The following State policy regarding audits of recipients is effective for fiscal years ending after December 31, 2003:
All State agencies that disburse federal grant, State grant or State aid funds to recipients that expend $500,000 or more in federal financial assistance or State financial assistance within their fiscal year must require these recipients to have annual single audits or program-specific audits performed in accordance with the Act, Amendments, OMB Circular No. A-133 Revised and State policy. It should be noted that the federal government will not pay for a single audit for any recipient that expends less than $500,000 of federal funds.
All State agencies that disburse federal grant, State grant or State
aid funds to recipients that expend less than $500,000 in federal
or State financial assistance within their fiscal year, but expend
$100,000 or more in State and/or federal financial assistance within
their fiscal year, must require these recipients to have either
a financial statement audit performed in accordance with Government
Auditing Standards (Yellow Book) or a program-specific audit performed
in accordance with the Act, Amendments, OMB Circular No. A-133 Revised
and State policy.
Program-specific audits in accordance with OMB Circular No. A-133 Revised can be elected when a recipient expends federal or State awards under only one federal or State program and the federal or State program's laws, regulations, or grant agreements do not require a financial statement audit of the grantee.
If a State funding department determines that a financial statement audit
in accordance with Government Auditing Standards will not provide
adequate monitoring for their department's funds, each department
has the responsibility to perform other monitoring procedures. Such
procedures include on-site visits, reviews of documentation supporting
requests for reimbursement, and limited scope audits as outlined in
OMB Circular No. A-133 Revised.
State Cognizant Departments should consider various risk factors in developing recipient monitoring procedures, such as the relative size and complexity of federal and State awards administered by recipients, prior experience with each recipient, and the cost-effectiveness of various monitoring procedures.
Although OMB Circular No. A-133 Revised allows certain biennial audits; State policy continues to require all audits to be performed on an annual basis.
In addition to federally required reports and opinions, recipient single audits
must contain similar reports and opinions for State grant or State aid funds.
Recipient single audit reports must include a supplementary schedule of the
entity's State grant and State aid financial assistance programs.
This schedule entitled Schedule of Expenditures of State Financial
Assistance must show for each State program:
State Grantor Department
State Account Number
Program Amount (Amount of Funds Received)
Program Grant (Contract) Period
Fiscal Year Disbursements
Auditors should use the same risk based approach to audit and monitor State financial assistance, as used for federal programs. This approach is described in OMB Circular No. A-133 Revised.
Unless a funding department's policy requires an earlier submission, audit reports are due nine months after the end of the audit period. Funding departments must include audit report due dates in standard grant agreements.
Each department must maximize the recovery of federal audit costs (as direct or indirect) in accordance with federal OMB Circulars, to fund federal monitoring positions.
Any State department that mandates audit requirements, above and beyond the minimum federal and State requirements, is responsible for funding the additional audit work performed.
Additional audit requirements must be communicated to the recipient's State Cognizant Department Single Audit Contact and the recipient at least 180 days prior to the recipient's fiscal year end.
State Cognizant Departments must update the Grantee Single Audit Monitoring System on a timely basis.
In instances of reported recipient noncompliance with material terms and conditions of grant agreements or State and federal laws and regulations, State agencies must ensure that appropriate corrective action is initiated within six months after receipt of the audit report.