The Single Audit Act intends that auditors conducting regular financial audits of state and local governments and not-for-profits organizations provide assurance to the federal government that:
A) The auditor is not required to be independent.
40 questions and answers about audit reports
A member shall not express his opinion on financial statements . of any enterprise financed in whole or in part by public distribution of . securities, if he owns or is committed to acquire a financial interest in . the enterprise which is substantial either in relation to its capital or to .
Issuing a qualified audit opinion where no qualification is necessary; Failing to emphasize a significant matter in the audit report; Providing an opinion on financial statements where no such opinion may be reasonably given due to a significant limitation of scope in the performance of the audit.
Accordingly, the auditor controls audit risk by adjusting detection risk according to the assessed levels of inherent and control risks.
An auditor must apply audit procedures to detect material misstatements in the financial statements, whether due to fraud or error. Misapplication or omission of critical audit procedures may result in a material misstatement remaining undetected by the auditor.
To keep the overall audit risk of engagements below an acceptable limit, the auditor must assess the level of risk of each component of audit risk. Explanation of the 3 elements of audit risk is as follows;
Audit risk is the risk that an auditor issues an incorrect opinion on the financial statements. Examples of inappropriate audit opinions include the following: Issuing an unqualified audit report where a qualification is reasonably justified; Issuing a qualified audit opinion where no qualification is necessary; ...
Detection risk can be reduced by auditors by increasing the number of sampled transactions for detailed testing.
Currently, if an auditor were to use different audit risk levels for different accounts and assertions, there would be no generally accepted way of com bining the results to determine the achieved overall audit risk level for the financial statements as a whole.
A veteran state auditor told me a story that sums up the situation. The state auditor was responsible for conducting the Single Audit for the entire state, and the federal cognizant agency overseeing the audit on behalf of all federal grantors felt that the state auditor wasn’t digging in deeply enough.
Each local government may have a legislative auditor (a city auditor who reports back to the city council) and an internal auditor. The Single Audit of a local government is often conducted by a CPA firm. Not-for-profits can also have internal auditors, but their Single Audit is usually conducted by a CPA firm.
An audit of internal controls over compliance for major programs.
A litany of criteria and defining documents. An audit is defined as the evaluation of an audit subject against given criteria – and the federal government gives and gives and gives. The OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards is over 100 pages long!
Congress responded to this complaint with the ‘Single Audit Act.’ The Single Audit Act designed an audit that should satisfy most of the entities involved in the flow of funds and make it unnecessary for these entities to visit and conduct an audit themselves. Instead of multiple audits, the grantee could undergo one ‘Single Audit’ that would make everyone happy.
1. The Single Audit is three audits in one
Each federal agency also has an ‘inspector general’ function. The federal inspectors general are responsible for monitoring or auditing grantees. Federal inspectors general also audit theiragency’s grant activities. The federal inspector general often uses the results of the Single Audit to monitor the grants awarded by the agency.