The independent audit for the State of New Jersey for the year ended June 30, 2017, was conducted by CliftonLarsonAllen LLP. The final report focused on two main aspects. First, on the schedule of expenditure of federal awards. Secondly on compliance for each of the main federal programs and the underlying internal controls. This paper will provide a summary of the auditor's opinion and the questioned costs therein. It will also offer insights on whether single audit reports are essential in ensuring the efficient use of grants and the government's position on the subject matter.
The auditors gave an unqualified report regarding the expenditure schedule. However, the state received a qualified opinion on the compliance with the guidelines in place for federal programs. The basis for this qualification was non-compliance with the guidelines under three federal programs as follows. First, the Social Service Block Grant contravened the period of performance rules. Secondly, the Medicaid Cluster on matters of eligibility and the health and safety standards of providers. Lastly, Homeland Security Grants regarding equipment rules ("State Of New Jersey Single Audit Report", 2018).
The report discussed questioned costs for the above programs and the internal control needed to foster such compliance. For the Social Service Block Grant, the question costs were undetermined since the non-compliance resulted from a departmental transmission issue. With regard to Homeland Security Grants, there were no questioned costs despite the fact that the state does not have proper policies and procedures for tracking and recording assets. The questioned costs under the Medicaid Programs were undeterminable due to insufficient information. The audit also raised queries on internal controls subject to the Medicaid grant. The state failed to give sub-awards as per the requirement to seven counties who were sub-recipients under the grant ("State Of New Jersey Single Audit Report", 2018).
Single Audit Reports and Grants Efficiency
It is important to recognize that single audit reports are definitely a fundamental facet in ensuring efficient use of federal grants. The auditor provides a link between the grantee and the granter by offering the latter a channel for oversight over the former. The audit process by itself does not give an absolute assurance on matters under investigation. In addition to this, the auditor is expected to exercise personal judgement particularly in selecting the major Federal programs to be investigated (Foelster, 1998). Single audit reports encapsulate diverse parties such that it is difficult to consolidate all inherent information. These facts could potentially limit the sufficiency of a single audit report. As such, for a single audit report to be sufficient it should be applied together with other control measures.
Federal Government's Role in Protecting Taxpayers' Money
The Federal Government has put in place laws and regulations that seek to protect taxpayers' money that is used in grants. While the laws could potentially improve the effectiveness of government grants, they are not adequately communicated to relevant bodies. For internal controls to be effective they need to be communicated and practiced in day to day activities (Messier, Glover & Prawitt, 2017). For example, the state of New Jersey did not comply with the laws on the period of performance. The cause of this failure was that the department was unaware of the existence of the said laws. Moreover, the Federal Government Grants Expenditure System exhibits low levels of transparency since most of the information is classified (Sternstein, 2016). This weakness complicates the process of oversight thus promotes mismanagement of taxpayers' money.
From the above discussion, one can infer that the government should take two corrective measures. First, it should emphasize that relevant parties should communicate through accessible channels, all information regarding grants. Such communication should be provided in searchable formats. Secondly, the government should put in controls that all requirements under the grants are clearly communicated to grantees and sub-recipients
Foelster, M. (1998). Single Audit Overhaul. Retrieved from https://www.journalofaccountancy.com/issues/1998/may/foelster.html
Messier, W., Glover, S., & Prawitt, D. (2017). auditing and assurance -a systematic approach (10th ed., p. pg 220). New York: McGraw Hill. Retrieved from https://www.dropbox.com/s/2mesd25qk8ilk5w/Textbook_Auditing%20and%20Assurance%20Services%20A%20Systematic%20Approach%2010th%20Edition.pdf?dl=0
State Of New Jersey Single Audit Report. (2018). Retrieved from https://www.nj.gov/treasury/omb/finmgmt/Single_Audit/17Report.pdfSternstein, A. (2016). Every American has the Right to Know. Retrieved from https://m.govexec.com/feature/the-right-know/
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