As a result, some entities were subject to numerous grant audits each year while others were not audited for long periods. The objectives of the Single Audit Act are to improve the financial management of state and local governments receiving federal financial assistance; establish uniform requirements for audits of federal financial assistance provided to state and local governments; promote the efficient and effective use of audit resources; and ensure that federal departments and agencies, to the extent practicable, rely upon and use audit work done pursuant to the act. Ensuring Adequate Audit Coverage While Reducing Burden

The criteria for determining which entities are to be audited is based solely on dollar amounts, which have not changed since the Act’s passage in 1984. Entities that fall below the audit threshold would still be required to maintain and provide access to records of the use of federal assistance. The proposed amendments would require OMB to develop a risk-based approach to target audit resources at the higher risk programs as well as focusing on the dollars expended. The proposed amendments would shorten this to 9 months. Additional Provisions

The proposed amendments would also expand the Single Audit Act to include nonprofit organizations, thereby placing all entities receiving federal funds under the same ground rules.
Why GAO Did This Study

GAO discussed proposed amendments to the Single Audit Act of 1984 and the act's importance.

What GAO Found

GAO noted that: (1) Congress enacted the act in response to state and local governments' poor accounting practices and lack of accountability for federal funds; (2) audits were not uniform and some grantees were subjected to multiple annual audits while others were not audited for long periods of time; (3) state and local governments have greatly improved their accountability and financial management under the act; (4) proposed amendments would reduce administrative burdens on grantees who receive comparatively small amounts by raising audit thresholds so that audit coverage returns to the 95-percent level; (5) grantees below the thresholds would still have to maintain records and be subject to monitoring; (6) the amendments require the Office of Management and Budget to develop a risk-based approach to targeting audit resources at higher-risk programs; (7) the amendments' required summary reports would increase audit timeliness and usefulness; (8) shortening the audits' due date to 9 months from the fiscal year's close would also improve the audits' timeliness; (9) bringing nonprofit organizations under the act would subject all grantees to uniform requirements; and (10) the proposed amendments would make the single audits the basis for other audits.