Successfully Implementing Cooperative Audit Resolution
The Association of Government Accountants (AGA) has issued an intergovernmental document as part of their Collaboration Series entitled Successfully Implementing Cooperative Audit Resolution. The document was published as part of the AGA’s Cooperative Audit Resolution and Oversight Initiative (CAROI).
The document outlines a proactive approach to implementing some of the broad policy reforms contained in the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards (Uniform Guidance). It illustrates how key provisions in the Uniform Guidance can be leveraged to create a continuous feedback loop for program improvement, not just for the federal government, but also for those who receive funds through federal awards. Specifically, it outlines a practical approach for building on the cooperative audit resolution provisions in the Uniform Guidance to expand oversight and address some of today’s most persistent program problems, such as improper payments.
Issued by the US Office of Management and Budget (OMB) in 2013, the Uniform Guidance is an expansive document that supersedes and streamlines eight previous OMB circulars. It articulates renewed federal goals to eliminate unnecessary or outdated requirements; improve performance and outcomes; increase accountability, integrity and transparency; and improve communication and reduce improper payments. Among other things, it requires federal awarding agencies to use cooperative audit resolution, which was the focus of AGA’s 2010 Guide to Improving Program Performance and Accountability through Cooperative Audit Resolution and Oversight (CAROI Guide).
The CAROI process is built on the premise that government programs improve when officials from all levels of government work together to resolve findings using coordinated, data-driven oversight practices. The “CAR” process was developed as a way to address long-standing audit issues. The “OI” component encompasses all aspects of agency oversight of grant programs, including audits, program monitoring, technical assistance, data collection and review activities.
CAROI does not change existing audit requirements; rather, it provides a principles-based foundation for audit resolution. CAROI’s principles promote collaboration and trust, and stress program improvement and technical assistance rather than sanctions and litigation.
The CAROI principles, discussed in detail in the CAROI Guide, are intended to:
- Facilitate the resolution of oversight findings
- Improve communication
- Foster collaboration
- Promote trust
- Develop understanding
- Enhance performance
The Uniform Guidance definition of cooperative audit resolution outlines concepts that are crucial for successful implementation. The definition offers the federal government a blueprint for building a strong partnership with grantees. Federal agencies have the opportunity to offer not only encouragement, but also incentive for grantees to use the cooperative audit resolution and oversight process. The definition states that CAROI is based upon the following:
- Federal agencies offering appropriate relief for past noncompliance when audits show prompt corrective action has occurred;
- A strong commitment by agency and non-federal-entity leadership to program integrity;
- Federal agencies strengthening partnerships and working cooperatively with nonfederal entities and their auditors; and nonfederal entities and their auditors working cooperatively with federal agencies; and
- A focus on current conditions and corrective action going forward.
As a result of cooperative audit resolution, grant recipients have the opportunity to focus on the most-critical issues affecting program performance and improper payments, and to begin designing and sustaining systems with stronger internal controls. Federal agencies have both an opportunity, and a directive, to work cooperatively with recipients, helping them understand the federal requirements that apply to their funding and the underlying causes of any noncompliance. This understanding will help nonfederal entities develop and execute effective and sustainable corrective action plans.
The Uniform Guidance provides a foundation for using cooperative audit resolution to improve program performance and reduce improper payments. The document connects the dots among various provisions within the Uniform Guidance. It focuses on how cooperative audit resolution offers a foundation for expanding the dialogue among those who award grants and those who receive them as a means of improving program outcomes and integrity.
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