The Single Audit Act of 1984 (Public Law 98-502) was passed by Congress to improve auditing and management for federal funds provided to state and local governments. These funds may include grants, contracts, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance, and direct appropriations from a number of federal agencies. Before the act, each federal agency had the authority to require an audit of each federally funded program or activity; there was no coordination among them, causing audit overlaps and organizational inefficiencies. For example, a state receiving funds from five different federal agencies could have been subjected to five different audits, performed by five different auditors consecutively or simultaneously.

The act created a single organization-wide financial and compliance audit for state and local governments receiving federal funds equal to or greater than $100,000 in any fiscal year (a fiscal year is any twelve-month period). There...