AICPA tells Senate steps taken to improve quality of audits of federal grants.

• Position: Regulatory matters

At a U.S. Senate hearing in Washington, D.C., the AICPA told lawmakers that achieving significant improvement in the quality of governmental audits will require broadly adopted improvements by auditors as well as procurers of audit services and federal agencies.

The AICPA outlined steps it has taken to improve the quality of audits of federal grants (also referred to as single audits) following a report issued in June by the President's Council on Integrity and Efficiency to the Office of Management and Budget. The report found deficiencies in single audits, although the vast majority, more than 92%, of the dollar value of federal grant funds was covered by reliable audits.

"The results of this study raise important issues the profession has been and will continue to address," said Mary Foelster, AICPA Director of Governmental Auditing and Accounting, in testimony for the Government Affairs Subcommittee on Federal Financial Management.

The AICPA established its Governmental Audit Quality Center in 2004. This was after the audits that were reviewed by the PCIE were performed, which generally occurred in the 2002 and 2003 timeframe. The AICPA Center helps accounting firms nationwide meet and maintain high standards for performing governmental audits, including single audits. More than 850 CPA firms are members of the Center and those firms audit approximately 83% of the federal expenditures covered in governmental audits performed by CPA firms.

Since June, the AICPA has formed seven task forces to examine the study's findings and recommendations; six of the task forces have already met...