Single Audit Update

1. Single Audit Update Gilbert Tran Executive Office of the President Office of Management and Budget

2. Agenda The Big Grant Picture Single Audit Requirements National Single Audit Sampling Project Federal Single Audit Workgroups

3. “…You know, we spend a lot of time and a lot of effort collecting your money, and we should show the same amount of effort in reporting how we spend it. Every year, the federal government issues more than $400 billion in grants, and more than $300 billion in contracts to corporations, associations, and state and local governments. Taxpayers have a right to know where that money is going, and you have a right to know whether or not you're getting value for your money…” President Bush, signing the Federal Funding Accountability and Transparency Act of 2006, September 26, 2006.

4. The Garden of Grants

5. Distribution of Federal Grants 2009 US BUDGET - $3.1 TRILLION GRANTS- $500 BILLION

6. Steep Rise in Federal Grants In Billion of $ $450B $200B $91B $24B $7B CFDA lists more than 1000 Federal grant programs

7. FY 2006 Budgeted Grants to State & Local • Governments by Agency I’m DHHS, Hear me roar, RAA!! $$$$ #Programs Department of Agriculture …………………………………… $25.7 68 Department of Commerce ...................................... 0.6 40 Department of Education ........................................ 40.1 124 Department of Energy ............................................. 0.3 4 Department of Health and Human Services .....256.6 169 Department of Homeland Security……………………………. .9.1 32 Department of Housing and Urban Development .........34.8 31 Department of the Interior ........................................ 4.1 66 Department of Justice ................................................ 3.8 60 Department of Labor ................................................. 7.1 22 Department of Transportation .................................... 46.8 20 Department of the Treasury ....................................... 0.3 1 Department of Veterans Affairs ................................. 0.3 6 Environmental Protection Agency ................................ 3.8 44 Other agencies ......................................................... 2.2 -- Total .....................................................................435.7 Billion

8. TOP 10 FEDERAL PROGRAMS (IN $ BILLION) • Medicaid 177.2 • Highway Planning & Const. 35.8 • TANF - HHS 19.2 • Section 8 Housing Choice Vouchers 14.7 • Title I –Education 12.3 • Special Education to States 10.1 • Head Start 6.8 • National School Lunch Program 6.8 • Foster Care 4.7 • Nutrition Program for WIC 4.6 Total: $292.2 Billion

9. OMB Grants Management Circulars • Cost Principles (Gilbert Tran) • A-21- Colleges & Universities • A-87- Governments • A-122- Non-Profits • Administrative Requirements (Marguerite Pridgen) • A-102- Governments • A-110- Everyone Else • Audit Requirements (Gilbert Tran) • A-133- Everyone • Compliance Supplement $500 B What’s the LAW ?

10. National Single Audit Sampling Project Final Report Issued June 2007 http://www.ignet.gov/pande/audit/NatSamProjRptFINAL2.pdf

11. Sample Design • 208 single audits from universe of 38,523 audits successfully submitted to clearinghouse April 1, 2003 to March 31, 2004 • 96 of 208 were from 852 audits of entities that expended Federal Awards of 50 million or more (Stratum I) • 112 of 208 were from 37,671 entities that expended less than 50 million in Federal Awards (Stratum II)

12. Classification of Audits • Acceptable • Limited reliability because of significant deficiencies • Unacceptable

13. Summary Results • Acceptable - 115 (49%) • Large – 61 (63.5%) , Smaller – 54 (48.2%) • Limited reliability because of significant deficiencies – 30 (16%) • Large – 12 (12.5%), Smaller – 18 (16.1%) • Unacceptable – 63 (35%) • Large – 23 (24%), Smaller – 40 (35.7%) • Fed Awards Reported $53/57 billion (93%) Acceptable

14. Deficiencies • Audit Documentation did not evidence auditor understanding of the 5 elements of internal control and testing of internal controls for many or all applicable compliance requirements. However, documentation did evidence that most required compliance testing was performed • Audit documentation did not evidence internal control testing and/or compliance testing for more than a few compliance requirements, or did not explain why they were not applicable for the auditee • Audit documentation did not evidence that audit work relating to the SEFA was adequately performed, or did not evidence that audit programs were used for auditing internal controls, compliance and/or the SEFA

15. Single Audit Improvement Process

16. Single Audit Improvement Process

17. Federal Workgroups • Good Rules & Guidance • Revisions to A-133 and AICPA Guidelines to report audit findings • Revisions to A-133, AICPA Audit Guide and OMB Compliance Supplement to document the required compliance testing • Revisions to A-133 and AICPA for audit testing and sampling • Training • Revisions to A-133 to require SA training.  Development of training curriculum

18. Federal Workgroups • Incentives • Review of suspension & debarment process and identify alternative methods to address unacceptable audits • Coordination with other SA constituencies for sanctions and punitive actions for substandard audits.  Revisions to A-133 to any proposed sanction language • System Support • Coordination with PCIE to issue uniform standards on QCRs • The New and Improved Single Audit Process

19. “INVENT THE FUTURE”