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A single audit is a term
used in reference to an entity-wide audit consisting of
two main parts: an audit of the basic financial
statements and an audit of the entity’s major federal
award programs. The audit of the major programs includes
(a) gaining an understanding of and testing the internal
controls and (b) testing compliance with compliance
requirements over the programs. In accordance with the
concept, one auditor integrates the various programs’
internal control and compliance auditing requirements
with an audit of the entity’s basic financial
statements.
However, not all state
and local governments and nonprofit organizations that
receive federal awards are subject to the single audit
requirements. Organizations that expend less than
$500,000 in federal awards during a year are exempt from
the single audit requirement for that year. Also the
Single Audit Act Amendments of 1996 gives the Director
of Office and Management and Budget (OMB) the authority
to change the $500,000 threshold every two years (except
the amount can never be reduced below $500,000).
Government Auditing
Standards
As a partial response to
the multitude of program audit guides, the U.S. General
Accounting Office (GAO) issued the Government
Accounting Standards in an attempt to bring
uniformity to audits of governmental organizations,
programs, activities, and certain entities (including
nonprofit organizations) receiving government
assistance. These standards relate to scope and quality
of audit efforts and to the characteristics of a
professional and meaningful audit report. They address
the concerns of public officials, legislators, and the
general public about whether governmental funds are
handled properly and in compliance with existing laws
and whether governmental programs are being conducted
efficiently, effectively, and economically.
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