GAO: Guidance for single audits should be more timely, responsive

By Ken Tysiac

The timing and content of key yearly federal guidance provided to single audit practitioners needs to be more responsive to auditors’ input and needs, according to a U.S. Government Accountability Office (GAO) report to Congress.

In a Report to Congressional Committees, the GAO called on the Office of Management and Budget (OMB) to implement appropriate measures to better ensure that the yearly Compliance Supplement used by single audit practitioners is responsive to users’ input and needs.

Representatives from the AICPA were among those who worked with the GAO as it prepared its recommendations.

Single audits, which are required of certain organizations that spend $750,000 or more in federal funding in a year, are required to be conducted under generally accepted government auditing standards (also known as GAGAS, GAS, and Yellow Book standards).

The Compliance Supplement, which is published each year by OMB, provides auditors with information on federal programs’ objectives, procedures, and compliance requirements and helps practitioners design single audit procedures to determine award recipients’ compliance with laws, regulations, contracts, and grant agreements.

The GAO report notes that in 2010, the GAO recommended that OMB issue the Compliance Supplement by March 31 each year to give practitioners time to effectively plan their audits and conduct interim testing. But the report states that in the last three years, OMB has issued its Compliance Supplements in May 2018, August 2019, and August 2020, with additional guidance related to COVID-19 relief programs and other existing programs issued in December 2020.

“Delays in issuing guidance could adversely affect auditors and the results and timing of their work and may lead to inconsistent reporting,” the GAO said.

Delays in guidance ultimately could also affect award recipients’ development of corrective actions, according to the report.

A request for comment from OMB was not immediately returned.

The GAO’s recommendations are aligned with feedback the AICPA Governmental Audit Quality Center (GAQC) has provided to OMB regarding the annual Compliance Supplement both in formal communications (see the GAQC COVID-19 Resource page) and in less formal discussions and comments filed with OMB.

Concerns expressed by the GAQC have included:

  • The lack of timeliness of the Compliance Supplement each year;
  • The lack of transparency around how annual feedback provided to OMB and the federal agencies about proposed Supplement changes are addressed (or why they are not addressed);
  • Additions of requirements in the Supplement that are not supported by underlying law or regulation or that lack objective criteria for auditors to measure against; and
  • An overall reduction in the quality of the Supplement over the last several years.

“Ultimately, the GAQC has raised these concerns, as, without improvements, single audit performance and audit results that are reported may be negatively impacted,” said Mary Foelster, CPA, the AICPA’s senior director–Governmental Auditing and Accounting. “This is especially troubling in light of the massive amounts of COVID-19 funding becoming subject to single audit and the reliance federal agencies will be placing on single audits of recipients of such funding.”

According to the GAO report, OMB did not provide a timeline for issuing the 2021 Compliance Supplement but stated that it believes there is currently an appropriate balance between the timeliness of issuing the Compliance Supplement and the consideration given to comments by stakeholders.

The report also stated that:

  • It is essential for OMB to establish a clear process to provide adequate time to work with stakeholders, including federal agencies and the audit community, to determine needed changes to more fully address their input and concerns.
  • The AICPA has asked for enhancements to OMB’s process for annually updating the Compliance Supplement, including more focus on areas of highest risk and ensuring that audit procedures are capable of consistent measurement against objective criteria.
  • Deadline extensions for 2020 single audit report submissions provided helpful flexibility to auditors and award recipients, but delays in issuing guidance and completing audits could affect reward recipients’ development of corrective action plans, management decisions, and resolution of findings identified during the audits.

According to the report, OMB stated that in developing the Compliance Supplement, it solicits comments from members of the audit community and makes revisions as appropriate before issuing the final guidance. But the report said members of the audit community are not clear on OMB’s decision-making process for resolving concerns raised during the comment period.

Ken Tysiac ( is the JofA’s editorial director.


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