What Happens If You Get an Audit Finding?

Audits are a part of everyday life for those managing government contracting and purchasing.  State and local governments, as well as the federal government, have auditors that audit to ensure that public agencies are complying with various laws, regulations, internal agency policies and procedures, and grant provisions.

What are some of the impacts of an audit finding?

• Negative Publicity:  Depending on the nature of the finding, it may be front page news.  As such, it casts your agency in a negative light from the public's perspective, and becomes a political issue as elected officials and administrators attempt to tighten up your agency's practices to prevent future problems.

• Personnel Actions:  Again, depending on the nature of the finding, it may result in agency employees being subject to disciplinary action, including personnel warnings, suspension without pay, and even termination.

• Loss of Grant Funding:  Some applications for grants will require agencies to disclose any audit findings, and such findings may impact a decision for an award of a grant.  Granting agencies want to make sure that those they are awarding grants to are managed properly.

• Procedural Changes:  Some audit findings are the result of an oversight that indicates a lack of internal controls to ensure that proper procedures are followed.  Other audit findings occur because an agency doesn't have policies and procedures in a particular area.  In either event, an audit finding will result in changes to how an agency operates to ensure tighter controls, and to prevent future findings.

• Follow-up Scrutiny:  An agency that has received an audit finding may be scrutinized more closely in future years by the auditor to ensure the agency has corrected the problems.  In Washington State, an audit finding may also lead to a Performance Audit of part of the agency's operations.  

Practical Tips:  Know what laws, regulations, internal policies and procedures, and grant provisions apply to the contracting and procurement of goods and services for your agency.  Obtain necessary training of your agency personnel.  Establish clear checks and balances to ensure compliance.