To establish accountability over State resources provided to nonstate organizations, the 1998 Legislature enacted the Florida Single Audit Act (FSAA).  The purpose of the act is to establish uniform State audit requirements for nonstate entities receiving State Financial Assistance (SFA); promote audit economy and efficiency; ensure State agency monitoring, use, and follow-up of audits of SFA; provide identification of SFA; promote sound financial management of SFA; and improve coordination between State agencies providing SFA and nonstate entities receiving SFA.

The FSAA requires each nonstate entity that expends $500,000 or more of SFA in any fiscal year to have a State single audit (audit of the financial statements and SFA) or project-specific audit conducted by an independent auditor.  Upon completion of the audit, a copy of the nonstate entity’s Financial Reporting Package (FRP) must be filed with the State agency(s) that provided the SFA and the Auditor General.

Our audit focused on the State’s implementation of the FSAA for the period July 2002 through January 2004 and selected activities occurring since July 2000.  State agencies have made progress toward implementing the FSAA.  However, we noted areas in which implementation and compliance with the FSAA should be enhanced and clarifications to the FSAA should be made.

Finding No. 1:      The Executive Office of the Governor (EOG) should ensure staff availability and procedures are sufficient to provide timely and accurate information on its FSAA Web site.  Each time updates are made to the Catalog of State Financial Assistance (CSFA) and State Projects Compliance Supplement (CS), the revision date should be added to the documents.  Additionally, better communication and coordination procedures between EOG and other State agencies are needed to ensure timely, accurate information in the CSFA and the CS.

Finding No. 2:      To provide efficient and effective identification and reporting of SFA provided to nonstate entities, the Department of Financial Services should ensure that, with implementation of the State’s new accounting system, State agencies are required to uniformly code SFA transactions.

Finding No. 3:      State agencies should improve the analysis of State resources and identification of State projects for which the FSAA applies.  Additionally, EOG and other State agencies should consider additional training and guidance to ensure State agency personnel have adequate knowledge and understanding to accurately identify State projects and recipient versus vendor relationships.

Finding No. 4:      To provide nonstate entities with information needed to comply with the FSAA, State agencies should include all appropriate information in awarding documents that establish the relationship with the nonstate entity.

Finding No. 5:      EOG and the other State agencies should ensure sufficient guidance is provided to prevent independent auditors and State agency monitors from performing the same procedures.  Additionally, EOG should provide additional State agency training and guidelines to assist State Agencies in designing CS requirements and the provisions of contracts, grants, etc.

Finding No. 6:      State agency monitoring policies and procedures should be enhanced to ensure FRPs are timely received and appropriately reviewed, corrective actions are taken, and reliable information is available for future program funding and policy decisions.  Additionally, State agencies should design on-site monitoring procedures relative to perceived risks after taking into consideration procedures and findings of independent auditors.

Finding No. 7:      State agencies should ensure adequate communication and guidance is provided to recipients of SFA to ensure the FSAA requirements are passed to subrecipients and that recipients are aware of appropriate subrecipient monitoring methods.  Additionally, the Legislature should consider amending the FSAA to clarify that awarding nonstate entities have the responsibility to ensure that subrecipients properly comply with the FSAA.

Finding No. 8:      EOG should include guidelines in its Rules or seek appropriate legislative changes to the FSAA, to address the applicability of the FSAA as it relates to State projects for which SFA is provided to a nonstate entity that has no, or extremely limited, required activities related to State project administration, but in turn provides SFA to a nonstate entity for which the FSAA should apply.

Finding No. 9:      For State projects in which more that one State agency participates in project administration, the Legislature should consider amending the FSAA to place FSAA responsibilities with the State agency primarily responsible for the operations and outcomes of the State project.

Finding No. 10:   The Legislature should consider instances for which audited information is required by statutes other than the FSAA and make modifications, as determined necessary, to prevent inconsistent and redundant audit requirements while ensuring needed information is obtained through an efficient audit process.  This consideration should also be incorporated in the development of future legislation that addresses audit requirements.

Finding No. 11:   To provide additional guidance and clarification for the implementation of the FSAA, the Legislature should consider amending Section 215.97, Florida Statutes, to:

• More clearly define the term “local governmental entity.”

• Include nonstate entities that expend SFA less than the FSAA threshold amount in the provision that requires a State agency to fund the audit, if the State agency otherwise requires an audit.

• Require each State agency that awards SFA to establish a “single audit liaison” within the agency.

• Designate the State agency that accounts for the greatest amount of SFA expenditures as the “coordinating agency” for purposes of assisting in resolving findings and recommendations that are not specific to a particular State agency.

The complete responses to the audit findings and recommendations may be viewed in their entirety on the Auditor General Web site.