan or  annual accountability report (6 agencies).
As can be seen, agencies report using single audits for a number of  purposes. However, between 1 and 8 agencies indicated that, for several  reasons, they did not use the reports for some or all of these purposes.  When asked why they did not use single audit reports, several agencies  noted that their programs were too small to be covered in the scope of an  audit performed under the Single Audit Act. For example, the Single Audit  Act requires auditors to use combined expenditure and risk-based criteria  to determine which programs to include in the scope of a single audit.  Since the expenditure portion of the criteria identifies awards with large- dollar expenditures, agencies whose programs do not meet this criteria are  less likely to have their programs audited during a single audit.  Additionally, agencies said the single audit reports did not provide relevant  information for specific purposes such as support for the agency financial  statements or holding federal program offices accountable for  administrative and program compliance. Other reasons provided for not  using single audit reports include limited staff resources and competing  priorities.
section_title: Federal Audit Clearinghouse Database Usage
paragraphs: Our survey results indicate that 11 agencies routinely use the FAC database  and that usage is distributed among the CFO, IG, and program offices. For  example, the 11 agencies indicated that they use the database to identify  recipients that have incurred questioned costs, have made improper  payments, or both. In addition, 8 agencies noted that they use the database  to determine whether large-dollar or complex programs have significant  findings such as adverse opinions on recipient compliance with program  laws and regulations. Survey respondents also indicated that they use the  FAC database to perform other tasks, such as    tracking the status of audit-finding resolution,    determining whether the recipient has filed its single audit report,    a source for audit leads,   identifying trends between recipients, and    verifying the accuracy of the Schedule of Expenditures of Federal  Awards.
Those agencies that do not use the database reported that they rely on the  FAC to send them the single audit reports and that they review the hard  copy reports to obtain information on the agency’s programs instead of the  database.
In discussions with personnel at 4 agencies, we learned that they were  unfamiliar with the FAC database and how it could be used. These officials  did express interest in using the database and inquired about the  availability of training.
We are sending copies of this report to the ranking minority member,  Subcommittee on Government Efficiency, Financial Management and  Intergovernmental Relations, House Committee on Government Reform;  the chairman and ranking minority member, Senate Committee on  Appropriations; the chairman and ranking minority member, House  Committee on Appropriations; the chairman and ranking minority member,  Senate Committee on Governmental Affairs; the chairman and ranking  minority member, House Committee on Government Reform; the chairman  and ranking minority member, Senate Budget Committee; and the chairman  and ranking minority member, House Budget Committee. We are also  sending copies of this report to the director of the Office of Management  and Budget and the agency CFOs and IGs. Copies of this report will be  made available to others upon request. This report will also be available on  GAO’s home page (http://www.gao.gov).
Please call me at (213) 830-1065 or Tom Broderick, Assistant Director, at  (202) 512-8705 if you or your staff have any questions about the information  in this report. Key contributors to this report were Cary Chappell, Mary  Ellen Chervenic, Valerie Freeman, Stuart Kaufman, and Gloria Hernandez- Saunders.
section_title: Agencies Subject to the Chief Financial Officers Act
section_title: Briefing on Results of Survey on CFO Act Agency Use of Single Audits
paragraphs: According to Office of Management and Budget (OMB) figures, federal  awards for fiscal year 2001 totaled $325 billion of the $1.8 trillion budget.  This assistance includes grants, loans, loan guarantees, property,  cooperative agreements, interest subsidies, insurance, food commodities,  and direct appropriations and federal cost reimbursement contracts.
subsections: section_title: Recipients of Federal Awards
paragraphs: (Fiscal Year 2001)
section_title: $325 Billion
paragraphs: Fiscal Year 2001 Grants by Agency to State and Local Governments  According to OMB figures, the Department of Health and Human Services  is responsible for managing 54 percent of the $325 billion in federal awards  provided during fiscal year 2001. The Departments of Transportation,  Housing and Urban Development, Education, and Agriculture are  responsible for managing an additional 32 percent of federal awards.
section_title: FY 2001 Grants by Agency to State
paragraphs: (in billions)
Top Ten Programs for Fiscal Year 2001  According to OMB figures, the Department of Health and Human Services  managed 5 of the top 10 federal awards programs in fiscal year 2001. These  programs are    Medicaid,    Temporary Assistance for Needy Families,    Head Start,    Foster Care, and    Child Support Enforcement.  (in billions)
subsections: section_title: • Medicaid • Highway Planning and Construction • Temporary Assistance for Needy Families • Title I - Education • National School Lunch Program • Work Force Investment Act • Head Start • Special Education - States • Foster Care • Child Support Enforcement
paragraphs: Briefing Section II—Single Audit Processes and Awarding Agency  Responsibilities  Organizations Performing Selected A-133 Responsibilities  According to our survey results, agency program offices are primarily  responsible for ensuring the application of the provisions set forth in OMB  Circular A-133, Audits of States, Local Governments, and Non-Profit  Organizations. For example, 20 agency program offices responded that  they ensure that recipients are given the information necessary to describe  the federal award and advise recipients of other applicable award  information. Nineteen responded that they advise recipients of the  requirement to obtain a single audit when they expend $300,000 or more in  federal awards in a year, 19 responded that they follow up on issues that  are identified in the reports that require corrective action, 17 responded  that they provide information to auditors about the federal program, and 10  responded that they ensure that single audits are completed and that the  reports are received in a timely manner. Additionally, at some agencies  more than one office responded that they are responsible for the  application of the provisions of OMB Circular A-133. For example, the chief  financial officer (CFO) and inspector general (IG) offices are involved in  providing information to auditors performing single audits and in  addressing issues that require corrective action.
While the majority of agencies hold program offices responsible for such  tasks, 3 agencies established a separate function within the CFO’s office to  ensure proper oversight of federal awards. While these agencies award  relatively small amounts of federal money, they felt it was important to  maintain proper oversight.
Agencies responded that the primary way they promote compliance with  OMB Circular A-133 is by mandating it in regulations, agency policy  directives, or guidance on grants administration, and by including it in the  grant award document.
section_title: Organizations Performing Selected A-133
paragraphs: Provide recipients the information necessary to  describe the federal award. Advise recipients of other applicable award  requirements and provide information as requested. Advise recipients of the requirement to obtain a single  audit when they expend $300,000 or more in federal  awards in a year. Address issues that are identified in single audit  reports that require corrective action. Provide information to auditors on agency programs as  requested. Ensure single audits are completed and reports are  received in a timely manner.
NOTE: Rows do not add across to total agencies because we received responses from multiple offices within an agency.
Briefing Section II—Single Audit Processes and Awarding Agency  Responsibilities Organizations Performing Selected A-133 Responsibilities OMB Circular A-133 requires the Federal Audit Clearinghouse (FAC) to  distribute single audit reports to the federal agencies. The FAC distributes  reports to each federal agency that provides federal awards and for which  the report identifies an audit finding related to an award managed by that  agency. Based upon our survey, receipt of single audit reports from the FAC  and distribution of the reports within the agency are predominately Office  of Inspector General (OIG) responsibilities. Our results show that 18 OIGs  receive the single audit reports directly from the FAC and distribute them  to applicable agency offices.
Under OMB Circular A-133, federal award recipients are assigned either a  cognizant agency for audit or an oversight agency for audit, depending on  the amount of federal awards they expend. The agency that provides the  predominant amount of direct funding to a recipient is responsible for  carrying out the functions of the cognizant or oversight agency, unless OMB  makes a specific cognizant agency for audit assignment. The cognizant  agency for audit is required to conduct quality control reviews (QCR) of  selected audits made by nonfederal auditors.
section_title: Organizations Performing Selected A-133
paragraphs: Receive single audit reports from the FAC.
Distribute single audit reports to the  applicable agency office.
Obtain or conduct QCRs of selected  audits made by nonfederal auditors, and  provide the results, when appropriate, to  other interested organizations.
NOTE: Rows do not add across to total agencies because we received responses from multiple offices within an agency.
Briefing Section II—Single Audit Processes and Awarding Agency  Responsibilities Analysis of our survey results indicates that both the IG and program  offices are responsible for the audit follow-up process. For example, 15 IG  and 9 program offices responded that they are responsible for reviewing  reports to verify that the report contains agency program-specific  information. When single audit reports do not have enough information,  both IG and program offices follow up with either the recipients or the  auditor. Thirteen IG and 14 program offices stated they follow up with the  recipient, and 13 IG and 10 program offices stated that they follow up with  the auditor.
Program offices, on the other hand, are responsible for evaluating the  corrective action plans filed by recipients to determine whether they  address the audit findings. As shown on the accompanying slide, 16  program offices responded that they are responsible for evaluating the  corrective action plans to determine their validity. Furthermore, the  program offices at 10 agencies stated that they rely on subsequent audits to  determine if corrective actions have been taken.
To facilitate follow-up procedures, automated or manual audit tracking  systems are necessary. The results of our interviews show that most  agencies use a tracking system to track single audit findings.
section_title: Single Audit Follow-up Process
paragraphs: NOTE: Rows do not add across to total agencies because we received responses from multiple offices within an agency.
Briefing Section III—How Agencies Use Single Audits Agency Uses of Single Audits Review of the surveys indicated that one or more offices at 22 agencies use  single audits as a tool to monitor compliance with administrative and  program requirements and to monitor the adequacy of recipients’  compliance with internal controls. Five agencies reported that the CFO, IG,  and program offices all perform these functions. Six agencies reported that  some combination of CFO, IG, and program offices perform them and 11  agencies reported that one office performs this function.
Our results also indicate that many agency personnel read all single audit  reports they receive to identify noncompliance with program requirements  or inadequacy of internal controls.
NOTE: Rows do not add across to total agencies because we received responses from multiple offices within an agency.
Briefing Section III—How Agencies Use Single Audits Agency Uses of Single Audits Single-audit-report leads for follow-on work can come from a review of the  entity’s financial statements or the auditor’s findings. Further, while single  audit report findings are supposed to be corrected by the entities, some  findings may indicate problems that need further investigation to be fully  understood and effectively resolved. Thus, information from single audit  reports may indicate the possible need for follow-on audits or additional  review and analysis by program officials or both.
Eighteen agencies responded that they use single audits as a source of  leads for additional audits. Fourteen agencies said they use single audits as  a preaward check to determine how the recipient managed previous  awards. These agencies responded that single audit reports are used in  preaward checks to identify  findings that may affect the program area of operations,  questioned or unallowable costs incurred by the recipient, and  findings that may affect future awards.
Program officials at 12 agencies responded that single audits are used as a  source of leads to select recipients for program site visits. Twelve agencies  said they used single audit reports as support for award closeout.
section_title: Agency Uses of Single Audits
paragraphs: Briefing Section III—How Agencies Use Single Audits Agency Uses of Single Audits Survey results indicate that 12 of the 24 CFO agencies use single audit  results to hold agency program offices accountable for administrative and  program compliance. Ten agencies responded that they use single audit  reports to support the agency’s financial statements. Six agencies  responded that they used the results of single audits as a source of program  information for the agency’s performance plan or annual accountability  report.
section_title: Agency Uses of Single Audits
paragraphs: Briefing Section III—How Agencies Use Single Audits Why Agencies Do Not Use Single Audit Reports As indicated in the preceding slides, agencies use single audits for a  number of purposes. However, between 1 and 8 agencies indicated that, for  several reasons, they did not use the reports for these purposes. When  asked why they did not use single audit reports for a particular purpose,  between 4 and 8 agencies noted that their programs were too small to be  covered by the Single Audit Act. For example, the Single Audit Act requires  auditors to use combined expenditure and risk-based criteria to determine  which programs to include in the scope of a single audit. Since the  expenditure portion of the criteria identifies awards with large-dollar  expenditures, agencies whose programs do not meet this criteria are less  likely to have their programs audited during a single audit. Additionally,  between 2 and 8 agencies said that the single audit reports did not provide  relevant information for specific uses. Other reasons provided for not using  single audit reports included limited staff resources (2 to 5 agencies), and  competing priorities (1 to 3 agencies).
section_title: Why Agencies Do Not Use Single Audit Reports
paragraphs: Briefing Section IV—Use of Federal Audit Clearinghouse Database Uses of Federal Audit Clearinghouse Database Our survey results indicate that 11 agencies routinely use the FAC database  and that usage is distributed among the CFO, IG, and program offices. For  example, 11 agencies indicated that they use the database to identify  recipients that have incurred questioned costs, have made improper  payments, or both. In addition, 8 agencies noted that they use the database  to determine whether large-dollar or complex programs have significant  findings such as adverse opinions on recipient compliance with program  laws and regulations. Survey respondents also indicated that they use the  FAC database to perform other tasks, such as   tracking the status of audit-finding resolution,   determining whether the recipient has filed its single audit report,   a source for audit leads,  identifying trends between recipients, and  verifying the accuracy of the Schedule of Expenditures of Federal  Awards.
Those agencies that do not use the database rely on the FAC to send them  the single audit reports and review the reports to obtain information on the  agency’s programs instead of using the database to obtain such  information.
In discussions with agency personnel at four agencies, we learned that they  were unfamiliar with the FAC and how it could be used. These officials did  express interest in using the database and inquired about the availability of  training.
section_title: Uses of Federal Audit Clearinghouse Database
paragraphs: to determine whether multiple agency programs have similar  audit issues called “finding categories”  to identify recipients that have incurred questioned costs,  made improper payments, or both  to determine how many recipients have recurring findings  to determine whether large-dollar or complex programs have  significant findings such as adverse opinions on recipient  compliance with program laws and regulations  to study the findings of subrecipients  (A subrecipient is a  nonfederal entity that expends federal awards received from a  pass-through entity to carry out federal programs.)
NOTE: Rows do not add across to total agencies because we received responses from multiple offices within an agency.
section_title: OMB Circular A-133 Compliance Supplement Requirements
paragraphs: Presented below are the 14 types of compliance requirements that the  auditor shall consider in every audit conducted under OMB Circular A-133.
Activities allowed or unallowed are unique to each federal program and are found in the  laws and regulations and the provisions of the contract or grant agreements pertaining to  the program.
OMB Circulars A-87, Cost Principles for State, Local and Indian Tribal Governments; A-21,  Cost Principles for Educational Institutions; and A-122, Cost Principles for Non-Profit  Organizations prescribe the cost accounting policies associated with the administration of  federal awards managed by states, local governments, Indian tribal governments,  educational institutions, and nonprofit organizations.
Requires that recipients follow procedures to minimize the time elapsing between the  transfer of funds from the U.S. Treasury and payment by the recipient.
Requires that all laborers and mechanics employed to work on construction projects over  $2,000 financed by federal assistance funds be paid prevailing wage rates.
The specific requirements for eligibility are unique to each federal program and are found in  the laws and regulations and the provisions of the contract or grant agreements pertaining  to the program.
Equipment and real property management Requires real property acquired by nonfederal entities with federal award funds be used for  the originally authorized purpose and may not be disposed of without prior consent of the  awarding agency.
The specific requirements for matching, level of effort, and earmarking are unique to each  federal program and are found in the laws and regulations and the provisions of the contract  or grant agreements pertaining to the program.
Where applicable, federal awards may specify a time period during which the nonfederal  entity may use the federal funds. A nonfederal entity may charge to the award only costs  resulting from obligations incurred during the funding period and any preaward costs  authorized by the awarding agency.
Nonfederal entities are prohibited from contracting with or making subawards to parties that  are suspended or debarred from contracting with the federal government.
Requires that program income be deducted from program outlays unless otherwise  specified in agency regulations or the terms and conditions of the award.
Requires that the provisions specified in the Uniform Relocation Assistance and Real  Property Acquisition Policies Act of 1970, as amended, are adhered to when persons are  displaced from their homes, businesses, or farms by federally assisted programs.
Requires that each recipient report program outlays and program income on a cash or  accrual basis, as prescribed by the awarding agency.
Requires that pass-through entities monitor subrecipients. Monitoring activities may include  reviewing reports submitted by subrecipients, performing site visits, reviewing the  subrecipients single audit results, and evaluating audit findings and the corrective action  plan.
Special tests and provisions are unique to each federal program and are found in the laws  and regulations and the provisions of the contract or grant agreements pertaining to the  program.
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