There are several federal and state agencies that have a role in oversight of the American Recovery and Reinvestment Act of 2009 (Recovery Act) funds. These agencies develop the requirements and provide guidance to state auditors. Some federal agencies also conduct reviews of the use and administration of the Recovery Act funds.
To learn more about the agencies responsible for federal oversight, visit:
The Recovery Act creates the Recovery Accountability and Transparency Board (Board) to coordinate and conduct oversight of funds distributed in order to prevent fraud, waste, and abuse. The Board is composed of a chair and 10 federal Inspectors General specified in the Recovery Act. The Recovery Act requires the Board to issue quarterly and annual reports on the use of Recovery Act funds and any oversight matters. The Recovery Act specifically directs the Board to coordinate its oversight activities with the U.S. Comptroller General and State Auditors.
The Board may make recommendations to agencies on measures to avoid problems and prevent fraud, waste, and abuse. Finally, the Board is charged with establishing and maintaining a user friendly Web site—www.recovery.gov—to foster greater accountability and transparency in the use of federal stimulus funds.
The U.S. Office of Management and Budget's (OMB) predominant mission is to assist the President in overseeing the preparation of the federal budget and to supervise its administration in Executive Branch agencies. The OMB ensures that federal agency reports, rules, testimony, and proposed legislation are consistent with the President's Budget and with Administration policies. In addition, the OMB oversees and coordinates the Administration's procurement, financial management, information, and regulatory policies.
The OMB's Initial Implementing Guidance recognizes the importance of the Single Audit in two key ways: first, in assessing risk, agencies should consider prior audit findings involving federal programs through which Recovery Act grants will be disbursed; and second, Single Audits are specifically identified in the OMB guidance as an audit tool integral to promoting accountability over Recovery Act grants. Clearly, the importance of the Single Audit process is magnified by the Recovery Act's emphasis on accountability.
The California State Auditor has sole responsibility for conducting the Single Audit of the State. The State Auditor will ensure that the Single Audit continues to assess risks related to federal programs, and identifies areas of material deficiencies and noncompliance, including instances in which compliance could not be substantially documented. The State Auditor looks forward to continuing to work with the OMB to assure that safeguards exist and that additional funds coming to California through the Recovery Act are monitored and used for their intended purposes.
The U.S. Government Accountability Office (GAO), the federal equivalent of the California State Auditor, is an independent, nonpartisan agency that works for Congress. Led by the U.S. Comptroller General, the GAO investigates how the federal government spends taxpayer dollars. In addition, the GAO's mission is to support the Congress in meeting its constitutional responsibilities and to improve the performance and ensure the accountability of the federal government for the benefit of the American people.
The mission of the Office of Inspectors General (IGs), is to protect the integrity of federal programs, as well as the health and welfare of the beneficiaries of those programs. The federal IGs have responsibility to report to Congress, program and management problems and recommendations to correct them. The IGs' duties are carried out through a nationwide network of audits, investigations, inspections, and other mission-related functions performed by IG components.
For the past 25 years, the State Auditor's Office and its predecessor has reported on the State's ability to comply with federal program requirements—both by department and by program. The number and type of federal programs audited each year as part of the Single Audit is formula-driven as stipulated by the federal OMB. In the fiscal year ending June 30, 2007, the State of California received $76 billion in federal funds, and the office audited $59 billion, or 78 percent of those funds.
Given the vast amount of federal funds that California expects to receive under the federal Recovery Act, oversight and accountability responsibilities for state auditors including the California State Auditor's Office will increase dramatically. In fact, because of concerns related to internal controls, the large amount of Recovery Act funds California expects to receive, the new requirements the federal government is imposing on recipients, and the limited time the State has to spend some of the funding, we added California's system for administering federal Recovery Act funds to our list of statewide high-risk issue areas.
Other state entities also serve to ensure such funds are used as intended.
In April 2009, the Governor created the California Recovery Task Force. The Recovery Act Task Force to track the Recovery Act funds coming into the state; work with the federal administration; help cities, counties, non-profits, and others access available funds; ensure that the funding directed to the state is spent efficiently and effectively; and maintain a Web site that is frequently and thoroughly updated to track Recovery Act funds.
In April 2009, the Governor created the position of Inspector General through an executive order to review and monitor the work of the Recovery Task Force and the Recovery Act funds. In addition, the Inspector General will be responsible for protecting the integrity and accountability of the expenditure of Recovery Act funds in California.
The Department of Finance serves as the State's internal auditor. The Office of State Audits and Evaluations (OSAE) within the Department of Finance monitors and coordinates the Financial Integrity and State Manager's Accountability Act, and issues Audit Memos to provide instruction to internal audit organizations within state departments. OSAE also performs special program reviews as requested by the Governor's Office, the Director of Finance, or other state entities. Many of these activities are reimbursed through interagency agreements.
The Audit Division within the State Controller's Office determines the legality and accuracy of all claims against the State through the performance of prepayment audits. The division also assures the accuracy of local government claims and financial statements submitted to the state and federal government by annually reviewing and revising audit guidelines, reviewing audits performed by independent local auditors under these guidelines, and performing field audits of a variety of state and federal programs.