Reporting on the Control Structures of Local Government Under the Single Audit Act of 1984

One of the major objectives of the Single Audit Act of 1984 (SAA) is to improve the financial management of local governments (Public Law 98–502, 98 Stat.2327). The purpose of this study is to examine how local governments have responded to the SAA and to provide some evidence concerning the extent to which the SAA is accomplishing its stated objectives. This study examines what auditors have reported with respect to the control structures of local governments and considers the extent to which control structures changed over the first four reporting years under the SAA. Differences in the frequency of reported weaknesses are examined across the four years and between types of government-counties and cities-and types of auditors- large and small public accounting firms and state auditors. The study also considers the extent to which reported weaknesses were corrected. The research findings reveal that auditors reported considerably more control weaknesses in counties than in cities, and the frequency of control weaknesses reported declined significantly over the first four reporting years under the SAA for city governments but remained relatively constant for county governments. In addition, there were significant differences in the frequency of control weaknesses reported related to the type of auditor.