Auditing Government Spending

Extracted Attributes

• Audit Types

  Financial, Compliance, Performance, and Accountability audits

• Core Components

  Government consumption, investment (gross capital formation), and transfer payments

• Economic Function

  Major component of GDP and primary tool for fiscal policy

• Primary Objectives

  Ensuring transparency, accountability, efficiency, and budget credibility

• Key Performance Indicators

  Budget credibility (avoiding underspending/overspending) and reduction of improper payments

Timeline

• Public expenditure gains prominence in the 20th century as John Maynard Keynes argues for its role in economic distribution. (Source: Wikipedia)

  1900-01-01

• The National Audit Office (UK) releases a comprehensive framework for evaluating government spending. (Source: Evaluating government spending: An audit framework)

  2021-12-01

• Fiscal Year 2024 results show six CFO Act agencies received disclaimer or qualified audit opinions. (Source: OMB Memorandum M-25-30)

  2024-09-30

• OMB Director Russell T. Vought issues Memorandum M-25-30 regarding federal auditing accountability and the role of DOGE. (Source: OMB Memorandum M-25-30)

  2025-06-23

• Predicted rise in auditing government spending and the growth of citizen journalism as major societal trends. (Source: All-In Podcast 2026 Predictions)

  2026-01-01

Government spending

Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual or collective needs of the community, is classed as government final consumption expenditure. Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is classed as government investment (government gross capital formation). These two types of government spending, on final consumption and on gross capital formation, together constitute one of the major components of gross domestic product. Spending by a government that issues its own currency is nominally self-financing. However, under a full employment assumption, to acquire resources produced by its population without potential inflationary pressures, removal of purchasing power must occur via government borrowing, taxes, custom duties, the sale or lease of natural resources, and various fees like national park entry fees or licensing fees. When these sovereign governments choose to temporarily remove spent money by issuing securities in its place, they pay interest on the money borrowed. Changes in government spending are a major component of fiscal policy used to stabilize the macroeconomic business cycle. Public expenditure is spending made by the government of a country on collective or individual needs and wants of public goods and public services, such as pension, healthcare, security, education subsidies, emergency services, infrastructure, etc. Until the 19th century, public expenditure was limited due to laissez faire philosophies. In the 20th century, John Maynard Keynes argued that the role of public expenditure was pivotal in determining levels of income and distribution in the economy. Public expenditure plays an important role in the economy as it establishes fiscal policy and provides public goods and services for households and firms.

Web Search Results

• [PDF] Evaluating government spending: An audit framework

  Source: Comptroller and Auditor General, Evaluating government spending, Session 2021‑22, HC 860, National Audit Office, December 2021 One page summary Introduction Evaluating government spending: An audit framework Strategy Planning Implementation Communication 17 Implementation Key principles Pick the most appropriate evaluation method Assess and collect data Build in and carry out quality assurance throughout the evaluation Keep the evaluation on track using good project management Build in and carry out quality assurance throughout the evaluation Quality assurance of all aspects of an evaluation, including design, method(s) selection, data collection and reporting will help make sure that evaluation outputs are robust and fit for purpose. Feedback on quality by independent reviewers [...] Source: Comptroller and Auditor General, Evaluating government spending, Session 2021-22, HC 860, National Audit Office, December 2021 One page summary Introduction Evaluating government spending: An audit framework Strategy Planning Implementation Communication 13 Planning Key principles Plan to incorporate evaluation throughout the policy cycle Be clear about the questions to be answered Consider evaluation requirements at the business planning stage, including the identification of resources needed Engage with stakeholders in planning evaluations Engage with stakeholders in planning evaluations Good policy development is likely to include extensive collaboration with a wide range of stakeholders, including designers, implementers, beneficiaries and interest groups, to understand how [...] Source: Comptroller and Auditor General, Evaluating government spending, Session 2021-22, HC 860, National Audit Office, December 2021 One page summary Introduction Evaluating government spending: An audit framework Strategy Planning Implementation Communication 11 Planning Key principles Plan to incorporate evaluation throughout the policy cycle Be clear about the questions to be answered Consider evaluation requirements at the business planning stage, including the identification of resources needed Engage with stakeholders in planning evaluations Be clear about the questions to be answered There are three main types of evaluation: process, impact and economic evaluation. For a full understanding of whether an intervention worked, how, why and for whom, and at what cost, all three types

• [PDF] Strengthening Budget Credibility: The Pocket Guide for Auditors

  Supreme Audit Institutions are well-positioned to contribute to budget credibility. In their role auditing government finances, Supreme Audit Institutions (SAIs) can help to: • identify deviations from the approved budget, • examine why these changes have happened, • discern the impact of those deviations on different groups or across policy areas, and • assess whether the country is meeting relevant international standards for managing public finance. Independent, evidence-based, and publicly available audit reports heighten awareness of budget credibility and reveal how it affects the achievement of national goals and successful service delivery. Well-crafted audit recommendations and conscientious follow-up on efforts to implement them are key to spurring improvements in credibility. [...] SAIs play an important role in the PFM system. Auditing and reporting on how governments mobilize revenues, allocate public funds, undertake public spending, and account for spent funds, is critical to budget credibility. Figure 1: Overview of PFM processes and actors by stage of the budget cycle Understanding budget credibility The standard definition of budget credibility refers to the government’s ability to meet its revenue and expenditure targets – as approved by the legislature and enacted into law – during the fiscal year. When government spending deviates from the approved budget, this action is described as: • Underspending: if actual spending is less than what was allocated in the budget, or • Overspending: if actual spending is greater than what was allocated in the budget. [...] • Inquires into the determinants through a risk-based approach – e.g., reviews PFM processes and institutions, governance; and/or • Considers specific dimensions of budget performance related to credibility: e.g., transparency, information/reporting systems (including performance indicators). Type of audit: Compliance audit (CA) and performance audit (PA), or mixed audits with PA elements. Scope: Across government, single units, or aggregated / systems.

• Types of Governmental Audits And the Role of Automation

  These audits are essential to ensure that funds are used according to prescribed requirements and that governments operate within legal and regulatory boundaries. In the course of a compliance audit, auditors dive into relevant laws, regulations, contracts, or grant agreements, assessing how well the government entity is adhering to them. They meticulously review records, policies, procedures, and practices to identify any instances of non-compliance. The significance of compliance audits lies in their role in promoting transparency, accountability, and good governance. By ensuring that government entities operate within the established legal framework, these audits contribute to maintaining the integrity of the public sector. ### Information Systems Audits [...] Financial audit testing – Automates matching of transactions to invoices, receipts, and contracts, cutting hours from reconciliation. Grant compliance reviews – Extracts data from standardized forms to quickly validate eligibility and ensure funds were used as intended. Single Audit support – Handles large sample sizes by linking source evidence to federal award spending, with clear documentation trails. Performance audits – Cross-references operational data and policy requirements to test whether programs meet efficiency and effectiveness goals. Control testing – Automates checks for approvals, signatures, and policy compliance, producing consistent and defensible results. [...] Through financial audits, government entities uphold the integrity of their financial information, offering stakeholders a clear insight into their financial health and stability. In the detailed process of a financial audit, auditors meticulously go through financial records like balance sheets, income statements, and cash flow statements. They analyze transactions, review supporting documentation, and assess the overall financial management practices of the government entity. This thorough examination helps pinpoint potential errors, irregularities, or instances of non-compliance with accounting standards. ### Performance Audits Performance audits step outside the realm of finances and zero in on the efficiency and effectiveness of government programs and operations.

• [PDF] M-25-30 Ensuring Accountability: How We Oversee, Audit, and ...

  EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON , D.C. 20503 THE DIRECTOR June 23, 2025 M-25-30 MEMORANDUM TO THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES FROM: Russell T. Vought c"'\ ~ • /\ Duector \J \_ -...AJ~ SUBJECT: Ensuring Accountability: How We Oversee, Audit, and Improve Federal Auditing Does Not Work The Federal Government spends hundreds of millions of dollars annually on financial statement audits. Audits can and should provide transparency and accountability for the use of taxpayer dollars by Federal agencies. This Administration is committed to utilizing every tool to prevent waste, fraud, and abuse and fulfill the duty we owe to Americans to use every dollar wisely, including through Department of Defense audits. Audits were once a tool for [...] • Linking transparency to reform. Financial transparency is critical, but it must be actionable. We are working to integrate audit results with program oversight, performance management, and root cause analysis to ensure findings lead to reform ­ not just reporting. Addressing improper payments and waste. While traditional financial audits do not • address underlying causes ofimproper payments, the Administration is already taking a whole-of-government approach to identify and prevent improper payments. The Change Is Now Audits matter greatly, but not all audits lead to better government. We owe the public much more than multiple disclaimers, super-late financial reports, and ever-more spending that only furthers Federal deficits, and debt. Taxpayers expect more than audits that are an [...] from agencies spending taxpayer dollars for useless and ineffective audits. The Department of Government Efficiency (DOGE) has identified breakdowns ­ ranging from fund control lapses to procurement irregularities -that traditional financial statement audits missed entirely. These were not buried in minutiae. They were symptoms of structural issues our current model does not address. Furthermore, during the Biden Administration, an effort to explode the size and spending of Federal Government was unchecked by the status quo audit process as audit requirements eroded, evidenced by the FY 2024 results, in which six Chief Financial Officers (CFO) Act agencies received either a disclaimer or qualified opinion. For the first time in nearly twenty years, only 18 CFO Act agencies received

• About State Government Audits | Office of the Washington State ...

  1. SAO Home 2. ABOUT AUDITS 3. About State Government Audits # About State Government Audits ## Types of state government audits and reports The State Auditor's Office (SAO) is responsible for performing a range of audits at the state government level. ### Accountability audits An accountability audit evaluates whether a state agency has adhered to applicable federal or state laws, rules, and its own policies and procedures. The process includes auditing records to ensure public funds are accounted for and internal controls are in place to protect public resources from misappropriation and misuse.