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**Preface**

The Single Audit Act and Office of Management and Budget (OMB) Circular
A-133, "Audits of States, Local Governments, and Non-Profit
Organizations," govern the auditing of Federal awards made to
non-Federal entities.

**The purpose of this pamphlet is to provide basic information on the
single audit process in straightforward and concise language. Users
should refer to the Circular and other referenced documents for the
language of the actual requirements.**

The target audience for this pamphlet are officials of Federal awarding
agencies and recipient organizations. Glossary terms are bolded the
first time they are used in the narrative.

This pamphlet is a publication of the Grants Management Committee of the
U.S. Chief Financial Officers (CFO) Council. An electronic version of
the pamphlet, with hypertext links to authoritative and detailed source
materials, is posted on the Council's website which is accessible
through the Financial Management in Government (or FINANCENET) home
page: **www.financenet.gov**. Click on the "U.S. Chief Financial
Officers Council," and then on "Grants Management Committee" (Note:
Effective December 1, 2001, the CFO Council's Internet address will
change to: **http://cfoc.gov**).

Suggestions for improvements to the pamphlet can be made by e-mail to
the Grants Management Committee at: PL106107@os.dhhs.gov.

October 2001

i

**Table of Contents**

> Preface
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> i
>
> Table of Contents
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> ii
>
> **INTRODUCTION**
>
> History of the Single Audit
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> 1
>
> OMB Circular A-133
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> 2
>
> Circular A-133 Compliance Supplement
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>
> What the Single Audit Is Intended to Do
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**OVERVIEW**

> Funding Relationships and Responsibilities
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>
> Single Audit Process
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> 5
>
> Diagram
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> 8

**PRIMARY RESPONSIBILITIES**

> Non-Federal Entity
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> 10
>
> Auditee
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> 11
>
> Auditor
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> 12
>
> Federal Audit Clearinghouse
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**SUPPLEMENTAL INFORMATION AVAILABLE**

> **ON THE INTERNET**
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> 14
>
> **GLOSSARY**
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> 15

ii

+------------------+---------------------------------------------------+
| **INTRODUCTION** | [History of the Single Audit]{.underline}         |
|                  |                                                   |
| Background       | Over \$300 billion of Federal **awards**,         |
|                  | representing one-sixth of the annual Federal      |
|                  | budget, are expended by **non-Federal entities    |
|                  | (NFEs)**. An NFE is a state (including federally- |
|                  | recognized Indian tribes), local government,      |
|                  | university, or non-profit organization. The       |
|                  | **single audit** is the primary mechanism used by |
|                  | Federal agencies to ensure accountability for     |
|                  | Federal awards.                                   |
+------------------+---------------------------------------------------+
| Federal Audit    | The first organization-wide audit requirements    |
| Requirements     | were contained in Attachment P, Audit             |
|                  | Requirements, to OMB Circular A-102, "Grants and  |
|                  | Cooperative Agreements with State and Local       |
|                  | Governments" issued in 1979. Prior to that time,  |
|                  | each Federal awarding agency was responsible for  |
|                  | the audit of its own awards.                      |
|                  |                                                   |
|                  | Many NFEs received awards from more than one      |
|                  | Federal agency. Frequently the grant-by-grant     |
|                  | audit processes of the Federal agencies were not  |
|                  | coordinated, resulting in audits that overlapped  |
|                  | or were conducted at different times. This        |
|                  | inflated the audit costs to the Federal           |
|                  | Government and placed an undue administrative     |
|                  | burden on many NFEs. Additionally, some NFEs may  |
|                  | not have been audited at all. The Single Audit    |
|                  | Act of 1984 legislatively established uniform     |
|                  | audit requirements and an organization-wide audit |
|                  | process for state and local governments.          |
+------------------+---------------------------------------------------+
| Amendments of    | While the 1984 Act was a significant step forward |
| 1996             | in producing quality audits of Federal programs,  |
|                  | experience demonstrated that improvement could be |
|                  | made. This led to the Single Audit Act Amendments |
|                  | of 1996 which extended the statutory audit        |
|                  | requirement to non-profit organizations, placing  |
|                  | states, local governments, universities, and      |
|                  | non-profit organizations under the same audit     |
|                  | process. It also increased the expenditure level  |
|                  | from Federal program(s) from \$25,000 to          |
|                  | \$300,000 before a non-Federal entity becomes     |
|                  | subject to a single audit.                        |
+------------------+---------------------------------------------------+

+------------------+---------------------------------------------------+
| Purpose          | [OMB Circular A-133]{.underline}                  |
|                  |                                                   |
|                  | To implement the requirements of the 1996         |
|                  | amendments, the OMB Circular A-133 was revised    |
|                  | and renamed "Audits of States, Local Governments, |
|                  | and Non-Profit Organizations" (**Circular**). The |
|                  | purpose of the Circular is to set standards for   |
|                  | consistency and uniformity for the audits         |
|                  | required by the 1996 amendments.                  |
|                  |                                                   |
|                  | The Circular provides specific policy,            |
|                  | procedures, and criteria which the Federal        |
|                  | agencies, **auditees**, and **auditors** are      |
|                  | required to follow.                               |
+------------------+---------------------------------------------------+
| Organization     | The Circular is organized by Subparts:            |
|                  |                                                   |
|                  | [Subpart]{.underline} [Contents]{.underline}      |
|                  |                                                   |
|                  | General: The purpose of the Circular and          |
|                  | definitions of terms used frequently in the       |
|                  | **single audit process**.                         |
|                  |                                                   |
|                  | Audits: Specific information on audit             |
|                  | requirements and other information related to the |
|                  | performance of the audit.                         |
|                  |                                                   |
|                  | Auditees: Specific information on the             |
|                  | responsibilities of auditees.                     |
|                  |                                                   |
|                  | Federal Agencies Specific information on the      |
|                  | responsibilities of                               |
|                  |                                                   |
|                  | & Pass-Through Federal agencies and               |
|                  | **pass-through**                                  |
|                  |                                                   |
|                  | Entities: **entities (PTEs)**.                    |
|                  |                                                   |
|                  | Auditors: Specific information on the             |
|                  | responsibilities of auditors.                     |
+------------------+---------------------------------------------------+

+------------------+---------------------------------------------------+
| Purpose          | [Circular A-133 Compliance                        |
|                  | Supplement]{.underline}                           |
|                  |                                                   |
|                  | The purpose of the compliance supplement is to    |
|                  | provide guidance to the auditor regarding testing |
|                  | Federal program **compliance requirements**.      |
+------------------+---------------------------------------------------+
| Programs and     | The supplement provides audit guidance for over   |
|                  | 150 Federal programs identified by **CFDA         |
| Cluster of       | (Catalog of Federal Domestic Assistance)**        |
| Programs         | number. It also provides a narrative description  |
|                  | of each program and contains information to help  |
|                  | the auditor understand the purpose of the program |
|                  | and how it operates.                              |
|                  |                                                   |
|                  | A cluster of programs is a group of closely       |
|                  | related programs that share common compliance     |
|                  | requirements and are considered one program for   |
|                  | audit purposes. Clusters of programs are          |
|                  | identified in Part 5 of the Compliance            |
|                  | Supplement.                                       |
+------------------+---------------------------------------------------+
| Compliance       | A "Matrix of Compliance Requirements" identifies  |
| Requirements     | which of 14 types of compliance requirements may  |
|                  | apply to a Federal program.                       |
|                  |                                                   |
|                  | The auditor is required to utilize the supplement |
|                  | to identify the compliance requirements to be     |
|                  | tested. For each type of compliance requirement,  |
|                  | the supplement provides one or more audit         |
|                  | objectives and suggested audit procedures. The    |
|                  | auditor has the option to develop alternative     |
|                  | testing procedures as long as they meet the audit |
|                  | objective(s) related to the compliance            |
|                  | requirement being tested. Accordingly, the        |
|                  | supplement identifies [what]{.underline} normally |
|                  | is tested and provides the auditor the            |
|                  | flexibility to determine [how]{.underline} it is  |
|                  | tested.                                           |
|                  |                                                   |
|                  | The supplement also provides guidance to the      |
|                  | auditor on the auditing of programs not included  |
|                  | in the supplement.                                |
+------------------+---------------------------------------------------+
| Revisions to the | To accommodate new, revised, or terminated        |
| Compliance       | programs, OMB issues an annual revision to the    |
| Supplement       | supplement. Through their agency **Compliance     |
|                  | Supplement Policy Official,** Federal officials   |
|                  | can suggest improvements to the supplement.       |
|                  | Non-Federal officials can suggest improvements to |
|                  | OMB through an annual notice in the *Federal      |
|                  | Register* requesting comments.                    |
+------------------+---------------------------------------------------+

+------------------+---------------------------------------------------+
| Cost-Effective   | [What the Single Audit Is Intended to             |
| Audit            | Do]{.underline}                                   |
|                  |                                                   |
|                  | The single audit is intended to provide a         |
|                  | cost-effective audit of NFEs. Efficiencies can be |
|                  | considerable when an organization-wide audit, or  |
|                  | single audit, is conducted in lieu of multiple    |
|                  | audits of individual Federal programs. The        |
|                  | parties involved in the audit process know        |
|                  | beforehand what is expected and what the products |
|                  | of the audit will be. Furthermore, repeated       |
|                  | exposures to a structured audit process promote   |
|                  | discipline in an auditee's accounting practices.  |
|                  |                                                   |
|                  | The auditor provides an opinion as to whether the |
|                  | auditee's **financial statements** are presented  |
|                  | fairly, thus providing a tool to assess the       |
|                  | financial condition of the auditee.               |
|                  |                                                   |
|                  | A risk-based audit approach assures audit         |
|                  | coverage to high-dollar, high-risk Federal        |
|                  | programs and provides opportunities for the       |
|                  | auditing of small-dollar, high-risk programs.     |
+------------------+---------------------------------------------------+
| What the Single  | Single audit reports are not intended to provide  |
| Audit Is Not     | detailed audit coverage of all the Federal awards |
| Intended to Do   | or provide detailed financial information for     |
|                  | individual awards. To do so would be              |
|                  | cost-prohibitive.                                 |
+------------------+---------------------------------------------------+

+------------------+---------------------------------------------------+
| **OVERVIEW**     | The diagram on page 8 complements the narrative   |
|                  | of this section.                                  |
|                  |                                                   |
|                  | [Funding Relationships and                        |
|                  | Responsibilities]{.underline}                     |
+------------------+---------------------------------------------------+
| Federal Awarding | An award made by a Federal awarding agency to an  |
| Agency,          | NFE is direct Federal funding. An NFE receiving   |
|                  | direct funding is also called a **recipient**.    |
| Non-Federal      |                                                   |
| Entity, and      | Federal awarding agencies are required to provide |
| Recipient        | the recipient specific information regarding the  |
|                  | award and its Federal requirements.               |
+------------------+---------------------------------------------------+
| Pass-Through     | An NFE may provide a portion of its award to      |
| Entity and       | another NFE. The NFE providing the award is       |
| Subrecipient     | called a pass-through entity, or PTE. The NFE     |
|                  | receiving this indirect Federal funding is called |
|                  | a **subrecipient**. A subrecipient can also be a  |
|                  | PTE if it provides indirect funding to another    |
|                  | NFE.                                              |
|                  |                                                   |
|                  | A PTE is required to provide the subrecipient     |
|                  | specific information regarding the award and its  |
|                  | Federal requirements.                             |
+------------------+---------------------------------------------------+
| Program          | NFEs are required to maintain effective internal  |
| Requirements     | control and comply with all applicable laws and   |
|                  | regulations.                                      |
+------------------+---------------------------------------------------+
| Threshold        | [Single Audit Process]{.underline}                |
| Expenditure      |                                                   |
| Level            | An NFE which expends \$300,000 or more in Federal |
|                  | awards in its fiscal year is required to have a   |
|                  | single audit.                                     |
+------------------+---------------------------------------------------+
| Program-Specific | If an NFE expends funds under only one program    |
| Audit            | (excluding research and development) that meets   |
|                  | the expenditure level and a financial statement   |
| NFEs Not         | audit is not required, the NFE may arrange for a  |
| Required to Have | **program-specific audit** in place of a single   |
| an Audit         | audit.                                            |
|                  |                                                   |
|                  | An NFE that expends less than the expenditure     |
|                  | level is not required by the Circular to have a   |
|                  | single audit. However, upon request, it is        |
|                  | required to make its records available for        |
|                  | "review or audit" by appropriate officials. In    |
|                  | certain circumstances, a PTE may obtain a         |
|                  | limited-scope audit of its subrecipient that      |
|                  | expends less than the threshold expenditure       |
|                  | level.                                            |
+------------------+---------------------------------------------------+

+------------------+---------------------------------------------------+
| Audit            | NFEs subject to audit (auditees) must: (1)        |
| Requirements     | arrange for a timely audit; (2) prepare           |
|                  | appropriate financial statements and a schedule   |
|                  | of expenditures of Federal awards; (3) ensure the |
|                  | audit is properly completed; (4) submit the       |
|                  | single audit report when due; and (5) take        |
|                  | corrective action on **audit findings**.          |
+------------------+---------------------------------------------------+
| Cost of the      | The fair share of the cost of the single audit is |
| Audit            | an allowable cost to Federal awards provided that |
|                  | the audit was conducted in accordance with the    |
|                  | requirements of the Circular and the cost is not  |
|                  | otherwise prohibited by law or regulation.        |
+------------------+---------------------------------------------------+
| Conducting the   | The audit must be conducted in accordance with    |
| Audit            | the ***Government Auditing Standards***. The      |
|                  | auditor must: (1) audit and provide opinions on   |
|                  | the fair presentation of the financial statements |
|                  | and the schedule of expenditures of Federal       |
|                  | awards; (2) gain an understanding of **internal   |
|                  | control over** **Federal programs** and test      |
|                  | internal control over **major programs**; and     |
|                  |                                                   |
|                  | \(3\) audit and provide an opinion on compliance  |
|                  | with requirements for major programs.             |
+------------------+---------------------------------------------------+
| Single Audit     | The single audit report (report) includes:        |
| Report           |                                                   |
|                  | -   the financial statements (auditee's           |
|                  |     responsibility to provide);                   |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   a schedule of expenditures of Federal awards  |
|                  |     (auditee's responsibility to provide);        |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   auditor\'s opinions on the fair presentation  |
|                  |     of the financial statements and schedule of   |
|                  |     expenditures of Federal awards;               |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   auditor's report on internal control and      |
|                  |     compliance pertaining to financial reporting; |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   auditor's report on internal control and      |
|                  |     opinion on compliance pertaining to major     |
|                  |     programs;                                     |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   auditor's schedule of findings and questioned |
|                  |     costs;                                        |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   auditee's corrective action plans; and        |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   a summary schedule of prior audit findings    |
|                  |     which includes planned and completed          |
|                  |     corrective actions (auditee's responsibility  |
|                  |     to provide).                                  |
+------------------+---------------------------------------------------+

+------------------+---------------------------------------------------+
| Submission of    | The auditee is responsible for submitting a       |
| the Single Audit | report that meets the requirements of the         |
| Report           | Circular.                                         |
|                  |                                                   |
|                  | If the auditee is a subrecipient, it must also    |
|                  | forward a copy of a report containing audit       |
|                  | findings to affected PTEs. If the report contains |
|                  | no findings, the subrecipient is only required to |
|                  | provide the affected PTEs with a notification     |
|                  | that the audit was completed.                     |
+------------------+---------------------------------------------------+
| Public Record    | Most audit reports are a matter of public record. |
+------------------+---------------------------------------------------+
| SF-SAC Form and  | The **SF-SAC Form** provides information on the   |
|                  | results of the audit which is entered into a      |
| Federal Audit    | database maintained by the **Federal Audit        |
| Clearinghouse    | Clearinghouse (FAC)**.                            |
|                  |                                                   |
|                  | While both the auditee and the auditor complete   |
|                  | parts of the SF-SAC Form, the auditee is          |
|                  | responsible for the overall accuracy of the       |
|                  | information on the form. The auditee forwards the |
|                  | SF-SAC Form and the appropriate number of reports |
|                  | to the FAC.                                       |
+------------------+---------------------------------------------------+
| Corrective       | The auditee is responsible for preparing a        |
| Action Plan      | corrective action plan, taking corrective actions |
|                  | on audit findings, and reporting the status of    |
|                  | corrective actions in subsequent reports.         |
+------------------+---------------------------------------------------+
| Questioned Costs | An audit finding may include questioned program   |
|                  | costs. If any of the questioned costs are         |
|                  | disallowed by the **management decision**, the    |
|                  | auditee may have to refund the disallowed amount. |
+------------------+---------------------------------------------------+
| Management       | Within 6 months of its receipt of the report, the |
| Decision         | Federal awarding agency or PTE is required to     |
|                  | issue a management decision on each audit         |
|                  | finding. The management decision, which may be    |
|                  | called various names, is a written evaluation of  |
|                  | the audit finding(s) that specifies the necessity |
|                  | for corrective action by the auditee.             |
|                  |                                                   |
|                  | If the auditee disputes a management decision, it |
|                  | has rights of appeal.                             |
+------------------+---------------------------------------------------+

![](media/image3.png){width="10.188888888888888in"
height="6.649305555555555in"}

+------------------+---------------------------------------------------+
| Cognizant Agency | Recipients which annually expend awards in excess |
|                  | of an amount specified by the Circular (currently |
| for Audit        | \$25 million) have a Federal cognizant agency for |
|                  | audit. The cognizant agency for audit provides    |
|                  | technical audit advice; considers requests for    |
|                  | extensions to the submission due date for the     |
|                  | audit report; coordinates the management decision |
|                  | for audit findings that affect more than one      |
|                  | Federal agency; coordinates quality control       |
|                  | reviews; and conducts other activities required   |
|                  | by the Circular.                                  |
|                  |                                                   |
|                  | A recipient's cognizant agency for audit for the  |
|                  | 5-year period                                     |
|                  |                                                   |
|                  | FY 2001 through FY 2005 is the Federal awarding   |
|                  | agency which provided the most direct funding for |
|                  | FY 2000. The cognizant agency for audit will be   |
|                  | redetermined for the 5-year period starting with  |
|                  | FY 2006. The cognizant agency for audit may be    |
|                  | different than the cognizant agency for indirect  |
|                  | cost.                                             |
+------------------+---------------------------------------------------+
| Oversight Agency | An NFE which does not have a cognizant agency has |
|                  | a Federal oversight agency. The oversight agency  |
|                  | is the Federal awarding agency that provides the  |
|                  | most direct funding or, if no direct funding, the |
|                  | most indirect funding. The oversight agency       |
|                  | provides technical audit advice and may assume    |
|                  | the duties of a cognizant agency.                 |
+------------------+---------------------------------------------------+
| Quality Control  | To ensure that single audits are performed in     |
|                  | accordance with applicable auditing standards,    |
|                  | the auditor's working papers are subject to a     |
|                  | quality control review by the cognizant agency    |
|                  | for audit, oversight agency, or Federal awarding  |
|                  | agency.                                           |
+------------------+---------------------------------------------------+
| Agency Contact   | Questions about the single audit process should   |
|                  | be directed to the agency contact(s) listed in    |
|                  | Appendix III of the compliance supplement.        |
+------------------+---------------------------------------------------+

+------------------+------------+------------+------------+------------+
| **PRIMARY        | [N         |            |            |            |
| RE               | on-Federal |            |            |            |
| SPONSIBILITIES** | Entity]{.  |            |            |            |
|                  | underline} |            |            |            |
| Managing the     |            |            |            |            |
| Award            | NFEs are   |            |            |            |
|                  | r          |            |            |            |
|                  | esponsible |            |            |            |
|                  | for        |            |            |            |
|                  | managing   |            |            |            |
|                  | their      |            |            |            |
|                  | awards.    |            |            |            |
|                  | This       |            |            |            |
|                  | includes   |            |            |            |
|                  | m          |            |            |            |
|                  | aintaining |            |            |            |
|                  | or         |            |            |            |
|                  | es         |            |            |            |
|                  | tablishing |            |            |            |
|                  | a system   |            |            |            |
|                  | of         |            |            |            |
|                  | internal   |            |            |            |
|                  | control    |            |            |            |
|                  | which      |            |            |            |
|                  | provides   |            |            |            |
|                  | reasonable |            |            |            |
|                  | assurance  |            |            |            |
|                  | that it is |            |            |            |
|                  | complying  |            |            |            |
|                  | with       |            |            |            |
|                  | pertinent  |            |            |            |
|                  | laws,      |            |            |            |
|                  | re         |            |            |            |
|                  | gulations, |            |            |            |
|                  | gove       |            |            |            |
|                  | rnmentwide |            |            |            |
|                  | req        |            |            |            |
|                  | uirements, |            |            |            |
|                  | and the    |            |            |            |
|                  | specific   |            |            |            |
|                  | conditions |            |            |            |
|                  | of its     |            |            |            |
|                  | award(s).  |            |            |            |
|                  | Add        |            |            |            |
|                  | itionally, |            |            |            |
|                  | the        |            |            |            |
|                  | accounting |            |            |            |
|                  | system     |            |            |            |
|                  | must be    |            |            |            |
|                  | able to    |            |            |            |
|                  | identify   |            |            |            |
|                  | all awards |            |            |            |
|                  | received   |            |            |            |
|                  | and the    |            |            |            |
|                  | amounts    |            |            |            |
|                  | expended   |            |            |            |
|                  | from each. |            |            |            |
+------------------+------------+------------+------------+------------+
| Governmentwide   |            |            |            |            |
| Requirements     |            |            |            |            |
+------------------+------------+------------+------------+------------+
|                  | Gove       |            |            |            |
|                  | rnmentwide |            |            |            |
|                  | Re         |            |            |            |
|                  | quirements |            |            |            |
|                  |            |            |            |            |
|                  | Covered by |            |            |            |
|                  | Single     |            |            |            |
|                  | Audit      |            |            |            |
+------------------+------------+------------+------------+------------+
|                  | Type of    | Cost       | Admi       | Audit      |
|                  |            |            | nistrative |            |
|                  | NFE        | Principles |            | Re         |
|                  |            |            | Re         | quirements |
|                  |            |            | quirements |            |
+------------------+------------+------------+------------+------------+
|                  | State &    | A-87       | A-102      | A-133      |
|                  |            |            |            |            |
|                  | Local      |            | Common     |            |
|                  | Gov=t      |            | Rule       |            |
+------------------+------------+------------+------------+------------+
|                  | Colleges & | A-21       | A-110      | A-133      |
|                  | Un         |            |            |            |
|                  | iversities |            |            |            |
+------------------+------------+------------+------------+------------+
|                  | Hospitals  | 45CFR 74   | A-110      | A-133      |
|                  | &          |            |            |            |
|                  |            |            |            |            |
|                  | Care       |            |            |            |
|                  | Facilities |            |            |            |
+------------------+------------+------------+------------+------------+
|                  | Other      | A-122      | A-110      | A-133      |
|                  |            |            |            |            |
|                  | Non-Profit |            |            |            |
+------------------+------------+------------+------------+------------+
|                  | The        |            |            |            |
|                  | gove       |            |            |            |
|                  | rnmentwide |            |            |            |
|                  | re         |            |            |            |
|                  | quirements |            |            |            |
|                  | above in   |            |            |            |
|                  | OMB        |            |            |            |
|                  | Circulars  |            |            |            |
|                  |            |            |            |            |
|                  | A-87,      |            |            |            |
|                  | A-21,      |            |            |            |
|                  | A-122,     |            |            |            |
|                  | A-133,     |            |            |            |
|                  | A-110 and  |            |            |            |
|                  | the A-102  |            |            |            |
|                  | common     |            |            |            |
|                  | rule are   |            |            |            |
|                  | available  |            |            |            |
|                  | at the OMB |            |            |            |
|                  | Grants     |            |            |            |
|                  | Management |            |            |            |
|                  | web site   |            |            |            |
|                  | at         |            |            |            |
|                  |            |            |            |            |
|                  | http:/     |            |            |            |
|                  | /www.omb.g |            |            |            |
|                  | ov/grants. |            |            |            |
+------------------+------------+------------+------------+------------+
| Monitoring       | PTEs are   |            |            |            |
| Subrecipients    | r          |            |            |            |
|                  | esponsible |            |            |            |
|                  | for        |            |            |            |
|                  | ensuring   |            |            |            |
|                  | their      |            |            |            |
|                  | subre      |            |            |            |
|                  | cipient(s) |            |            |            |
|                  | meet the   |            |            |            |
|                  | re         |            |            |            |
|                  | quirements |            |            |            |
|                  | of the     |            |            |            |
|                  | Circular   |            |            |            |
|                  | and        |            |            |            |
|                  | specific   |            |            |            |
|                  | re         |            |            |            |
|                  | quirements |            |            |            |
|                  | of the     |            |            |            |
|                  | award.     |            |            |            |
|                  |            |            |            |            |
|                  | PTEs are   |            |            |            |
|                  | r          |            |            |            |
|                  | esponsible |            |            |            |
|                  | for        |            |            |            |
|                  | preparing  |            |            |            |
|                  | management |            |            |            |
|                  | d          |            |            |            |
|                  | ecision(s) |            |            |            |
|                  | on         |            |            |            |
|                  | su         |            |            |            |
|                  | brecipient |            |            |            |
|                  | audit      |            |            |            |
|                  | findings.  |            |            |            |
+------------------+------------+------------+------------+------------+

+------------------+---------------------------------------------------+
| Preparation of   | [Auditee]{.underline}                             |
| Financial        |                                                   |
| Statements and   | Auditees are responsible for preparing their      |
| Schedule         | financial statements and a schedule of            |
|                  | expenditures of Federal awards. The statements    |
|                  | and schedule must be prepared for the same time   |
|                  | period.                                           |
+------------------+---------------------------------------------------+
| Selection of an  | Selecting an auditor to conduct the audit         |
| Auditor          | required by the Circular can be the auditee's     |
|                  | most important activity in the audit process. For |
|                  | some governmental auditees, state or local law    |
|                  | places the authority and responsibility to        |
|                  | conduct or arrange for the audit with an          |
|                  | independent government auditor. Other             |
|                  | governmental auditees may have the option to      |
|                  | engage an independent government auditor or a     |
|                  | public accounting firm. Non-governmental auditees |
|                  | normally must engage a public accounting firm to  |
|                  | conduct the audit.                                |
|                  |                                                   |
|                  | The auditee is responsible for ensuring the       |
|                  | auditor has the professional qualifications and   |
|                  | technical abilities to conduct the audit. The     |
|                  | Circular provides information to assist the NFE   |
|                  | in evaluating the sufficiency of potential audit  |
|                  | services (also see page 14 - Supplemental         |
|                  | Information Available on the Internet).           |
+------------------+---------------------------------------------------+
| Current          | The auditee is responsible for (a) preparing a    |
| Findings -       | corrective action plan for current-year audit     |
| Corrective       | findings and (b) taking action to correct the     |
| Action Plan      | reported findings.                                |
|                  |                                                   |
| Prior Findings - | The auditee is responsible for reporting the      |
| Corrective       | status of its corrective action for each          |
| Action Status    | prior-year finding in the summary schedule of     |
|                  | prior audit findings until the finding has been   |
|                  | corrected or the finding is no longer valid or    |
|                  | warrants corrective action.                       |
+------------------+---------------------------------------------------+
| Submission to    | The auditee is responsible for submitting the     |
| the              | SF-SAC Form and the audit report to the Federal   |
| Clearinghouse    | Audit Clearinghouse within 30 days of receipt of  |
|                  | the auditor's reports, but no later than 9 months |
|                  | after the end of the auditee's fiscal year. To    |
|                  | take advantage of the on-line editing feature,    |
|                  | the auditee is encouraged to use the Internet to  |
|                  | electronically submit the                         |
|                  |                                                   |
|                  | SF-SAC Form to the FAC.                           |
|                  |                                                   |
|                  | Until the FAC receives an acceptable audit report |
|                  | and SF-SAC Form, the auditee does not receive     |
|                  | credit for meeting the audit requirement.         |
+------------------+---------------------------------------------------+

+------------------+---------------------------------------------------+
| Requirements for | [Auditor]{.underline}                             |
| the Auditor      |                                                   |
|                  | The auditor is required to:                       |
|                  |                                                   |
|                  | -   perform the audit in accordance with the      |
|                  |     *Government Auditing Standards;*              |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   apply risk assessment procedures to determine |
|                  |     which programs will be audited; a program     |
|                  |     that is audited is called a "major program;"  |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   determine whether the financial statements    |
|                  |     and schedule of expenditures of Federal       |
|                  |     awards are presented fairly;                  |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   gain an understanding of internal control     |
|                  |     over Federal programs and test internal       |
|                  |     control over major programs;                  |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   determine whether the auditee has complied    |
|                  |     with the compliance requirements which may    |
|                  |     have a direct and material effect on each of  |
|                  |     its major programs; and                       |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   follow up on prior audit findings.            |
+------------------+---------------------------------------------------+
| Audit Finding    | The auditor is required to present the following  |
|                  | as an audit finding in the schedule of findings   |
|                  | and questioned costs:                             |
|                  |                                                   |
|                  | -   a deficiency in internal control related to   |
|                  |     major programs;                               |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   material noncompliance with the laws,         |
|                  |     regulations, or contract or grant provisions  |
|                  |     related to major programs;                    |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   for major programs, questioned costs which    |
|                  |     exceed, or are likely to exceed, \$10,000 for |
|                  |     each type of compliance requirement;          |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   for non-major programs, questioned costs      |
|                  |     which exceed \$10,000;                        |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   detected fraud which affects a program; and   |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   misrepresentation of the status of a prior    |
|                  |     audit finding.                                |
|                  |                                                   |
|                  | The auditor is required to prepare specific       |
|                  | components of the audit report and sections of    |
|                  | the SF-SAC.                                       |
+------------------+---------------------------------------------------+

+------------------+---------------------------------------------------+
| Bureau of the    | [Federal Audit Clearinghouse]{.underline}         |
| Census           |                                                   |
|                  | OMB has designated the Bureau of the Census to    |
|                  | operate the Federal Audit Clearinghouse (FAC).    |
|                  | The FAC serves as the central collection point,   |
|                  | repository, and distribution center for single    |
|                  | audit reports.                                    |
+------------------+---------------------------------------------------+
| Receive and      | The primary functions of the FAC are to:          |
| Archive the      |                                                   |
| SF-SAC Form and  | -   receive the SF-SAC Form and the audit report  |
| Single Audit     |     from the auditee;                             |
| Report           |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   archive copies of the SF-SAC Form and audit   |
|                  |     report;                                       |
+------------------+---------------------------------------------------+
| Forward Audit    | -   forward a copy of the audit report to each    |
| Report           |     Federal awarding agency which has provided    |
|                  |     direct funding and which has a related audit  |
|                  |     finding;                                      |
+------------------+---------------------------------------------------+
| Maintain Data    | -   maintain an electronic database of the SF-SAC |
| Base             |     Forms which is accessible via the Internet;   |
|                  |     and                                           |
+------------------+---------------------------------------------------+
| Inquiries        | -   answer inquiries concerning submission        |
|                  |     requirements of the Circular at               |
|                  |     1-888-222-9907 or govs.fac@census.gov.        |
+------------------+---------------------------------------------------+

+------------------+---------------------------------------------------+
| **Supplemental   |                                                   |
| Information      |                                                   |
| Available on the |                                                   |
| Internet**       |                                                   |
+------------------+---------------------------------------------------+
| www.ignet.gov    | **IGnet**                                         |
|                  |                                                   |
|                  | -   The web site maintained by the Inspectors     |
|                  |     General includes a single audit library with  |
|                  |     hypertext links to several of the source      |
|                  |     materials referred to in this pamphlet        |
+------------------+---------------------------------------------------+
| ww               | **Chief Financial Officers Council**              |
| w.financenet.gov |                                                   |
|                  | -   Important public financial management and     |
| Effective        |     accounting information                        |
| 12-01-01         |                                                   |
|                  |                                                   |
| http://cfoc.gov  |                                                   |
+------------------+---------------------------------------------------+
| www.gao.gov      | **The United States General Accounting Office**:  |
|                  |                                                   |
|                  | -   *Government Auditing Standards*               |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   S*tandards For Internal Control in the        |
|                  |     Federal Government* (GAO/AIMD-00-21.3.1; Nov. |
|                  |     1999)                                         |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   *How to Avoid a Substandard Audit:            |
|                  |     Suggestions for Procuring an Audit* (National |
|                  |     Intergovernmental Audit Forum; May 1988)      |
+------------------+---------------------------------------------------+
| www.omb.gov      | **The Office of Management and Budget**:          |
|                  |                                                   |
|                  | -   *Circular A-133*, Federal Cost Principles and |
|                  |     Administrative Requirements Circulars         |
|                  |                                                   |
|                  | ```{=html}                                        |
|                  | <!-- -->                                          |
|                  | ```                                               |
|                  | -   Compliance Supplement is available free on    |
|                  |     the OMB web site. Printed and CD ROM copies   |
|                  |     may be purchased from the Superintendent of   |
|                  |     Documents, U.S. Government Printing Office,   |
|                  |     P.O. Box 371954, Pittsburgh, PA, 15250-7954.  |
|                  |     The telephone number is 202-512-1800. The     |
|                  |     document must be identified as the *Circular  |
|                  |     A-133 Compliance Supplement* with the current |
|                  |     year GPO stock number.                        |
+------------------+---------------------------------------------------+
| www.cfda.gov     | **Catalog of Federal Domestic Assistance**        |
|                  |                                                   |
|                  | -   Searchable Database of Federal Award Programs |
+------------------+---------------------------------------------------+
| h                | **Federal Audit Clearinghouse**                   |
| ttp://harvester. |                                                   |
|                  | -   Searchable Database of Single Audit SF-SAC    |
| census.gov/sac   |     Data                                          |
+------------------+---------------------------------------------------+
| ww               | **Mid-America Intergovernmental Audit Forum**     |
| w.auditforum.org |                                                   |
|                  | -   Guide On Selecting An External Auditor        |
+------------------+---------------------------------------------------+

GLOSSARY

**Auditee** A non-Federal entity that expends Federal awards which must
be audited pursuant to the provisions of the Circular

**Audit Finding** A deficiency that the auditor is required to report in
the schedule of findings and questioned costs

**Auditor** A public accountant or a Federal, state, or local
government, audit organization which meets the *Government Auditing
Standards*

**Award** Federal financial assistance (e.g., grants), and Federal cost
reimbursement contracts, including awards received from pass-through
entities

**Circular** OMB Circular A-133, *Audits of States, Local Governments,
and Non-Profit Organizations*

**Catalog of Federal** A governmentwide compendium of all Federal
programs, grants

**Domestic Assistance** and other activities which provide assistance to
the American

**(CFDA)** public; each Federal program is identified by a unique
2-digit,

> 3-decimal number

**Compliance** A requirement which is applicable to a program and may be

**Requirement** included in the compliance supplement requirements for
the auditor to test

**Compliance** The Federal awarding agency policy official responsible
for

**Supplement** ensuring that program objectives, procedures and
compliance

**Policy Official** requirements are provided to OMB for inclusion in
the Supplement

**Federal Audit** An agent for OMB to maintain a governmentwide database
of

**Clearinghouse (FAC)** single audit results and reports

**Financial Statements** Financial statements that reflect the auditee's
financial position, results of operations or changes in net assets, and
where appropriate, cash flows for the fiscal year audited

**Government Auditing** Standards for auditing government organizations
and programs

**Standards** issued by the United States General Accounting Office and
commonly

referred to as the "Yellow Book"

**GLOSSARY**

**Internal Control Over** A process, effected by an entity's management
and other

**Federal Programs** personnel, designed to provide reasonable assurance
regarding proper accounting and reporting of transactions, compliance
with laws and regulations, and safeguarding assets

**Major Program** A program that is audited

**Management Decision** An evaluation made by the Federal awarding
agency or pass-through entity of the audit findings and corrective
action plan, and the issuance of a written decision as to what
corrective action is needed

**Non-Federal Entity** A state (including federally-recognized Indian
tribes), local

**(NFE)** government, university, or non-profit organization

**Pass-Through Entity** A non-Federal entity that provides a Federal
award to a

**(PTE)** subrecipient to carry out a Federal program

**Program-Specific Audit** An audit of one Federal program based on
provisions in the

Circular

**Recipient** A non-Federal entity that expends Federal awards received
directly from a Federal awarding agency to carry out a Federal program

**SF-SAC Form** A data collection form submitted to the Federal Audit
Clearinghouse which provides information about the auditor, the auditee
and its Federal programs, and the results of the audit

**Single Audit** An audit of a non-Federal entitys financial statements
and Federal awards which meets the requirements of the Circular

**Single Audit Process** The audit process prescribed in the Circular

**Subrecipient** A non-Federal entity that expends Federal awards from a
pass-through entity to carry out a Federal program; a subrecipient may
also be a recipient of other Federal awards directly from a Federal
awarding agency