§ 7502. — Audit requirements; exemptions.
[Laws in effect as of January 7, 2003]
[Document not affected by Public Laws enacted between
January 7, 2003 and December 19, 2003]
[CITE: 31USC7502]
TITLE 31--MONEY AND FINANCE
SUBTITLE V--GENERAL ASSISTANCE ADMINISTRATION
CHAPTER 75--REQUIREMENTS FOR SINGLE AUDITS
Sec. 7502. Audit requirements; exemptions
(a)(1)(A) Each non-Federal entity that expends a total amount of
Federal awards equal to or in excess of $300,000 or such other amount
specified by the Director under subsection (a)(3) in any fiscal year of
such non-Federal entity shall have either a single audit or a program-
specific audit made for such fiscal year in accordance with the
requirements of this chapter.
(B) Each such non-Federal entity that expends Federal awards under
more than one Federal program shall undergo a single audit in accordance
with the requirements of subsections (b) through (i) of this section and
guidance issued by the Director under section 7505.
(C) Each such non-Federal entity that expends awards under only one
Federal program and is not subject to laws, regulations, or Federal
award agreements that require a financial statement audit of the non-
Federal entity, may elect to have a program-specific audit conducted in
accordance with applicable provisions of this section and guidance
issued by the Director under section 7505.
(2)(A) Each non-Federal entity that expends a total amount of
Federal awards of less than $300,000 or such other amount specified by
the Director under subsection (a)(3) in any fiscal year of such entity,
shall be exempt for such fiscal year from compliance with--
(i) the audit requirements of this chapter; and
(ii) any applicable requirements concerning financial audits
contained in Federal statutes and regulations governing programs
under which such Federal awards are provided to that non-Federal
entity.
(B) The provisions of subparagraph (A)(ii) of this paragraph shall
not exempt a non-Federal entity from compliance with any provision of a
Federal statute or regulation that requires such non-Federal entity to
maintain records concerning Federal awards provided to such non-Federal
entity or that permits a Federal agency, pass-through entity, or the
Comptroller General access to such records.
(3) Every 2 years, the Director shall review the amount for
requiring audits prescribed under paragraph (1)(A) and may adjust such
dollar amount consistent with the purposes of this chapter, provided the
Director does not make such adjustments below $300,000.
(b)(1) Except as provided in paragraphs (2) and (3), audits
conducted pursuant to this chapter shall be conducted annually.
(2) 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 chapter biennially. Audits conducted biennially under the
provisions of this paragraph shall cover both years within the biennial
period.
(3) Any nonprofit 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 chapter biennially.
Audits conducted biennially under the provisions of this paragraph shall
cover both years within the biennial period.
(c) Each audit conducted pursuant to subsection (a) shall be
conducted by an independent auditor in accordance with generally
accepted government auditing standards, except that, for the purposes of
this chapter, performance audits shall not be required except as
authorized by the Director.
(d) Each single audit conducted pursuant to subsection (a) for any
fiscal year shall--
(1) cover the operations of the entire non-Federal entity; or
(2) at the option of such non-Federal entity 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
organizational unit, which shall be considered to be a non-Federal
entity.
(e) The auditor shall--
(1) determine whether the financial statements are presented
fairly in all material respects in conformity with generally
accepted accounting principles;
(2) determine 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;
(3) with respect to internal controls pertaining to the
compliance requirements for each major program--
(A) obtain an understanding of such internal controls;
(B) assess control risk; and
(C) perform tests of controls unless the controls are deemed
to be ineffective; and
(4) determine whether the non-Federal entity has complied with
the provisions of laws, regulations, and contracts or grants
pertaining to Federal awards that have a direct and material effect
on each major program.
(f)(1) Each Federal agency which provides Federal awards to a
recipient shall--
(A) provide such recipient the program names (and any
identifying numbers) from which such awards are derived, and the
Federal requirements which govern the use of such awards and the
requirements of this chapter; and
(B) review the audit of a recipient as necessary to determine
whether prompt and appropriate corrective action has been taken with
respect to audit findings, as defined by the Director, pertaining to
Federal awards provided to the recipient by the Federal agency.
(2) Each pass-through entity shall--
(A) provide such subrecipient the program names (and any
identifying numbers) from which such assistance is derived, and the
Federal requirements which govern the use of such awards and the
requirements of this chapter;
(B) monitor the subrecipient's use of Federal awards through
site visits, limited scope audits, or other means;
(C) review the audit of a subrecipient as necessary to determine
whether prompt and appropriate corrective action has been taken with
respect to audit findings, as defined by the Director, pertaining to
Federal awards provided to the subrecipient by the pass-through
entity; and
(D) require each of its subrecipients of Federal awards to
permit, as a condition of receiving Federal awards, the independent
auditor of the pass-through entity to have such access to the
subrecipient's records and financial statements as may be necessary
for the pass-through entity to comply with this chapter.
(g)(1) The auditor shall report on the results of any audit
conducted pursuant to this section, in accordance with guidance issued
by the Director.
(2) When reporting on any single audit, the auditor shall include a
summary of the auditor's results regarding the non-Federal entity's
financial statements, internal controls, and compliance with laws and
regulations.
(h) The non-Federal entity shall transmit the reporting package,
which shall include the non-Federal entity's financial statements,
schedule of expenditures of Federal awards, corrective action plan
defined under subsection (i), and auditor's reports developed pursuant
to this section, to a Federal clearinghouse designated by the Director,
and make it available for public inspection within the earlier of--
(1) 30 days after receipt of the auditor's report; or
(2)(A) for a transition period of at least 2 years after the
effective date of the Single Audit Act Amendments of 1996, as
established by the Director, 13 months after the end of the period
audited; or
(B) for fiscal years beginning after the period specified in
subparagraph (A), 9 months after the end of the period audited, or
within a longer timeframe authorized by the Federal agency,
determined under criteria issued under section 7504, when the 9-
month timeframe would place an undue burden on the non-Federal
entity.
(i) If an audit conducted pursuant to this section discloses any
audit findings, as defined by the Director, including material
noncompliance with individual compliance requirements for a major
program by, or reportable conditions in the internal controls of, the
non-Federal entity with respect to the matters described in subsection
(e), the non-Federal entity shall submit to Federal officials designated
by the Director, a plan for corrective action to eliminate such audit
findings or reportable conditions or a statement describing the reasons
that corrective action is not necessary. Such plan shall be consistent
with the audit resolution standard promulgated by the Comptroller
General (as part of the standards for internal controls in the Federal
Government) pursuant to section 3512(c).
(j) The Director may authorize pilot projects to test alternative
methods of achieving the purposes of this chapter. Such pilot projects
may begin only after consultation with the Chair and Ranking Minority
Member of the Committee on Governmental Affairs of the Senate and the
Chair and Ranking Minority Member of the Committee on Government Reform
and Oversight of the House of Representatives.
(Added Pub. L. 98-502, Sec. 2(a), Oct. 19, 1984, 98 Stat. 2329; amended
Pub. L. 103-272, Sec. 4(f)(1)(W), July 5, 1994, 108 Stat. 1363; Pub. L.
104-156, Sec. 2, July 5, 1996, 110 Stat. 1399.)
References in Text
The effective date of the Single Audit Act Amendments of 1996,
referred to in subsec. (h)(2)(A), is the effective date of Pub. L. 104-
156, which is classified generally to this chapter. See section 7507 of
this title.
Amendments
1996--Pub. L. 104-156 reenacted section catchline without change and
amended text generally, substituting present provisions for similar
provisions relating to audit requirements and exemptions from such
requirements for State and local governments receiving Federal financial
assistance of $100,000 or more in any fiscal year and requiring audits
to be conducted annually in most instances, to cover entirety of
government operations, for reports to be made on audits in specified
time period, and for appropriate corrective action plans to be submitted
to Federal officials for any material State or local noncompliance with
Federal laws and regulations.
1994--Subsec. (b)(2). Pub. L. 103-272, Sec. 4(f)(1)(W), substituted
``October 19, 1984'' for ``the date of enactment of this chapter'' in
subpar. (A) and for ``such date'' in subpar. (B).
Subsec. (d)(5), (6). Pub. L. 103-272, Sec. 4(f)(1)(W)(iii),
redesignated par. (6) as (5) and struck out former par. (5) which read
as follows: ``Each State or local government which, in any fiscal year
of such government, receives directly from the Department of the
Treasury a total of $25,000 or more under chapter 67 of this title
(relating to general revenue sharing) and which is required to conduct
an audit pursuant to this chapter for such fiscal year shall not have
the option provided by paragraph (1)(A) for such fiscal year.''
Subsec. (g). Pub. L. 103-272, Sec. 4(f)(1)(W)(iv), substituted
``section 3512(c)'' for ``section 3512(b)''.
Change of Name
Committee on Government Reform and Oversight of House of
Representatives changed to Committee on Government Reform of House of
Representatives by House Resolution No. 5, One Hundred Sixth Congress,
Jan. 6, 1999.
Section Referred to in Other Sections
This section is referred to in sections 7501, 7503, 7504, 7505 of
this title; title 42 section 300ff-75a; title 49 section 47107.
