OMB A-133

Circular A-133 -- Audits of States, Local Governments, and Non-Profit OrganizationsSkip

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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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