Circular No. A-133
Revised to show changes published in the
Federal Register June 27, 2003
Audits of States, Local Governments, and Non-Profit Organizations
Accompanying
Federal Register Materials:
-- Audits of States, Local Governments, and
Non-Profit
Organizations June 30, 1997
--
Revision published June 27, 2003
TO THE HEADS
OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Audits of States, Local Governments, and Non-Profit Organizations
1. Purpose.
This Circular is issued pursuant to the Single Audit Act of 1984, P.L.
98-502, and the Single Audit Act Amendments of 1996, P.L. 104-156. It
sets forth standards for obtaining consistency and uniformity among Federal
agencies for the audit of States, local governments, and non-profit organizations
expending Federal awards.
2. Authority.
Circular A-133 is issued under the authority of sections 503, 1111, and
7501 et seq. of title 31, United States Code, and Executive Orders
8248 and 11541.
3. Rescission
and Supersession. This Circular rescinds Circular A-128, "Audits of
State and Local Governments," issued April 12, 1985, and supersedes the
prior Circular A-133, "Audits of Institutions of Higher Education and
Other Non-Profit Institutions," issued April 22, 1996. For effective dates,
see paragraph 10.
4. Policy.
Except as provided herein, the standards set forth in this Circular shall
be applied by all Federal agencies. If any statute specifically prescribes
policies or specific requirements that differ from the standards provided
herein, the provisions of the subsequent statute shall govern.
Federal agencies
shall apply the provisions of the sections of this Circular to non-Federal
entities, whether they are recipients expending Federal awards received
directly from Federal awarding agencies, or are subrecipients expending
Federal awards received from a pass-through entity (a recipient or another
subrecipient).
This Circular
does not apply to non-U.S. based entities expending Federal awards received
either directly as a recipient or indirectly as a subrecipient.
5. Definitions.
The definitions of key terms used in this Circular are contained in §___.105
in the Attachment to this Circular.
6. Required
Action. The specific requirements and responsibilities of Federal
agencies and non-Federal entities are set forth in the Attachment to this
Circular. Federal agencies making awards to non-Federal entities, either
directly or indirectly, shall adopt the language in the Circular in codified
regulations as provided in Section 10 (below), unless different provisions
are required by Federal statute or are approved by the Office of Management
and Budget (OMB).
7. OMB
Responsibilities. OMB will review Federal agency regulations and implementation
of this Circular, and will provide interpretations of policy requirements
and assistance to ensure uniform, effective and efficient implementation.
8. Information
Contact. Further information concerning Circular A-133 may be obtained
by contacting the Financial Standards and Reporting Branch, Office of
Federal Financial Management, Office of Management and Budget, Washington,
DC 20503, telephone (202) 395-3993.
9. Review
Date. This Circular will have a policy review three years from the
date of issuance.
10. Effective
Dates. The standards set forth in §___.400 of the Attachment
to this Circular, which apply directly to Federal agencies, shall be effective
July 1, 1996, and shall apply to audits of fiscal years beginning after
June 30, 1996, except as otherwise specified in §___.400(a).
The standards set forth in this Circular that Federal agencies shall apply
to non-Federal entities shall be adopted by Federal agencies in codified
regulations not later than 60 days after publication of this final revision
in the Federal Register, so that they will apply to audits of fiscal
years beginning after June 30, 1996, with the exception that §___.305(b)
of the Attachment applies to audits of fiscal years beginning after June
30, 1998. The requirements of Circular A-128, although the Circular is rescinded,
and the 1990 version of Circular A-133 remain in effect for audits of fiscal
years beginning on or before June 30, 1996.
The revisions published in the Federal Register June 27,
2003, are effective for fiscal years ending after December 31, 2003, and
early implementation is not permitted with the exception of the definition
of oversight agency for audit, which is effective July 28, 2003.
Augustine T. Smythe
Acting Director
Attachment
PART__
--AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON-PROFIT ORGANIZATIONS
Subpart
A--General
Sec.
__.100 Purpose.
__.105 Definitions.
Subpart
B--Audits
__.200 Audit
requirements.
__.205 Basis for determining Federal awards expended.
__.210 Subrecipient and vendor determinations.
__.215 Relation to other audit requirements.
__.220 Frequency of audits.
__.225 Sanctions.
__.230 Audit costs.
__.235 Program-specific audits.
Subpart
C--Auditees
__.300 Auditee
responsibilities.
__.305 Auditor selection.
__.310 Financial statements.
__.315 Audit findings follow-up.
__.320 Report submission.
Subpart
D--Federal Agencies and Pass-Through Entities
__.400 Responsibilities.
__.405 Management decision.
Subpart
E--Auditors
__.500 Scope
of audit.
__.505 Audit reporting.
__.510 Audit findings.
__.515 Audit working papers.
__.520 Major program determination.
__.525 Criteria for Federal program risk.
__.530 Criteria for a low-risk auditee.
Appendix
A to Part __ - Data Collection
Form (Form SF-SAC).
Appendix
B to Part __ - Circular
A-133 Compliance Supplement.
Table of Contents
Subpart
A--General
§___.100
Purpose.
This part
sets forth standards for obtaining consistency and uniformity among Federal
agencies for the audit of non-Federal entities expending Federal awards.
§___.105
Definitions.
Auditee
means any non-Federal entity that expends Federal awards which must be
audited under this part. Auditor means an auditor, that is a public
accountant or a Federal, State or local government audit organization,
which meets the general standards specified in generally accepted government
auditing standards (GAGAS). The term auditor does not include internal
auditors of non-profit organizations.
Audit
finding means deficiencies which the auditor is required by §___.510(a)
to report in the schedule of findings and questioned costs.
CFDA number
means the number assigned to a Federal program in the Catalog of Federal
Domestic Assistance (CFDA).
Cluster
of programs means a grouping of closely related programs that share
common compliance requirements. The types of clusters of programs are
research and development (R&D), student financial aid (SFA), and other
clusters. "Other clusters" are as defined by the Office of Management
and Budget (OMB) in the compliance supplement or as designated by a State
for Federal awards the State provides to its subrecipients that meet the
definition of a cluster of programs. When designating an "other cluster,"
a State shall identify the Federal awards included in the cluster and
advise the subrecipients of compliance requirements applicable to the
cluster, consistent with §___.400(d)(1) and §___.400(d)(2),
respectively. A cluster of programs shall be considered as one program
for determining major programs, as described in §___.520,
and, with the exception of R&D as described in §___.200(c),
whether a program-specific audit may be elected.
Cognizant
agency for audit means the Federal agency designated to carry out
the responsibilities described in §___.400(a).
Compliance
supplement refers to the Circular A-133 Compliance Supplement,
included as Appendix B to Circular A-133, or such documents as OMB or
its designee may issue to replace it. This document is available from
the Government Printing Office, Superintendent of Documents, Washington,
DC 20402-9325.
Corrective
action means action taken by the auditee that:
(1) Corrects
identified deficiencies;
(2) Produces
recommended improvements; or
(3) Demonstrates
that audit findings are either invalid or do not warrant auditee action.
Federal
agency has the same meaning as the term agency in Section 551(1)
of title 5, United States Code.
Federal
award means Federal financial assistance and Federal cost-reimbursement
contracts that non-Federal entities receive directly from Federal awarding
agencies or indirectly from pass-through entities. It does not include
procurement contracts, under grants or contracts, used to buy goods or
services from vendors. Any audits of such vendors shall be covered by
the terms and conditions of the contract. Contracts to operate Federal
Government owned, contractor operated facilities (GOCOs) are excluded
from the requirements of this part.
Federal
awarding agency means the Federal agency that provides an award directly
to the recipient.
Federal
financial assistance means assistance that non-Federal entities receive
or administer in the form of grants, loans, loan guarantees, property
(including donated surplus property), cooperative agreements, interest
subsidies, insurance, food commodities, direct appropriations, and other
assistance, but does not include amounts received as reimbursement for
services rendered to individuals as described in §___.205(h)
and §___.205(i).
Federal
program means:
(1) All Federal
awards to a non-Federal entity assigned a single number in the CFDA.
(2) When
no CFDA number is assigned, all Federal awards from the same agency made
for the same purpose should be combined and considered one program.
(3) Notwithstanding
paragraphs (1) and (2) of this definition,
a cluster of programs. The types of clusters of programs are:
(i) Research
and development (R&D);
(ii) Student
financial aid (SFA); and
(iii) "Other
clusters," as described in the definition of cluster of programs in
this section.
GAGAS
means generally accepted government auditing standards issued by the Comptroller
General of the United States, which are applicable to financial audits.
Generally
accepted accounting principles has the meaning specified in generally
accepted auditing standards issued by the American Institute of Certified
Public Accountants (AICPA).
Indian
tribe means any Indian tribe, band, nation, or other organized group
or community, including any Alaskan Native village or regional or village
corporation (as defined in, or established under, the Alaskan Native Claims
Settlement Act) that is recognized by the United States as eligible for
the special programs and services provided by the United States to Indians
because of their status as Indians.
Internal
control means a process, effected by an entity's management and other
personnel, designed to provide reasonable assurance regarding the achievement
of objectives in the following categories:
(1) Effectiveness
and efficiency of operations;
(2) Reliability
of financial reporting; and
(3) Compliance
with applicable laws and regulations.
Internal
control pertaining to the compliance requirements for Federal programs
(Internal control over Federal programs) means a process--effected by
an entity's management and other personnel--designed to provide reasonable
assurance regarding the achievement of the following objectives for Federal
programs:
(1) Transactions
are properly recorded and accounted for to:
(i) Permit
the preparation of reliable financial statements and Federal reports;
(ii) Maintain
accountability over assets; and
(iii) Demonstrate
compliance with laws, regulations, and other compliance requirements;
(2) Transactions
are executed in compliance with:
(i) Laws,
regulations, and the provisions of contracts or grant agreements that
could have a direct and material effect on a Federal program; and
(ii) Any
other laws and regulations that are identified in the compliance supplement;
and
(3) Funds,
property, and other assets are safeguarded against loss from unauthorized
use or disposition.
Loan
means a Federal loan or loan guarantee received or administered by a non-Federal
entity.
Local
government means any unit of local government within a State, including
a county, borough, municipality, city, town, township, parish, local public
authority, special district, school district, intrastate district, council
of governments, and any other instrumentality of local government.
Major
program means a Federal program determined by the auditor to be a
major program in accordance with §___.520 or a program
identified as a major program by a Federal agency or pass-through entity
in accordance with §___.215(c).
Management
decision means the evaluation by the Federal awarding agency or pass-through
entity of the audit findings and corrective action plan and the issuance
of a written decision as to what corrective action is necessary.
Non-Federal
entity means a State, local government, or non-profit organization.
Non-profit
organization means:
(1) any corporation,
trust, association, cooperative, or other organization that:
(i) Is
operated primarily for scientific, educational, service, charitable,
or similar purposes in the public interest;
(ii) Is
not organized primarily for profit; and
(iii) Uses
its net proceeds to maintain, improve, or expand its operations; and
(2) The term
non-profit organization includes non-profit institutions of higher
education and hospitals.
OMB
means the Executive Office of the President, Office of Management and
Budget.
Oversight
agency for audit means the Federal awarding agency that provides the
predominant amount of direct funding to a recipient not assigned a cognizant
agency for audit. When there is no direct funding, the Federal agency
with the predominant indirect funding shall assume the oversight responsibilities.
The duties of the oversight agency for audit are described in §___.400(b).
Effective
July 28, 2003, the following is added to this definition:
A
Federal agency with oversight for an auditee may reassign oversight
to another Federal agency which provides substantial funding and agrees
to be the oversight agency for audit. Within 30 days after any reassignment,
both the old and the new oversight agency for audit shall notify the
auditee, and, if known, the auditor of the reassignment.
Pass-through
entity means a non-Federal entity that provides a Federal award to
a subrecipient to carry out a Federal program.
Program-specific
audit means an audit of one Federal program as provided for in §___.200(c)
and §___.235.
Questioned
cost means a cost that is questioned by the auditor because of an
audit finding:
(1) Which
resulted from a violation or possible violation of a provision of a law,
regulation, contract, grant, cooperative agreement, or other agreement
or document governing the use of Federal funds, including funds used to
match Federal funds;
(2) Where
the costs, at the time of the audit, are not supported by adequate documentation;
or
(3) Where
the costs incurred appear unreasonable and do not reflect the actions
a prudent person would take in the circumstances.
Recipient
means a non-Federal entity that expends Federal awards received directly
from a Federal awarding agency to carry out a Federal program.
Research
and development (R&D) means all research activities, both basic
and applied, and all development activities that are performed by a non-Federal
entity. Research is defined as a systematic study directed toward
fuller scientific knowledge or understanding of the subject studied. The
term research also includes activities involving the training of individuals
in research techniques where such activities utilize the same facilities
as other research and development activities and where such activities
are not included in the instruction function. Development is the
systematic use of knowledge and understanding gained from research directed
toward the production of useful materials, devices, systems, or methods,
including design and development of prototypes and processes.
Single
audit means an audit which includes both the entity's financial statements
and the Federal awards as described in §___.500.
State
means any State of the United States, the District of Columbia, the Commonwealth
of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth
of the Northern Mariana Islands, and the Trust Territory of the Pacific
Islands, any instrumentality thereof, any multi-State, regional, or interstate
entity which has governmental functions, and any Indian tribe as defined
in this section.
Student
Financial Aid (SFA) includes those programs of general student assistance,
such as those authorized by Title IV of the Higher Education Act of 1965,
as amended, (20 U.S.C. 1070 et seq.) which is administered by the
U.S. Department of Education, and similar programs provided by other Federal
agencies. It does not include programs which provide fellowships or similar
Federal awards to students on a competitive basis, or for specified studies
or research.
Subrecipient
means a non-Federal entity that expends Federal awards received from a
pass-through entity to carry out a Federal program, but does not include
an individual that is a beneficiary of such a program. A subrecipient
may also be a recipient of other Federal awards directly from a Federal
awarding agency. Guidance on distinguishing between a subrecipient and
a vendor is provided in §___.210.
Types
of compliance requirements refers to the types of compliance requirements
listed in the compliance supplement. Examples include: activities allowed
or unallowed; allowable costs/cost principles; cash management; eligibility;
matching, level of effort, earmarking; and, reporting.
Vendor
means a dealer, distributor, merchant, or other seller providing goods
or services that are required for the conduct of a Federal program. These
goods or services may be for an organization's own use or for the use
of beneficiaries of the Federal program. Additional guidance on distinguishing
between a subrecipient and a vendor is provided in §___.210.
Subpart
B--Audits
§___.200
Audit requirements.
(a) Audit
required. Non-Federal entities that expend $300,000 ($500,000
for fiscal years ending after December 31, 2003) or more in a year
in Federal awards shall have a single or program-specific audit conducted
for that year in accordance with the provisions of this part. Guidance
on determining Federal awards expended is provided in §___.205.
(b) Single
audit. Non-Federal entities that expend $300,000 ($500,000 for
fiscal years ending after December 31, 2003) or more in a year in
Federal awards shall have a single audit conducted in accordance with
§___.500 except when they elect to have a program-specific
audit conducted in accordance with paragraph (c) of this
section.
(c) Program-specific
audit election. When an auditee expends Federal awards under only
one Federal program (excluding R&D) and the Federal program's laws,
regulations, or grant agreements do not require a financial statement
audit of the auditee, the auditee may elect to have a program-specific
audit conducted in accordance with §___.235. A program-specific
audit may not be elected for R&D unless all of the Federal awards
expended were received from the same Federal agency, or the same Federal
agency and the same pass-through entity, and that Federal agency, or pass-through
entity in the case of a subrecipient, approves in advance a program-specific
audit.
(d) Exemption
when Federal awards expended are less than $300,000 ($500,000
for fiscal years ending after December 31, 2003). Non-Federal
entities that expend less than $300,000 ($500,000 for fiscal years
ending after December 31, 2003) a year in Federal awards are exempt
from Federal audit requirements for that year, except as noted in §___.215(a),
but records must be available for review or audit by appropriate officials
of the Federal agency, pass-through entity, and General Accounting Office
(GAO).
(e) Federally
Funded Research and Development Centers (FFRDC). Management of an
auditee that owns or operates a FFRDC may elect to treat the FFRDC as
a separate entity for purposes of this part.
§___.205
Basis for determining Federal awards expended.
(a) Determining
Federal awards expended. The determination of when an award is expended
should be based on when the activity related to the award occurs. Generally,
the activity pertains to events that require the non-Federal entity to
comply with laws, regulations, and the provisions of contracts or grant
agreements, such as: expenditure/expense transactions associated with
grants, cost-reimbursement contracts, cooperative agreements, and direct
appropriations; the disbursement of funds passed through to subrecipients;
the use of loan proceeds under loan and loan guarantee programs; the receipt
of property; the receipt of surplus property; the receipt or use of program
income; the distribution or consumption of food commodities; the disbursement
of amounts entitling the non-Federal entity to an interest subsidy; and,
the period when insurance is in force.
(b) Loan
and loan guarantees (loans). Since the Federal Government is at risk
for loans until the debt is repaid, the following guidelines shall be
used to calculate the value of Federal awards expended under loan programs,
except as noted in paragraphs (c) and (d)
of this section:
(1) Value
of new loans made or received during the fiscal year; plus
(2) Balance
of loans from previous years for which the Federal Government imposes
continuing compliance requirements; plus
(3) Any interest
subsidy, cash, or administrative cost allowance received.
(c) Loan
and loan guarantees (loans) at institutions of higher education. When
loans are made to students of an institution of higher education but the
institution does not make the loans, then only the value of loans made
during the year shall be considered Federal awards expended in that year.
The balance of loans for previous years is not included as Federal awards
expended because the lender accounts for the prior balances.
(d) Prior
loan and loan guarantees (loans). Loans, the proceeds of which were
received and expended in prior-years, are not considered Federal awards
expended under this part when the laws, regulations, and the provisions
of contracts or grant agreements pertaining to such loans impose no continuing
compliance requirements other than to repay the loans.
(e) Endowment
funds. The cumulative balance of Federal awards for endowment funds
which are federally restricted are considered awards expended in each
year in which the funds are still restricted.
(f) Free
rent. Free rent received by itself is not considered a Federal award
expended under this part. However, free rent received as part of an award
to carry out a Federal program shall be included in determining Federal
awards expended and subject to audit under this part.
(g) Valuing
non-cash assistance. Federal non-cash assistance, such as free rent,
food stamps, food commodities, donated property, or donated surplus property,
shall be valued at fair market value at the time of receipt or the assessed
value provided by the Federal agency.
(h) Medicare.
Medicare payments to a non-Federal entity for providing patient care services
to Medicare eligible individuals are not considered Federal awards expended
under this part.
(i) Medicaid.
Medicaid payments to a subrecipient for providing patient care services
to Medicaid eligible individuals are not considered Federal awards expended
under this part unless a State requires the funds to be treated as Federal
awards expended because reimbursement is on a cost-reimbursement basis.
(j) Certain
loans provided by the National Credit Union Administration. For purposes
of this part, loans made from the National Credit Union Share Insurance
Fund and the Central Liquidity Facility that are funded by contributions
from insured institutions are not considered Federal awards expended.
§___.210
Subrecipient and vendor determinations.
(a) General.
An auditee may be a recipient, a subrecipient, and a vendor. Federal awards
expended as a recipient or a subrecipient would be subject to audit under
this part. The payments received for goods or services provided as a vendor
would not be considered Federal awards. The guidance in paragraphs (b)
and (c) of this section should be considered in determining
whether payments constitute a Federal award or a payment for goods and
services.
(b) Federal
award. Characteristics indicative of a Federal award received by a
subrecipient are when the organization:
(1) Determines
who is eligible to receive what Federal financial assistance;
(2) Has its
performance measured against whether the objectives of the Federal program
are met;
(3) Has responsibility
for programmatic decision making;
(4) Has responsibility
for adherence to applicable Federal program compliance requirements; and
(5) Uses
the Federal funds to carry out a program of the organization as compared
to providing goods or services for a program of the pass-through entity.
(c) Payment
for goods and services. Characteristics indicative of a payment for
goods and services received by a vendor are when the organization:
(1) Provides
the goods and services within normal business operations;
(2) Provides
similar goods or services to many different purchasers;
(3) Operates
in a competitive environment;
(4) Provides
goods or services that are ancillary to the operation of the Federal program;
and
(5) Is not
subject to compliance requirements of the Federal program.
(d) Use
of judgment in making determination. There may be unusual circumstances
or exceptions to the listed characteristics. In making the determination
of whether a subrecipient or vendor relationship exists, the substance
of the relationship is more important than the form of the agreement.
It is not expected that all of the characteristics will be present and
judgment should be used in determining whether an entity is a subrecipient
or vendor.
(e) For-profit
subrecipient. Since this part does not apply to for-profit subrecipients,
the pass-through entity is responsible for establishing requirements,
as necessary, to ensure compliance by for-profit subrecipients. The contract
with the for-profit subrecipient should describe applicable compliance
requirements and the for-profit subrecipient's compliance responsibility.
Methods to ensure compliance for Federal awards made to for-profit subrecipients
may include pre-award audits, monitoring during the contract, and post-award
audits.
(f) Compliance
responsibility for vendors. In most cases, the auditee's compliance
responsibility for vendors is only to ensure that the procurement, receipt,
and payment for goods and services comply with laws, regulations, and
the provisions of contracts or grant agreements. Program compliance requirements
normally do not pass through to vendors. However, the auditee is responsible
for ensuring compliance for vendor transactions which are structured such
that the vendor is responsible for program compliance or the vendor's
records must be reviewed to determine program compliance. Also, when these
vendor transactions relate to a major program, the scope of the audit
shall include determining whether these transactions are in compliance
with laws, regulations, and the provisions of contracts or grant agreements.
§___.215
Relation to other audit requirements.
(a) Audit
under this part in lieu of other audits. An audit made in accordance
with this part shall be in lieu of any financial audit required under
individual Federal awards. To the extent this audit meets a Federal agency's
needs, it shall rely upon and use such audits. The provisions of this
part neither limit the authority of Federal agencies, including their
Inspectors General, or GAO to conduct or arrange for additional audits
(e.g., financial audits, performance audits, evaluations, inspections,
or reviews) nor authorize any auditee to constrain Federal agencies from
carrying out additional audits. Any additional audits shall be planned
and performed in such a way as to build upon work performed by other auditors.
(b) Federal
agency to pay for additional audits. A Federal agency that conducts
or contracts for additional audits shall, consistent with other applicable
laws and regulations, arrange for funding the full cost of such additional
audits.
(c) Request
for a program to be audited as a major program. A Federal agency may
request an auditee to have a particular Federal program audited as a major
program in lieu of the Federal agency conducting or arranging for the
additional audits. To allow for planning, such requests should be made
at least 180 days prior to the end of the fiscal year to be audited. The
auditee, after consultation with its auditor, should promptly respond
to such request by informing the Federal agency whether the program would
otherwise be audited as a major program using the risk-based audit approach
described in §___.520 and, if not, the estimated
incremental cost. The Federal agency shall then promptly confirm to the
auditee whether it wants the program audited as a major program. If the
program is to be audited as a major program based upon this Federal agency
request, and the Federal agency agrees to pay the full incremental costs,
then the auditee shall have the program audited as a major program. A
pass-through entity may use the provisions of this paragraph for a subrecipient.
§___.220
Frequency of audits.
Except for
the provisions for biennial audits provided in paragraphs (a)
and (b) of this section, audits required by this part
shall be performed annually. Any biennial audit shall cover both years
within the biennial period.
(a) A State
or local government that is required by constitution or statute, in effect
on January 1, 1987, to undergo its audits less frequently than annually,
is permitted to undergo its audits pursuant to this part biennially. This
requirement must still be in effect for the biennial period under audit.
(b) Any non-profit
organization that had biennial audits for all biennial periods ending
between July 1, 1992, and January 1, 1995, is permitted to undergo its
audits pursuant to this part biennially.
§___.225
Sanctions.
No audit
costs may be charged to Federal awards when audits required by this part
have not been made or have been made but not in accordance with this part.
In cases of continued inability or unwillingness to have an audit conducted
in accordance with this part, Federal agencies and pass-through entities
shall take appropriate action using sanctions such as:
(a) Withholding
a percentage of Federal awards until the audit is completed satisfactorily;
(b) Withholding
or disallowing overhead costs;
(c) Suspending
Federal awards until the audit is conducted; or
(d) Terminating
the Federal award.
§___.230
Audit costs.
(a) Allowable
costs. Unless prohibited by law, the cost of audits made in accordance
with the provisions of this part are allowable charges to Federal awards.
The charges may be considered a direct cost or an allocated indirect cost,
as determined in accordance with the provisions of applicable OMB cost
principles circulars, the Federal Acquisition Regulation (FAR) (48 CFR
parts 30 and 31), or other applicable cost principles or regulations.
(b) Unallowable
costs. A non-Federal entity shall not charge the following to a Federal
award:
(1) The cost
of any audit under the Single Audit Act Amendments of 1996 (31 U.S.C.
7501 et seq.) not conducted in accordance with this part.
(2) The cost
of auditing a non-Federal entity which has Federal awards expended of
less than $300,000 ($500,000 for fiscal years ending after December
31, 2003) per year and is thereby exempted under §___.200(d)
from having an audit conducted under this part. However, this does not
prohibit a pass-through entity from charging Federal awards for the cost
of limited scope audits to monitor its subrecipients in accordance with
§___.400(d)(3), provided the subrecipient does not
have a single audit. For purposes of this part, limited scope audits only
include agreed-upon procedures engagements conducted in accordance with
either the AICPA's generally accepted auditing standards or attestation
standards, that are paid for and arranged by a pass-through entity and
address only one or more of the following types of compliance requirements:
activities allowed or unallowed; allowable costs/cost principles; eligibility;
matching, level of effort, earmarking; and, reporting.
§___.235
Program-specific audits.
(a) Program-specific
audit guide available. In many cases, a program-specific audit guide
will be available to provide specific guidance to the auditor with respect
to internal control, compliance requirements, suggested audit procedures,
and audit reporting requirements. The auditor should contact the Office
of Inspector General of the Federal agency to determine whether such a
guide is available. When a current program-specific audit guide is available,
the auditor shall follow GAGAS and the guide when performing a program-specific
audit.
(b) Program-specific
audit guide not available.
(1) When a program-specific audit guide
is not available, the auditee and auditor shall have basically the same
responsibilities for the Federal program as they would have for an audit
of a major program in a single audit.
(2) The auditee
shall prepare the financial statement(s) for the Federal program that
includes, at a minimum, a schedule of expenditures of Federal awards for
the program and notes that describe the significant accounting policies
used in preparing the schedule, a summary schedule of prior audit findings
consistent with the requirements of §___.315(b),
and a corrective action plan consistent with the requirements of §___.315(c).
(3) The auditor
shall:
(i) Perform
an audit of the financial statement(s) for the Federal program in accordance
with GAGAS;
(ii) Obtain
an understanding of internal control and perform tests of internal control
over the Federal program consistent with the requirements of §___.500(c)
for a major program;
(iii) Perform
procedures to determine whether the auditee has complied with laws,
regulations, and the provisions of contracts or grant agreements that
could have a direct and material effect on the Federal program consistent
with the requirements of §___.500(d) for a major
program; and
(iv) Follow
up on prior audit findings, perform procedures to assess the reasonableness
of the summary schedule of prior audit findings prepared by the auditee,
and report, as a current year audit finding, when the auditor concludes
that the summary schedule of prior audit findings materially misrepresents
the status of any prior audit finding in accordance with the requirements
of §___.500(e).
(4) The auditor's
report(s) may be in the form of either combined or separate reports and
may be organized differently from the manner presented in this section.
The auditor's report(s) shall state that the audit was conducted in accordance
with this part and include the following:
(i) An
opinion (or disclaimer of opinion) as to whether the financial statement(s)
of the Federal program is presented fairly in all material respects
in conformity with the stated accounting policies;
(ii) A
report on internal control related to the Federal program, which shall
describe the scope of testing of internal control and the results of
the tests;
(iii) A
report on compliance which includes an opinion (or disclaimer of opinion)
as to whether the auditee complied with laws, regulations, and the provisions
of contracts or grant agreements which could have a direct and material
effect on the Federal program; and
(iv) A
schedule of findings and questioned costs for the Federal program that
includes a summary of the auditor's results relative to the Federal
program in a format consistent with §___.505(d)(1)
and findings and questioned costs consistent with the requirements of
§___.505(d)(3).
(c) Report
submission for program-specific audits.
(1) The audit
shall be completed and the reporting required by paragraph (c)(2)
or (c)(3) of this section submitted within the earlier
of 30 days after receipt of the auditor's report(s), or nine months after
the end of the audit period, unless a longer period is agreed to in advance
by the Federal agency that provided the funding or a different period
is specified in a program-specific audit guide. (However, for fiscal years
beginning on or before June 30, 1998, the audit shall be completed and
the required reporting shall be submitted within the earlier of 30 days
after receipt of the auditor's report(s), or 13 months after the end of
the audit period, unless a different period is specified in a program-specific
audit guide.) Unless restricted by law or regulation, the auditee shall
make report copies available for public inspection.
(2) When
a program-specific audit guide is available, the auditee shall submit
to the Federal clearinghouse designated by OMB the data collection form
prepared in accordance with §___.320(b), as applicable
to a program-specific audit, and the reporting required by the program-specific
audit guide to be retained as an archival copy. Also, the auditee shall
submit to the Federal awarding agency or pass-through entity the reporting
required by the program-specific audit guide.
(3) When
a program-specific audit guide is not available, the reporting package
for a program-specific audit shall consist of the financial statement(s)
of the Federal program, a summary schedule of prior audit findings, and
a corrective action plan as described in paragraph (b)(2)
of this section, and the auditor's report(s) described in paragraph (b)(4)
of this section. The data collection form prepared in accordance with
§___.320(b), as applicable to a program-specific
audit, and one copy of this reporting package shall be submitted to the
Federal clearinghouse designated by OMB to be retained as an archival
copy. Also, when the schedule of findings and questioned costs disclosed
audit findings or the summary schedule of prior audit findings reported
the status of any audit findings, the auditee shall submit one copy of
the reporting package to the Federal clearinghouse on behalf of the Federal
awarding agency, or directly to the pass-through entity in the case of
a subrecipient. Instead of submitting the reporting package to the pass-through
entity, when a subrecipient is not required to submit a reporting package
to the pass-through entity, the subrecipient shall provide written notification
to the pass-through entity, consistent with the requirements of §___.320(e)(2).
A subrecipient may submit a copy of the reporting package to the pass-through
entity to comply with this notification requirement.
(d) Other
sections of this part may apply. Program-specific audits are subject
to §___.100 through §___.215(b),
§___.220 through §___.230,
§___.300 through §___.305,
§___.315, §___.320(f) through
§___.320(j), §___.400 through
§___.405, §___.510 through
§___.515, and other referenced provisions of this
part unless contrary to the provisions of this section, a program-specific
audit guide, or program laws and regulations.
Subpart
C--Auditees
§___.300
Auditee responsibilities.
The auditee
shall:
(a) Identify,
in its accounts, all Federal awards received and expended and the Federal
programs under which they were received. Federal program and award identification
shall include, as applicable, the CFDA title and number, award number
and year, name of the Federal agency, and name of the pass-through entity.
(b) Maintain
internal control over Federal programs that provides reasonable assurance
that the auditee is managing Federal awards in compliance with laws, regulations,
and the provisions of contracts or grant agreements that could have a
material effect on each of its Federal programs.
(c) Comply
with laws, regulations, and the provisions of contracts or grant agreements
related to each of its Federal programs.
(d) Prepare
appropriate financial statements, including the schedule of expenditures
of Federal awards in accordance with §___.310.
(e) Ensure
that the audits required by this part are properly performed and submitted
when due. When extensions to the report submission due date required by
§___.320(a) are granted by the cognizant or oversight
agency for audit, promptly notify the Federal clearinghouse designated
by OMB and each pass-through entity providing Federal awards of the extension.
(f) Follow
up and take corrective action on audit findings, including preparation
of a summary schedule of prior audit findings and a corrective action
plan in accordance with §___.315(b) and §___.315(c),
respectively.
§___.305
Auditor selection.
(a) Auditor
procurement. In procuring audit services, auditees shall follow the
procurement standards prescribed by the Grants Management Common Rule
(hereinafter referred to as the "A-102 Common Rule") published March 11,
1988 and amended April 19, 1995 [insert appropriate CFR citation], Circular
A-110, "Uniform Administrative Requirements for Grants and Agreements
with Institutions of Higher Education, Hospitals and Other Non-Profit
Organizations," or the FAR (48 CFR part 42), as applicable (OMB Circulars
are available from the Office of Administration, Publications Office,
room 2200, New Executive Office Building, Washington, DC 20503). Whenever
possible, auditees shall make positive efforts to utilize small businesses,
minority-owned firms, and women's business enterprises, in procuring audit
services as stated in the A-102 Common Rule, OMB Circular A-110, or the
FAR (48 CFR part 42), as applicable. In requesting proposals for audit
services, the objectives and scope of the audit should be made clear.
Factors to be considered in evaluating each proposal for audit services
include the responsiveness to the request for proposal, relevant experience,
availability of staff with professional qualifications and technical abilities,
the results of external quality control reviews, and price.
(b) Restriction
on auditor preparing indirect cost proposals. An auditor who prepares
the indirect cost proposal or cost allocation plan may not also be selected
to perform the audit required by this part when the indirect costs recovered
by the auditee during the prior year exceeded $1 million. This restriction
applies to the base year used in the preparation of the indirect cost
proposal or cost allocation plan and any subsequent years in which the
resulting indirect cost agreement or cost allocation plan is used to recover
costs. To minimize any disruption in existing contracts for audit services,
this paragraph applies to audits of fiscal years beginning after June
30, 1998.
(c) Use
of Federal auditors. Federal auditors may perform all or part of the
work required under this part if they comply fully with the requirements
of this part.
§___.310
Financial statements.
(a) Financial
statements. The auditee shall prepare financial statements that reflect
its financial position, results of operations or changes in net assets,
and, where appropriate, cash flows for the fiscal year audited. The financial
statements shall be for the same organizational unit and fiscal year that
is chosen to meet the requirements of this part. However, organization-wide
financial statements may also include departments, agencies, and other
organizational units that have separate audits in accordance with §___.500(a)
and prepare separate financial statements.
(b) Schedule
of expenditures of Federal awards. The auditee shall also prepare
a schedule of expenditures of Federal awards for the period covered by
the auditee's financial statements. While not required, the auditee may
choose to provide information requested by Federal awarding agencies and
pass-through entities to make the schedule easier to use. For example,
when a Federal program has multiple award years, the auditee may list
the amount of Federal awards expended for each award year separately.
At a minimum, the schedule shall:
(1) List
individual Federal programs by Federal agency. For Federal programs
included in a cluster of programs, list individual Federal programs
within a cluster of programs. For R&D, total Federal awards expended
shall be shown either by individual award or by Federal agency and
major subdivision within the Federal agency. For example, the National
Institutes of Health is a major subdivision in the Department of Health
and Human Services.
(2) For Federal
awards received as a subrecipient, the name of the pass-through entity
and identifying number assigned by the pass-through entity shall be included.
(3) Provide
total Federal awards expended for each individual Federal program and
the CFDA number or other identifying number when the CFDA information
is not available.
(4) Include
notes that describe the significant accounting policies used in preparing
the schedule.
(5) To the
extent practical, pass-through entities should identify in the schedule
the total amount provided to subrecipients from each Federal program.
(6) Include,
in either the schedule or a note to the schedule, the value of the Federal
awards expended in the form of non-cash assistance, the amount of insurance
in effect during the year, and loans or loan guarantees outstanding at
year end. While not required, it is preferable to present this information
in the schedule.
§___.315
Audit findings follow-up.
(a) General.
The auditee is responsible for follow-up and corrective action on all
audit findings. As part of this responsibility, the auditee shall prepare
a summary schedule of prior audit findings. The auditee shall also prepare
a corrective action plan for current year audit findings. The summary
schedule of prior audit findings and the corrective action plan shall
include the reference numbers the auditor assigns to audit findings under
§___.510(c). Since the summary schedule may include
audit findings from multiple years, it shall include the fiscal year in
which the finding initially occurred.
(b) Summary
schedule of prior audit findings. The summary schedule of prior audit
findings shall report the status of all audit findings included in the
prior audit's schedule of findings and questioned costs relative to Federal
awards. The summary schedule shall also include audit findings reported
in the prior audit's summary schedule of prior audit findings except audit
findings listed as corrected in accordance with paragraph (b)(1)
of this section, or no longer valid or not warranting further action in
accordance with paragraph (b)(4) of this section.
(1) When
audit findings were fully corrected, the summary schedule need only list
the audit findings and state that corrective action was taken.
(2) When
audit findings were not corrected or were only partially corrected, the
summary schedule shall describe the planned corrective action as well
as any partial corrective action taken.
(3) When
corrective action taken is significantly different from corrective action
previously reported in a corrective action plan or in the Federal agency's
or pass-through entity's management decision, the summary schedule shall
provide an explanation.
(4) When
the auditee believes the audit findings are no longer valid or do not
warrant further action, the reasons for this position shall be described
in the summary schedule. A valid reason for considering an audit finding
as not warranting further action is that all of the following have occurred:
(i) Two
years have passed since the audit report in which the finding occurred
was submitted to the Federal clearinghouse;
(ii) The
Federal agency or pass-through entity is not currently following up
with the auditee on the audit finding; and
(iii) A
management decision was not issued.
(c) Corrective
action plan. At the completion of the audit, the auditee shall prepare
a corrective action plan to address each audit finding included in the
current year auditor's reports. The corrective action plan shall provide
the name(s) of the contact person(s) responsible for corrective action,
the corrective action planned, and the anticipated completion date. If
the auditee does not agree with the audit findings or believes corrective
action is not required, then the corrective action plan shall include
an explanation and specific reasons.
§___.320
Report submission.
(a) General.
The audit shall be completed and the data collection form described in
paragraph (b) of this section and reporting package described
in paragraph (c) of this section shall be submitted within
the earlier of 30 days after receipt of the auditor's report(s), or nine
months after the end of the audit period, unless a longer period is agreed
to in advance by the cognizant or oversight agency for audit. (However,
for fiscal years beginning on or before June 30, 1998, the audit shall
be completed and the data collection form and reporting package shall
be submitted within the earlier of 30 days after receipt of the auditor's
report(s), or 13 months after the end of the audit period.) Unless restricted
by law or regulation, the auditee shall make copies available for public
inspection.
(b) Data
Collection.
(1) The auditee shall submit a data collection form which
states whether the audit was completed in accordance with this part and
provides information about the auditee, its Federal programs, and the
results of the audit. The form shall be approved by OMB, available from
the Federal clearinghouse designated by OMB, and include data elements
similar to those presented in this paragraph. A senior level representative
of the auditee (e.g., State controller, director of finance, chief executive
officer, or chief financial officer) shall sign a statement to be included
as part of the form certifying that: the auditee complied with the requirements
of this part, the form was prepared in accordance with this part (and
the instructions accompanying the form), and the information included
in the form, in its entirety, are accurate and complete.
(2) The data
collection form shall include the following data elements:
(i) The
type of report the auditor issued on the financial statements of the
auditee (i.e., unqualified opinion, qualified opinion, adverse opinion,
or disclaimer of opinion).
(ii) Where
applicable, a statement that reportable conditions in internal control
were disclosed by the audit of the financial statements and whether
any such conditions were material weaknesses.
(iii) A
statement as to whether the audit disclosed any noncompliance which
is material to the financial statements of the auditee.
(iv) Where
applicable, a statement that reportable conditions in internal control
over major programs were disclosed by the audit and whether any such
conditions were material weaknesses.
(v) The
type of report the auditor issued on compliance for major programs (i.e.,
unqualified opinion, qualified opinion, adverse opinion, or disclaimer
of opinion).
(vi) A
list of the Federal awarding agencies which will receive a copy of the
reporting package pursuant to §___.320(d)(2) of
OMB Circular A-133.
(vii) A
yes or no statement as to whether the auditee qualified as a low-risk
auditee under §___.530 of OMB Circular A-133.
(viii)
The dollar threshold used to distinguish between Type A and Type B programs
as defined in §___.520(b) of OMB Circular A-133.
(ix) The
Catalog of Federal Domestic Assistance (CFDA) number for each
Federal program, as applicable.
(x) The
name of each Federal program and identification of each major program.
Individual programs within a cluster of programs should be listed in
the same level of detail as they are listed in the schedule of expenditures
of Federal awards.
(xi) The
amount of expenditures in the schedule of expenditures of Federal awards
associated with each Federal program.
(xii) For
each Federal program, a yes or no statement as to whether there are
audit findings in each of the following types of compliance requirements
and the total amount of any questioned costs:
(A) Activities
allowed or unallowed.
(B) Allowable
costs/cost principles.
(C) Cash
management.
(D) Davis-Bacon
Act.
(E) Eligibility.
(F) Equipment
and real property management.
(G) Matching,
level of effort, earmarking.
(H) Period
of availability of Federal funds.
(I) Procurement
and suspension and debarment.
(J) Program
income.
(K) Real
property acquisition and relocation assistance.
(L) Reporting.
(M) Subrecipient
monitoring.
(N) Special
tests and provisions.
(xiii)
Auditee Name, Employer Identification Number(s), Name and Title of Certifying
Official, Telephone Number, Signature, and Date.
(xiv) Auditor
Name, Name and Title of Contact Person, Auditor Address, Auditor Telephone
Number, Signature, and Date.
(xv) Whether
the auditee has either a cognizant or oversight agency for audit.
(xvi) The
name of the cognizant or oversight agency for audit determined in accordance
with §___.400(a) and §___.400(b),
respectively.
(3) Using
the information included in the reporting package described in paragraph
(c) of this section, the auditor shall complete the applicable
sections of the form. The auditor shall sign a statement to be included
as part of the data collection form that indicates, at a minimum, the
source of the information included in the form, the auditor's responsibility
for the information, that the form is not a substitute for the reporting
package described in paragraph (c) of this section, and
that the content of the form is limited to the data elements prescribed
by OMB.
(c) Reporting
package. The reporting package shall include the:
(1) Financial
statements and schedule of expenditures of Federal awards discussed in
§___.310(a) and §___.310(b),
respectively;
(2) Summary
schedule of prior audit findings discussed in §___.315(b);
(3) Auditor's
report(s) discussed in §___.505; and
(4) Corrective
action plan discussed in §___.315(c).
(d) Submission
to clearinghouse. All auditees shall submit to the Federal clearinghouse
designated by OMB the data collection form described in paragraph (b)
of this section and one copy of the reporting package described in paragraph
(c) of this section for:
(1) The Federal
clearinghouse to retain as an archival copy; and
(2) Each
Federal awarding agency when the schedule of findings and questioned costs
disclosed audit findings relating to Federal awards that the Federal awarding
agency provided directly or the summary schedule of prior audit findings
reported the status of any audit findings relating to Federal awards that
the Federal awarding agency provided directly.
(e) Additional
submission by subrecipients.
(1) In addition to the requirements discussed
in paragraph (d) of this section, auditees that are
also subrecipients shall submit to each pass-through entity one copy
of the reporting package described in paragraph (c) of
this section for each pass-through entity when the schedule of findings
and questioned costs disclosed audit findings relating to Federal awards
that the pass-through entity provided or the summary schedule of prior
audit findings reported the status of any audit findings relating to
Federal awards that the pass-through entity provided.
(2) Instead
of submitting the reporting package to a pass-through entity, when a subrecipient
is not required to submit a reporting package to a pass-through entity
pursuant to paragraph (e)(1) of this section, the subrecipient
shall provide written notification to the pass-through entity that: an
audit of the subrecipient was conducted in accordance with this part (including
the period covered by the audit and the name, amount, and CFDA number
of the Federal award(s) provided by the pass-through entity); the schedule
of findings and questioned costs disclosed no audit findings relating
to the Federal award(s) that the pass-through entity provided; and, the
summary schedule of prior audit findings did not report on the status
of any audit findings relating to the Federal award(s) that the pass-through
entity provided. A subrecipient may submit a copy of the reporting package
described in paragraph (c) of this section to a pass-through
entity to comply with this notification requirement.
(f) Requests
for report copies. In response to requests by a Federal agency or
pass-through entity, auditees shall submit the appropriate copies of the
reporting package described in paragraph (c) of this
section and, if requested, a copy of any management letters issued by
the auditor.
(g) Report
retention requirements. Auditees shall keep one copy of the data collection
form described in paragraph (b) of this section and one
copy of the reporting package described in paragraph (c)
of this section on file for three years from the date of submission to
the Federal clearinghouse designated by OMB. Pass-through entities shall
keep subrecipients' submissions on file for three years from date of receipt.
(h) Clearinghouse
responsibilities. The Federal clearinghouse designated by OMB shall
distribute the reporting packages received in accordance with paragraph
(d)(2) of this section and §___.235(c)(3)
to applicable Federal awarding agencies, maintain a data base of completed
audits, provide appropriate information to Federal agencies, and follow
up with known auditees which have not submitted the required data collection
forms and reporting packages.
(i) Clearinghouse
address. The address of the Federal clearinghouse currently designated
by OMB is Federal Audit Clearinghouse, Bureau of the Census, 1201 E. 10th
Street, Jeffersonville, IN 47132.
(j) Electronic
filing. Nothing in this part shall preclude electronic submissions
to the Federal clearinghouse in such manner as may be approved by OMB.
With OMB approval, the Federal clearinghouse may pilot test methods of
electronic submissions.
Subpart
D--Federal Agencies and Pass-Through Entities
§___.400
Responsibilities.
(a) Cognizant
agency for audit responsibilities. Recipients expending more than
$25 million ($50 million for fiscal years ending after December 31,
2003) a year in Federal awards shall have a cognizant agency for
audit. The designated cognizant agency for audit shall be the Federal
awarding agency that provides the predominant amount of direct funding
to a recipient unless OMB makes a specific cognizant agency for audit
assignment.
Following
is effective for fiscal years ending on or before December 31,
2003: To provide for continuity of cognizance, the determination
of the predominant amount of direct funding shall be based upon direct
Federal awards expended in the recipient's fiscal years ending in 1995,
2000, 2005, and every fifth year thereafter. For example, audit cognizance
for periods ending in 1997 through 2000 will be determined based on
Federal awards expended in 1995. (However, for States and local governments
that expend more than $25 million a year in Federal awards and have
previously assigned cognizant agencies for audit, the requirements of
this paragraph are not effective until fiscal years beginning after
June 30, 2000.)
Following
is effective for fiscal years ending after December 31, 2003: The
determination of the predominant amount of direct funding shall be based
upon direct Federal awards expended in the recipient's fiscal years
ending in 2004, 2009, 2014, and every fifth year thereafter. For example,
audit cognizance for periods ending in 2006 through 2010 will be determined
based on Federal awards expended in 2004. (However, for 2001 through
2005, the cognizant agency for audit is determined based on the predominant
amount of direct Federal awards expended in the recipent's fiscal year
ending in 2000).
Notwithstanding
the manner in which audit cognizance is determined, a Federal awarding
agency with cognizance for an auditee may reassign cognizance to another
Federal awarding agency which provides substantial direct funding and
agrees to be the cognizant agency for audit. Within 30 days after any
reassignment, both the old and the new cognizant agency for audit shall
notify the auditee, and, if known, the auditor of the reassignment. The
cognizant agency for audit shall:
(1) Provide
technical audit advice and liaison to auditees and auditors.
(2) Consider
auditee requests for extensions to the report submission due date required
by §___.320(a). The cognizant agency for audit may
grant extensions for good cause.
(3) Obtain
or conduct quality control reviews of selected audits made by non-Federal
auditors, and provide the results, when appropriate, to other interested
organizations.
(4) Promptly
inform other affected Federal agencies and appropriate Federal law enforcement
officials of any direct reporting by the auditee or its auditor of irregularities
or illegal acts, as required by GAGAS or laws and regulations.
(5) Advise
the auditor and, where appropriate, the auditee of any deficiencies found
in the audits when the deficiencies require corrective action by the auditor.
When advised of deficiencies, the auditee shall work with the auditor
to take corrective action. If corrective action is not taken, the cognizant
agency for audit shall notify the auditor, the auditee, and applicable
Federal awarding agencies and pass-through entities of the facts and make
recommendations for follow-up action. Major inadequacies or repetitive
substandard performance by auditors shall be referred to appropriate State
licensing agencies and professional bodies for disciplinary action.
(6) Coordinate,
to the extent practical, audits or reviews made by or for Federal agencies
that are in addition to the audits made pursuant to this part, so that
the additional audits or reviews build upon audits performed in accordance
with this part.
(7) Coordinate
a management decision for audit findings that affect the Federal programs
of more than one agency.
(8) Coordinate
the audit work and reporting responsibilities among auditors to achieve
the most cost-effective audit.
(9) For biennial
audits permitted under §___.220, consider auditee
requests to qualify as a low-risk auditee under §___.530(a).
(b) Oversight
agency for audit responsibilities. An auditee which does not have
a designated cognizant agency for audit will be under the general oversight
of the Federal agency determined in accordance with §___.105.
The oversight agency for audit:
(1) Shall
provide technical advice to auditees and auditors as requested.
(2) May assume
all or some of the responsibilities normally performed by a cognizant
agency for audit.
(c) Federal
awarding agency responsibilities. The Federal awarding agency shall
perform the following for the Federal awards it makes:
(1) Identify
Federal awards made by informing each recipient of the CFDA title and
number, award name and number, award year, and if the award is for
R&D.
When some of this information is not available, the Federal agency
shall provide information necessary to clearly describe the Federal
award.
(2) Advise
recipients of requirements imposed on them by Federal laws, regulations,
and the provisions of contracts or grant agreements.
(3) Ensure
that audits are completed and reports are received in a timely manner
and in accordance with the requirements of this part.
(4) Provide
technical advice and counsel to auditees and auditors as requested.
(5) Issue
a management decision on audit findings within six months after receipt
of the audit report and ensure that the recipient takes appropriate and
timely corrective action.
(6) Assign
a person responsible for providing annual updates of the compliance supplement
to OMB.
(d) Pass-through
entity responsibilities. A pass-through entity shall perform the following
for the Federal awards it makes:
(1) Identify
Federal awards made by informing each subrecipient of CFDA title and
number, award name and number, award year, if the award is R&D,
and name of Federal agency. When some of this information is not available,
the pass-through entity shall provide the best information available
to describe the Federal award.
(2) Advise
subrecipients of requirements imposed on them by Federal laws, regulations,
and the provisions of contracts or grant agreements as well as any supplemental
requirements imposed by the pass-through entity.
(3) Monitor
the activities of subrecipients as necessary to ensure that Federal awards
are used for authorized purposes in compliance with laws, regulations,
and the provisions of contracts or grant agreements and that performance
goals are achieved.
(4) Ensure
that subrecipients expending $300,000 ($500,000 for fiscal years ending
after December 31, 2003) or more in Federal awards during the subrecipient's
fiscal year have met the audit requirements of this part for that fiscal
year.
(5) Issue
a management decision on audit findings within six months after receipt
of the subrecipient's audit report and ensure that the subrecipient takes
appropriate and timely corrective action.
(6) Consider
whether subrecipient audits necessitate adjustment of the pass-through
entity's own records.
(7) Require
each subrecipient to permit the pass-through entity and auditors to have
access to the records and financial statements as necessary for the pass-through
entity to comply with this part.
§___.405
Management decision.
(a) General.
The management decision shall clearly state whether or not the audit finding
is sustained, the reasons for the decision, and the expected auditee action
to repay disallowed costs, make financial adjustments, or take other action.
If the auditee has not completed corrective action, a timetable for follow-up
should be given. Prior to issuing the management decision, the Federal
agency or pass-through entity may request additional
information or documentation from the auditee, including a request for
auditor assurance related to the documentation, as a way of mitigating
disallowed costs. The management decision should describe any appeal process
available to the auditee.
(b) Federal
agency. As provided in §___.400(a)(7), the cognizant
agency for audit shall be responsible for coordinating a management decision
for audit findings that affect the programs of more than one Federal agency.
As provided in §___.400(c)(5), a Federal awarding
agency is responsible for issuing a management decision for findings that
relate to Federal awards it makes to recipients. Alternate arrangements
may be made on a case-by-case basis by agreement among the Federal agencies
concerned.
(c) Pass-through
entity. As provided in §___.400(d)(5), the pass-through
entity shall be responsible for making the management decision for audit
findings that relate to Federal awards it makes to subrecipients.
(d) Time
requirements. The entity responsible for making the management decision
shall do so within six months of receipt of the audit report. Corrective
action should be initiated within six months after receipt of the audit
report and proceed as rapidly as possible.
(e) Reference
numbers. Management decisions shall include the reference numbers
the auditor assigned to each audit finding in accordance with §___.510(c).
Subpart
E--Auditors
§___.500
Scope of audit.
(a) General.
The audit shall be conducted in accordance with GAGAS. The audit shall
cover the entire operations of the auditee; or, at the option of the auditee,
such audit shall include a series of audits that cover departments, agencies,
and other organizational units which expended or otherwise administered
Federal awards during such fiscal year, provided that each such audit
shall encompass the financial statements and schedule of expenditures
of Federal awards for each such department, agency, and other organizational
unit, which shall be considered to be a non-Federal entity. The financial
statements and schedule of expenditures of Federal awards shall be for
the same fiscal year.
(b) Financial
statements. The auditor shall determine whether the financial statements
of the auditee are presented fairly in all material respects in conformity
with generally accepted accounting principles. The auditor shall also
determine whether the schedule of expenditures of Federal awards is presented
fairly in all material respects in relation to the auditee's financial
statements taken as a whole.
(c) Internal
control.
(1) In addition to the requirements of GAGAS, the auditor
shall perform procedures to obtain an understanding of internal control
over Federal programs sufficient to plan the audit to support a low assessed
level of control risk for major programs.
(2) Except
as provided in paragraph (c)(3) of this section, the
auditor shall:
(i) Plan
the testing of internal control over major programs to support a low
assessed level of control risk for the assertions relevant to the compliance
requirements for each major program; and
(ii) Perform
testing of internal control as planned in paragraph (c)(2)(i)
of this section.
(3) When
internal control over some or all of the compliance requirements for a
major program are likely to be ineffective in preventing or detecting
noncompliance, the planning and performing of testing described in paragraph
(c)(2) of this section are not required for those compliance
requirements. However, the auditor shall report a reportable condition
(including whether any such condition is a material weakness) in accordance
with §___.510, assess the related control risk at
the maximum, and consider whether additional compliance tests are required
because of ineffective internal control.
(d) Compliance.
(1) In addition to the requirements of GAGAS, the auditor shall determine
whether the auditee has complied with laws, regulations, and the provisions
of contracts or grant agreements that may have a direct and material
effect on each of its major programs.
(2) The principal
compliance requirements applicable to most Federal programs and the compliance
requirements of the largest Federal programs are included in the compliance
supplement.
(3) For the
compliance requirements related to Federal programs contained in the compliance
supplement, an audit of these compliance requirements will meet the requirements
of this part. Where there have been changes to the compliance requirements
and the changes are not reflected in the compliance supplement, the auditor
shall determine the current compliance requirements and modify the audit
procedures accordingly. For those Federal programs not covered in the
compliance supplement, the auditor should use the types of compliance
requirements contained in the compliance supplement as guidance for identifying
the types of compliance requirements to test, and determine the requirements
governing the Federal program by reviewing the provisions of contracts
and grant agreements and the laws and regulations referred to in such
contracts and grant agreements.
(4) The compliance
testing shall include tests of transactions and such other auditing procedures
necessary to provide the auditor sufficient evidence to support an opinion
on compliance.
(e) Audit
follow-up. The auditor shall follow-up on prior audit findings, perform
procedures to assess the reasonableness of the summary schedule of prior
audit findings prepared by the auditee in accordance with §___.315(b),
and report, as a current year audit finding, when the auditor concludes
that the summary schedule of prior audit findings materially misrepresents
the status of any prior audit finding. The auditor shall perform audit
follow-up procedures regardless of whether a prior audit finding relates
to a major program in the current year.
(f) Data
Collection Form. As required in §___.320(b)(3),
the auditor shall complete and sign specified sections of the data collection
form.
§___.505
Audit reporting.
The auditor's
report(s) may be in the form of either combined or separate reports and
may be organized differently from the manner presented in this section.
The auditor's report(s) shall state that the audit was conducted in accordance
with this part and include the following:
(a) An opinion
(or disclaimer of opinion) as to whether the financial statements are
presented fairly in all material respects in conformity with generally
accepted accounting principles and an opinion (or disclaimer of opinion)
as to whether the schedule of expenditures of Federal awards is presented
fairly in all material respects in relation to the financial statements
taken as a whole.
(b) A report
on internal control related to the financial statements and major programs.
This report shall describe the scope of testing of internal control and
the results of the tests, and, where applicable, refer to the separate
schedule of findings and questioned costs described in paragraph (d)
of this section.
(c) A report
on compliance with laws, regulations, and the provisions of contracts
or grant agreements, noncompliance with which could have a material effect
on the financial statements. This report shall also include an opinion
(or disclaimer of opinion) as to whether the auditee complied with laws,
regulations, and the provisions of contracts or grant agreements which
could have a direct and material effect on each major program, and, where
applicable, refer to the separate schedule of findings and questioned
costs described in paragraph (d) of this section.
(d) A schedule
of findings and questioned costs which shall include the following three
components:
(1) A summary
of the auditor's results which shall include:
(i) The
type of report the auditor issued on the financial statements of the
auditee (i.e., unqualified opinion, qualified opinion, adverse opinion,
or disclaimer of opinion);
(ii) Where
applicable, a statement that reportable conditions in internal control
were disclosed by the audit of the financial statements and whether
any such conditions were material weaknesses;
(iii) A
statement as to whether the audit disclosed any noncompliance which
is material to the financial statements of the auditee;
(iv) Where
applicable, a statement that reportable conditions in internal control
over major programs were disclosed by the audit and whether any such
conditions were material weaknesses;
(v) The
type of report the auditor issued on compliance for major programs (i.e.,
unqualified opinion, qualified opinion, adverse opinion, or disclaimer
of opinion);
(vi) A
statement as to whether the audit disclosed any audit findings which
the auditor is required to report under §___.510(a);
(vii) An
identification of major programs;
(viii)The
dollar threshold used to distinguish between Type A and Type B programs,
as described in §___.520(b); and
(ix) A
statement as to whether the auditee qualified as a low-risk auditee
under §___.530.
(2) Findings
relating to the financial statements which are required to be reported
in accordance with GAGAS.
(3) Findings
and questioned costs for Federal awards which shall include audit findings
as defined in §___.510(a).
(i) Audit
findings (e.g., internal control findings, compliance findings, questioned
costs, or fraud) which relate to the same issue should be presented
as a single audit finding. Where practical, audit findings should be
organized by Federal agency or pass-through entity.
(ii) Audit
findings which relate to both the financial statements and Federal awards,
as reported under paragraphs (d)(2) and (d)(3)
of this section, respectively, should be reported in both sections of
the schedule. However, the reporting in one section of the schedule
may be in summary form with a reference to a detailed reporting in the
other section of the schedule.
§___.510
Audit findings.
(a) Audit
findings reported. The auditor shall report the following as audit
findings in a schedule of findings and questioned costs:
(1) Reportable
conditions in internal control over major programs. The auditor's determination
of whether a deficiency in internal control is a reportable condition
for the purpose of reporting an audit finding is in relation to a type
of compliance requirement for a major program or an audit objective identified
in the compliance supplement. The auditor shall identify reportable conditions
which are individually or cumulatively material weaknesses.
(2) Material
noncompliance with the provisions of laws, regulations, contracts, or
grant agreements related to a major program. The auditor's determination
of whether a noncompliance with the provisions of laws, regulations, contracts,
or grant agreements is material for the purpose of reporting an audit
finding is in relation to a type of compliance requirement for a major
program or an audit objective identified in the compliance supplement.
(3) Known
questioned costs which are greater than $10,000 for a type of compliance
requirement for a major program. Known questioned costs are those specifically
identified by the auditor. In evaluating the effect of questioned costs
on the opinion on compliance, the auditor considers the best estimate
of total costs questioned (likely questioned costs), not just the questioned
costs specifically identified (known questioned costs). The auditor shall
also report known questioned costs when likely questioned costs are greater
than $10,000 for a type of compliance requirement for a major program.
In reporting questioned costs, the auditor shall include information to
provide proper perspective for judging the prevalence and consequences
of the questioned costs.
(4) Known
questioned costs which are greater than $10,000 for a Federal program
which is not audited as a major program. Except for audit follow-up, the
auditor is not required under this part to perform audit procedures for
such a Federal program; therefore, the auditor will normally not find
questioned costs for a program which is not audited as a major program.
However, if the auditor does become aware of questioned costs for a Federal
program which is not audited as a major program (e.g., as part of audit
follow-up or other audit procedures) and the known questioned costs are
greater than $10,000, then the auditor shall report this as an audit finding.
(5) The circumstances
concerning why the auditor's report on compliance for major programs is
other than an unqualified opinion, unless such circumstances are otherwise
reported as audit findings in the schedule of findings and questioned
costs for Federal awards.
(6) Known
fraud affecting a Federal award, unless such fraud is otherwise reported
as an audit finding in the schedule of findings and questioned costs for
Federal awards. This paragraph does not require the auditor to make an
additional reporting when the auditor confirms that the fraud was reported
outside of the auditor's reports under the direct reporting requirements
of GAGAS.
(7) Instances
where the results of audit follow-up procedures disclosed that the summary
schedule of prior audit findings prepared by the auditee in accordance
with §___.315(b) materially misrepresents the status
of any prior audit finding.
(b) Audit
finding detail. Audit findings shall be presented in sufficient detail
for the auditee to prepare a corrective action plan and take corrective
action and for Federal agencies and pass-through entities to arrive at
a management decision. The following specific information shall be included,
as applicable, in audit findings:
(1) Federal
program and specific Federal award identification including the CFDA title
and number, Federal award number and year, name of Federal agency, and
name of the applicable pass-through entity. When information, such as
the CFDA title and number or Federal award number, is not available, the
auditor shall provide the best information available to describe the Federal
award.
(2) The criteria
or specific requirement upon which the audit finding is based, including
statutory, regulatory, or other citation.
(3) The condition
found, including facts that support the deficiency identified in the audit
finding.
(4) Identification
of questioned costs and how they were computed.
(5) Information
to provide proper perspective for judging the prevalence and consequences
of the audit findings, such as whether the audit findings represent an
isolated instance or a systemic problem. Where appropriate, instances
identified shall be related to the universe and the number of cases examined
and be quantified in terms of dollar value.
(6) The possible
asserted effect to provide sufficient information to the auditee and Federal
agency, or pass-through entity in the case of a subrecipient, to permit
them to determine the cause and effect to facilitate prompt and proper
corrective action.
(7) Recommendations
to prevent future occurrences of the deficiency identified in the audit
finding.
(8) Views
of responsible officials of the auditee when there is disagreement with
the audit findings, to the extent practical.
(c) Reference
numbers. Each audit finding in the schedule of findings and questioned
costs shall include a reference number to allow for easy referencing of
the audit findings during follow-up.
§___.515
Audit working papers.
(a) Retention
of working papers. The auditor shall retain working papers and reports
for a minimum of three years after the date of issuance of the auditor's
report(s) to the auditee, unless the auditor is notified in writing by
the cognizant agency for audit, oversight agency for audit, or pass-through
entity to extend the retention period. When the auditor is aware that
the Federal awarding agency, pass-through entity, or auditee is contesting
an audit finding, the auditor shall contact the parties contesting the
audit finding for guidance prior to destruction of the working papers
and reports.
(b) Access
to working papers. Audit working papers shall be made available upon
request to the cognizant or oversight agency for audit or its designee,
a Federal agency providing direct or indirect funding, or GAO at the completion
of the audit, as part of a quality review, to resolve audit findings,
or to carry out oversight responsibilities consistent with the purposes
of this part. Access to working papers includes the right of Federal agencies
to obtain copies of working papers, as is reasonable and necessary.
§___.520
Major program determination.
(a) General.
The auditor shall use a risk-based approach to determine which Federal
programs are major programs. This risk-based approach shall include consideration
of: Current and prior audit experience, oversight by Federal agencies
and pass-through entities, and the inherent risk of the Federal program.
The process in paragraphs (b) through (i)
of this section shall be followed.
(b) Step
1.
(1) The auditor shall identify the larger Federal programs, which
shall be labeled Type A programs. Type A programs are defined as Federal
programs with Federal awards expended during the audit period exceeding
the larger of:
(i) $300,000
or three percent (.03) of total Federal awards expended in the case
of an auditee for which total Federal awards expended equal or exceed
$300,000 but are less than or equal to $100 million.
(ii) $3
million or three-tenths of one percent (.003) of total Federal awards
expended in the case of an auditee for which total Federal awards expended
exceed $100 million but are less than or equal to $10 billion.
(iii) $30
million or 15 hundredths of one percent (.0015) of total Federal awards
expended in the case of an auditee for which total Federal awards expended
exceed $10 billion.
(2) Federal
programs not labeled Type A under paragraph (b)(1) of
this section shall be labeled Type B programs.
(3) The inclusion
of large loan and loan guarantees (loans) should not result in the exclusion
of other programs as Type A programs. When a Federal program providing
loans significantly affects the number or size of Type A programs, the
auditor shall consider this Federal program as a Type A program and exclude
its values in determining other Type A programs.
(4) For biennial
audits permitted under §___.220, the determination
of Type A and Type B programs shall be based upon the Federal awards expended
during the two-year period.
(c) Step
2.
(1) The auditor shall identify Type A programs which are low-risk.
For a Type A program to be considered low-risk, it shall have been audited
as a major program in at least one of the two most recent audit periods
(in the most recent audit period in the case of a biennial audit), and,
in the most recent audit period, it shall have had no audit findings
under §___.510(a). However, the auditor may use
judgment and consider that audit findings from questioned costs under §___.510(a)(3) and §___.510(a)(4),
fraud under §___.510(a)(6),
and audit follow-up for the summary schedule of prior audit findings
under §___.510(a)(7) do not preclude the Type A
program from being low-risk. The auditor shall consider: the criteria
in §___.525(c), §___.525(d)(1), §___.525(d)(2),
and §___.525(d)(3); the results of audit follow-up;
whether any changes in personnel or systems affecting a Type A program
have significantly increased risk; and apply professional judgment in
determining whether a Type A program is low-risk.
(2) Notwithstanding
paragraph (c)(1) of this section, OMB may approve a Federal
awarding agency's request that a Type A program at certain recipients
may not be considered low-risk. For example, it may be necessary for a
large Type A program to be audited as major each year at particular recipients
to allow the Federal agency to comply with the Government Management Reform
Act of 1994 (31 U.S.C. 3515). The Federal agency shall notify the recipient
and, if known, the auditor at least 180 days prior to the end of the fiscal
year to be audited of OMB's approval.
(d) Step
3.
(1) The auditor shall identify Type B programs which are high-risk
using professional judgment and the criteria in §___.525.
However, should the auditor select Option 2 under Step 4 (paragraph (e)(2)(i)(B) of
this section), the auditor is not required to identify more high-risk
Type B programs than the number of low-risk Type A programs. Except for
known reportable conditions in internal control or compliance problems
as discussed in §___.525(b)(1), §___.525(b)(2),
and §___.525(c)(1), a single criteria in §___.525
would seldom cause a Type B program to be considered high-risk.
(2) The auditor
is not expected to perform risk assessments on relatively small Federal
programs. Therefore, the auditor is only required to perform risk assessments
on Type B programs that exceed the larger of:
(i) $100,000
or three-tenths of one percent (.003) of total Federal awards expended
when the auditee has less than or equal to $100 million in total Federal
awards expended.
(ii) $300,000
or three-hundredths of one percent (.0003) of total Federal awards expended
when the auditee has more than $100 million in total Federal awards
expended.
(e) Step
4. At a minimum, the auditor shall audit all of the following as major
programs:
(1) All Type
A programs, except the auditor may exclude any Type A programs identified
as low-risk under Step 2 (paragraph (c)(1) of this section).
(2) (i) High-risk
Type B programs as identified under either of the following two options:
(A) Option
1. At least one half of the Type B programs identified as high-risk
under Step 3 (paragraph (d) of this section), except
this paragraph (e)(2)(i)(A) does not require the auditor
to audit more high-risk Type B programs than the number of low-risk Type
A programs identified as low-risk under Step 2.
(B) Option
2. One high-risk Type B program for each Type A program identified
as low-risk under Step 2.
(ii) When
identifying which high-risk Type B programs to audit as major under
either Option 1 or 2 in paragraph (e)(2)(i)(A) or (B),
the auditor is encouraged to use an approach which provides an opportunity
for different high-risk Type B programs to be audited as major over
a period of time.
(3) Such
additional programs as may be necessary to comply with the percentage
of coverage rule discussed in paragraph (f) of this section.
This paragraph (e)(3) may require the auditor to audit
more programs as major than the number of Type A programs.
(f) Percentage
of coverage rule. The auditor shall audit as major programs Federal
programs with Federal awards expended that, in the aggregate, encompass
at least 50 percent of total Federal awards expended. If the auditee meets
the criteria in §___.530 for a low-risk auditee,
the auditor need only audit as major programs Federal programs with Federal
awards expended that, in the aggregate, encompass at least 25 percent
of total Federal awards expended.
(g) Documentation
of risk. The auditor shall document in the working papers the risk
analysis process used in determining major programs.
(h) Auditor's
judgment. When the major program determination was performed and documented
in accordance with this part, the auditor's judgment in applying the risk-based
approach to determine major programs shall be presumed correct. Challenges
by Federal agencies and pass-through entities shall only be for clearly
improper use of the guidance in this part. However, Federal agencies and
pass-through entities may provide auditors guidance about the risk of
a particular Federal program and the auditor shall consider this guidance
in determining major programs in audits not yet completed.
(i) Deviation
from use of risk criteria. For first-year audits, the auditor may
elect to determine major programs as all Type A programs plus any Type
B programs as necessary to meet the percentage of coverage rule discussed
in paragraph (f) of this section. Under this option,
the auditor would not be required to perform the procedures discussed
in paragraphs (c), (d), and (e)
of this section.
(1) A first-year
audit is the first year the entity is audited under this part or the first
year of a change of auditors.
(2) To ensure
that a frequent change of auditors would not preclude audit of high-risk
Type B programs, this election for first-year audits may not be used by
an auditee more than once in every three years.
§___.525
Criteria for Federal program risk.
(a) General.
The auditor's determination should be based on an overall evaluation of
the risk of noncompliance occurring which could be material to the Federal
program. The auditor shall use auditor judgment and consider criteria,
such as described in paragraphs (b), (c),
and (d) of this section, to identify risk in Federal
programs. Also, as part of the risk analysis, the auditor may wish to
discuss a particular Federal program with auditee management and the Federal
agency or pass-through entity.
(b) Current
and prior audit experience.
(1) Weaknesses in internal control over
Federal programs would indicate higher risk. Consideration should be
given to the control environment over Federal programs and such factors
as the expectation of management's adherence to applicable laws and regulations
and the provisions of contracts and grant agreements and the competence
and experience of personnel who administer the Federal programs.
(i) A Federal
program administered under multiple internal control structures may
have higher risk. When assessing risk in a large single audit, the auditor
shall consider whether weaknesses are isolated in a single operating
unit (e.g., one college campus) or pervasive throughout the entity.
(ii) When
significant parts of a Federal program are passed through to subrecipients,
a weak system for monitoring subrecipients would indicate higher risk.
(iii) The
extent to which computer processing is used to administer Federal programs,
as well as the complexity of that processing, should be considered by
the auditor in assessing risk. New and recently modified computer systems
may also indicate risk.
(2) Prior
audit findings would indicate higher risk, particularly when the situations
identified in the audit findings could have a significant impact on a
Federal program or have not been corrected.
(3) Federal
programs not recently audited as major programs may be of higher risk
than Federal programs recently audited as major programs without audit
findings.
(c) Oversight
exercised by Federal agencies and pass-through entities.
(1) Oversight
exercised by Federal agencies or pass-through entities could indicate
risk. For example, recent monitoring or other reviews performed by an
oversight entity which disclosed no significant problems would indicate
lower risk. However, monitoring which disclosed significant problems
would indicate higher risk.
(2) Federal
agencies, with the concurrence of OMB, may identify Federal programs which
are higher risk. OMB plans to provide this identification in the compliance
supplement.
(d) Inherent
risk of the Federal program.
(1) The nature of a Federal program may
indicate risk. Consideration should be given to the complexity of the
program and the extent to which the Federal program contracts for goods
and services. For example, Federal programs that disburse funds through
third party contracts or have eligibility criteria may be of higher risk.
Federal programs primarily involving staff payroll costs may have a high-risk
for time and effort reporting, but otherwise be at low-risk.
(2) The phase
of a Federal program in its life cycle at the Federal agency may indicate
risk. For example, a new Federal program with new or interim regulations
may have higher risk than an established program with time-tested regulations.
Also, significant changes in Federal programs, laws, regulations, or the
provisions of contracts or grant agreements may increase risk.
(3) The phase
of a Federal program in its life cycle at the auditee may indicate risk.
For example, during the first and last years that an auditee participates
in a Federal program, the risk may be higher due to start-up or closeout
of program activities and staff.
(4) Type
B programs with larger Federal awards expended would be of higher risk
than programs with substantially smaller Federal awards expended.
§___.530
Criteria for a low-risk auditee.
An auditee
which meets all of the following conditions for each of the preceding
two years (or, in the case of biennial audits, preceding two audit periods)
shall qualify as a low-risk auditee and be eligible for reduced audit
coverage in accordance with §___.520:
(a) Single
audits were performed on an annual basis in accordance with the provisions
of this part. A non-Federal entity that has biennial audits does not qualify
as a low-risk auditee, unless agreed to in advance by the cognizant or
oversight agency for audit.
(b) The auditor's
opinions on the financial statements and the schedule of expenditures
of Federal awards were unqualified. However, the cognizant or oversight
agency for audit may judge that an opinion qualification does not affect
the management of Federal awards and provide a waiver.
(c) There
were no deficiencies in internal control which were identified as material
weaknesses under the requirements of GAGAS. However, the cognizant or
oversight agency for audit may judge that any identified material weaknesses
do not affect the management of Federal awards and provide a waiver.
(d) None
of the Federal programs had audit findings from any of the following in
either of the preceding two years (or, in the case of biennial audits,
preceding two audit periods) in which they were classified as Type A programs:
(1) Internal
control deficiencies which were identified as material weaknesses;
(2) Noncompliance
with the provisions of laws, regulations, contracts, or grant agreements
which have a material effect on the Type A program; or(3) Known or likely
questioned costs that exceed five percent of the total Federal awards
expended for a Type A program during the year.
Appendix
A to Part __ - Data Collection
Form (Form SF-SAC)
Appendix
B to Part __ - Circular
A-133 Compliance Supplement
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