+-----------+--------------------------------+-----+------------------+
| ##        |                                |     |                  |
| Guide for |                                |     |                  |
|  Review o |                                |     |                  |
| f Adminis |                                |     |                  |
| trative a |                                |     |                  |
| nd Financ |                                |     |                  |
| ial Manag |                                |     |                  |
| ement Req |                                |     |                  |
| uirements |                                |     |                  |
+-----------+--------------------------------+-----+------------------+
| **Name of |                                |     |                  |
| Program   |                                |     |                  |
| Parti     |                                |     |                  |
| cipant:** |                                |     |                  |
|           |                                |     |                  |
|           |                                |     |                  |
+-----------+--------------------------------+-----+------------------+
| **Staff   |                                |     |                  |
| Con       |                                |     |                  |
| sulted:** |                                |     |                  |
|           |                                |     |                  |
|           |                                |     |                  |
+-----------+--------------------------------+-----+------------------+
| **Name(s) |                                | **D |                  |
| of        |                                | ate |                  |
| Revie     |                                | :** |                  |
| wer(s):** |                                |     |                  |
+-----------+--------------------------------+-----+------------------+

**NOTE:** All questions that address requirements contain the citation
for the source of the requirement (statute, regulation, NOFA, or grant
agreement). If the requirement is not met, HUD must make a finding of
noncompliance. All other questions (questions that do not contain the
citation for the requirement) do not address requirements, but are
included to assist the reviewer in understanding the participant\'s
program more fully and/or to identify issues that, if not properly
addressed, could result in deficient performance. Negative conclusions
to these questions may result in a \"concern\" being raised, but not a
\"**finding**.\"

**[Instructions:]{.underline}** The Administrative and Financial
Management review is divided into three components, the first two of
which include nine subject areas and a set of applicable questions. The
purpose of the first component is to determine whether the state\'s
records are sufficient to demonstrate that the state is administering
the program in accordance with applicable financial management
requirements. The second component is to determine if the state has
sufficient records to demonstrate that it has conducted financial
reviews of its recipients as may be necessary to ensure recipient
compliance with applicable financial management requirements. A
worksheet is included to assist in assessing the quality of
documentation concerning state reviews of recipients' compliance. The
third component is the compliance of the state and its recipients with
the audit requirements of the Single Audit Act as outlined in OMB
Circular A-133.

Relevant State CDBG program administrative requirements are contained in
24 CFR 570.489. As outlined in these regulations, a state has
considerable latitude in establishing its own administrative procedures
and standards. A notable difference between the State CDBG program and
the CDBG Entitlement program is that the uniform administrative
requirements of 24 CFR Part 85 *are not* automatically applicable to the
State program. However, an individual state may *choose* to adopt all or
part of these administrative requirements in their system. Similarly,
only Subpart I of 24 CFR 570 is automatically applicable to the State
CDBG program, although a state can choose to adopt all or part of the
CDBG Entitlement program regulations. OMB Circular A-87 and 31 CFR 205
(regarding Federal Grant Payments) **are** applicable to the State CDBG
Program.

To assess compliance under the administrative and financial management
topics, a reviewer must first determine whether the state has developed
required policies and procedures for itself as well as for the units of
local government that act as the state's recipients. Further, the
reviewer must assess whether these policies and procedures are adequate
to ensure that funds are used in compliance with applicable statutory
and regulatory provisions and that they are spent only for the
reasonable and necessary costs of operating programs \[see 24 CFR
570.489(d)\]. Determinations that the state's policies and procedures
are *inadequate* should generally be based on a *pattern* of failure to
prevent noncompliance under the state's existing systems. *Failure to
follow the state's established system(s)* can also constitute a finding
of noncompliance.

As a result of a state's flexibility in establishing policies and
procedures, this administrative and financial management Exhibit does
not include a series of specific questions. Instead, reviewers are
generally asked to determine if the state's system or systems, when
viewed as a whole, is/are adequate. If a reviewer needs additional
background on financial topics, the CDBG Entitlement Program financial
monitoring Exhibit in Chapter 3 can be used as guidance in identifying
issues that may be relevant to making such overall assessments. However,
if the CDBG Entitlement Exhibit is used, the reviewer should take care
to ensure that all findings are based on noncompliance with the Act,
and/or Subpart I of 24 CFR 570, and/or the state's own procedures
(including the portions of 24 CFR part 85 or the CDBG Entitlement
regulations that have been adopted by the state). Unless adopted by the
state, variances from part 85 or a section of the CDBG Entitlement
regulations are [not]{.underline} findings, although a reviewer may
suggest that the state consider using these authorities as guidance.

**State CDBG Program Review Subject Areas**

The review of eight of the nine areas mentioned above (A through I) is
documented through completion of the State-Level and the Recipient-Level
Worksheets contained in this Exhibit. The Recipient-Level Worksheet also
includes a State Review of Recipient Records Worksheet. A separate guide
and worksheet for assessing compliance with a ninth area (J, audit
requirements) is located at the end of this Exhibit. This Exhibit is
based on a review of records. The reviewer's sampling method and size
should be appropriate for the testing basis and the state's systems.
Examples of records that can be reviewed include, but are not limited
to, written policies and procedures, standard forms, mass mailings to
recipients, general ledgers, journal entries, subsidiary ledgers or
control systems, databases, bank statements, Treasury records, internal
management reports or systems, control matrices, project files,
expenditure and other support documentation, subgrant and other
contracts. Additional guidance for the HUD reviewer to use in reviewing
these areas follows.

A. [Financial Management and Record keeping Requirements:]{.underline}
State records should be accurate, current, and fully disclose financial
results at the state level. The state should have similar requirements
for its recipients. A state may satisfy requirements by: using existing
statewide requirements; adopting new program-specific requirements; or
applying 24 CFR Part 85.

B. [Retention and Custody Requirements:]{.underline} State records
should evidence record retention for a specified period after grant
activities are completed which takes into account possible litigation,
audit, claims and the like. The general retention period is the greater
of three years from HUD's closeout of the grant to the state, or the
period required by other applicable laws and regulations.

C. [Allowability and Allocability Requirements:]{.underline} The
reviewer is to evaluate and test the adequacy of guidance/principles
established by the state for determining the acceptability of direct and
indirect costs charged to the state program. OMB Circular A-87 is
applicable to the State CDBG program.

D. [Bonding and Insurance Requirements:]{.underline} Bid guarantees,
performance bonds, and payment bonds are normally part of established
procedures for construction contracts.

E. [Program Income Requirements:]{.underline} The reviewer is to
determine whether the state complies with HUD's program income
requirements and whether the state requires its recipients to comply
with these requirements. The regulations require that, to the maximum
feasible extent, program income should be disbursed prior to requesting
additional CDBG funds. The regulations at 24 CFR 570.489(e)(3)(ii)(B)
has been superseded by a statutory change to Section 104(j) of the HCDA
which provides that program income received by a local government after
closeout must be used for eligible activities that follow the
requirements of the HCDA.

F. [Cash Management Requirements:]{.underline} The reviewer is to
determine the adequacy of the state's cash management system.
Additionally, the reviewer should determine whether the recipient's cash
management procedures are adequate and how effectively they are enforced
by the state. A good cash management system should include documentation
equivalent to a Federal Cash Transaction Register which provides for the
daily recording of cash receipts, disbursements, and cash balances. A
well-managed system would also include procedures for forecasting
immediate cash requirements. The HUD reviewer may want to obtain and
review a copy of the state's agreement with the U.S. Treasury regarding
the timing of requests for funds. States must follow the cash management
requirements of 31 CFR 205.

G. [Property Management Requirements:]{.underline} The reviewer is to
identify and evaluate the property management procedures adopted by the
state for both state-acquired and recipient-acquired property. The
procedures should encompass such functions as (1) property records, (2)
physical inventories, (3) ownership rights, and (4) use and disposition
of property. While property management requirements covered in 24 CFR
part 85 (guidance unless adopted by the state) are concerned mostly with
personal property, the reviewer should ensure that the state and its
recipients have procedures to account for real property as well, as
required by 24 CFR 570.489(k).

H. [Procurement Requirements:]{.underline} The state must have
procedures which meet the requirements of 24 CFR 570.489(g). The
reviewer should determine whether procurement procedures of the state
and its recipients: (1) provide for maximum free and open competition;
(2) prescribe methods of procurement consistent with §570.489(g); (3)
provide for adequately documented procurement records; (4) provide for
agreements that include all applicable Federal contract provisions; and
(5) include in each agreement a clear and concise description of the
goods or services required.

I. [Conflict of Interest Requirements:]{.underline} The state is to have
standards governing its own actions and staff, standards governing
actions and staff at the state grant recipient level, and standards and
procedures for granting exceptions to state grant recipients.

J.  [Audit Requirements:]{.underline} The Single Audit Act, described in
    OMB Circular A-133, is applicable to the State CDBG program. States
    are required to have audits of their own activities and to establish
    oversight systems for entities they fund to ensure compliance with
    OMB A-133.

  ----------------------- ----------------------- -----------------------
  **Worksheet:                                    
  State-Level Financial                           
  Management**                                    

  **Program               **Reviewer:**           **Date:**      
  Participant:**                                  
  ----------------------- ----------------------- -----------------------

1\.

+-----------------------------------------------------------------------+
| Indicate which financial management procedures the state has chosen   |
| to adopt:                                                             |
|                                                                       |
| 24 CFR Part 85 Official statewide requirements Special                |
| state-established requirements for CDBG                               |
+-----------------------------------------------------------------------+
| **Describe Basis for Conclusion:**                                    |
+-----------------------------------------------------------------------+
|                                                                       |
+-----------------------------------------------------------------------+

2\.

+---+---------------------+----------+-----------+-----------+--------+
|   | SUBJECT AREA        | Does the | Are the   | Based on  | E      |
|   |                     | state    | p         | state     | xplain |
|   |                     | have     | rocedures | record    |        |
|   |                     |          |           |           | An     |
|   |                     | pr       | e         | review,   | swers. |
|   |                     | ocedures | quivalent | does the  |        |
|   |                     | g        | to part   | state     |        |
|   |                     | overning | 85,       |           |        |
|   |                     |          |           | comply    |        |
|   |                     | this     | Treasury  | with      |        |
|   |                     | subject  | or other  |           |        |
|   |                     | area?    |           | 24 CFR    |        |
|   |                     |          | requ      | Part 570? |        |
|   |                     | (**Y**es | irements? |           |        |
|   |                     | /**N**o) |           | (**Y**e   |        |
|   |                     |          | (**Y**e   | s/**N**o) |        |
|   |                     |          | s/**N**o) |           |        |
+===+=====================+==========+===========+===========+========+
| A | Financial           | \        | \         | \         |        |
| . | Management & Record | Y N      | Y N       | Y N       |        |
|   | Keeping             |          |           |           |        |
|   | Requirements        |          |           |           |        |
|   | \[§570.489 &        |          |           |           |        |
|   | §570.490\]          |          |           |           |        |
+---+---------------------+----------+-----------+-----------+--------+
| B | Retention & Custody | \        | \         | \         |        |
| . | Requirements        | Y N      | Y N       | Y N       |        |
|   | \[§570.490(d)\]     |          |           |           |        |
+---+---------------------+----------+-----------+-----------+--------+
| C | Allowability &      | \        | \         | \         |        |
| . | Allocability of     | Y N      | Y N       | Y N       |        |
|   | Costs \[§570.489(d) |          |           |           |        |
|   | & A-87\]            |          |           |           |        |
+---+---------------------+----------+-----------+-----------+--------+
| D | Bonding & Insurance | \        | \         | \         |        |
| . | Requirements        | Y N      | Y N       | Y N       |        |
+---+---------------------+----------+-----------+-----------+--------+
| E | Program Income      | \        | \         | \         |        |
| . | Requirements        | Y N      | Y N       | Y N       |        |
|   | \[§570.489(e) &     |          |           |           |        |
|   | HCDA, Section       |          |           |           |        |
|   | 104(j)\]            |          |           |           |        |
+---+---------------------+----------+-----------+-----------+--------+
| F | Cash Management     | \        | \         | \         |        |
| . | Requirements        | Y N      | Y N       | Y N       |        |
|   | \[§570.489( c) & 31 |          |           |           |        |
|   | CFR part 205\]      |          |           |           |        |
+---+---------------------+----------+-----------+-----------+--------+
| G | Property Management | \        | \         | \         |        |
| . | Requirements        | Y N      | Y N       | Y N       |        |
|   | \[§570.489(k)\]     |          |           |           |        |
+---+---------------------+----------+-----------+-----------+--------+
| H | Procurement         | \        | \         | \         |        |
| . | Requirements        | Y N      | Y N       | Y N       |        |
|   | \[570.489(g)\]      |          |           |           |        |
+---+---------------------+----------+-----------+-----------+--------+
| I | Conflict of         | \        | N/A       | \         |        |
| . | Interest            | Y N      |           | Y N       |        |
|   | Requirements        |          |           |           |        |
|   | \[§570.489(h)\]     |          |           |           |        |
+---+---------------------+----------+-----------+-----------+--------+

  ----------------------- ------------------------ ----------------------
  **Worksheet:                                     
  Recipient-Level                                  
  Financial Management**                           

  **Program Participant:  **Reviewer:      **      **Date:      **
       **                                          
  ----------------------- ------------------------ ----------------------

  ------------------------------------------------------------------------------------------------------------------------
       SUBJECT AREA                Has the state      Are the procedures Based on a review  Does the state     Explain
                                   established        equivalent to Part of the state's     have records       answers.
                                   requirements for   85, Treasury or    records, is the    showing it has     
                                   recipients for     other              state in           adequately         
                                   this subject area? requirements?      compliance with    reviewed           
                                   (**Y**es/**N**o)   (**Y**es/**N**o)   Part 570?          recipients'        
                                                                         (**Y**es/**N**o)   compliance?        
                                                                                            **\*\***           
                                                                                            (**Y**es/**N**o)   
  ---- --------------------------- ------------------ ------------------ ------------------ ------------------ -----------
  A.   Financial Management &      \                  \                  \                  \                       
       Record keeping Requirements Y N                Y N                Y N                Y N                
       \[§570.489 & §570.490\]                                                                                 

  B.   Retention & Custody         \                  \                  \                  \                       
       Requirements                Y N                Y N                Y N                Y N                
       \[§570.490(d)\]                                                                                         

  C.   Allowability & Allocability \                  \                  \                  \                       
       of                          Y N                Y N                Y N                Y N                
       Costs\[§570.489(d)&A-87\]                                                                               

  D.   Bonding & Insurance         \                  \                  \                  \                       
       Requirements                Y N                Y N                Y N                Y N                

  E.   Program Income Requirements \                  \                  \                  \                       
       \[§570.489(e)& HCDA,        Y N                Y N                Y N                Y N                
       Section 104(j)\]                                                                                        

  F.   Cash Management             \                  \                  \                  \                       
       Requirements \[§570.489(c)  Y N                Y N                Y N                Y N                
       & 31 CFR Part 205\]                                                                                     

  G.   Property Management         \                  \                  \                  \                       
       Requirements                Y N                Y N                Y N                Y N                
       \[§570.489(k)\]                                                                                         

  H.   Procurement Requirements    \                  \                  \                  \                       
       \[570.489(g)\]              Y N                Y N                Y N                Y N                

  I.   Conflict of Interest        \                  \                  N/A                \                       
       Requirements                Y N                Y N                                   Y N                
       \[§570.489(h)\]                                                                                         
  ------------------------------------------------------------------------------------------------------------------------

**\*\*** Answer after completing the Financial Management Review
Worksheet: State Review Of Recipient Records.

+--------------------------------+-------------------------------------+
| ## Worksheet: Stat             |                                     |
| e Review Of Recipient Records  |                                     |
+--------------------------------+-------------------------------------+
| ## Name                        |                                     |
| of Program Participant:        |                                     |
+--------------------------------+-------------------------------------+
| **Name of Reviewer:      **    | **Date:      **                     |
+--------------------------------+-------------------------------------+

**Instructions:** For each state grant recipient for which you reviewed
the state's records, assess the quality of the state's documentation
using the following eight factors. Your summary assessment of this
information should be used to answer Column 4 of the Review of
Recipient-Level Financial Management Worksheet.

+---+----------------------------+-----+-----+-----+-----+-----+-----+
|   | ###                        | *   | *   | *   | ##  | *   | *   |
|   |                            | *Re | *Re | *Re | Rec | *Re | *Re |
|   |                            | cip | cip | cip | ipi | cip | cip |
|   |                            | ien | ien | ien | ent | ien | ien |
|   |                            | t** | t** | t** |     | t** | t** |
|   |                            |     |     |     | **  |     |     |
|   |                            | **  | **  | **  |     | **  | **  |
|   |                            |     |     |     |  ** |     |     |
|   |                            |  ** |  ** |  ** |     |  ** |  ** |
+===+============================+=====+=====+=====+=====+=====+=====+
|   | ### ASSESSMENT FACTOR      | (   | (   | (   | (   | (   | (   |
|   |                            | **Y | **Y | **Y | **Y | **Y | **Y |
|   |                            | **e | **e | **e | **e | **e | **e |
|   |                            | s/* | s/* | s/* | s/* | s/* | s/* |
|   |                            | *N* | *N* | *N* | *N* | *N* | *N* |
|   |                            | *o) | *o) | *o) | *o) | *o) | *o) |
+---+----------------------------+-----+-----+-----+-----+-----+-----+
| 1 | Program information is     | \   | \   | \   | \   | \   | \   |
| \ | accurate, current, and     | Y N | Y N | Y N | Y N | Y N | Y N |
| . | fully discloses financial  |     |     |     |     |     |     |
|   | results of program.        |     |     |     |     |     |     |
|   |                            |     |     |     |     |     |     |
|   | \[24 CFR 570.489(d)\]      |     |     |     |     |     |     |
+---+----------------------------+-----+-----+-----+-----+-----+-----+
| 2 | Keeps financial results of | \   | \   | \   | \   | \   | \   |
| \ | program after close-out    | Y N | Y N | Y N | Y N | Y N | Y N |
| . | for reasonable periods for |     |     |     |     |     |     |
|   | claims, audits, etc. \[24  |     |     |     |     |     |     |
|   | CFR 570.490(d)\]           |     |     |     |     |     |     |
+---+----------------------------+-----+-----+-----+-----+-----+-----+
| 3 | Shows evidence of          | \   | \   | \   | \   | \   | \   |
| \ | adherence to established   | Y N | Y N | Y N | Y N | Y N | Y N |
| . | direct and indirect cost   |     |     |     |     |     |     |
|   | principles. \[OMB Circular |     |     |     |     |     |     |
|   | A-87\]                     |     |     |     |     |     |     |
+---+----------------------------+-----+-----+-----+-----+-----+-----+
| 4 | In contracts, shows        | \   | \   | \   | \   | \   | \   |
| \ | evidence of use of bid     | Y N | Y N | Y N | Y N | Y N | Y N |
| . | guarantees, performance    |     |     |     |     |     |     |
|   | and payment bonds.         |     |     |     |     |     |     |
+---+----------------------------+-----+-----+-----+-----+-----+-----+
| 5 | Requests for funds         | \   | \   | \   | \   | \   | \   |
| \ | documents evidence         | Y N | Y N | Y N | Y N | Y N | Y N |
| . | accounting for and using   |     |     |     |     |     |     |
|   | program income prior to    |     |     |     |     |     |     |
|   | requesting additional CDBG |     |     |     |     |     |     |
|   | funds. \[24 CFR            |     |     |     |     |     |     |
|   | 570.489(e); HCDA, Section  |     |     |     |     |     |     |
|   | 104(j)\]                   |     |     |     |     |     |     |
+---+----------------------------+-----+-----+-----+-----+-----+-----+
| 6 | Identical or equivalent    | \   | \   | \   | \   | \   | \   |
| \ | use of Federal Cash        | Y N | Y N | Y N | Y N | Y N | Y N |
| . | Transaction Register is    |     |     |     |     |     |     |
|   | indicated.                 |     |     |     |     |     |     |
|   |                            |     |     |     |     |     |     |
|   | \[24 CFR 570.489(c)\]      |     |     |     |     |     |     |
+---+----------------------------+-----+-----+-----+-----+-----+-----+
| 7 | Procedures for accounting  | \   | \   | \   | \   | \   | \   |
| \ | for real and personal      | Y N | Y N | Y N | Y N | Y N | Y N |
| . | property are followed.     |     |     |     |     |     |     |
|   | \[24 CFR 570.489(k)\]      |     |     |     |     |     |     |
+---+----------------------------+-----+-----+-----+-----+-----+-----+
| 8 | Indications exist of       | \   | \   | \   | \   | \   | \   |
| \ | procurement procedures in  | Y N | Y N | Y N | Y N | Y N | Y N |
| . | use involving competition, |     |     |     |     |     |     |
|   | methods of procurement and |     |     |     |     |     |     |
|   | appropriately written      |     |     |     |     |     |     |
|   | contracts. \[24 CFR        |     |     |     |     |     |     |
|   | 570.489(g)\]               |     |     |     |     |     |     |
+---+----------------------------+-----+-----+-----+-----+-----+-----+

[J. Audits Management System]{.underline}

**[Instructions]{.underline}:**

States are required to follow OMB Circular A-133, which establishes
audit requirements pursuant to the Single Audit Act Amendments of 1996
for state and local governments that receive Federal aid. The Circular
defines Federal responsibilities for implementing and monitoring those
requirements. This section of the Exhibit is designed to assist in
determining whether the state is in compliance with the required
elements of an audits management system. An audit management review
worksheet follows the section questions and can be used to supplement
your review by testing a sample of grants to state recipients against
the state's control system.

**[Questions:]{.underline}**

1\.

+------------------------------------------------------------+---------+
| Does the system have a procedure for informing recipients  | > **Yes |
| of the Single Audit Act requirements?                      | > No**  |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(2)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

2\.

+------------------------------------------------------------+---------+
| Does the system have a way of determining that localities  | > **Yes |
| expending \$500,000 or more in Federal awards in one       | > No**  |
| fiscal year meet the requirements of Circular A-133?       |         |
|                                                            |         |
| \[OMB Circular A-133, §§\_\_\_ .200 and \_\_\_             |         |
| .400(d)(4)\]                                               |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

3\.

+------------------------------------------------------------+---------+
| a\. Does the system have a means of ensuring that audits   | > **Yes |
| are conducted at the proper time?                          | > No**  |
|                                                            |         |
| > \[OMB Circular A-133, §\_\_\_ .320(a)\]                  |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

+------------------------------------------------------------+---------+
| b.  Does the system have a means of ensuring that audits   | > **Yes |
|     are conducted by independent, qualified personnel?     | > No**  |
|                                                            |         |
| > \[OMB Circular A-133, §\_\_\_ .305\]                     |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

+------------------------------------------------------------+---------+
| c\. Does the system have a means of ensuring that audits   | > **Yes |
| are conducted in a manner which meets the Comptroller      | > No**  |
| General's audit standards at OMB Circular A-133 §\_\_\_    |         |
| .500?                                                      |         |
|                                                            |         |
| > \[OMB Circular A-133, §\_\_\_ .400(d)(4)\]               |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

4\.

+------------------------------------------------------------+---------+
| Does the system have a way of ensuring that each audit has | > **Yes |
| determined whether the financial statements present fairly | > No**  |
| the local government's financial position and the results  |         |
| of its financial operations in accordance with generally   |         |
| accepted accounting principles?                            |         |
|                                                            |         |
| \[OMB Circular A-133, §§\_\_\_ .400(d)(4) and \_\_\_       |         |
| .500(b)\]                                                  |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

5\.

+------------------------------------------------------------+---------+
| Does the system have a way of ensuring that each audit has | > **Yes |
| determined whether the local government has internal       | > No**  |
| accounting and other control systems to provide reasonable |         |
| assurance that it is managing Federal financial assistance |         |
| programs in compliance with applicable laws and            |         |
| regulations?                                               |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(3) and (4), as well  |         |
| as §\_\_\_ .500(c)\]                                       |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

6\.

+------------------------------------------------------------+---------+
| Does the system have a way of ensuring that each audit has | > **Yes |
| determined whether the local government has complied with  | > No**  |
| laws and regulations that may have a material effect on    |         |
| its financial statements and on each major Federal         |         |
| assistance program?                                        |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(3) and (4), as well  |         |
| as §\_\_\_ .500(d)\]                                       |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

7\.

+------------------------------------------------------------+---------+
| Does the system ensure that audit reports are submitted to | > **Yes |
| the state within the earlier of: (i) thirty (30) days      | > No**  |
| after receipt of the auditor's report(s); or (ii) nine (9) |         |
| months after the end of the audit period?                  |         |
|                                                            |         |
| \[OMB Circular A-133, §§\_\_\_ .235(c)(1), \_\_\_ .320(a), |         |
| and \_\_\_ .400(d)(4)\]                                    |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

8\.

+------------------------------------------------------------+---------+
| Does the system ensure that audit costs are allowable as a | > **Yes |
| direct cost or as an allocated indirect cost, as           | > No**  |
| determined in accordance with the applicable OMB cost      |         |
| principles?                                                |         |
|                                                            |         |
| \[OMB Circular A-133, §§\_\_\_ .230 and \_\_\_             |         |
| .400(d)(4)\]                                               |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

9\.

+------------------------------------------------------------+---------+
| Does the system include a process for reviewing and        | > **Yes |
| reaching determinations to accept or reject findings and   | > No**  |
| ensure determinations are properly documented?             |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(5)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

10\.

+------------------------------------------------------------+---------+
| Does the system have a process for referral of             | > **Yes |
| agency-contested findings and recommendations to senior    | > No**  |
| level officials, outside the normal chain of command, for  |         |
| resolution?                                                |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(5)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

11\.

+------------------------------------------------------------+---------+
| Does the system have a means for determining what          | > **Yes |
| corrective actions by the locality are necessary and       | > No**  |
| appropriate to resolve findings and that such actions are  |         |
| taken?                                                     |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(5)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

12\.

+------------------------------------------------------------+---------+
| Does the system ensure that the state issues management    | > **Yes |
| decisions for audit findings within six months after       | > No**  |
| receipt of recipient audit reports, and provide follow-up  |         |
| to ensure that the recipient takes appropriate and timely  |         |
| corrective action?                                         |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(5)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

13\.

+------------------------------------------------------------+---------+
| Does the system have a means for deciding whether the      | > **Yes |
| local government audit necessitates adjustment of the      | > No**  |
| state records?                                             |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(6)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

14\.

+------------------------------------------------------------+---------+
| Did record review disclose any items that should have been | > **Yes |
| adjusted in the state's records, but were not?             | > No**  |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(6)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

15\.

+------------------------------------------------------------+---------+
| Does the system require each local government to permit    | > **Yes |
| independent auditors and state staff to have access to the | > No**  |
| records and financial statements, as necessary, to comply  |         |
| with the Circular?                                         |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(7)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

16\.

+------------------------------------------------------------+---------+
| Does the system have a procedure to promptly inform HUD    | > **Yes |
| and federal law enforcement authorities of illegal acts or | > No**  |
| irregularities?                                            |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(3)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

17\.

+------------------------------------------------------------+---------+
| Does the system have a procedure to inform state and local | > **Yes |
| law enforcement authorities of illegal acts or             | > No**  |
| irregularities?                                            |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .400(d)(3)\]                 |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

18\.

+------------------------------------------------------------+---------+
| Is there a procedure to establish an account receivable    | > **Yes |
| from the local government when a monetary sanction is      | > No**  |
| involved?                                                  |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

19\.

+------------------------------------------------------------+---------+
| Is there a means of ensuring consistent treatment of all   | > **Yes |
| audit findings?                                            | > No**  |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

20\.

+------------------------------------------------------------+---------+
| Does the state make positive efforts to utilize small      | > **Yes |
| businesses, minority-owned firms, and women's business     | > No**  |
| enterprises in procuring audit services, and does its      |         |
| system encourage recipients to do the same?                |         |
|                                                            |         |
| \[OMB Circular A-133, §\_\_\_ .305(a)\]                    |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

21\.

+------------------------------------------------------------+---------+
| Did you note any other items relevant to the assessment of | > **Yes |
| the state's compliance with audits management system       | > No**  |
| requirements?                                              |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

22\.

+------------------------------------------------------------+---------+
| Based on the results of your review, does the state        | > **Yes |
| **fully** comply with its responsibility to establish and  | > No**  |
| maintain a system for ensuring that its recipients comply  |         |
| with OMB A-133?                                            |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

23\.

+------------------------------------------------------------+---------+
| Is the state in compliance with the public service cap of  |         |
| 15% as stated in Section 105(a)(8) of the HCDA?            |         |
|                                                            |         |
| \[Section 105(a)(8) of the HCDA\]                          |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

24\.

+------------------------------------------------------------+---------+
| Is the state in compliance with the planning and           |         |
| administrative cap of 20%?                                 |         |
|                                                            |         |
| \[24 CFR 570.489(a)(3)\]                                   |         |
+------------------------------------------------------------+---------+
| **Describe Basis for Conclusion:**                         |         |
+------------------------------------------------------------+---------+
|                                                            |         |
+------------------------------------------------------------+---------+

+-----------+--------------------------------+-----+------------------+
| **Guide   |                                |     |                  |
| for       |                                |     |                  |
| Review of |                                |     |                  |
| Financial |                                |     |                  |
| Man       |                                |     |                  |
| agement** |                                |     |                  |
|           |                                |     |                  |
| **OMB     |                                |     |                  |
| Circular  |                                |     |                  |
| A-133     |                                |     |                  |
| Audits    |                                |     |                  |
| M         |                                |     |                  |
| anagement |                                |     |                  |
| System    |                                |     |                  |
| Review    |                                |     |                  |
| Wo        |                                |     |                  |
| rksheet** |                                |     |                  |
+-----------+--------------------------------+-----+------------------+
| **Name of |                                |     |                  |
| Program   |                                |     |                  |
| Parti     |                                |     |                  |
| cipant:** |                                |     |                  |
|           |                                |     |                  |
|           |                                |     |                  |
+-----------+--------------------------------+-----+------------------+
| **Staff   |                                |     |                  |
| Con       |                                |     |                  |
| sulted:** |                                |     |                  |
|           |                                |     |                  |
|           |                                |     |                  |
+-----------+--------------------------------+-----+------------------+
| **Name(s) |                                | **D |                  |
| of        |                                | ate |                  |
| Revie     |                                | :** |                  |
| wer(s):** |                                |     |                  |
+-----------+--------------------------------+-----+------------------+

**[Instructions]{.underline}:**

This worksheet is intended to supplement the information contained in
Section J, "Audits Management," of the **Guide for Review of Financial
Management**. Where unit of local government audits are reviewed to test
the implementation of the state's system, select a sample of grants and
insert the names of the unit of government in column (a) of Section A.
Provide due dates and receipt deadlines in columns (b) through (e) of
Section A; and answer **Y**es or **N**o, as appropriate, in columns (f)
through (j) of Section B.

[A. Receipt Deadlines]{.underline}

+---+----------------+-----------+-----------+-----------+-----------+
|   | \(a\)          | \(b\)     | \(c\)     | \(d\)     | \(e\)     |
+---+----------------+-----------+-----------+-----------+-----------+
|   | ##             | **Fiscal  | **Audit** | **Audit** | **Audit   |
|   | Recipient Name | Year End  |           |           | R         |
|   |                | Date**    | **Report  | **Due     | eceived** |
|   |                |           | Date**    | Date**    |           |
|   |                |           |           |           | **Date**  |
+---+----------------+-----------+-----------+-----------+-----------+
| 1 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+
| 2 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+
| 3 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+
| 4 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+
| 5 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+
| 6 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+
| 7 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+
| 8 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+
| 9 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+
| 1 |                |           |           |           |           |
| 0 |                |           |           |           |           |
| \ |                |           |           |           |           |
| . |                |           |           |           |           |
+---+----------------+-----------+-----------+-----------+-----------+

[B. Were Requirements Met?]{.underline} (Yes/No; N/A if no corrective
actions called for)

+---+---------+-----------+--------------+----------+---------------+
|   | \(f\)   | \(g\)     | \(h\)        | \(i\)    | \(j\)         |
+---+---------+-----------+--------------+----------+---------------+
|   | ## A-1  | **C       | **Corrective | **Co     | **Corrective  |
|   | 33 Met? | orrective | Actions      | rrective | Actions**     |
|   |         | Actions   | D            | Actions  |               |
|   |         | Ac        | ocumented?** | Taken?** | **Taken in 6  |
|   |         | cepted?** |              |          | months?**     |
+---+---------+-----------+--------------+----------+---------------+
| 1 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+
| 2 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+
| 3 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+
| 4 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+
| 5 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+
| 6 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+
| 7 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+
| 8 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+
| 9 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+
| 1 |         |           |              |          |               |
| 0 |         |           |              |          |               |
| \ |         |           |              |          |               |
| . |         |           |              |          |               |
+---+---------+-----------+--------------+----------+---------------+

[C. Conclusions]{.underline}

  -----------------------------------------------------------------------
  Explain responses, including negative responses or delays in complying
  with the required deadlines.

  **Describe Basis for Conclusion:**

       
  -----------------------------------------------------------------------