A single audit is a term
used in reference to an entity-wide audit consisting of
two main parts: an audit of the basic financial
statements under Government Auditing Standards and an
audit of the entity’s major federal award programs.
The audit of the major programs includes (a) gaining an
understanding of and testing the internal controls and
(b) testing compliance with compliance requirements over
the programs. In accordance with the concept, one
auditor integrates the various programs’ internal
control and compliance auditing requirements with an
audit of the entity’s basic financial statements.
In December 2014, the
Office of Management and Budget's (OMB) Uniform
Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (commonly called
"Uniform Guidance") was officially implemented by the
Council on Financial Assistance Reform (COFAR). The
Uniform Guidance – a "government-wide framework for
grants management" – synthesizes and supersedes guidance
from earlier OMB circulars.
The reforms that comprise
the Uniform Guidance aim to reduce the administrative
burden on award recipients and, at the same time, guard
against the risk of waste and misuse of Federal funds.
Among other things, the OMB's Uniform Guidance does the
following:
-
Removes previous guidance that is conflicting and
establishes standard language
-
Directs the focus of audits on areas that have been
identified as at risk for waste, fraud and abuse
-
Lays the groundwork for Federal agencies to
standardize the processing of data
-
Clarifies and updates cost reporting guidelines for
award recipients
However, not all state
and local governments and nonprofit organizations that
receive federal awards are subject to the single audit
requirements under the Uniform Guidance. Organizations
that expend less than $750,000 in federal awards during
a year are exempt from the requirement for that year.
Government Auditing
Standards
As a partial response to
the multitude of program audit guides, the U.S. General
Accounting Office (GAO) issued the Government
Accounting Standards in an attempt to bring
uniformity to audits of governmental organizations,
programs, activities, and certain entities (including
nonprofit organizations) receiving government
assistance. These standards relate to scope and quality
of audit efforts and to the characteristics of a
professional and meaningful audit report. They address
the concerns of public officials, legislators, and the
general public about whether governmental funds are
handled properly and in compliance with existing laws
and whether governmental programs are being conducted
efficiently, effectively, and economically.
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