Innovations don’t have to be grand to be meaningful. A provision included in sweeping federal guidance is a case in point. The federal government sends more than $700 billion a year to states, local governments and other grantees. With so much money in play, a simple, overarching change can have a big impact on programs across all levels of government. OMB’s Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, (Uniform Guidance), issued in December 2013, included many simple, meaningful changes. One of these changes requires federal agencies to use cooperative audit resolution with direct grantees. Cooperative audit resolution is a concrete process for improving programs and addressing fiscal and programmatic challenges. First developed by U.S. Department of Education (ED) in the mid-1990s, cooperative audit resolution can play a pivotal role in improving a program by identifying its underlying problems and charting a course to address them.
Significantly, then, cooperative audit resolution isn’t just a good idea. It’s a requirement. This means that federal agencies must work in collaboration with counties, states or other direct awardees in resolving audit findings.
In congressional testimony before the newly created Speakers Task Force on Intergovernmental Relations, then-NACO President Bryan Desloge explained that “Counties throughout the country are partners with cities, other counties, nonprofit organizations and the private sector to deliver high-quality services to their residents in a cost-efficient manner. Given these important intergovernmental roles and responsibilities, counties are more than mere stakeholders or interested members of the public — counties are intergovernmental partners.” In a similar vein, Speaker Ryan charged the task force with examining ways to restore the balance of power between the federal government and the states, tribes, and local governments.
During his testimony before the task force, Desloge observed that “This task force highlights the vital role of intergovernmental coordination as we serve our shared constituencies. We are excited about the opportunities this task force presents for collaboration.”
Collaboration is one of the foundational principles of cooperative audit resolution. The Uniform Guidance begins its definition of cooperative audit resolution with this statement:
Cooperative audit resolution means the use of audit follow-up techniques which promote prompt corrective action by improving communication, fostering collaboration, promoting trust, and developing an understanding between the federal agency and the non-federal entity.
This definition offers the federal government a blueprint for building a strong partnership with counties and other grantees. In implementing cooperative audit resolution, it is important to include any government official who has an interest in an audited program, including federal and county auditors, program officials, attorneys and accountants. Each of these disciplines tends to look a problem from a different perspective, which can shed light on the underlying cause of an audit finding. Certainly “communication, collaboration, trust and understanding” are not words that typically appear in federal guidance, but, like the Speakers Task Force, their use signals that it is a good time to promote changes in the way that governments relate to one another.
County commissioners play a pivotal role in the successful implementation of cooperative audit resolution. Perhaps most importantly, they can establish a constructive “tone-at-the-top.” County commissioners can make it clear that “communication, collaboration, trust and understanding” are critical across professional disciplines within the county, as well as across levels of government. It is also important for county commissioners to recognize that their county can ask a state to engage in cooperative audit resolution, if the state is serving as a pass-through entity for federal funds. While a pass-through entity is not required to use cooperative audit resolution with a subrecipient, OMB encourages subrecipients to request it.
Fortunately, AGA, the professional association for financial managers at all levels of government, has prepared two free guides that help governments implement cooperative audit resolution. AGA’s more than 14,000 members include elected officials, senior executives, mid-level managers, entry-level employees and students. AGA members work in government financial management professions, including accounting, auditing, budgeting, financial reporting, performance reporting, grants management, contract management and information systems. State and local government officials comprise the single largest group of AGA members (42 percent).
AGA has issued 11 free tools and guides, which are available to anyone at no cost. One of them, Guide to Improving Program Performance and Accountability through Cooperative Audit Resolution and Oversight, was issued in 2010 to capture lessons learned by the U.S. Department of Education during the early days of cooperative audit resolution. The second guide, Successfully Implementing Cooperative Audit Resolution, was completed in 2016. It outlines specific steps, or plays, for meeting cooperative audit resolution requirements in the Uniform Guidance. AGA also offers a one-day course on cooperative audit resolution, which is taught onsite at an employer’s location.
To reap the full benefit from cooperative audit resolution, it is important for county officials to understand what it is, remind federal agencies when they are required to use it, set a constructive “tone-at-the-top” for implementation, and to request it when the county is a state’s subrecipient.