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§ 7502. —  Audit requirements; exemptions. - US § 7502. —  Audit requirements; exemptions. - US Code : CHAN ROBLES VIRTUAL LAW LIBRARY


[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.




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