	Evolution of the 1996 Refinements

The concept of the single audit was created to replace multiple grant audits  with one audit of an entity as a whole. 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. The 1996 amendments were effective for audits of recipients for fiscal  years ending June 30, 1997, and after. The refinements cover a range of  fundamental areas affecting the single audit process and single audit  reporting, including provisions to extend the law to cover all recipients of federal financial assistance, ensure a more cost-beneficial threshold for requiring single audits, more broadly focus audit work on the programs that present the  greatest financial risk to the federal government, provide for timely reporting of audit results, provide for summary reporting of audit results, promote better analyses of audit results through establishment of a  federal clearinghouse and an automated database, and authorize pilot projects to further streamline the audit process and  make it more useful. OMB’s Role

In June 1997, OMB issued Circular A-133, Audits of States, Local  Governments, and Non-Profit Organizations. The Circular establishes  policies to guide implementation of the Single Audit Act 1996 amendments  and provides an administrative foundation for uniform audit requirements  for nonfederal entities that administer federal awards. OMB also issued a  revised OMB Circular A-133 Compliance Supplement. The Compliance Supplement identifies for single auditors the key program  requirements that federal agencies believe should be tested in a single audit  and provides the audit objective and suggested audit procedures for testing  those requirements. We reported in our 1994 report that the Compliance  Supplement had not kept pace with changes to program requirements, and  had only been updated once since it was issued in 1985. We recommended  that the Compliance Supplement be updated at least every 2 years. OMB is  now updating this supplement on a more regular basis. The 1996 amendments expanded the scope of the act to include nonprofit  organizations.
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed the status of efforts to implement the Single Audit Act Amendments of 1996, focusing on: (1) the importance of the 1996 amendments; (2) the actions taken to implement them; and (3) ways in which the refinements will continue to evolve and benefit future single audit efforts.

What GAO Found

GAO noted that: (1) the concept of the single audit was created to replace multiple grant audits with one audit of an entity as a whole; (2) the objectives of the Single Audit Act, as amended, are to: (a) promote sound financial management, including effective internal controls, with respect to federal awards administered by non-federal entities; (b) establish uniform requirements for audits of federal awards administered by non-federal entities; (c) promote the efficient and effective use of audit resources; (d) reduce burdens on state and local governments, Indian tribes, and nonprofit organizations; and (e) ensure that federal departments and agencies rely upon and use audit work done pursuant to the act; (3) the 1996 amendments were effective for audits of recipients' fiscal years ending June 30, 1997, and after; (4) the refinements cover a range of fundamental areas affecting the single audit process and single audit reporting, including provisions to: (a) extend the law to cover all recipients of federal financial assistance; (b) ensure a more cost-beneficial threshold for requiring single audits; (c) more broadly focus audit work on the programs that present the greatest financial risk to the federal government; (d) provide for timely and summary reporting of audit results; (e) promote better analyses of audit results through establishment of a federal clearinghouse and an automated database; and (f) authorize pilot projects to further streamline the audit process and make it more useful; (5) in June 1997, the Office of Management and Budget (OMB) issued Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; (6) the Circular establishes policies to guide implementation of the Single Audit Act 1996 amendments and provides an administrative foundation for uniform audit requirements for nonfederal entities that administer federal awards; (7) OMB also issued a revised OMB Circular A-133 Compliance Supplement; (8) the Compliance Supplement identifies for single auditors the key program requirements that federal agencies believe should be tested in a single audit and provides the audit objective and suggested audit procedures for testing those requirements; (9) GAO reported in its 1994 report that the Compliance Supplement had not kept pace with changes to program requirements, and had only been updated once since it was issued in 1985; (10) GAO recommended that the Compliance Supplement be updated at least every 2 years; and (11) OMB is now updating this supplement on a more regular basis.