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ENVIRONMENTAL
PROTECTION AGENCY
CFDA 66.458 CAPITALIZATION
GRANTS FOR STATE REVOLVING FUNDS
I. PROGRAM OBJECTIVES
Capitalization grants
are awarded to States to create and maintain Clean Water State Revolving
Funds (CWSRFs) to: (1) enable States to encourage construction of wastewater
treatment facilities to meet the enforceable requirements of the Clean
Water Act (Act); (2) increase the emphasis on nonpoint source pollution
control and protection of estuaries; and (3) establish permanent financing
institutions in each State to provide continuing sources of financing
to maintain water quality. The CWSRF provides loans and other types of
financial assistance (but not grants) to qualified communities and local
agencies. The CWSRF is a permanent revolving fund to provide loans and
other assistance (40 CFR section 35.3115).
II. PROGRAM PROCEDURES
The CWSRF program
is established in each State by capitalization grants from the Environmental
Protection Agency (EPA). Since the enabling legislation was enacted in
1987, capitalization grants have been available to States in most years.
EPA implements the CWSRF in a manner that preserves a high degree of flexibility
for States in operating their revolving funds in accordance with each
State's unique needs and circumstances.
States are required
to provide an amount equal to 20 percent of the capitalization grant as
State matching funds in order to receive a grant. Capitalization grant
applications shall include: (1) an Intended Use Plan (IUP), which lists
proposed projects eligible for financing from CWSRF loans; (2) an identification
of the source of the matching amount; (3) a proposed payment schedule;
and, (4) certain certifications and demonstrations. States may transfer
an amount up to 33 percent of its CWSRF capitalization grant to the Drinking
Water State Revolving Fund (DWSRF) (CFDA 66.468) or an equivalent amount
from the DWSRF to the CWSRF.
The State shall provide
an Annual Report to the EPA on its CWSRF program.
Source of Governing
Requirements
The CWSRF program
is authorized under Title VI of the Act and the implementing regulations
are in 40 CFR part 35, subpart K.
III. COMPLIANCE
REQUIREMENTS
In developing the
audit procedures to test compliance with the requirements for a Federal
program, the auditor should first look to Part 2, Matrix of Compliance
Requirements, to identify which of the 14 types of compliance requirements
described in Part 3 are applicable and then look to Parts 3 and 4 four
the details of the requirements.
The audit focus is
on a State's CWSRF program, rather than individual capitalization grants
awarded to States by EPA.
A. Activities
Allowed or Unallowed
1. The CWSRF
may provide financial assistance: (1) to municipalities, inter-municipal,
interstate, or State agencies for the construction of publicly owned
treatment works, as defined in section 212 of the Act that are on the
State's project priority list; (2) for implementing nonpoint source
management programs under section 319 of the Act; and (3) for developing
and implementing estuary management plans under section 320 of the Act.
The six allowable
types of financial assistance are:
a. Loans (not
grants) and other authorized forms of financial assistance for qualified
projects;
b. Refinancing
of existing debt obligations;
c. Guaranteeing
or purchasing of insurance for local debt obligations;
d. Guaranteeing
of or using as a source of repayment for CWSRF debt obligations (providing
that the net proceeds of the sale of such bonds are deposited in the
CWSRF);
e. Loan guarantees
for similar revolving funds established by municipalities or intermunicipal
agencies; and
f. Paying
CWSRF administrative expenses.
2. CWSRF funds
may be used for the reasonable costs of administering and managing the
CWSRF.
C. Cash Management
The State may draw
cash from the Letter-of-Credit (LOC) for :
1. Loans - when
the CWSRF receives a request from a loan recipient, based on incurred
costs, including pre-building and building costs.
2. Refinance
or purchase of municipal debt - generally, when at a rate no greater
than equal amounts over the maximum number of quarters that payments
can be made, and up to the portion of the LOC committed to the refinancing
or purchase of the local debt.
3. Purchase
of insurance - when insurance premiums are due.
4. Guarantees
and security for bonds - immediately, in the event of imminent default
in debt service payments on the guaranteed/secured debt.
5. Administrative
expenses - cash can be drawn based on a schedule that coincides with
the rate at which administrative expenses will be incurred (40 CFR section
35.3160).
G. Matching, Level
of Effort, Earmarking
1. Matching
Requirement
States are required
to deposit into the CWSRF from State monies, an amount equal to 20 percent
of each grant payment. If the State provides a match in excess of the
required amount, the excess balance may be banked toward subsequent
match requirements. States generally report the total amount of their
matching for a capitalization grant in an annual CWSRF report to EPA.
The match is required to be made on or before the time that EPA funds
are drawn (40 CFR section 35.3135(b)).
2. Level
of Effort - Not Applicable
3. Earmarking
The maximum amount
allowable for administering and managing the CWSRF is 4 percent of the
cumulative amount of capitalization grant awards received. When the
administrative expense of the CWSRF exceeds 4 percent, the excess must
be paid from sources outside the CWSRF (40 CFR section 35.3120(g)).
H. Period of Availability
of Funds
"Grant Payments"
from a capitalization grant shall begin in the quarter in which the
grant is awarded, and generally end no later than 8 quarters after the
grant is awarded (40 CFR section 35.3155(c)).
L. Reporting
1. Financial
Reporting
a. SF-269,
Financial Status Report - Applicable
b. SF-270,
Request for Advance or Reimbursement - Not Applicable
c. SF-271,
Outlay Report and Request for Reimbursement for Construction Program
- Not Applicable
d. SF-272,
Federal Cash Transactions Report - Applicable
2. Performance
Reporting - Not Applicable
3. Special Reporting
The State must
provide an Annual Report to EPA according to the schedule in the grant
agreement (OMB No. 2040-0118). The report shall address how the
State:
a. Conducted
environmental reviews for Section 212 projects funded by the CWSRF;
b. Deposited
the required matching funds;
N. Special Tests
and Provisions
1. Environmental
Review requirements
Compliance Requirement
- The State must conduct reviews of the potential environmental impacts
of all Section 212 construction projects receiving assistance from the
CWSRF, including nonpoint source pollution control and estuary protection
projects that are also Section 212 projects (40 CFR section 35.3140).
Audit Objective
- Determine whether the State is performing environmental reviews before
construction proceeds.
Suggested Audit
Procedures
a. Inquire
of CWSRF management about the environmental review procedures in place.
b. Select
a sample of projects that began during the year to ascertain that
the decisions were rendered prior to the project proceeding and were
approved in the State environmental review process.
2. Binding Commitments
Compliance Requirement
- A Abinding commitment@ is a legal obligation by a State to a local
recipient that defines the terms for assistance under the CWSRF. Cumulative
binding commitments must equal at least 120 percent of cumulative capitalization
grant payments received one year earlier. Binding commitments requirements
are intended to help assure that the State utilizes grant funds in a
timely manner. EPA may withhold future payments and require adjustments
to the payment schedules before releasing further payments if the State
does not meet the binding commitment requirement. States generally report
the total amount of their binding commitments in an annual CWSRF report
to EPA (40 CFR sections 35.3135(c) and 35.3165(a)).
Audit Objective
- Determine whether States have complied with the requirement to make
binding commitments equal to or greater than 120 percent of the amount
of the capitalization grants.
Suggested Audit
Procedure
a. Review
binding commitments in conjunction with the EPA payment schedules
to ascertain if the State entered into cumulative binding commitments
in an amount at least equal to 120 percent of the cumulative grant
payments received 1 year earlier (i.e., cumulative binding commitments
in the current year should be equal to or greater than 120 percent
of cumulative grant payments made through the previous year).
b. Test a
sample of binding commitments reported by the State to verify that
the amount and date agree with supporting documentation.
3. Fund Establishment,
Loan Repayments, and Fund Earnings
Compliance Requirements
- The State shall establish a separate account or series of accounts
that is dedicated solely to providing loans and other forms of financial
assistance. All loan repayments, including principal and interest, and
interest earnings on investments, must be credited directly to the CWSRF.
Repayment of loans shall begin within one year after project completion,
and loans shall be fully amortized over not more than 20 years after
project completion (40 CFR sections 35.3110(b) and 35.3120(a)).
Audit Objectives
- Determine whether the State has a separate account or series of accounts
for the CWSRF. Determine whether principal and interest payments, and
interest earnings on investments, were properly credited to the CWSRF.
Suggested Audit
Procedures
a. Ascertain
if the CWSRF is a separate account, or series of accounts, dedicated
solely to purposes of the program.
b. Test a
sample of projects funded by the CWSRF and for which repayments were
due during the year to determine that principal and interest payments
were properly credited to the CWSRF accounts.
c. Test a
sample of loan agreements and other project records to ascertain if
the repayments began within one year of project completion and the
loans are scheduled for full amortization within 20 years.
d. Obtain
a list of investments made during the year and ascertain if earnings
on investments were properly recorded in the CWSRF.
4. CWSRF as
Security for Bonds
Compliance Requirement
- To use the CWSRF as security or a source of revenue for the payment
of principal and interest on revenue or general obligation bonds issued
by the State, the net proceeds (i.e., funds raised from the sale of
bonds minus issuance costs) of the sale of such bonds must be deposited
in the CWSRF (40 CFR section 35.3120(d)).
Audit Objective
- Determine whether the State placed the net proceeds from the sale
of bonds guaranteed by the CWSRF into the CWSRF.
Suggested Audit
Procedures
Review bond documentation
and trace amounts qualifying as net proceeds to accounts in the CWSRF.
IV. OTHER INFORMATION
Subrecipients
- In years after the subrecipient has expended loan proceeds and completed
construction, and the subrecipient's only ongoing financial activity
of the program is the payment of principal and interest on outstanding
balances, the prior loan balances at the subrecipient level are not
considered to have continuing compliance requirements under OMB Circular
A-133 section ___.205(d). Prior loans which do not have continuing compliance
requirements other than to repay the loans are not considered Federal
awards expended and therefore are not required to be audited under OMB
Circular A-133.
ENVIRONMENTAL
PROTECTION AGENCY
CFDA 66.468 CAPITALIZATION
GRANTS FOR DRINKING WATER STATE REVOLVING FUND
I. PROGRAM OBJECTIVES
Capitalization grants
are awarded to States to create and maintain Drinking Water State Revolving
Funds (DWSRF) programs. States can use capitalization grant funds to establish
a revolving loan Fund (DWSRF Fund) to assist public water systems finance
the costs of infrastructure needed to achieve or maintain compliance with
Safe Drinking Water Act (SDWA) requirements and protect the public health
objectives of the Act. The DWSRF Fund can be used to provide loans and
other types of financial assistance for qualified communities, local agencies,
and private entities. States may also set aside certain percentages of
their capitalization grant or allotment for various activities that promote
source water protection and enhanced water systems management.
II. PROGRAM PROCEDURES
The DWSRF program
is established in each State by capitalization grants from the Environmental
Protection Agency (EPA) and State match equaling 20 percent of the EPA
capitalization grants. EPA implements the DWSRF program in a manner that
preserves flexibility for States in operating their program in accordance
with their unique needs and circumstances. States have the flexibility
to set aside up to 31 percent of their capitalization grants for other
related activities. States may also transfer an amount up to 33 percent
of its DWSRF capitalization grant to the Clean Water State Revolving Fund
(CWSRF) (CFDA 66.458) or an equivalent amount from the CWSRF to the DWSRF.
Capitalization grant
agreements include: (1) an application; (2) an Intended Use Plan (IUP),
which describes how the State intends to use funds made available to it,
including a list of proposed projects eligible for financing and a description
of the financial status of the program; (3) a proposed payment schedule;
(4) certain certifications and demonstrations which can be included in
an optional operating agreement; and (5) workplans describing use of set-aside
activities. Costs incurred between the time projects are approved by a
State and execution of a loan agreements are eligible for reimbursement.
The State shall provide
a Biennial Report to the EPA containing detailed information on how the
State met the goals and objectives of the previous two fiscal years as
stated in its IUP and grant agreement. Such report shall cover the State's
entire DWSRF program, including its set-aside activities.
Source of Governing
Requirements
This program is authorized
under Section 1452 of the Public Health Service Act (Title XIV), commonly
known as the SDWA (42 USC 300g-12).
Availability of Other
Program Information
EPA Drinking Water
State Revolving Fund Program Guidelines (DWSRF Guidelines) dated February
28, 1997 (EPA-816-R-97-005) were published in the Federal Register
on November 5, 1998, and are available on the Internet (http://www.epa.gov/OGWDW/regs/intro.html).
Other general information about the program is available on the EPA Drinking
Water State Revolving Fund home page (http://www.epa.gov/safewater/dwsrf.html).
III. COMPLIANCE
REQUIREMENTS
In developing the
audit procedures to test compliance with the requirements for a Federal
program, the auditor should first look to Part 2, Matrix of Compliance
Requirements, to identify which of the 14 types of compliance requirements
described in Part 3 are applicable and then look to Parts 3 and 4 for
the details of the requirements.
The audit focus is
on a State's DWSRF program, rather than individual capitalization grants
awarded to States by EPA.
A. Activities
Allowed or Unallowed
1. The DWSRF
program may provide the following financial assistance to publicly or
privately owned community water systems and non-profit non-community
water systems for eligible drinking water infrastructure projects (42
USC 300j-12 (a)(2) and (f)(2)):
(a) Making
loans for eligible projects.
(b) Purchasing
or refinancing existing debt obligations of municipal, intermunicipal
and interstate agencies entered into on or after July 1, 1993.
(c) Guarantee
of or purchasing insurance for local debt obligations.
(d) Providing
a source of revenue or security for DWSRF debt obligations, provided
that the net proceeds of the sale of such debt obligations are deposited
in the DWSRF.
2. A State may
set aside funds from the DWSRF for the following designated set-aside
activities (42 USC 300j-12 (g)(2) and (k)):
(a) Administrative
expenses (including technical assistance).
(b) Technical
assistance to small water systems.
(c) State
program management.
(d) Local
assistance and other state programs.
3. The DWSRF
may not provide assistance for (DWSRF Guidelines III.C.3):
(a) Dams or
reservoirs, water rights, laboratory fees for monitoring, system operation
and maintenance, or fire protection projects.
(b) Expansion
projects pursued solely in anticipation of future growth.
C. Cash Management
The State may draw
cash through the Automated Clearing House (ACH) for (DWSRF Guidelines
V.C.4):
1. Loans
- when the DWSRF receives a request from a loan recipient, based on
incurred costs, including pre-building and building costs.
2. Refinance
or purchase of municipal debt - generally, at a rate not greater
than equal amounts over the maximum number of quarters that payments
can be made, and up to the amount committed to the refinancing or purchase
of the local debt. A State may immediately draw cash for up to the greater
of $2 million or 5 percent of each fiscal year's capitalization grant
to refinance costs.
3. Purchase
of insurance - when insurance premiums are due.
4. Guarantees
and security for bonds - immediately, in the event of imminent default
in debt service payments on the guaranteed/secured debt; otherwise,
up to the amount dedicated for the guarantee or security based on actual
construction cost.
5. Set-Asides
- generally, on an incurred cost basis.
G. Matching, Level
of Effort, Earmarking
1. Matching
Requirement
a. States
are required to deposit into the DWSRF Fund from State monies, an
amount equal to 20 percent of each grant payment. The match is required
to be made on or before the time that EPA funds are drawn. If the
State provides a match in excess of the required amount, the excess
balance may be banked toward subsequent match requirements. States
generally report the total amount of their matching for a capitalization
grant in the Biennial DWSRF Report to EPA (42 USC j-12(e) and (g)(2)).
b. In the
case of the State Program Management set-aside, the State must also
provide an amount equal to 100 percent of said payments (42 USC j-12(g)(2)).
c. For grant
payments to the State from funds appropriated in Federal fiscal year
1997, the State may defer deposit of the matching amount until no
later than September 30, 1999.
2. Level of
Effort - Not Applicable
3. Earmarking
Up to 31 percent
of the allotment can be earmarked for set-aside activities as follows:
(a) Administrative
Expenses - Not to exceed 4 percent of the cumulative amount allotted
(42 USC 300j-12(g)(2)).
(b) Technical
Assistance to Small Systems - Not to exceed 2 percent of the cumulative
allotment (42 USC 300j-12(g)(2)).
(c) State
Program Management - Not to exceed 10 percent of the cumulative
allotment (42 USC 300j-12(g)(2)(A)-(D)).
(d) Local
Assistance and Other State Programs - Not to exceed 15 percent
of the capitalization grant and no more than 10 percent is used on
any one of the defined activities (42 USC 300j-12(k)).
A State cannot
use more than 30 percent of any capitalization grant to provide loan
forgiveness in the form of principal forgiveness or negative interest
rate loans to communities meeting the State's definition of disadvantaged,
or communities the State expects to become disadvantaged as a result
of the project (42 USC 300j-12 (d)).
H. Period of Availability
of Funds
Grant payments
from a capitalization grant shall begin no earlier than the quarter
in which the grant is awarded, and generally end no later than 8 quarters
after the grant is awarded, not to exceed 12 quarters from the date
of allotment of grant funds to the States (DWSRF Guidelines V.C.2).
J. Program Income
The State may charge
an application fee to process, manage, or review an application for
Federal assistance. Such fees may be collected in an account outside
the DWSRF and used to supplement administrative expenses. Monies in
this non-DWSRF account must be dedicated to the administrative purposes
associated with the DWSRF program. However, if these fees are deposited
into the DWSRF, they are subject to the uses of the DWSRF which does
not include the use of funds for administrative purposes (DWSRF Guidelines
II.B.3.a).
L. Reporting
1. Financial
Reporting
a. SF-269A,
Financial Status Report - Applicable
b. SF-270,
Request for Advance or Reimbursement - Not Applicable
c. SF-271,
Outlay Report and Request for Reimbursement for Construction Program
- Not Applicable
d. SF-272,
Federal Cash Transactions Report - Applicable
2. Performance
Reporting - Not Applicable
3. Special
Reporting - Not Applicable
N. Special Tests
and Provisions
1. Environmental
Review Requirements
Compliance Requirement
- The State must conduct reviews of the potential environmental impacts
of all infrastructure projects receiving assistance from the DWSRF program.
A State Environmental Review Process (SERP) that is equivalent to a
National Environmental Policy Act (NEPA) review must be performed on
projects with cumulative costs equal to the annual capitalization grant.
Other projects must be reviewed under an alternative SERP (DWSRF Guidelines
IV.B).
Audit Objective
- Determine whether the State performed environmental reviews before
construction proceeded.
Suggested Audit
Procedures
a. Inquire
of DWSRF management about the environmental review procedures in place.
b. Select
a sample of projects that began during the year to ascertain that
decisions were rendered prior to the project proceeding and were approved
in the SERP.
2. Binding Commitments
Compliance Requirement
- A "binding commitment" is a legal obligation by a State to a local
recipient that defines the terms for assistance under the DWSRF. Cumulative
binding commitments must be made in an amount equal to the amount of
each grant payment plus the required State match that is deposited into
the Fund within one year after the receipt of each grant payment. Payments
for set-asides are not included in the binding commitment calculation.
Binding commitment requirements are intended to help assure that the
State utilizes grant funds in a timely manner. EPA may withhold future
payments and require adjustments to the payment schedules before releasing
further payment if the State does not meet the binding commitment requirement.
States generally report the total amount of their binding commitments
in the Biennial DWSRF Program report to EPA (DWSRF Guidelines I.A.12).
Audit Objective
- Determine whether the State complied with the requirements to
make binding commitments in an amount equal to the amount of each grant
payment plus the required State match deposited into the Fund within
one year after the receipt of each grant payment.
Suggested Audit
Procedure
a. Review
binding commitments in conjunction with the EPA payment schedules
to ascertain if the State entered into binding commitments in an amount
equal to the cumulative amount of grant payments plus the cumulative
required State match deposited into the Fund, less cumulative set-aside
funds, within one year after the receipt of each grant payment.
b. Test a
sample of binding commitments reported by the State to verify that
the amount and date agree with supporting documentation.
3. Deposits
to the Fund
Compliance Requirements
- The State shall establish a separate account, or series of accounts,
that is dedicated solely to providing loans and other forms of financial
assistance. All loan repayments, including principal and interest, interest
earnings on investments, capitalization grants (except that portion
the State intends to use as set-asides), State match and transfers from
the CWSRF must be credited directly to the DWSRF Fund. Transfers between
the DWSRF and CWSRF must be approved the State Governor. Repayment of
loans shall begin within one year after project completion, and loans
shall be fully amortized over not more than 20 years after project completion,
with the exception that loans to qualified disadvantaged communities
can be amortized over 30 years (DWSRF Guidelines I.A and II.C.1.a).
Audit Objectives
- Determine whether the State has a separate account or series of accounts
for DWSRF loans. Determine whether principal and interest payments,
and interest earnings on investments, applicable portions of capitalization
grants, and State match were credited to the appropriate accounts.
Suggested Audit
Procedures
a. Ascertain
if the DWSRF is a separate account, or series of accounts, dedicated
solely to purposes of the program.
b. Test a
sample of projects funded by the DWSRF and for which repayments were
due during the year to determine that principal and interest payments
were properly credited directly to the DWSRF accounts.
c. Test a
sample of loan agreements and other project records to ascertain if
the repayments began within one year of project completion and the
loans are scheduled for full amortization within 20 years, or 30 years
for loans to disadvantaged communities.
d. Obtain
a list of investments made during the year and ascertain if earnings
on investments were directly credited to the DWSRF.
e. Obtain
an ACH cash draw schedule from the EPA Regional office and ascertain
if ACH cash draws were directly credited to the DWSRF and the appropriate
State match was deposited.
f. Ascertain
if a transfer between the DWSRF and CWSRF occurred and if the transfer
was approved by the State Governor.
4. DWSRF as
Security for Bonds
Compliance Requirement
- When the DWSRF is used as security or as a source of revenue for the
payment of principal and interest on revenue or general obligation bonds
issued by the State, the net proceeds (i.e., funds raised from the sale
of bonds less issuance costs) of the sale of such bonds must be deposited
in the DWSRF. This requirement includes the situation where the State
employs the cross-collateralization process permitted by the DWSRF program.
Cross-collateralization allows for certain assets of both the DWSRF
and the CWSRF to be pledged as collateral for a single or joint bond
issue in proportion to the assets offered as collateral. Proportionality
may be achieved at different levels of security: (1) at reserve level;
(2) at loan repayment level; or (3) using an alternative structure approved
by EPA (DWSRF Guidelines II.C.4).
Audit Objective
- Determine whether the State properly deposited and recorded the net
proceeds from the sale of bonds guaranteed by the DWSRF into the DWSRF
loan fund.
Suggested Audit
Procedures
a. Review
bond documentation and trace amounts qualifying as net proceeds to
the appropriate accounts in the DWSRF loan fund.
b. Ascertain
that the net bond proceeds were deposited into the DWSRF.
c. If the
State has employed a cross-collateralization technique, ascertain
that the net proceeds deposited into the DWSRF fund were proportionate
to the assets offered as collateral.
5. Repayment
of Set-Aside Loans
Compliance Requirement
- Assistance from the Local Assistance and Other State Programs
set-aside for assistance for land acquisition or conservation easements
for source water protection of a public water system or for implementation
of voluntary, incentive-based source water quality protection measures
for a community water system must be made in the form of a loan which
must be repaid within 20 years after completion of the project. Principal
and interest payments on these loans must be placed in the DWSRF Fund
or in a separate dedicated account or accounts for use of the same set-aside
activity in accordance with 42 USC 300j-12k (DWSRF Guidelines II.B.3).
Audit Objective
- Determine whether principal and interest payments on set-aside loans
directly credited to the DWSRF or a separate account to be used for
the same set-aside activity.
Suggested Audit
Procedures
Test a sample of
set-aside loan repayments to ascertain that they were credited to the
DWSRF Fund or in a separate dedicated account or accounts for additional
land acquisition or conservation easements for source water protection
of public water systems or for implementation of voluntary, incentive-based
source water quality protection measures for a community water system.
6. Disadvantaged
Assistance
Compliance Requirements
- A State may extend the term for a loan to a disadvantaged community
to up to 30 years after project completion (DWSRF Guidelines II.C.1).
Audit Objectives
- Determine whether communities receiving loans with repayment periods
exceeding 20 years and loans receiving any type of principal forgiveness
meet the State's definition of disadvantaged.
Suggested Audit
Procedures
a. Review
program and loan accounting records to identify any loans with repayment
periods exceeding 20 years, and loans receiving any type of principal
forgiveness, including negative amortization.
b. Review
the IUPs to determine which capitalization grants provided funding
for disadvantaged loans, and obtain the State's criteria for providing
disadvantaged assistance.
c. Review
documentation in loan files to confirm that loans to communities with
extended repayment periods or principal forgiveness meet the State's
definition of disadvantaged.
IV. OTHER INFORMATION
Subrecipients
- In years after the subrecipient has expended loan proceeds and completed
construction, and the subrecipient's only ongoing financial activity
of the program is the payment of principal and interest on outstanding
balances, the prior loan balances at the subrecipient level are not
considered to have continuing compliance requirements under OMB Circular
A-133 section ___.205(d). Prior loans which do not have continuing compliance
requirements other than to repay the loans are not considered Federal
awards expended and therefore are not required to be audited under OMB
Circular A-133.
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