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UNITED STATES GENERAL ACCOUNTING OFFICE

20548
WASHINGTON, D.C.

FOR RELEASE ON DELIVERY

EXPECTED AT 10 A.M.
NOVEMBER 13, 1985

STATEMENT OF
FREDERICK D. WOLF, DIRECTOR
ACCOUNTING AND FINANCIAL MANAGEMENTDIVISION
BEFORE THE
LEGISLATION AND NATIONAL SECURITY SUBCOMMITTEE
OF THE
HOUSE COMMITTEE ON GOVERNMENTOPERATIONS
ON GAO'S
REVIEW OF AUDIT QUALITY OF
CERTIFIED PUBLIC ACCOUNTANTS

Mr. Chairman

and Members,of

I am pleased

to be here

today

to discuss

of

grants

to state

quality

of

audits

governments
entities
Audit

and non-profit

receiving
Act of

federal

1984.

federal

the Subcommittee:

organizations,
funds

prior

our

review

of

the

and local

and single
to passage

of

audits

of

the#$'Single

INTRODUCTION AND'BACKGROUND

The federal
programs

government

through

state

exceeding

$100 billion

and local

officials

in assuring

being
with

Grantees

or federal

the

program

audit

financial

tha-t

activities

controls

addresses

the

general

in those

audit

funds
This

prior

of

,,(

,;

il..

r,*

-<.,-7.

reports

with

reviews
audits

of

(3)

the Single

has a long-standing

interest

in this

yy

.,

,-

:,

-.

:/

to state

Audit

Act of

,rn,*.

OperaThe

and commitment

I.

1984.

of Representative

Subcommittee.

includinq

and

receiving

has been instrumental

area

of

report

on Government

Security

of

by inspectors

of entities

and National

the

the extent

grants

at the request

The Subcommittee

assure

on (1)

This

federal

audits
of

with

the requirements

performed

House Committee

legislation

,:,

consistent

These auditors

are

accountants

expenditures.

was performed

quality.

government

directly

in many cases,

to passage

Chairman,

Subcommittee

compliance

quality

Legislation

state,

funds

public

funds.

federal

these

contract

have reliable

and single

review

Jack Brooks,

these

they

over

governments,

federal

are conducted

certified

and,

in many of

federal

agencies

(2)

and regulations,

internal

federal,

and regulations.

much of

managers

funds

have a common interest

funds

programs

auditors--mostly

(CPAs) --to

passage

over

and if

laws

audit

citizens

assistance

with

The Congress,

and private

applicable

tions,

governments

per year.

used properly

local

domestic

They want and need to know if

non-federal

laws

and local

accountability

programs.

administers

the Single

to
in
Audit

Act of

1984 and the _/

,Znspector General Act of 1978/
GAO shares
and has supported
these legisthe Subcommittee's
interest,

lative

initiatives.
that

Subcommittee,
towards

improving

controls

over,

the Single
the

audits

it

measures

quality

that

have surfaced

single

audits.

Hence,

those

problems

focused

the past

request--

grants

quality

those

funds.

the

problems

two decadesl,

that

to state

and local

resulted
issues

1 Many Proprietary
Education's
August 20, 1984.

with

of
for

Act

audit

identify

them as the
Audit

audit

in many

the most part,

those

in several

the quality
governments

of

agen-

audits

of

and non-profit

in our most extensive

review

of

to date.

Schools

Do Not Comply With

the Department

Quality
Testinq
of Audits of Grantee's
Records--How
It
Done by Selected
Federal Agencies and What Improvements
Needed, FGMSD-79-38, July 19, 1979.
Using Independent
Public
Agencies --An Assessment,
Need for

audit

Act.

quality

audits

is

and

to

the Single

on selected
GAO study

Audit

grant-by-grant

was undertaken

subject

way

and in promoting

as the Single

to avoid

study

on problems

organizations--has
audit

funds

that

this

go a long

federal

implementing

GAO has raised

reports

This

Act will

in the prior

this

moves towards

over

federal

be taken

before

and to recommend ways to avoid

reports

cies.

of

is essential

implemented,

While

Audit

and management of

We believe

community

and testified

We believe,

More Effective

Accountants
CED-76-133,
Audit

Activities,

1973.

of

Is
are

to Audit Public
Housing
August 25, 1976.
B-130515,

April

14,

Because

of the magnitude

GAO established
review

work

an Audit
into

evaluating

both

eral

audit

(IGs)

of

Quality

two phases.

The first

the quality
quality

of

systems
IGs'

performed

by non-federal

auditors.

review

is

aimed at determining

public

accountants

overall

of

The basic

exist

will

at what the

look

performed

IGs do to answer

role

at the

results

in this

area.

This

testimony

that

inspectors

process

and the

extent

to which

during

their

if

phase will

and assessment

the

reviews

of

answer

are conducted
any problems

standards
and the

second

this

those

studies

that

play

in the
work.

IGs have identified

audits,

in a manner
which

by looking

and reporting

of

first

their

question

phase,

on the

two phases

are properly

question

of other

of

in these

identified,

a sample

general

of

assistance

that

this

In our

focuses

results

certified

auditing

to address
audits

and,

own review

of audits

audits.

assurance

are.

gen-

as the

to which

federal

reasonable

answers

also

of

those

what their

reviews

professional

is whether

Our first

reported.

with

we want

be identified

as well

inspectors

The second phase of our

question

review

as to provide

their

of

the extent

of recipients

quality

of our

comply

the

its

phase was aimed at

review
of

request,

and divided

the offices'

on the results

audits

Subcommittee's

Task Force

reporting

on their

the

on

we will

make our

audits.

We will

have been

phase of our work--the

audit
It

will

audit

and discuss

quality

review

describe
quality

some of

the

problems
the

common

problems

It

identified.

inspectors

general

will

also

have in place

recommend ways they

can improve

describe

the

to review

audit

their

audit

systems

the

work and

quality

review

sys-

tems to be more effective.

Before

discussing

understand

two things.

accounting

profession

role

the

our review
First,
define

inspectors

results,

is

important

how GAO and others

in the

a quality

qeneral

play

it

audit,

to

and second,

in assuring

audit

the

quality.

WHAT IS AUDIT QUALITY?

The term
context
with

Naudit

of our work,

professional

audit

quality"

being

and quality
meaningful
Public

standards

various

interprets

Guides

ensure

as compliance

the particular
consistency

type
in the

Institute

of
scope

of professional

and

of Certified

and GAO have issued

the AICPA has set

committees,

Standards
generally

"Statements

financial

for

In the

standards

that

must follow.

the Auditing

audits

out

the American

(AICPA)

Over the years,

through

set

quality"

work and preparation

both

Accountants

"audit

To help

audit

reports,

auditors

we define

conducted.
of

has many connotations.

Board.
accepted

on Auditinq

performed

material

since

auditing

opinions

The AICPA also

to assist

standards

October

The Auditing

Standards."

to express

statements.
and other

and,

auditing

1978,

through

Standards

Board

standards

throuqh

These standards

apply

to

on an organization's
issues
auditors

Industry

Audit

in the performance

of their

work andswhich

certain

specific

further

industri,es,

codify

standards

auditing

such as state

and local

in

qovern-

ments.
Auditing

standards

ument Standards
grams,

for

Activities,

referred

issued

Audit

of Governmental

and Functions,

to as "Generally

Standards"

by GAO are published

Accepted

Generally,

or GAGAS.

Government
auditors

auditing

standards

received

by contractors,

non-profit

external

organizations.

These standards

than

those

set

and program

area

of

have one significant

standards.

GAGAS standards

on financial
statement

statements,
on compliance

In regard

to the

work and the difference

standards
noted

ments-- not
that

the primary
audit

important

through
substantive

laws

between

and any "government"

that

internal

control

testing.

and other
in scope

statement
audits,

from

these

the AICPA's

in addition

to an opinion

on internal

controls

internal

control

so called
audit

and a

All

"commercial"

or
if

it

in reporting

auditing

be evaluated

reviews

and compliance

standards,
is

controls

Likewise,

funds

and regulations.

distinction

requirements.
internal

statement

require,

of

federal

are broader

difference

with

these

economy and efficiency

a statement

issue

of

as financial

financial

standards

Auditing

organizations,

as well

work,

Pro-

commonly

must follow

of recipients

by the AICPA and cover

results

In the

audits.

on audits

Orqanizations,
Revision]

[1981

in the doc-

indirectly
significant

should

be

require-

standards
either
through
funds

audit

require
directly
expanded
are

received

under

which

requires

terms,

then

a cuntract,
compliance

compliance

can result

GAGAS, the

auditor

accordance

with

of

the

auditor's

contain

must

the programs

regulations.

in compliance

These requirements

upon in the

Single

of compliance,

Audit

and accounting

The Inspector

General

that

the

inspectors

that

any work performed

organizations'
with

these

standards.

GAGAS when performing

been included
In addition
audits

are often

subject

of

contracts

to these

and

in the

to the

steps

requirements
funds

or engagement

applicable

professional

provisions

areas

controls.

auditors

federal

of

and amplified

requires
to ensure

of

federal

and functions

As a result,

in audit

laws

as amended,

appropriate

activities,

audits

is

federal

1978,

controls

entity

and administrative

take

of

particularly

by non-federal

programs,

audited

with

1984,

Act of

general

entity's

two sections

were clarified

Act of

The

accounting

on these
the

in

controls.

instances

on internal

that

under

a preliminary

on the

material

rely

audited.

of compliance

a statement

to assure

being

and at least

identifying

report

noncompliance

or a grantee,

accounting

agencies

or legal

since

a review

and a statement

auditor's

contractual

an entity

internal

The federal

managing

of

arrangement

on the entity

and regulations

including

reviewed.

impact

audit

entities'

similar

is required

must conduct
laws

noncompliance,

or other
specific

testing

the

report

compliance,

the

with

in a significant

In conducting

review

grant

complies
for

following

have generally
letters.
standards,

of program

audit

guides

or other

guidance

agencies

or the entity

signed.

Audit

conducting
include
follow

at the

set

out

on an audit

steps
course

to the CPA by the

audit

typically

and reporting

in the

programs

under

guides

detailed

provided

are normally

their

a framework

language

work.

prepared

a contract

engagement

and suggested
of

time

Audit

by the

federal

for

and normally
auditors

guides

agency

is

should

for

specific

inspectors

general.
IG'S

ROLE IN ASSURING AUDIT QUALITY

The IGs have played

reports

for

.4(b)(3)

of

inspectors

adherence
the

Inspector

general

will

any work performed

standards
only

the

terms,

general

must take

review

we evaluated

1978

"take

process.
the

Act of

appropriate

audit

specify

IGs'

15 elements

to assure
with

steps

that
the

The act

function

in

the

inspectors

comprise

a typical

function.
which

They compose the process

activities

that

General..."

the

this

states

complies

review

audit

Section

steps

auditors

quality

to accomplish

We have identified
quality

General

by the Comptroller
IGs'

in reviewing

standards.

and does not

general

role

to professional

by non-federal

established

addresses

an important

and are discussed

against

IG
which

in detail

later.
OBJECTIVBS, SCOPE, AND METHODOLOGY
The scope of GAO's work consisted
of

independent

control

reviews

random samples
at

seven IGs.

of

analyzing

of desk reviews

the results

and quality

It

also

included

review

systems

performed

an evaluation
to determine

by non-federal

accepted

government

following

of

auditing

complies

IGs for

Department

of Agriculture

--The

Department

of Education

--The

Department

of Health

Department

of Labor

--The

Department

of Transportation

--The

Environmental

regional

majority

offices.

some IGs did

regions

we visited,

total

of

reviews

results

not
this

of

audit

objective
of

(DOT);

our
for

year
the

quality

reports

review

they
all

domestic

function

to

the

in seven regions.

in all

seven

federal

is based on work performed

at a

(RIGS).

was to compile
desk reviews

received

of

we conducted

offices

have offices

the RIGS'

because

1984.

IGs'

offices

95 percent

audit

report

(HUD);

and,

(EPA).

study

Consequently,

46 IG regional

Our first
on the

for

of our work at these

Recause

(HHS);

'

Agency

accounting

The IGs decentralized

their

(DOL);

fiscal

the

'

and Urban Development

Protection

in

generally

and Human Services

were chosen

work

review:

(Education);

--The

assistance

that

(USDA);

of Housing

federal

with

quality

We selected

our

-&The Department

programs

audit

assure

standards.

--The

administered

IGs'

the ways they

auditors

seven agencies'

These departments

these

during

and report
and quality

control

fiscal

1984.

year

To

accomplish

this,

regional

officials

of desk

reviews

determined
these

we determined,

through

and examinations
performed

our work,

based on input

we estimate
in fiscal

year

reviews

on 885 of

these

95 percent

the

the number

and other

We then

performed

quality

Our estimates

with

a sampling

on

Based on

records.

46 RIGS desk reviewed

audits.
level

logs,

reviews

1984 and performed

confidence

with

46 locations.

control

logs

that

reports

of report

by RIGS at the

the number of quality

audits,

discussions

9,530

control
are based on a

error

of between

'
5

and 6 percent.
Reports
constitute

reviewed
only

funds.

officials

are reviewed

by program

In order

these

correspondence,

to GAGAS, but
these

standards,

applicable
reviewing

it

standards
the

case

performed
audits

state

on federal

came to our

level

in the

the results
collection

or by federal

scope of our review.

of

projects

and all

which

the

reviews

was often
affected

necessary

reviews,
to record

we
the

we examined

other

problems

IGs'

IGs'

instrument

to relate

files.

the

each report,

checklists,

because

general

offices.

data

We attempted

inspectors

are of HUD housing

In reviewing

findings.

audits

are not

audits

to compile

used a standardized

file.

all

at the

and that

of

by the

25,000

are reviewed

The majority

IGs'

of

approximately

that

program

quality

a portion

In fact,

attention

for

documents

in the

case

identified

by the RIGS

were often

not

for

tied

to

us to determine

based on our best

judgment

the

after

Our second objective

have to assure
accepted

that

non-federal

government

identified

15

was to identify

auditing

elements

auditors
standards.

in a typical

based on our discussionswith

through
assuring

our examination
audit

15 elements,
believed
results
locations

the IGs'

were most critical

the regional
systems were,

level,

we

quality

current

with

our work are generally : reported

than for agency IGs as a whole.

and

for

respect

system.

to all
we

Our

RIG officials

at the 46

and procedures

to verify

The results
for

system

on ten elements

of IG policies

and our own testing

working.

review

policies

data with

to an effective

a review

in fact,

To do this,

our analysis

were based on discussions

we visited,

generally

in the IG community

We collected

but concentrated

RIGS

the

comply with

audit

officials

of

quality.

the systems

how well

of this

IG regional

the

aspect

offices,

at

of

rather

THE RESULTS OF
REGIONAL INSPECTOR GENERAL
AUDIT QUALITY REVIEWS
RIGs,have
designed

audit

'to detect

individual

quality
and correct

audits.

with

ards--

and for

are

the report

that

Desk reviews

are

working

papers.

A quality
of

conforms
cally,

with
quality

and effort

to

identify

they

applicable

on the part

received.

on at least

reviews

which

audits

judgmental

to subject

of the

papers

involve

and is generally

managers.
report
supporting

to enable
audit

the

performed.

hand,

to ensure

includes
that

the audit
Typi-

standards.
substantially

percent

100

quality

audits.

to quality

in

more time

do desk reviews.

conducted

these

findings

auditor's

the

stand-

important

audit

designed
of

con-

clarification.

audit

of the

desk reviewed

of

RIGS per-

for

one other

on the other

of IGs than

work on

reporting

professional

They usually
5 percent

report

by the program

the quality

working

The RIGS typically

they

for

are not

review,

auditor's

control

systems,

and record

reviews

evaluate

all

those

needing

to a review

include

control

the

items

performed

Hence,

RIGS to directly

unacceptable

of an audit

of

are primarily

of

standards--usually

limited

and do not

that

reviews.

have to be resolved

itself,

review

a review

typically
is

of

control

identification

and that

reason,

is

professional

Desk reviews

part

and quality

A desk review

systems

problems

As a major

form desk reviews

formity

review

of

control

The decision

control

based on criteria

review

is

such as

the

audits

reviews
regarding
largely

institutional
the results
the firm

memory of prior
.

of

the RIG's

has ever

RIG experience

desk review

contracted

of

with

the CPA firm,

the report,

to provide

audit

and whether

services

for

the

agency.
The RIGS'

audit

quality

review

identify

and have the auditors

numerous

cases

since

these

do not

identified

regional

from

the accuracy
of

of

case files.

between

on

accept.

remain

or type

the RIGS to

action

However,

in the

or headquarters

officials

of problems
compiled

Although

the RIGS' individual

appear

not

We therefore

correspondence

generally

would

know the extent

the RIGS'

enable

corrective

the most part,

by the reviews.

results

take

work they

for

case files,

generally

they

audit

results,

individual

review

of

systems

beinq

the

we did

reviews,

followinq

not verify

based on our

the RIGS and the CPA firms,

to have been adequately

performed.

RESULTS OF RIG DESK

REVIEWS OF AUDIT REPORTS
Our analysis

of

the

audit

reports

indicated

that

the RIGS had problems

reports.

We estimate

that

the 9,530

audits

desk reviewed2.

they

The problems
reports

the report

to omitting

laws and regulations.

having

auditors

correct

with

in our

25 percent

the RIGS had problems

identified

were presented

reviewed

off

those
of

2,410

the way the

and ranqed

from

a required

statement

on compliance

with

Generally,

the RIGS were successful

in

their

leaving

of

with

by the RIGS concerned

sample

the date

of

reports.

2 Estimated
with 95 percent
confidence
that the rate of
occurrence
of problem audits,
taken as a percentage
of all
audits
that IGs' desk reviewed,
was 25.3 percent
with a
samplinq error of 5.0 percent.
13

We reviewed
where
the

the

a sample of

RIGS found

auditors

328 audits

problems3

related

and identified

84

to standards

requiring

to:

--identify

instances

regulations
--identify

of noncompliance

with

laws

and

(42 reports),
internal

controls

studied

and evaluated

(19

reports),
due professional

--use

reports),

care

in preparing

audit

reports

(65

and

--correctly

cite

the

auditing

standards

followed

(18

reports).
Because
report

only

enable

the

the desk review

and not

RIGS to

The work

review.

Our analysis
reviews

Statement

the working
identify

itself.

control

itself

programs,

they

laws

auditing,

because

Generally

rules

in this

the work
control

testimony.

and requlations
with

government
are usually

government

reports
exceeds 84 because
to more than one standard.
14

do not

the RIGS' quality

and regulations

accepted

the

i,n a quality

compliance

and functions

activities,

of

of

usually

regarding

evaluated

later

significant

3 The sum of these

problems related

papers,

the results

with

and have more specific

orqanizations.

to a review

problems

is discussed

on compliance

is

limited

is only
of

In governmental
regulations

is

laws

and

organizations,
created
than

by

law

do private

auditing

some

reports

had

standards

require

statement

of positive

with

and regulations

laws

assurance

on those

of material
cations

of

fraud,

the

abuse,

fied

came to the

untested

did

items

consists

not

test,

compliance
of negative

and a description

and instances
acts

of

they

or indi-

found

a statement

assurance

auditor's

with

is

during

or

cause

by the

auditors

applicable

laws

a statement

attention,

would

were not

of

a statement

were in compliance

that

items

tested,

reports

audit.

Negative

procedures,

on those

or illegal

their

items

and regulations.
nothing

they

in their

of noncompliance

assurance

tested

include

they

items

with

Positive

to

assurance

instances

in connection

that

auditors

that

as a result

the

auditors

in compliance

with

of

speci-

to believe

applicable

the

laws

and

regulations.
Many of

the problems

RIGS had with

related

to statements

on compliance.

reports

which

include

reports

included

statement

a qeneral

failed

on compliance,

with

statement

laws

or

inadequately

the CPA does not

work in this

important

attest
area.

15

omitted

statement

numerous

and regulations.

reports
RIGS found

on compliance.

but

or the

identified

to report,

For example,

a statement

assurance

RIGS also

noncompliance

required

not

of positive

assurance.
auditors

did

auditors'

instances
reported
Without

to having

either

Other
the

of negative
where
findings
the

of

statement

performed

the

Statement

on internal

Generally
require

compliance

to study

audits.

A study
for

identify

the

controls

evaluated,

therefore,

entity's

RIGS had problems

reports

accounting
which

controls.
did

included

Other

not

identify

identified

the

reports

controls,

not

evaluated

relating
RIGS

on controls

the

to
found

accounting

controls,

identify

the

identified.

on internal
a statement

not

an

should

reports

significant

did

in forming

For example,

no statement
included

auditing

and the reasons

weaknesses

reporting.

controls

controls,

many auditors'

the entity's

of

The reports

control

control

internal

step

accounting

controls

with

and

the extent

significant
the

of

an important

normally

accounting

financial

and evaluation

statements.

and any material

internal

of

determining

financial

standards

internal

as part

to be used and is
on the

auditing

and evaluate

thereon,

a basis

procedures

government

and report

establishes

opinion

accepted

auditors

controls

controls

but

or havinq

controls

that

were evaluated.
Due

professional

care

Generally

accepted

auditors

to use due professional

reports.

Due professional

mance of
taken.

government

a quality
It

also

appropriate
means using

care

auditing
care

in preparing

requires
for

the

audit

16

require

audit

professional

qood judgment

reports.

standards

assignment

in preparing

perforunderaudit

Many of
related

the problems.

to due professional

instances

where

statements

with

in balance,

auditor's
guidance
Statement

schedules,
of

omitted

auditing
standards

incorrect

formats.

There

signature,
followed

or did
in the

on auditing

to state

did

not

standards,
but

cite
did

referenced

Without

the

correct

how the

standards

cite

properly
the

with

Other

not

contain

the

the

agency

audit.

auditing

reports

that

such standards.
generally
cite

standards

their

examination

the reader

was

government

any standards,
that

require

RIGS identified

accepted

standards

which

reports

followed

government

not

entries,

work performed.

of

not

and inadequate

not

citations,
against

were audit

did

conduct

in their
with

adjusting

the report,4

standards

accepted

that

of

audit

financial

such as accounts

information,

scope of

the date

made in accordance
reports

accounts,

reports
RIGS found

contained

inaccuracies,

missing
the

auditors'

For example,

reports

unexplained

Generally
auditors

care.

auditors'

reporting

descriptions
reports

the

incorrect

and improper
missing

RIGS had with

or cited

the

had been superceded.

is not

clear

the CPA maintains

the

as to
audit

was

conducted.
We believe
indicate

a lack

that

the results

of awareness

of

the RIGS'

desk reviews

by CPA's of GAGAS reporting

4Omittinq
the date from the audit report
is not an insignificant
item because the auditor
is required
to disclose
events that
occur between the date of the financial
statements
and the date
of the report
that have a material
effect
on the financial
statements.
17

standards
Given

and other

these

reviews
that

results

to

and the

identify

audit

desk reviews

RIGS'

audit

the next

requirements

section

desk review

of

this

results

resolution,

desk
we believe

to be an integral

report,

we believe
audit

part

of

as explained

Further,

systems.

to prevent

audits.

of performing

for

continue

review

governmental

importance

findings

should

quality

for

in

IGs can better

quality

problems

control

reviews

use

from

recurring.

AUDIT QUALITY CONTROL REVIEWS

RIGS normally
least

5 percent

percentage
the

review

of

varied

RIGS did

performed

not

those

reports

widely

judgment

usually

select

reviews

are not

problems

as to which

in the

whole.

Rather,

problem

audits.

necessarily

they

skewed towards

quality

control

occur

in a substantial

audits
control
analysis

of
that

audits,

reviews

these

the

performed

the

results

we selected

at the

from

indicate

that

independent
IG records

we estimate
18

control

control

frequency

of

level

of

the results

serious

of

problems

audits.
quality

control

random samples
had been quality
From an

IG offices.
that

based
to have

quality

that

the RIGS'

46 regional

samples,

earlier,

largely

a higher

we believe

of

the

by CPAs as a

number of governmental

we determined

reviewed
of

this,

audits

of

of

are

quality

of RIGS'

universe

RIGS'

reviews

for

indicative
audits

but

were more likely

the results

Despite

To determine

audits

firms

on at

As described

They selected

Consequently,

problems.

desk reviewed,

among agencies.

on a random basis.

on their

quality

the

seven IGs

of

conducted
that

885 quality

control

the RIGS identified

of these

22 percent 6 of

the RIGS did

with

audits

the

until

the

auditor:

work performed,

not

399,

In other

RIGS quality

control

or

(1)

performed

(3)

provided

A few were in fact

performed.
were not

accepted
to the

document

accept,

audits.

the

five

their

problems

We further

estimate

or about

45 percent

reviews.

Furthermore,

related

reviews.5

sufficient

conclusions

one out

reviewed

more support

for

never

the

(2)
the

involved

auditors

evidential

accepted
clarified
audit

Audits

accepted.
often

about

of every

was not
work,

requiring

competent

words,

more audit

by the RIGS most

standard

as submitted,

that

failings
to obtain

matter

work

and

to support

and opinions.

Evidence
Generally
auditors
support

accepted

to obtain
their

government

sufficient,

conclusions

and extent

of

engagement

are a matter

determined

by the

standards

competent,
and opinions.

the procedures

auditor,

auditing

evidential

matter

The nature,

timing,

to be applied

of professional

require

on a particular

judgment

based on specific

to be

circumstances.

5 Estimated
with 95 percent
confidence
that the rate of
occurrence
taken as a percentage
of all audits
the IGs
quality
control
reviewed was 45.1 percent
with a sampling
error of 5.8 percent.
6 Estimated
with 95 percent
confidence
that the rate of
occurrence
taken as a percentage
of all audits
the IGs
quality
control
reviewed was 22.4 percent
with a sampling
error of 4.9 percent.
19

to

However,

the procedures

the audit

objectives

evidential

matter

developed
obtained

to form conclusions.
objectivity,

its

evidential
leads,

adopted

be adequate

by the auditor,

should

for

its

of other

the conclusions

bear on its, competence.

A written
record of auditors'

the auditor

of the evidence,

and the existence

corroborating

to achieve

and the

be sufficient

The pertinence

timeliness,

matter

should

to which

it

all

the form of working

should

contain

papers.

As a general

the results

and be clear

supplementary,

quantity,

type,

rule,

so that

oral

and content

working

papers

exam inations

While

explanations.

should

in

they do not require

of working

they normally

circumstances,

must be retained

and scope of auditors'

and understandable

detailed,

evidence

papers

include

the

vary with

evidence

the

showing

that:
--Audit

work has been adequately

planned

and supervised.

--Testing
of compliance with laws and regulations
has been
performed and exceptions
have been identified
and
resolved.
--Internal
accounting
evaluated.

controls

have been studied

--Accounting
transactions,
balances
and any related
evidential
matter
Insufficient
found

in audits

there

was little

properly
audit.

planned

evidence

or no evidence

RIGS found audits

and financial
items,
have been exam ined.

was the most com m on problem

they would not accept.

the audit

and

RIGS found audits

showing that

or supervised
where there

20

RIGS

the auditors

and reviewed

was little

where

the

or no evidence

showing

testing

least

of

two-thirds

problems

of

in the

lacking

compliance
the

with

audits

compliance

with

area;

more significantly,

or,

laws

evidence

either

RIGS also

found

insufficient

evidence

documenting

the

internal

controls;

again,

lacking

of

or the work-was

audits

where

there

ing of

financial

not

operations

federal

funds

final

by CPAs.

report

problems

issued

related

two hundred
general.

in

on their
judgmental,

rather

The results,
control

reviews
In this

resulted
--four

begun

of

was

and

evidence

was

RIGS found

auditors'

Ethics

standards
to

it

in audits

in late

the AICPA's

test-

similar

with

1979

on nearly

a
found

half

of

inspectors

by the

and therefore,

of

Division

by federal

a statistically

are

continue

study,

in the

In a study

review,

however,

evidence

were selected

than

study
the

of

there

In addition,

problems

submitted

preliminary

where

either

identified

1984,

These reports

was

or transactions.

to professional

reports

involved

testing

auditors'

performed.

was insufficient

The AICPA has also

the evidence

audits

was done.

At

problems

no or inadequate

compliance

evaluation

and regulations.

RIGS based
were part

valid

largely

of

random sample.

to what the

IGs'

quality

to disclose.

the AICPA investigated

following

actions:

were referred

to the

trial

106

board

cases

for

which

disciplinary

action,
--23

were given

required

administrative

CPAs to take

reprimands

continuing

21

of which

professional

21

education

credits,

and in some of

those

instances,

have their

future

work reviewed,
--64

were sent

improvement
--no

action

Examples

of

in future

unaccepted
below

initially

accept.

evidence,

as well

there

audits,

was:

audits
are

illustrations

audit

of

the

required

tests

to determine

auditor's

study

accounting

procedures,

controls.
review
problems

funds,

These problems

noted

after

papers

(3)

insufficient

evidence
with

laws

insufficient
of

the

by the RIG in his

for
that

and

evidence

internal

of

controls

investment

of

due HUD, and budgetary

in a quality

did

not

control

respond

desk review

of

the

to
audit

report.
--An

HHS RIG found

Colorado

that

Head Start

a CPA firm
grant

contracted

and one of
22

the

reporting

were noted
auditor

that

of

support

funds

OIG

insufficient

compliance

of

of

HUD regional

and disbursements,

submission

performed

an audit

(2)

and financial

cash receipts

to

the RIG determined

and evaluation

records

related

in the working

were made, and (4)

regulations

excess

because

audit,

and conclusions,

over

to perform

no evidence

not

The Atlanta

report

RIGS did

problems

standards.

findings

the

of audits

include

authority.

(1)

supervision

and

a CPA contracted

the

comment for

on 15 cases.

as other

housing

rejected

constructive

The examples

Tennessee,

city's

of

was taken

Described

--In

letters

its

to audit
staff

members

hired

the Head Start

audit.

In addition

the RIG noted

that

and only

of

laws

part

the

program,

there

internal

control

compliance
program
report

that

since

system

of

RIG found

internal

control

auditor.

In his

he

control

the

IG that

controls

program

regulations.

Texas,

the

properly

auditor
all

cautioning
on the

institution,
compliance

and

documented.by

the

included
work

submit

required

in accordance

that

was not

required

with

the

documentation
The

work was performed.

additional

and material

additional

report

relying

work

cases

The OIG rejected

the CPA to the New York State

Accountancy

or test

independence.

additional

performed

internal

the

the

and

for

the

even though
not

staff

designed

the required

the

standards,

IG subsequently

city.

that

with

The CPA firm's

about

of

performed

did

compliance

of an educational

report,

The auditor

referred

for

The CPA completed

work was not

that

independence,

he personally

due to the question

to satisfy

testinq

to be careful

in the

work was performed,

and the RIG issued

Education

case.

control

internal

system.

on an audit

to assist

of

was no need to question

officials

professional

lack

was completed.

tests,

statements

the

no internal

New York,

the

--In

to notinq

and regulations

implemented

bookkeeper

the required

member responded

--In

proqram's

of

and found

poor

noncompliance
the

report

Board

with

and

of

and the AICPA.

a CPA contracted

The Fort

Worth

to perform

HUD regional

a single

RIG would

audit
not

of

accept

23

2,

the

audit

report

because

supervision,

(2)

to determine

compliance

insufficient

made,

(3)

study

and evaluation

the

controls

his

results

of

respectively.

1984

report

internal

and perform

in May 1985.

24

of

could

additional

were

auditor's

internal

not

1984,

tests

to clearly

and (4)

and quality

The RIG finally

required

the

controls

and October

a desk review

of

the review

that

that

of

and regulations

testing,

in the report

revise

report

of

between

in July

The RIG,

laws

documentation

and substantive

information

no evidence

(1)

evidence

with

insufficient

relationship

he found

show

accounting

financial
be reconciled.

asked the CPA to

work based on the

control

accepted

review,

and issued

the

IMPROVEMENTSSHOULD BE MADE TO ASSURE

BETTER RIG MONITORING OF CPA AUDITS
The prior
quality

sectionqescribed

review

noted

results

in the RIGS'

full

coverage

believe

that

be crucial

and explained

of

will
the

audit

professional

standards

in the conduct

of

reliable

reports.

audit

As mentioned
to take
comply

with

GAGAS, but

the RIGS'

identified

of

are not

high

quality

existing

audit

process--

securing

process,

and uses of quality

The elements
manuals,

officials

observations

that

three

services

in the

at the

specific

systems

system.

of

We
and

(See

we identified

consisted

the quality
quality

review
review

results.
in part,

from

and Budget

and through

IG community,

46 RIGS we visited.
25

auditors

auditors.

review

and reports,

review

of

are required

to follow

stages

of Management
Supplement,

need to follow

non-federal

a typical

were developed,

the Office

A-102' Compliance
several

audit

that

quality

system
the

they

work by these

The typical
involving

what

qeneral

required

of

15 elements

Further,
we
i.
will
continue
to

understand

to assure

the

greater

1984,

funds.

inspectors

the key elements

Attachment.)

With

and in the preparation

the

steps

Act of

guidance

audits,

of problems

function

auditors

earlier,

to assure

review

and other

their

appropriate

procedures
studied

that

Audit

audit

reviews.

to federal

quality

in assuring

types

control

the Single

be devoted

the RIGS'

the

desk and quality

implementation

audit

some of

existing

(OMB) C.ircular

discussions
as well

as our

with

agency

We evaluated

the RIGS' audit

10 of the 15 elements

that

quality

headquarters

and RIG officials

quality,

systems

review

reviewed

review

we determined

an effective

audit

quality

process.

on

were most critical

to

We interviewed

to evaluate

agency guidance,

to see how well

systems focusing

how they assured

and tested

they were working

their

in relation

to our

10

elements.
Our work showed that
much of the audit
OIGs.

Although

regions

with

their

all

ofz.the

IGs decentralized

function

to the regional

each headquarters

guidance

we visited

system to assure

auditors

review

some written

and implementing

review

quality

we found that

the 46 regions

We found that

the headquarters

were,
audit

IG had provided

on performing

for

this

the most part,

quality

review

developing

systems

RIGS had some type of audit

the quality

function,

locally.
quality

of work by non-federal

but the scope of work varied

significantly

among

regions.
Based upon our review,
more effective

in identifying

improved

systems

their

Specifically,

--provide

we believe

accurate

to assure

we believe

and combating

in areas related
the IGs could

written

compliance

that

with

guidance

the RIGS could

be

poor audits

they

to these

if

10 elements.

do more to:

to grantees

GAGAS standards

and CPAs

(element

3);

--improve

desk and.quality

fically

programs,

speci-

and format of the checklist

'
,I
the RBGs use to identify
quality
problems

(elements

5, 6, and 7);

more frequent

reliability

actions

of audit

--compile,

and analyze

at the

regional

prevent
13);

review

in the"scope

guidance

--take

control

reports

to

CPAs to

(element

the results

level

recurring

against

quality

quality

land take

problems

the

9);

of audit

identify

increase

reviews

action

(elements

to
12

and

audits

to

10,

and

--require

regional

headquarters
Congress

so that

on its

(elements

offices

14

to report

on problem

headquarters

efforts

can advise

to monitor

audit

the

quality

and 15).

PROVIDE ACCURATE WRITTEN GUIDANCE

TO GRANTEES AND CPAs
The inspectors
their

preparation

distributed
engagement.
requirements
including

general

help

of program

audit

to most CPA firms

The audit
for
specific

audit

audit

guides,

quality

which

at the beginning

guides

performing

assure

often

audits
procedures

include

of

through

are
the

audit

detailed

and reporting
and suggested

audit
report

results,

CPAs rely on audit guides,

language.
in addition
to applicable
professional
standards,
to plan and carry out their
audit work.
We evaluated
eleven of the audit guides that are widely
used at the 46 RIG offices.
We determined
whether the selected
audit guides:
(1) specified
audit objectives,
(2) listed
audit
procedures
for testing
compliance,
and (3) included
the
appropriate
reporting
requirements.
In our evaluation
of the
universe
of 9,530 reports
desk reviewed by inspectors
general
at the seven federal
agencies,
we found that outdated
audit
guides contributed
to some audit reports
not satisfying
the
reporting
standards
specifiedc
in GAGAS.
Some audit guides included
outdated
report
language
We found
reviewed
version

at

that
six7

eight
IGs did

of GAGAS--the

7 DOT regional
audit guides

of

the

not

year

eleven

reference

substantial

program
the

audit

current

revisions

we

(1981)

were made to

officials
told us they did not provide
for audits of their
grant programs.
28

guides

CPAs with

these

standards.9

include

sample

GAGAS and that

reporting
of

estimated

guides

audit
9,530

of

the

being

that

with

reporting

nature,

extent,

guides

reports,

that

consistent
and results

been adequately

disclosed

may have been conducted

8 These standards

with
of

When audit

--expand
the explanations
questions
about them;

users,

of

in order

some standards

--separate
the standards
for financial
from those for economy and efficiency
results
audits;

reports

even though
with

the

the

do not
the

examinations

in accordance

have been revised

of

due to the

standards,

auditors'

to the

7,500
with

standards

established
the

contained

from our

or about

inconsistencies

or outdated.

referenced

upon by CPAs in

we estimated,

GAGAS reporting

not

standards

79 percent,

contained

reports9
current

work,

did

accurately

were relied

of their

inaccurate

language

audit

audit

guides

language

was consistent

contain

not

report

the results

reviews

language

audit

Since

in GAGAS.

the audit

As a result,

have
the

standards.

to:
in response

to

and compliance
audits
audits
and proqram

--incorporate
standards
relating
to audits
in which automatic
data processing
systems are used by the entity;
and
--add a standard
to make more specific
the auditor's
responsibility
for detectinq
fraud and abuse in government
programs and operation.

g Estimated
4 percent.

with

95 percent

confidence

29

with

a sampling

error

of

We found
language

audit

reports

from outdated

reporting

standards

--A

the

audit

contained

guides.

shall

accepted

financial

and compliance

percent

--Either.the

of

not

reports

assurance

and negative

assurance

[GAO Note:

Reports

positive

and/or

reports
with

auditing

standards

properly

reference

for

the reports.]

or a separate

of positive

violated:

audits.

did

auditors'

statements

three

in the auditors'

government

Reports

GAGAS--

report

was made in accordance

generally

[GAO Note:

most often

be included

examination

improper

The following

were among those

statement

that

that

on the entity's

report

shall

on those

items

on those
did

not

negative

financial

contain
of

items

compliance

not

include

a statement

tested.

statement

assurance--58

tested

of

percent

of

the

reports.]

--The
of

auditors

shall

internal

controls

compliance

and/or
not

made as part

Reports
accounting

identify

include

to study

on their

study
of

and evaluation

the

financial

and

audit.

[GAO Note:
internal

report

not

identify

controls,

material

which

weaknesses

an explanation

and evaluate

the reports.]

did

the

were reviewed
found.

of why the

internal

significant

auditor

controls--72

Others

did

chose not
percent

of

The RIGS did

not

problems

because

report

ide.ntify

the

they

above inconsistencies

told

us the CPAs relied

the RIGS had prepared.

Some RIG officials

were hesitant

to revise

and update

they

the guides

believed

implementation
our

of

we found

study,

to follow

all

region,
reporting

single

that

reporting

audit

reports

audit

some of

because
format

who perform

audits

of

this

audit

guides

they
because

after
However,

legislation.

during

the RIGS are now requiring

For example,
failed

to

the audit

included

An HHS official

on guidance

us that

become obsolete

consistently

reporting

Guide.

their

standards.

requirements

prescribed
Audit

the

would

told

as

told

GAGAS

relied

on a

in the Head Start

us that

program

in one HHS

include

firms

it

CPAs

Program

now requires

to follow

all

CPAs

reporting

standards.
We believe

that

audit

reports

that

issuing

audit

AICPA's

Codification

that

auditors

formats

which

part

of

incorporate

continue
audit

latest

planning

audit

conjunction

the

with

will

states

to prescribed

that

and auditing

The

areas.

reporting

states

accounting

standards.
auditors

should

pronouncements

efforts.

procedures,

to be applicable

guides

codification

for

Standards

revisions

current

a new comprehensive

single

in these

on Auditing

do not

Even though
specifying

of Statements

of

the responsibility

were deficient

make appropriate

the

their

share

should

The 1984 version

be aware of

firms

will

audits,

compliance
generally

program

audit

in many situations.

be used whenever
31

additional

supplement,

be used in
guides

will

Specifically,
audit

work

is

as

undertaken

to build

entities

who are eligible

audit,

guides

so that

to

that

a grant,

this

rather

managers
is

reporting,

or when

than
their

to reporting

guidance

proper

audit,

revise

references

to program

that

influence

in a single

RIGS should

proper

distributed

We believe

RIGS have to
gets

include

reports

written.

to choose

We believe

do so.

audit

on work- performed

single
program

standards

are properly

the best

opportunity

even before

the audit

underway.

IMPROVE DESK AND QUALITY

CONTROL REVIEW PROGRAM
We believe
are essential
reviews

not

language,
audit

only

help

they

reports

of

the

control

review

of the

audit

checklists,

quality

they

to the
high

if

control

reports

they

for

accounting
quality

with

report

potentially

this

Desk

problem

reviews.
activity,

properly

Since
reviews

written

profession

the

work.

reviews

they:

reviews

systems.

control

can ensure

be more effective

function

tied

problems

available

control

review

the RIGS select

based on our

quality

and quality

quality

to perform

producing

IGs could

to perform

help

so that

We believe,
that

also

and emphasize

importance

audit

resources

effective

be

desk

RIGS identify

on which

RIGS have limited

must

effective

to the RIGS'

but

firms

that

at the

46 RIGS we visited,

in the desk and quality

(1)

reviews

required

to the professional

32

of

on an established
and (2)

receive;

all

their

RIGS

percentage

used standardized

standards,

at each agency.

Establish

goals

Six of

the

quality

control

reports

they

level
that

for

received.

quality

in its
of

control

33 of

chart

reviews
study

had policies

on at least

5 percent

The seventh

IG did

quality
the

reviews

The following

control

seven IGs in our

reviews

of effort
a total

quality

control

of

not

review

46 RIGS we visited

on at least

shows the range

requiring
the

audit

require

a minimum

program.

We found

actually

performed

5 percent

of

their

of effort

devoted

reports.
to this

activity:
The Number of RIGS Performing
Quality
Control
Reviews
Percentage
Categories
in the Following
Fiscal
Year 1984
Less
than
5%

Name of
Agency
Education
DOL'O
DOT
EPA lo
HHS
HUD
USDA
TOTAL

Between
5% and

Over

5%

10%

10%

10%
1
0

0
1

0
3
0
3

:
0
0

3
7
0

13

17

Total

0
0

3
4
0
0
4

7
6
7
5
7
7
7

12

46

Several
control
resources

RIG officials

reviews

they

available.

10 These IGs did

visited.

performed
Others

not

told

us that
was limited

stated

have offices

that

in all

the

number of quality
by the

they

amount of

considered

seven regions

we

33

quality
that

review

to be a low priority

the benefits

realized--both

problem

firms

quality-percent

of

the

While
coupled

after

any percentage

is

the

analysis

audits

low.

the

This

first

we believe

Further,
is gained

under

the

arbitrary,

an established

we believe
steps

control

would

be especially

target

of

RIG office.

quality

of

level

control

and recourse

few years

We believe

potentially

high

to quality

in every

of

relatively

an overall

reports

with

the percent

resources

region.

in identifying

and in ensuring

warrant

in their

goals

discussed

reviewed

single

should

if
below,

can be kept

true,

audits

that,

in our opinion,

under

the

be revised

act.

1984

as experience

act.

Develop more useful

and
consistent
review checklists
Almost

all

checklists
audit

reports

additional

revisions

a consistent

depend

the

deficiencies
as violations

papers

paper

approach

reviewers'
audit

of professional

that

review.

to

and audit

standards.

34

of
that

would
or

or other

the RIG reviewer

When checklists
of quality

independently

report

review

fieldwork,

A checklist

and consistency
ability

problems

additional

to ensure
to his

control

examinations

to identify

documentation.

is designed

in the

through

to the report,

effectiveness

upon the

on quality

reviewers

and working

document

used,

46 RIGS relied

their

working

similar

not

the

to guide

necessitate

take

of

and to

are
reviews

identify
interpret

them

We reviewed
to determine
regions

of each IG and to see if

sample

review

included

grant

used at all

adopted

desk review

that

of

none of the

own checklists

from

checklists

which

they

believed

that

provided

of quality

OIG regions

of

varies.

to GAGAS make it
the

types

measures
audit
that

quality
the

easier

can be taken
problems.

checklist

approaches

believe

reviewing

that

agency

for
found
to

auditing

checklists
others

were

told

was more detailed

that

if

in our view,

are not
their

checklists

us

than

comparable

because
among

emphasis

or format

that

are annotated

the RIGs to categorize

and analyze

in unacceptable

so that

audits

At the

same time,

audit

or

intergovernmental

while

the profession

the

Many regions

that

inform

evaluation

the reviewer

the

important,

reviews

we believe

of problems

of

were

IG.

are

control

that

by professional

'version

headquarters

a particular

Moreover,

for

of others,

explained

local

checklists

the results

sections

by headquarters,

their

by their

Standardized

in
Our

checklists

we visited.

chapters

RIG officials

or provided

that

found

standards.

had checklists

were developed

such as various
Some

among all

problems.

control

agencies

their

not required

checklists

audits.

their

forums.

related

and quality

offices

organizations

of

-of professional

regional

developed

sample

they

to violations

and single

We found

audit

judgmental

the same ones were used consistently

if

the quality

both

an unbiased,

should
task

not

we would

recurring
emphasize

become so routine

by "checking

reports

about

the boxes."

and working

papers,are

that
We

'

processes
skilled

which

require

specific

of

assisted

audit.

extends

our

standards

by technically

in the

reference

the

of what requirements
Other

standards.

become familiar
annotated

standards
the nature

with

language

of

standards

only

referencing

in our view,

the problems

the violation.
the

but

detailed

that

standards,

RIG-identified

as well

did

not

exp1anation.s
the

the RIG reviewers

but

included

no

more detailed
problems

the CPA to better

as the

2S check-

and elements

to meet each of

help

of

Some checklists

standards,

recommended

is

a standard

to standards

or provide

professional

of

one of

checklist.

the

the quality

whether

severity

to

the reviewer

about

in case the reviewerneeded

Cross

of

that

on the

checklists

would,

the

were necessary

references

explanation.

so,

report

that

to determining

annotations

each item

and audit

judgments

we found

included

for

were written

also

audit

we believe

his

and if

review,

we examined

either

a standard,

violated,

During

in the

in forming

This

was actually

of

problems

elements

greatly

lists

judgment

reviewers.
When RIGS tie

the

professional

authoritative

to

understand
criteria

used by the RIG.

RIGS SHOULD CONSIDER TAKING ACTIONS

WHEN AUDIT WORK IS UNACCEPTABLE
Currently,
when problems

the RIGS focus

are

found.

on correcting

We believe

that

individual

audits

when the RIGS find

problems,

he should

not only

depending

upon the severity,

a management letter,
Actions

body.

community's

to referral

work,

and should
on recipients

The actions
in our view,

should

relate

ranging

to a regulatory

ultimately

or professional

to the grantee

not be considered

problems --where
he contracted

the audit

improve

of federal

future

the CPA neglected.to

to perform

the auditor

as the appropriate

for

state

are unacceptable,

of the problems

in certain

with
areas,

official

a copy
to a

that

the

audits.

In cases of severe

complete

much of the work

example--the

to regulatory

of

funds.

or contracting

for

the quality

to the auditor,

improvement

from

of performing

to the severity

suggesting

recommendation

Ethics

actions

taken by the OIGs when audits

to the auditee,

referring

but,

other

They can range from a letter

auditor

corrected

taken by the OIG would increase

performed

found.

consider

awareness of the consequences

unacceptable
audits

get the audit

OIG should

or professional

board of accountancy

and/or

consider
bodies

such

the AICPA

Division.
During

policies

our review,

and procedures

we ascertained
for

and under what conditions

discussed

with

of pursuing

taking
actions

RIG officials

various

actions

whether

action

on unacceptable

were taken.

the effectiveness
against

the RIGS had

audits

In addition,

we

and practicality

CPAs when work was

unacceptable.
OIGs concentrate
We found that
with

the auditor

on having
the basic
to obtain

audits

corrected

philosophy
an acceptable
37

of most RIGS was to work'.

report--even

if

the ac-

acceptable

version

cooperated

with

OIG took

that

time

working

with

several

examples

months

to satisfy

expend

resources

diminishes

much of

their

audit

manager,

passes,

example

an audit

of

office,

report

of

report

thereafter,

a quality

control

RIG stated

in a letter

planned
the
find

firm's

of

or evidence

and regulations

reports.
report

report.
problems:

housing

was issued

papers
of

auditor
that

and,

that

shortly

the

there

audit

a study

and evaluation

of

of

The
was no

was
review

that

38

in

was performed.

the RIG stated

was performed.

and

authority

a supervisory

any testing

In

the grantee,

Also,

that

on an earlier

these

to the

evidence

partner.

no evidence

controls
laws

and little

if

the audit

review

we

the RIGS to

a subsequent

relied

a local

The audit

in the working

responsive,

the RIG desk reviewed

June 1984.

evidence

deemed

more than

especially

illustrates

one HUD regional

issued

of

We
review

auditors'

usefulness

version

time.

quality

and caused

or the public

incomplete

of

took

or re-reviewing

as time

The following

auditors

the

was initially

were very

concerns

the

corrections,

work was initially

where the

tracking

program

--In

periods

some auditors

we believe

or

the auditor

audit

long

the RIGS'

greatly

incorrect

If

took

CPAs where their

Although

cases,

to produce.

even when the

the RIGS spent

unacceptable.

federal

action,

and the process

found

these

months

the OIG and made the necessary

no further

unacceptable

found

took

it

by
could

internal

compliance

with

the OIG mentioned

Further,
sufficient,

opinion

dated

this

additional

the

audit

additional
that

September

IG officials
report

it

21,

also
would

it

furnished

audit

the
The

the CPA inform

them

work,

and directed
in the

Seven months

working

and the original

that

be distributed

report.

the requested

1985,

The OIG

based on this

audit

should

the

60 days.

within

be revised

lacked

to support

and asked

asked that

same manner as the original

in April

1984,

and/or

was revised,

papers

statements.

be provided

documentation

if

matter

financial

documentation

regional
if

on the

letter

the working

evidential

competent,

auditor's

that

papers

report

later,

had not

had not

been

been

retracted.
During

our

reluctant

to consider

expressed

concern

since

their

mandate

that

actions

against

boards

of

that
and/or

that

addresses

referrals,

against

to assure

the

reasons

A few RIGS

CPAs.
large

audit
create

amount of
Others

CPAs.

RIGS are

quality,

told
they

an adversary

resources
us that

believed
relationship

one was more effective.

several

RIGS are reluctant

professional

bodies,

they

they

have agency

seldom

make the

to refer

Division.
guidance

need to take

required

39

auditors

such as the

or the AICPA Ethics

although

CPAs usually

against

CPAs would

accountancy

explained

because

is

into

the relatively

measures

where a cooperative

to regulatory

actions

about

needed in pursuing

We found

we inquired

work,

this

adjustments

state
Many RIGS

which
action
to the

audits.

A few RIGS are concerned

especially

in regard

have to be devoted

to documentation
to the referral

In the AICPA's
reports

suggested

individual
not

study,

of

not

contributes
A case
of

their

--The

trial

history

the

audit

lacked

there

sufficient

auditor's
internal

control

RIG rejected

papers

audit

required

documentation

informed

the grantee

required.
auditor
regulatory
rejecting

In response
was never
body,
the

planning,

little

audit

not

was sufficient.

40

provide

time

frame

would
about

to a professional
told

that

were made.

the RIG's

a RIG official

the

evidence

within

inquiry

(2)

the conclusions
and (4)

the CPA did

to our

and determined

(3)

after

referred

report

an audit

reviews

another

of the

have been referred:

support,

provided

that

the

referrals.

documented,

and compliance

the

in

of referrals

of proper

and competent

working

the agencies,

We believe

should

evidence

work was poorly

decided

is representative

reviewed

was not

of AICPA's

investigations

infrequent

region

control

with

of progress

of

audit

Division

results.

in our opinion,

RIG quality
(1)

submitting

the results

conducting

status

in HHS' New York

that

agencies

board

the

IGs'

that,

the

of

would

process.

case results

policy

discussing

cases

requirements--which

The AICPA Ethics

for

to the

the resources--

the AICPA reveal

individual

except

confidence,

types

that

these

and to continue

policy

1979

investigations.

to share

about

us that

The
the
and

be

why the
or
he thought

We believe
auditor

the RIGS' approach of working

that

to make the report

problems

the RIG should

problems,

even when the auditor

action,
necessary

audits

that

their

professional

governmental

would ultimately

consider

when
more serious

taking

further

to make the corrections

actions

auditors

against

CPAs when their

would become more aware of

responsibilities

in the performance

We believe

audits.

for

the

acceptable.

by pursuing

are unacceptable,

that

is willing

to make the audit

We believe

is appropriate

However, we believe

are minor.

and recurring

acceptable

with

that

improve the overall

this

of

increased

quality

awareness

of audits.

COMPILE, ANALYZE AND USE THE

RESULTSOF QUALITY REVIEWS
We believe

the RIGS are missing

recurring

audit

aggregate

the results

views.

working

audit
with

that

dual audits,
if

of their

quality

in addition

efforts

problems

have focused

the results

reinstead

basis,

We be-

problems

on indivi-

quality

problems

recurring

data on each audit

of their

quality

we determined

were used.

Specifically,

out:

41

if

on

and

corrected.

quality

historic

and

firm's

reviews

or patterns.

At the 46 RIG offices

reviews

prevent

and compiled

control

on a case-by-case

to detecting

and analyzed

common trends

of quality

desk and quality

their

the RIGS could

to prevent

because they do not record

the CPAs to have the problems

they recorded

performance
for

problems

For the most part,

detecting

lieve

quality

an opportunity

and how the results

we wanted to find

--if

the

RIGS compile

on audit

--if

firms'

and maintain

performance,

the RIGS summarize

results

for

trends

historic

data

and

and analyze

or patterns

quality

review

of recurring

quality

problems.

If

the RIGS compiled

historic

data

determine
over
the

for

each audit

the quality

a period

of

types

audit

they

a data
would

be able

work performed
base could

base containing
to

by each audit

firm

be used to answer

of questions:

--How much experience

financial

firm,

The data

of years.

following

and maintained

do the

and compliance

--How many times

have the

audit

audits

firms

firms
for

have

the

in performing

agency?

been quality

control

reviewed?

--Which

firms

have performed

--Which

firms

need more technical

their

--Which

satisfactory

work

assistance

performance?

firms

have improved

their

42

performance?

in the past?

to improve

--Which

firms

need to be monitored

--Which

firms

have consistently

audit
With

the RIGS could

information,

For example,

more effectively.
that

have a history

firms

with

prior

could

also

be used to track

a RIG intends

to take

would permit

reports

and in the

conduct

contracting

decisions.

guidance

is

might
changes

puttinq

in audit

enough emphasis

they

could

act

firms

up-to-date

areas

that

with

audit

the

the

common types

changing

audit

work when

the data

base

of their

quality

occurring
for

in the

RIGS may find

that
hand,

were unfamiliar

of

audit

use in future

with

the RIGS were not

the

audit

work.

of problems

or minimize

clarify

information

unacceptable

or that
areas

to prevent

attention

On the other

firms

on certain

guidance,

these

and their
problems

keep the

requirements,

in

audit

and emphasize

need more attention.

RIGS do not compile,

summarize
analyze historic
data on audit
None of
historic

the audits

requirements,

The RIGS could

the future.

This

the results

or unclear.

the

less

work and more on

firms,

common problems
of

resources

a CPA.

individual

inadequate

Once the RIGS determined

causes,

against

For example;

show that

focus

acceptable

the RIGS to aqgregate

the

could

and document

to tracking

to determine

recent

unacceptable

use their

performance.

actions

reviews

analyses

they

of

unacceptable

In addition

their

performed

work?

this

on firms

more closely?

data

and
firms

the 46 RIGS systematically

on audit

firms'

performance
43

compile
from

and maintain
their

reviews

of

audits

contracted

directly

with

but

only

in order

However,

even at

audit

and used for

address

for

by-grantees.
firms

did

to help
these

keep some data

purposes,

review

results

related

audits,

renewal

information

the

contracted

on those

them make contract

RIGS where the

contracting

quality

Seven RIGS that

decisions.

is collected

information

did

not

to specific

GAGAS

standards.
During
ple

our work,

contracted

one of

their

particular

we found

to perform
regional

audit

these

where the

RIG had problems

firm

also

contracted

the

RIG also

performance
should
could

the

in all

with

with

the

and maintain

historic

reasons

for

know who the

system,

do not

not

information

one instance
This

report.

in the

same region

We did

not

but

believe

track

firms'

that

the RIGS

so that

the RIGS

audits.
they

believed

data
compiling

they

on audit

did

not

need

They gave

firms.

the data:

auditors

"problem"

are without

using

and

know what the

they

were to share

firm

with

other

share

firm's

performance

these

us that

a formal
--they

monitor

RIGS told

following

--they

past

sam-

one RIG in a

We found

locations,

in our

one IG in more than

RIGS do not

agency

problems.

firms

more than

an audit

another

noted
of

more closely

to compile

the

for

auditors.

be aware of a firm's

Several

or for

Presently,
of

some audit

services

offices,

region.

on the performance

where

that

legal

negative

ramifications

information

RIG offices.
44

about

would

be if

an audit

We believe
specific
tors

RIGS should

develop

While

needs.

we believe

memory in lieu
This

ing.

in offices
RIGS should

where only
not

of documenting

rely

to gain

to their

quality

review

a nationwide

own

"problem"

a few audit

on their

becomes even more important

headquarters

tailored

the RIGS may know who the

are-- especially

used,

a system

audi-

firms

are

institutional
results

when data

perspective

in writ-

are sent

about

to

quality

problems.
Last,

we believe

IGs sharing

information

firms.

Audit

Forum periodically

has been quality

RIGS may call
the quality

to discuss

an audit

firm's

their

types
will

information

case files

reviews

base in its
of problems

noted

be coded and will

performing
in the next

the

audit.

RIG.

on audit
since

develop

whose work

firms

Other

based on

is readily

most RIGS document

or quality

a system

the

control

to meet their

needs

way.

time,

Phoenix

firms

performance

on a desk review

burdensome

At the present
data

the

that

The RIGS should

least

of

by a particular

results.

of

Intergovernmental

listings

review

agency

on the performance

the Southeastern
publishes

in the RIGS'

checklist.
in the

among themselves

different

reviewed

control

of

for

control

We believe

results

is precedent

For example,

audit

available

there

the HHS IG is pilot-testing

office
during

relate
This

that

will

collect

desk reviews.

section.

45

information

on

These problems

to the professional
program

a computer

is discussed

standards

for

in more detail

HEADQUARTERSSHOULD BE A.FOCAL POINT

IN THE RIGS' AUDIT QUALITY REVIEW PROCESS
As we have noted,
function

took

audit

place
review

IGs to their

regional

IGs acted

as a focal

recurring

quality
would

system

point

improve

cies

First,

arose,

program
would

not

would

also

from

obtained,

with

their

agency

nationwide

accomplish

two major

reports

the

found

to maintaining

steps

to educate
so that

guidance

IGs could

statistical

data

be included

a high

level

46

on the
taken

the

of quality

results
inform

of

the IGs'
that

types

this
of

au-

on substandard

in the IG's

strengthen

auditors.

periodically

We believe

and the recourse

and would

review

on the results

efforts.

stemming

IGs

quality

then

system

by them.

the headquarters
regions'

problems
the

provided

if

federal

these

any problems

review

include

routinely

of deficien-

IGs remedying

if

purposes

or patterns

Monitoring

the

to the Congress

commitment
non-federal

could

of

review

same frequency.

that

quality

problems

on

the quality

and auditors

heads and the Congress

dit

It

take

inaccurate

basis,

should

audits.

could

and used the

information
quality

in monitoring

we believe

audit

data

IGs could

the

or

on a consistent

regional

and integrity

the

analyzed,

headquarters

greatly.

facilitate

Secondly,

if

usefulness

grantees,

inconsistent

the

by headquarters
that

gathering

review

Generally,

the

headquarters

recur

quality

IG offices.

where common problems

managers,

audit

We believe
for

problems,

were more involved

system.

actual

was decentralized

offices.

The headquarters
they

the

in the regional

quality

system

much of

semiannual

agencies'
among

CURRENT EFFORTS UNDERWAYTO

IMPROVE AUDIT QUALITY REVIEW SYSTEMS
Our review
made during
During

October

we found

and Efficiency

quality

that

quality

review

IGs,

were undertaken,

concern

about

audit

Although

some of

and one is being

implemented

they

these

time

efforts

contain.draft

of

are very

none had yet

these

number of our recommendations

initiatives

are consistent

collecting

and analyzing

reviews,

considering

guidance

to CPAs.

The following

results

actions

describes

for

our

RIG
of

these

Subcommittee's
our

review.

guidelines

been fully

except

inspectors

we cannot
to say that,

general.

recommendations

of desk

on

and

in

and seem to be addressing

to the
with

several

Therefore,

efforts

constructive

improve

the

request

of our review.

efficacy

of

and its

pilot-tested,

at the

comment on the
general,

quality

to
that

because

Council

of Management

efforts

in part;

was

1985.

the President's

We believe

systems.

systems

September

the Office

(PCIE),

efforts

review

through

1984

and the AICPA have initiated

Budget,
audit

review,

audit

the RIGS'

the period

our

Integrity

of

These

for

and quality

control

against

CPAs, and providing

some of

these

initiatives.

THE DEPARTMENTOF HEALTH AND HUMAN SERVICES-AUTOMATEDQUALITY REVIEW SYSTEM

The HHS IG is developinq
to streamline

the processing

an automated

quality

review

system

of non-federal

audit

reports.

The

system,
field

currently
off ice,

following

beinq

will

pilot-tested

collect

data

in ,the Phoenix,
which

Arizona

can be used for

the

purposes:

--managing

and controlling

--maintaining
program,

a record
auditee,

--providing

of problems

and audit

information

recurring

the workload;

problems

with

reports

by

firm;

that

can be analyzed

encountered

with

to determine

the quality

of

audits;
--keepinq

track

--providing
HHS is

of

the

status

an up-to-date
the

cognizant

of

audits:

universe

and

of entities

for

which

agency.

DEPARTMENTOF EDIJCATION--REVISIONS
TO POLICIES AND PROCEDURESREGARDING
SUBSTANDARDAUDIT WORK
The Department
and procedures
independent
referring
old

corrected

auditors,

Education

addressing

CPAs were not

Division

IG is reviewing

substandard

and has proposed

CPAs to regulatory

policy,

Ethics

for

of

and state

the deficiencies

performance
new guidelines

or professional
referred
boards
within

its

bodies.

to the AICPA's
of

accountancy

a time

frame

policies
by
for
Under

its

Professional
if

the auditors

that

the RIG

judges

reasonable.

correcting
require
refer

proposed

some deficiencies

whether

guide,

whether

made as requested,

include

and whether

into

of the

and are

occurred

the proposed

policy

to

to the program

the deficiency

their

whether

are possible

us that

for

also,

in deciding

adhered

actions

IG told

have been incorporated

but,

the materiality

firm

corrective

provide

a referral

factors

the audit

Educations'

repeatedly.

other

These factors

deficiencies,

revisions

without

the IG to consider
a CPA.

audit

The IG's

revisions

and are currently

in

eff'ect.

AICPA TASK FORCE TO STUDY THE QUALITY OF AUDITS

A task
the .quality
working

force

of audits

through

information

from the AICPA has been established

of governmental

units.

The task

the IGs at the grant-making

on the results

to study

agencies

of desk reviews

force

to obtain

and quality

control

reviews.

PC1.E REVISIONS TO "ORANGEBOOK"

As a result

of the passage of the Single

Audit

1984, the PCIE formed a committee

to revise

Cognizant

under OMB Circular

Audit

Agency Guidelines

(The Orange Book).

cognizant

audit

under the circular.

incorporates

These guidelines

agencies

The revision,

guidance

out their
issued

changes and new provisions

49

and up-date

provide

in carrying

Act of

A-102
for

responsibilities

in October
brought

the

1985,

is

about

by the

fully

implement

address

act

the

many of

discussed

to specify

the role

Single

Audit

the objectives

in this

of

Act.
for

cognizant

agencies

These revised

a good quality

to

guidelines

review

system

report.

OFFICE OF MANAGEMENTAND BUDGET--GUIDELINES FOR

INSPECTORS' GENERAL DEVELOPMENTOF A QUALITY
CONTROL PROGRAMFOR SINGLE AUDITS
In September
supplement
State

the provisions

and Local

program

OMB asked.the

1985,

for

of OMB Circular

Governments,"

single

inspectors

audits.

A-128,

by developing
of

Some

the

general

to

"Audits

of

a quality

areas

for

control
consideration

were:
--desk

reviews

--quality
three

on 100 percent

control
years

reviews

of

the

conducted

on recipients

for

audit

reports,

at least

which

once every

an agency

has

cognizance;
--quality
receiving

control

reviews

direct

upon cognizant

federal
agency;

responsible

--states

receiving

all

on a sample of recipients

of

for
their

funds

when there

is no agreed

and
quality

reviews

federal

funds

on recipients
through

the

states.

STATE AND LOCAL AUDIT AND

ACCOUNTING GUIDANCE INCORPORATES
THE SINGLE AUDIT CONCEPT
The AICPA Audit
and Local

Governments

and Accounting
Units,

last

Guide
published

for

Audits
in

1975,

of State
has been

significantly

revised.

guidance
of

for

the

the Single

contained

single

Audit

issued

will

provide

This

guidance,

the end of

audit

Act of

in OMB Circular

Governments,"

of audit

The revised

A-128,

in April

1985,

is

requirements.

will

concept

will

incorporate

based upon the provisions

1984 and implementing

comprehensive
which

guide

"Audits

1985.

audits

of State

This

merging

of governmental

be available

intended

regulations

to assure

to the
the

audit

uniform

and Local
of guidance
entities.
community
application

by

CONCLUSIONS AND RECOMMENDATIONS

FOR THE STATUTORY INSPECTORS GENERAL

We believe
quality
lems

IGs play

a major

steps

to assure

and in taking
are corrected.

identified

audit

We found

numerous
These

accept.

did

the

work,
not

instances

situations,

did

not

prepare

audit

profession.

These results

and improved

monitoring

underscored
tion.

that

properly
accordance

with

appropriate
address

CPA audits

the

of

Audit

audit

in this

performed

under

the Single

work performed,
concern

continued

general.
quality

will

full

funds

are administered

that

It

the quality
over

are
in

is

profession

surfaced

be

implementa-

federal

accounting

Act.

the

accounting

and regulations.

carry

have

required

a need for

that

so that

prob-

not

warrant

programs

do not
Audit

did
perform

audit

approaches

problems

programs

testimony

not

of audit

IGs and the

quality

federal

discussed

laws

recurring

they

inspectors

Act

audit

on the whole,

and the

to assure

and that

the

IGs,

demonstrate

importance

applicable

now for

those

branch,

by the

for

past

documentation,

be involved

accounted

the

document

also

as the Single

CPAs will

that

where CPAs did

the executive

of the Congress,

in monitoring

of work that

adequately

clear

We believe

that

role

during
problems

to audits

to
prior

'
or

RECOMMENDATIONSTO THE
STATUTORY INSPECTORS GENERAL
In order
adequately
problems,

to provide

identifies,

a quality
disseminates,

we recommend that

--Prepare

and update

auditors

should

auditor

the

single

to use

of

the

be reviewed

the

--Develop

the

system

and corrects

statutory

program

to use in the

the passage

control

Single

to determine

in performing

guides
of

Audit

audit

inspectors

audit

conduct

for

their

Act,

non-federal
Due

audit

guides

all

audits

general:

audits.

how they

grant

that

can best

that

build

to

assist
upon

audit.

and require
standardized

regional

inspector

checklists

that

general
are

offices

annotated

to

GAGAS.

--Require

all

an establish

RIGS to conduct
percentage

of

quality
the

control

reviews

on

audit

reports

they

revise

policies

on taking

audits,

even when

receive.

--Clarify,
actions
the

and where necessary,

against

auditor

Policies

CPAs on unacceptable

ultimately
should

also

provides
include

an acceptable

provisions

for

report.
referring

CPAs to regulatory
boards

--Work

of

with

accountancy

reviews

correct

trends

--Report
quality

of

so that

problems

problems

quality

to

identify

and

problems.

quality

review

formats

and

and patterns

of

can be identified.

identified

to agency

semiannual

their

consistent
trends

bodies.

of

to report

nationwide

of

compile,

of quality

using

boards

to these

audits

IG offices

to headquarters

respectively.

to collect,

individual

such as state

state

on the results

or patterns

regional

terminology
quality

referrals

IG offices

and use data

control

results

and the AICPA,

to expedite

regional

analyze,

--Require

bodies

the AICPA and appropriate

accountancy

--Require

and professional

reports.

and efforts

to

heads and to the Congress

improve

audit

in their

ATTACIf?ENT

ATTACHMENT

F W k e n E l e m e n l r of a n E fl octlve IO A u d i 1
Ourllty Review S y 8 t e m

S e c u r i n g Audit Services a n d Reports

I.

IG is involved

contracts
appropriate

in a s s u r i n g

that

for audit arc

and comprehensive.

2. IG a s s u r e s that his office

receives all of the audit
reports
it is s u p p o s e d to
reccIvc,
a n d o n a timely
basis.

!Yiztimetine
of audit8
-w--m------

FOIIOW-Up
with auditor
a n d grantee

3. p r o v i d e accurate a n d up-tod a t e g u i d a n c e for the auditor

to u s e in the earliest
stages
of the audit e n g a g e m e n t .

t
I

-l

audit reports a r e
controlled t h r o u g h o u t the
c o m p l e t e audit review cycle.

4. A s s u r e that

Completed
auda
reports

amstance
an0 loaaon

L -r

i-9

Fiewpt a n d

S e e next p e g e
..- -.

AlTACtMEHf

ATTACHMENT

FItteen Elmentr of on Ellective IO Audit

Ouallty Rovkw Syrtem

Processing
Review

Reports

Through

Quality

5. Conduct a desk review

program
that assures quality
audit
reports
and identities
report
findings
for audit resolution.

6. Conduct a quality control

review program that assures
audits are performed in
accordance with professional

-0
AUQI!

okay?

7. Use standardized

checklists,
professional
quality

. @I

IS

standards.

perform

Yea

s
Perform
OCR

Audit
lmdmgs
for resolution
am
followUP

review

tied

to

standards,
to
desk reviews and
control
reviews.

8. Camumicate with the auditor

and grantee

deficiencies,
established

to correct

noted

using procedures
by the

headquarters

IGS.

8.

Assure

that

appropriate

sanctions are taken

problems are noted.
include

requirements

documenting action

when

severe

Subsyslom
Compfle 8
maintam
hlstorlc
twm data

This should
for

taken.

10. Compile and maintain historic

data on audit tins
on both
issued reports
and unacceptable

audit
report

audits.
11. Inform
audftor

both the grantee and

of quality
review
results on both fssued reports
and unacceptable
audits.

punttwe
actlon
next

page

.
ATTACHbENT

ATTACHMENT

FItteen Elemwtts of an Eftoctlvr IQ Audit

Ourllty Rovlow System

Using Quality

Regional
periodic
summary
0t
SyStOWl
results

Review Results

and sunrnaritt quality

review results at the regional
level.

12. Record

I
+

13. Consistently
and accurately
report quality review results
to the headquarters
IGs.
14. Analyze

results

and use quality

on a nationwide

15. Report nationwide

quality

reviews

head and to the

Headqu%rIam
rawwes
information

El

review
basis.

Mm
Provision
t0r
haadqumers
to analyze
data

results of
to the agency
Congress.

0
I

f
f
Headquaflen
plans and
takes
corrective
action

mporn mutts
to Ihe
agency head
and to the
Congress

1I4

.
ATTACHMENT

ATTACtMENT

Flttwn Elomonts of en Effoctlve IQ Audit

Ourllty Rovlew Systrm

Using Quality

Review Results

and summarize quality

review results at the regiona
level.

12. Record

Rwional
periodic
wmmrry
Of
system
results

13. Consistently
and accurately
report
quality
review results
to the headquarters
Es.
14. Analyze and use quality
results on a nationwide

cl

tie%dqu%rten
nceiws
intormation

review

basis.

15. Report nationwide

results of
quality reviews to the agency
head and to the Congress.
Headquarters
plans and
takea

COWdW

action

Headquarters
meofls
rasuIn
to the
agency
head
and to the
Congress

ATTACHMENT

ATTACHMENT

Flttoen Elrmentr of rn E floctlvo IO Audit

Ourllty R o v h w Syotrm

U s i n g Quality R e v i e w Results
12. R e c o r d a n d sumarize

review results
level.
13. Consistently

report quality

quality
at the regional

a n d accurately

review results

to the h e a d q u a r t e r s

ICS.

14. Analyze a n d u s e quality

results o n a n a t f o n w i d e
15. R e p o r t

quality

Regional
periodic
surnnllry
Of
system
results

review
basis.

results of
reviews to the a g e n c y

nationwide

wmProvision
f0r
headquarters
to analyze
data

h e a d a n d to the C o n g r e s s .
+

reports
results
to Ihe
agency h e a d
e n d to the
Congress

0
I
0
1

ATTACHMENT

ATTACHMENT

Flftwn Elrmentr of rn Effoctlvo IO Audlt

Ourllty Revvkw 8yrt8m

Securing Audit Services and Reports

1. IC is involved

contracts
appropriate

in assuring

for audit

Gnnteas
contract
foraudft
wwicw
(grants)

that

are

EntItles
and
titz
audita

t.
+

and comprehensive.

2. IC assures that

his

office

receives all of the audit

reports it: is supposed to
receive,
and on a timely
basis.
3. Provide accurate
and up-todate guidance for the auditor
to use in the earliest
stages
of the audit engagement.
4. Assure

that

audit reports
throughout
the

controlled
complete audit

are

review cycle.

and grantee

I
Completed
audn
reports

Receipt and
control
ot
audit reports
for federal

quahty

0
-A

revtow
See

next

pege

_.- -_J