Highlights
Volume 1, September 2003

A-133 Audit Reports

Financial Statement Audit Recommends Increased NSF Award Oversight and Information Security

The Single Audit Act of 1984 (Public Law 98-502) and the Single Audit Act amendments of 1996 (Public Law 104-156) established uniform requirements for audits of non-federal entities receiving federal awards. Under the Act, non-Federal entities that expend $300,000 or more a year in Federal awards are required to have an organization-wide audit that includes the non-federal entity's financial statements and compliance with federal award requirements. OMB is increasing the threshold from $300,000 to $500,000 effective for audits having fiscal years ending after December 31, 2003. The non-federal entities are responsible for procuring these audits and submitting the report through the Federal Audit Clearinghouse (FAC) within nine months after the end of their fiscal year. Single audits are usually performed by an independent public accountant or State auditor, and must be conducted according to Government Auditing Standards. OMB Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations" (the Circular) is the implementing guidance for the Act and sets forth standards for obtaining consistency and uniformity among federal agencies for these audits.

Audit Quality. NSF, like other federal agencies, relies on the results of the single audit to monitor the more than $5 billion of awards it funds annually. Thus, the quality of these audits is important to enabling NSF to carryout its stewardship responsibilities. However, as reported in our previous semiannual reports, recent Quality Control Reviews (QCR) conducted by other federal agencies has raised concerns about the overall quality of these audits and the pervasiveness of the problem. Of particular concern is the amount and quality of A-133 audit coverage NSF awards received, since these awards tend to be small relative to the awardee's other federal awards.

To address audit quality concerns, a government-wide project commenced in FY 2003 to assess the quality of Single Audits and to provide a baseline for measuring Single Audit quality in the future. The project will perform QCRs of a statistically representative sample of A-133 audits and project the results to the universe of single audits. Development of a sampling methodology and an evaluation instrument are currently underway and the reviews are expected to begin in the spring of 2004. OMB has requested funding for this project in the President's FY 2004 budget. Given the importance of the A-133 audits to NSF's post award administration, the OIG is participating in both the planning of the approach for this project and the performance of the QCRs.

We also continue to participate in various federal A-133 audit groups including the PCIE National Single Audit Coordinators and the AICPA Single Audit Roundtable. These groups provide an opportunity for government single audit coordinators and the private sector auditors to discuss current developments and future directions for audits of federal awards.

• Desk Reviews (see Semiannual for Details)

 Jul 08, '04