The Single Audit Act: How Compliant are Nonprofit Organizations?

Over the past decade, concerns have been raised about the accountability of nonprofit organizations. Our paper reports on one form of accountability, the "A-133" or "single" audit. Since 1990, nonprofits receiving substantial federal funds are required to undergo this rigorous and expensive form of federal oversight. We report on 11,841 nonprofit entities that underwent such audits, and the 3,592 audit firms that conducted them, from 1997 to 1999. Overall, compliance with federal regulations appears to be high. The audit reports indicate relatively few reportable conditions and even fewer instances of material noncompliance. Public and societal benefit nonprofits received the most adverse audit findings and arts organizations the least. Big-5 audit firms had the largest clients and generally reported fewer adverse audit findings.