Summary: In a speech before an intergovernmental audit forum, GAO discussed the background of single audits was presented as well asits own and conclusions on the subject. Because the system for auditing Federal grants was not very effective, a new approach to grant audits, a single coordinated audit of grant recipients on an entity-wide basis, was called for in 1979. GAO found that there was a lack of common understanding of what was to be accomplished by single audits, policies and procedures were still being developed, Federal audit requirements differed depending on the source of funding, State and local auditing varied from State to State, and few single audits had been completed by 1982. Therefore, it was suggested that there was a need: (1) to develop a definition for the single audit that would be commonly understood and accepted; (2) for a threshold of funding levels for requiring audits of local governments; and (3) for a more workable cognizance plan and structure. In helping to draft proposed legislation, a GAO task force determined that the purpose of the single audit of a Government entity is to determine: (1) whether the financial statements of the entity present fairly the financial position and the results of financial operations in accordance with generally accepted accounting principles; and (2) whether the entity has adequate internal accounting and administrative control systems to provide reasonable assurance that it is managing grant programs in compliance with laws and regulations. The minimum work required in a single audit would include: (1) identifying internal control systems and how they are designed; (2) testing sample transactions; (3) identifying internal control weaknesses; and (4) expressing an opinion on the adequacy of the systems and making recommendations for any needed changes.
