Senator introduces bill to improve single audit process.

Senator John Glenn (D-Ohio) has introduced a bill that would amend the Single Audit Act of 1984. The legislation, S 1579, is intended to improve financial management of federal funds and reduce paperwork burdens on state and local governments, universities and other not-for-profit organizations that receive federal assistance.

The American Institute of CPAs supports the revisions to the Act, but it has expressed some reservations about language in the bill relating to photocopies of auditor working papers. "We think this language is written too broadly, and there is concern that a federal agency could ask for copies of more than what is needed to support a specific objective," said Andrew Blossom of KPMG Peat Marwick in New York City and member of the AICPA government accounting and auditing committee. The AICPA is seeking clarification from Congress about this language in the bill.

Glenn had requested that the General Accounting Office study the implementation of the Single Audit Act and suggest any needed changes. The legislation is based on the findings of the GAO's report Single Audit: Refinements Can Improve Usefulness and was developed in cooperation with the GAO and the Office of Management and Budget. The OMB has worked with Congress to ensure revisions to Circular A-133, Audits of Institutions of Higher Education and Other Nonprofit Organizations, will be consistent with the provisions of the bill.

The bill would authorize the OMB to issue rules to implement the act and revise certain audit requirements as needed. "This gives the OMB the flexibility to make quick changes when they are needed, instead of having to rely on Congress to pass amendments," said Blossom.

The new legislation would extend the Single Audit Act to cover not-for-profit entities that receive federal assistance. "Broadening the Single Audit Act's coverage in this way ensures that all nonfederal grantee organizations will be covered by a single audit process" said Senator Glenn.

The bill also would raise the single audit threshold from $100,000 to $300,000, exempting thousands of smaller state and local governments from federal single audit requirements. "It still would ensure, however, that the vast majority of federal funds remain subject to testing" said Glenn.

The amendments include a risk-based approach for selecting programs to be tested during single audits that would replace audit testing based solely on the basis-of-dollar criteria. "Using the risk-based approach will ensure coverage of large programs, as well as other programs that are actually more at risk" said Glenn.

Auditors would be required to provide a summary of audit results 9 months after the yearend rather than the current 13 months. The summary also is intended to highlight certain information required in the seven or more separate reports needed for each single audit.

A companion bill to the Senate's

S 1579 was introduced in the House in April.