(a) Basic rule. Grantees and subgrantees are responsible for
obtaining audits in accordance with the Single Audit Act Amendments of
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of
States, Local Governments, and Non-Profit Organizations.'' The audits
shall be made by
an independent auditor in accordance with generally accepted government
auditing standards covering financial audits.
(b) Subgrantees. State or local governments, as those terms are
defined for purposes of the Single Audit Act Amendments of 1996, that
provide Federal awards to a subgrantee, which expends $300,000 or more
(or other amount as specified by OMB) in Federal awards in a fiscal
year, shall:
(1) Determine whether State or local subgrantees have met the audit
requirements of the Act and whether subgrantees covered by OMB Circular
A-110, ``Uniform Administrative Requirements for Grants and Agreements
with Institutions of Higher Education, Hospitals, and Other Non-Profit
Organizations,'' have met the audit requirements of the Act. Commercial
contractors (private for-profit and private and governmental
organizations) providing goods and services to State and local
governments are not required to have a single audit performed. State and
local governments should use their own procedures to ensure that the
contractor has complied with laws and regulations affecting the
expenditure of Federal funds;
(2) Determine whether the subgrantee spent Federal assistance funds
provided in accordance with applicable laws and regulations. This may be
accomplished by reviewing an audit of the subgrantee made in accordance
with the Act, Circular A-110, or through other means (e.g., program
reviews) if the subgrantee has not had such an audit;
(3) Ensure that appropriate corrective action is taken within six
months after receipt of the audit report in instance of noncompliance
with Federal laws and regulations;
(4) Consider whether subgrantee audits necessitate adjustment of the
grantee's own records; and
(5) Require each subgrantee to permit independent auditors to have
access to the records and financial statements.
(c) Auditor selection. In arranging for audit services, Sec. 97.36
shall be followed.
[53 FR 8069, 8087, Mar. 11, 1988, as amended at 62 FR 45939, 45942, Aug.
29, 1997]
