GAO Scrutinizes FAC Functionality, Lack of Single Audit Quality Review

The Government Accountability Office (GAO) recently issued a highly critical report about status of information submitted and maintained at the General Services Administration’s (GSA) Federal Audit Clearinghouse (FAC), particularly in light of the massive amount of federal relief funding issued in response to the COVID-19 pandemic. The report, which contained numerous recommendations, also called for the scheduling of a governmentwide single audit quality review.

The Single Audit Act and the Office of Management and Budget (OMB) uniform guidance (§200.501(a)) requires nonfederal entities that spend $750,000 or more in federal awards in a year to undergo a single audit. This threshold will be increased to $1 million under the 2024 revisions to the uniform guidance published April 22, which become effective for awards issued on or after Oct. 1, unless federal agencies elect to implement them earlier. Audit results must be submitted to the FAC, which had been maintained by the U.S. Census Bureau until October 2023, at which time the GSA assumed responsibilities (see ¶650 in the Single Audit Information Service Module). OMB told GAO that it expected GSA to modernize the FAC in a phased approach over time to improve usability and increase transparency over federal award spending.

After analyzing FAC data from 2015 through 2021, GAO determined that the data are generally reliable enough to allow federal agencies to oversee award spending. However, it did find issues such as inaccurate identification of federal programs, inconsistent recordings of audit opinions and incomplete information on single audit findings. For example, GAO identified 119 audits with an award expenditure that included Coronavirus Relief Fund as the program name, but did not use the associated Assistance Listing number (21.019) or another valid Assistance Listings number from a complete list obtained through SAM.gov.

“When recipients label expenditures under another federal program or an invalid [Assistance Listings] number, federal agencies could fail in their FAC searches to identify audit findings related to those expenditures,” GAO explained. “This could hinder federal agencies’ ability to monitor recipients of federal awards, identify issues with the recipients’ spending of funds and ensure that recipients resolve their deficiencies.”

GAO also expressed concerns with using the FAC, such as difficult search functionality, variations in recipient names, incomplete texts fields and download restrictions. “The lack of modernization in the FAC makes accessing and using FAC data more challenging for federal agency officials and public users,” GAO added. “This could cause FAC users to expend resources on preparing data to use single audit results for further analyses.”

Audit Quality Review

While the uniform guidance currently requires that a governmentwide single audit quality review be performed every six years or at an alternative interval that OMB determines (§200.513), such a review has not occurred since 2007, and no review is currently scheduled (see ¶733 in the Module). (The 2024 revised guidance removes the six-year designation and only states that it “must be performed at an interval determined by OMB.”)

Among findings in the 2007 report, conducted by the President’s Council on Integrity and Efficiency (PCIE), are that 49 of the 208 audits reviewed did not include one or more required reporting elements in audit findings. As of March, OMB has not designated an entity to perform the next single audit quality review, and stated that recipients it corresponded with requested that this review not take place until after the 2024 uniform guidance revisions were implemented and they had time to comply with them.

“Therefore, it is unclear when OMB and federal agencies will perform the next governmentwide single audit quality review,” GAO noted. “Given the trillions of dollars of COVID-19-related financial assistance provided in recent years, it is increasingly important that the FAC provide federal agencies with quality information on recipients’ use of federal funds.”

GAO also found that OMB could improve single audit information in the FAC by obtaining a list from federal agencies of all recipients that did not submit their single audits as required. Further, devising a method to identify recipients that met the single audit expenditure threshold by spending funds from multiple agencies can help OMB and GSA ensure that the FAC contains complete information on all recipients’ single audits. GAO also noted that $1.17 trillion, or about 16.7%, of the reported $6.97 trillion of direct federal awards that recipients spent from 2017 to 2021 were linked to single audit findings that were both severe and persistent.

“OMB does not have a strategy for a governmentwide analysis of FAC single audit data to assess the risk to the government from unresolved single audit findings,” GAO explained. “Without a governmentwide analysis of FAC single audit data, OMB and federal agencies may not identify governmentwide risks of recipients misusing federal awards or develop appropriate responses to those risks.”

Recommendations and Response

GAO provided recommendations to both GSA and OMB, and officials with these agencies concurred with them. It urged GSA to:

• develop a process to regularly identify, analyze and respond to FAC data reliability issues that may affect federal oversight, such as establishing edit checks to mitigate issues related to data accuracy, consistency and completeness;
• coordinate with federal agencies and professional audit organizations to identify and prioritize features to enhance the usefulness of FAC data for federal oversight in accordance with federal data standards;
• coordinate with federal agencies to develop proposed funding and timelines for implementing the identified and prioritized features to enhance the usefulness of FAC data for federal oversight through interagency agreements or other methods; and
• consult with professional audit organizations to provide additional training to auditors and recipients to help ensure that they complete FAC data collection forms accurately, completely and consistent with the audit report.

It recommended that OMB:

• consult with federal agencies to implement the governmentwide single audit quality review requirement by naming a federal agency to lead the review as required by the uniform guidance;
• ensure that each of the federal agencies responsible for single audit oversight collects and reports to GSA a list of the recipients of its federal awards that should have submitted a single audit report for audit year 2023 and did not;
• work with GSA to establish formal guidance implementing an annual process for each of the federal agencies to collect and report to GSA a list of its federal award recipients that should have submitted a single audit report and did not and to then communicate the guidance to federal agencies for single audits in 2024 and beyond;
• work with GSA to develop a method for determining federal award recipients that did not submit a single audit report but should have based on their combined funds received from multiple federal agencies and communicate this method to federal awarding agencies;
• consult with federal agencies, the Council of the Inspectors General on Integrity and Efficiency (formerly the PCIE) and relevant inspectors general offices to discuss methods to help ensure that single audit report reviewers are verifying that the information in a single audit report aligns with the summary information entered on the FAC data collection form; and
• work with GSA and agency key management single audit liaisons to develop a strategy to use FAC data to identify governmentwide risks to federal award funds, such as single audit reports that contain findings that are severe or have remained unresolved for multiple years.

It also recommended that Congress consider amending the Single Audit Act to require: (1) OMB to initiate a governmentwide single audit quality review at a regular interval, and submit a report on the review findings to Congress; and (2) federal awarding agencies to work with OMB on a governmentwide single audit quality review.

For More Information

The GAO report, “Single Audits: Improving Federal Audit Clearinghouse Information and Usability Could Strengthen Federal Award Oversight,” (GAO-24-106173) is available at https://www.gao.gov/assets/d24106173.pdf.