PREPARED STATEMENT OF
FREDERICK T. KNICKERBOCKER
ASSOCIATE DIRECTOR FOR ECONOMIC PROGRAMS
U.S. BUREAU OF THE CENSUS
Before the Subcommittee on Government Efficiency, Financial
Management and Intergovernmental Relations
Committee on Government Reform
U.S. House of Representatives
June 26, 2002
Mr. Chairman, Congresswoman Schakowsky, and Members of the Subcommittee:
It is a pleasure to appear before you to testify at this hearing on the Single Audit Act.
Purpose
To begin, let us refresh our memory as to what the Single Audit Act (Act) is all about. The purpose of this Act is to: (1) improve the effectiveness and performance of Federal financial assistance programs; (2) simplify Federal financial assistance application and reporting requirements, particularly auditing requirements; (3) improve the delivery of services to the public; and (4) facilitate greater coordination among those responsible for delivering such services. The Census Bureau's Federal Audit Clearinghouse contributes to improvements in each of these areas.
The Single Audit Act Amendments of 1996 (Public Law 104-156) requires the Office of Management and Budget (OMB) to designate a Federal clearinghouse to receive copies of reports required by the Act and identify recipients who failed to submit the required audits. OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, designates the Bureau of the Census as that clearinghouse. The Clearinghouse processes incoming reporting packages and related data collection forms, maintains a governmentwide database of audits, distributes reports with audit findings to individual Federal agencies for audit resolution, and maintains an archival copy of all reports. The Clearinghouse provides an efficient and effective method of: (1) processing, distributing, and archiving Single Audit reports, (2) monitoring recipients' compliance with the requirement to submit reports required by the Act; and (3) capturing and analyzing information on audit results.
The Clearinghouse reduces the costs of the audit process in a number of ways. First, the central collection and distribution function allows grantees to send reports to one location, instead of reporting to each agency that provided grant funding. Without the Clearinghouse, each grantmaking agency would be required to devote resources to maintain systems to process audit reports submitted by grantees. Next, the Clearinghouse distributes only the reports grantmaking agencies need to follow-up on audit findings. This allows agencies to focus their efforts on grantees that are of concern. The Clearinghouse also facilitates the identification of those organizations that did not submit required audits, and thus enables agencies to more efficiently address problem issues. Finally, the central Clearinghouse provides important governmentwide audit information that was previously not available to Congress, OMB, and agency program managers.
Prior to the Act and the revised Circular A-133, non-Federal entities (States, local governments, and non-profit organizations) submitted their Single Audit reports to each of the Federal agencies providing direct funding. Each agency separately processed these reports. Establishing the Clearinghouse reduces (1) the reporting burden on non-Federal entities, and (2) the number of reports that Federal agencies must process (generally agencies only need to act on reports with audit Clearinghouse findings). It also provides a central database of audits,
which is the only governmentwide monitoring system for the audits of the more than $350 billion in annual Federal awards.
The Clearinghouse operates under the direction of the OMB, with input from the Federal agencies through a user's group and non-Federal auditors. In Fiscal Year 2002, the Clearinghouse operated with a $2.6 million dollar budget and 32.5 FTE staff. All of these funds are provided by the 24 Federal agencies included in the Chief Financial Officers Council.
Single Audit Processing
The Clearinghouse began processing data collection forms in December 1997. It now processes approximately 35,000 submissions each year. To date, the Clearinghouse has processed approximately 150,000 data collection forms and reporting packages (audits and financial statements) submitted under revised OMB Circular A-133. Three attachments to my written testimony provide details on the status of submissions for FY 1997 through FY 2001 and copies of the current version of the government's audit reporting form (Form SF-SAC) and the special instructions accompany the reporting form.
Nonresponse Follow-up
The Clearinghouse is currently working with OMB and members of the Audit Oversight Workgroup of the Chief Financial Officers Council on a Delinquent Audit Plan. In July 2001, the Clearinghouse performed a nonresponse follow-up test to assist work being performed on behalf of the Audit Oversight Workgroup. The goal of this test was to determine whether efforts made by the Clearinghouse would result in a significant number of additional submissions. The test results demonstrated that a marked improvement in the response rate is possible. The Chief Financial Officers Council is using these results together with information in other sources, such as those used for grant payments, to develop a governmentwide plan to identify delinquent single audits.
The Clearinghouse is now preparing to begin a new phase of work detailed in the Delinquent Audit Plan, where our staff will work with the Federal grantmaking agencies to match Clearinghouse records against those of the three Federal payment management systems. These systems are operated by the Department of Health and Human Services, the Department of the Treasury, and the Department of Defense.
Governmentwide Database and Internet Site
The Clearinghouse maintains a governmentwide database covering all complete data collection form data. The database is accessible to Federal agency users and the public through the Internet at the following web site address: http://harvester.census.gov/sac. Our staff developed this data dissemination system with input from the Single Audit Users Group.
Federal agency representatives of the Single Audit User Group made several requests for enhanced capabilities of the Clearinghouse's Internet Data Dissemination System. Some of these requests resulted from efforts of the Chief Financial Officers Council to meet the requirements of the Federal Financial Assistance Management Improvement Act of 1999 (PL 106-107). These requests resulted in the Clearinghouse adding capabilities to its dissemination system, including: a more user-friendly menu; expanded query options; and viewable and downloadable spreadsheet options for handling data produced from custom queries.
The database of all completed submissions now approaches 150,000 records. A complete downloadable copy of the database is also available through the Census web site. This option is primarily used by organizations whose search criteria generate a large number of records.
The Clearinghouse also posts an in-progress file. This file identifies entities that have filed Circular A-133 submissions, which are still in various stages of processing or were rejected due to form errors and/or missing audit components.
The web site also contains a Summary Report of the number of database records, detailed by fiscal year with and without audit findings (deficiencies which the auditor is required to report). The summary report is organized by: Incomplete receipts, complete receipts with findings, and complete receipts without findings for each fiscal year.
Federal agencies can use the database to identify submissions reporting the use of funds for programs their agency administers. It can identify which of the various federal agencies providing funds to individual award recipients has primary oversight for Single Audit purposes.
These data can also quickly help Federal agencies identify and begin the resolution of audit findings associated with the Federal award funds expended under these programs.
Accessibility
In developing and maintaining the Clearinghouse web site, our staff were mindful of the requirements of Section 508 of the Rehabilitation Act of 1973. The primary purpose of Section 508 is to provide access to and use of Federal executive agencies' electronic and information technology by individuals with disabilities. We have done extensive work to get the web site to comply with both Section 508 and the Census Bureau's own accessibility standards.
Electronic Filing Options
The Clearinghouse developed the following electronic options to ease reporting burden:
Electronic Submission of Federal Award Expenditures, Findings, and Questioned Costs
Concerns were expressed over the heavy reporting burden of entering data on hundreds of Federal programs on a data collection form for larger entities. In response, the Clearinghouse created a processing method to allow larger entities to submit on a spreadsheet the list of Federal programs. This method provides a way for the auditees to download Federal program data from their internal financial database into a file, perform minor adjustments to allow the data to conform to specific technical parameters, and submit the data via a diskette.
Internet Version of Data Collection Form
In an effort to drastically cut the rate of report submission problems and to ease the reporting burden on auditees, the Clearinghouse developed an Internet data entry system. This system allows entities to enter, edit, and print all data electronically. The system ensures higher data integrity in the database by limiting the number of keying errors, reducing reporting burden and the rejection rate, decreasing processing time, and cutting costs.
When the form is complete, if edit failures still exist, only a draft copy prints. Once all edits have been resolved, a final copy of the data collection form prints at the entity's computer for signatures. Signed forms are then mailed to the Clearinghouse. A unique identifier code is assigned by the system for use in processing Internet forms by the Clearinghouse. When the signed form is received, it is matched with the Internet data, and the Internet data are merged into the database. The audits are further processed and disseminated under regular procedures.
The Clearinghouse released this new submission option in early 2000. The form is accessible through the Census web site. During this first year of availability, approximately 10 percent of submissions were filed using the online option. The Clearinghouse is now entering the third year of Internet reporting availability and approximately 60 percent of 2001 submissions have been entered online. Once the electronic signature technology is refined, OMB may also opt to eliminate the parallel paper submission for these cases.
Access to OMB Circular A-133 Audits
Under revised Circular A-133, the Clearinghouse is the single submission point for nearly all audit reporting packages. Federal agencies generally no longer receive copies of the audit reports directly from auditees. The Clearinghouse currently maintains an archive of the current years audit reports and those for the four prior fiscal years.
Requests for copies of Circular A-133 reporting packages are received daily, and those from Federal awarding agency representatives are processed immediately. Public requests for copies of government audits and nonprofit organization audits require special attention, due to the possible presence of sensitive data, such as the names of individuals and Social Security numbers. For requests from non-Federal entities, the Clearinghouse staff locates and copies the audits, and our Freedom of Information Act Office forwards them to the entity's designated Federal cognizant or oversight agency for review and distribution.
Outside Consultation
Single Audit Users Group
A Single Audit Users Group was formed with representatives from the Federal grant making agencies, OMB, GAO, the Clearinghouse, and the public sector and private accounting communities. This group has met periodically between February 1997 and the present.
The objectives of the group are:
Accounting and Auditing Community
The Clearinghouse staff actively participates in Federal, State, and national audit forums and professional accounting conferences. Presentations have consisted of discussions on reporting problems, explaining how to avoid them, and updates on any changes related to filing Circular A-133 submissions. These efforts have contributed to a substantial reduction in the rejection rate.
Conclusion
The Census Bureau's Federal Audit Clearinghouse continues to serve an important role in streamlining the grant management oversight and monitoring activities of the Federal Government. The Census Bureau will continue to work closely with the Office of Management and Budget, the General Accounting Office, the Federal grantmaking agencies, grant recipients, and the auditing and accounting community. Our collective efforts will help ensure the most efficient monitoring and reporting possible on the more than $350 billion in annual Federal awards covered by the Single Audit Act.
That concludes my testimony and I will be happy to answer any questions.
Attachment 1
OMB Circular A-133 Filing Status as of May 13, 2002
Fiscal Year 1997 Status Report
Completed w/o Findings 19,983
Completed w/Findings 6,450
Rejected Receipts 1,463
Total Processed Receipts 27,896
Fiscal Year 1998 Status Report
Completed w/o Findings 24,723
Completed w/Findings 7,274
Rejected Receipts 971
Total Processed Receipts 32,968
Fiscal Year 1999 Status Report
Completed w/o Findings 26,321
Completed w/Findings 7,078
Rejected Receipts 690
Total Processed Receipts 34,089
Fiscal Year 2000 Status Report
Completed w/o Findings 27,339
Completed w/Findings 6,792
Rejected Receipts 957
Total Processed Receipts 35,088
Fiscal Year 2001 Status Report
Completed w/o Findings 15,927
Completed w/Findings 3,073
Rejected Receipts 2,353
Total Processed Receipts 21,353*
* The Clearinghouse is currently processing the 2001 submissions.