SECTION 800:

Compliance:

802 - General Compliance Checklist: 

.01: 
The compliance testing section consists of a General Compliance 
Checklist (questionnaire) for identifying laws and regulations for 
compliance testing and supplements for the laws OMB requires auditors 
of CFO Act agencies to test for (see section 295 H) and other laws of 
general applicability auditors may consider during federal financial 
audits. The compliance supplements provide detailed guidance for 
assessing the effectiveness of compliance controls and testing 
compliance with the significant provisions of each law.

.02: 
The General Compliance Checklist (Form 802), or equivalent, generally 
should be completed for federal financial audits. If an individual law 
is considered to be significant for purposes of compliance testing, the 
related supplement should be completed. Supplements should be completed 
only for laws required to be tested for CFO Act agencies and for other 
laws identified for compliance testing on the General Compliance 
Checklist. Use of these documents is described below.

.03: 
To understand and evaluate compliance controls, the auditor also should 
follow the guidance in FAM 260 on identifying risk factors and in FAM 
320 on understanding information systems. The FAM also provides 
additional guidance on compliance considerations for all audit phases.

INSTRUCTIONS FOR GENERAL COMPLIANCE CHECKLIST:

.04: 
The checklist contains a summary of each law. The auditor generally 
should use this checklist or equivalent to determine which of these 
laws are considered to be significant for purposes of testing 
compliance, as discussed in FAM 245. The auditor should indicate 
whether each law meets the criteria for significance by placing a check 
mark in the appropriate column (yes or no). OMB audit guidance requires 
auditors of CFO Act agencies to test for five of the laws, as noted in 
section 295 H. Auditors also may test for the other four laws if they 
have determined they are material to the financial statements being 
audited.

.05: 
The auditor may need to use estimates or interim information in the 
preliminary column. The final amounts (based on the audited amounts or 
the final amounts of available budget authority) are used to determine 
whether all laws that would be significant in quantitative terms have 
been identified for control and compliance testing. The sources of all 
amounts included in this checklist should be documented. If the law is 
considered to be significant from a qualitative standpoint, the reasons 
for this conclusion should be documented.

.06: 
Supplements to the General Compliance Checklist (Form 802):

Supplement number: 

Law: Antideficiency Act (required for CFO Act agencies); Supplement 
number: 803.

Law: Federal Credit Reform Act of 1990 (required for CFO Act 
agencies); Supplement number: 808.

Law: Provisions Governing Claims of the U.S. Government as provided 
primarily in 31 U.S.C. 3711-3720E (Including the Debt Collection 
Improvement Act of 1996 (DCIA)) (required for CFO Act agencies); 
Supplement number: 809.

Law: Prompt Payment Act (required for CFO Act agencies); Supplement 
number: 810.

Law: Pay and Allowance System for Civilian Employees as Provided 
Primarily in Chapters 51-59 of Title 5, U.S. Code (required for CFO 
Act agencies); Supplement number: 812.

Law: Civil Service Retirement Act; Supplement number: 813.

Law: Federal Employees Health Benefits Act; Supplement number: 814.

Law: Federal Employees' Compensation Act; Supplement number: 816.

Law: Federal Employees' Retirement System Act of 1986; Supplement 
number: 817.

[End of table]

Entity:

Period of financial statements:

Job code:


Description of Law:

Antideficiency Act - 31 U.S.C. 1341, 1342, 1514, 1517: 

This law 
imposes restrictions on the amounts of budgetary authority that may be 
obligated or expended. As discussed in FAM 250, the auditor should 
obtain information on the entity's budget authority, from sources such 
as appropriation legislation, and identify all legally binding 
restrictions on budget execution; 

Do the amounts of any legally 
binding budget execution restrictions on budget authority in effect 
during the audit period exceed planning materiality or are provisions 
of the Antideficiency Act otherwise considered to be significant? 


(OMB audit guidance requires auditors of CFO Act agencies to test for 
compliance with this law.);

Individual appropriations: (Preliminary; Final):
budget authority: (Preliminary; Final):
Planning materiality: (Preliminary; Final): 
If yes, complete compliance supplement 803; 

Federal Credit Reform Act of 1990 (FCRA), 2 U.S.C. 661-661f; 

This law 
contains numerous provisions relating to the recording of activity 
related to direct loans, loan guarantees, and related modifications for 
budget accounting purposes. The law provides that after October 1, 
1991, an agency may incur new direct loan obligations or make new loan 
guarantee commitments only to the extent that Congress has provided 
budget authority to cover the costs of the loan or loan guarantee; 

Does the entity's budget authority available during the audit period 
for direct loan obligations, loan guarantee commitments, or any related 
modifications exceed planning materiality or are provisions of the FCRA 
of 1990 otherwise considered to be significant? 

(OMB audit guidance 
requires auditors of CFO Act agencies to test for compliance with this 
law.); 

Total appropriations or other budget authority available during the 
fiscal year for costs of FCRA activities (direct loans, loan 
guarantees, and related modifications): (Preliminary; Final)

Planning materiality: (Preliminary; Final) 

If yes, complete compliance supplement 808.

Provisions Governing Claims of the U.S. Government, Including the Debt 
Collection Improvement Act of 1996 (DCIA): 

These provisions address 
the collection of amounts owed to the federal government. Interest 
generally accrues from the date that a notice stating the amount due 
and the interest policies is first mailed to the debtor. Interest 
generally accrues at a rate established by the Secretary of the 
Treasury. Administrative costs and penalties shall also be charged; 

The provisions also require the entity to take all appropriate steps to 
collect the debt before discharging it and to notify Treasury about 
delinquent debt for administrative offset, collection by a debt 
collection center, or tax refund offset. Entities shall also 
participate in a computer match of delinquent debt with federal 
employees, and when collection actions are terminated, the entity 
holding delinquent debt shall sell it. Provisions also require the 
entity (or entities making loans the government guarantees) to notify 
credit-reporting agencies about delinquent debt and not make or 
guarantee loans to persons who owe delinquent debt; 

Does the 
cumulative amount of receivables created during the audit period that 
are subject to provisions governing claims of the U.S. government, 
including DCIA, exceed planning materiality; does the amount of 
receivables at the end of the audit period that are subject to 
provisions governing claims of the U.S. government, including DCIA, 
exceed planning materiality; or are provisions governing claims of the 
U.S. government, including the DCIA, otherwise considered to be 
significant? 

(OMB audit guidance requires auditors of CFO Act agencies to test for 
compliance with this law.)

Provisions Governing Claims of the U.S. Government, Including the Debt 
Collection Improvement Act of 1996 (DCIA):  


Cumulative amount of; receivables created during the; audit period 
that are subject to; provisions governing claims of; the U.S. 
government, including; DCIA: (Preliminary; Final) or:

Amount of receivables at the end of the audit period that are subject 
to provisions governing claims of the U.S. government, including DCIA:
(Preliminary; Final).  

Planning materiality: (Preliminary; Final)

If yes, complete compliance supplement 809; 

Note: These 
provisions of the law generally do not apply to amounts payable to the 
entity under the Internal Revenue Code, the Social Security Act, or 
tariff laws. Those laws contain specific provisions for these amounts.

Prompt Payment Act, 31 U.S.C. 3901 et seq: 

The Prompt Payment Act requires federal entities to make payments for 
property or services by 
the due date specified in the related contract or, if a payment date is 
not specified in the contract, generally 30 days after the invoice for 
the amount due is received. If payments are not made within the 
appropriate period, the entity shall pay an interest penalty. Also, 
discounts offered by vendors may be taken only during the specified 
period. If they are taken after the time period has expired, an 
interest penalty shall be paid; 

Do the entity's payments for 
property or services subject to the Prompt Payment Act for the audit 
period exceed planning materiality or are provisions of the Prompt 
Payment Act otherwise considered to be significant? 

(OMB audit 
guidance requires auditors of CFO Act agencies to test for compliance 
with this law.); 

Amount of payments made for property and services subject to the 
Prompt Payment Act: (Preliminary; Final)

Planning materiality: (Preliminary; Final)

If yes, complete compliance supplement 810; 

Pay and Allowance System for Civilian Employees as Provided Primarily 
in Chapters 51-59 of Title 5, U.S. Code; 

These laws require that 
employees be paid at the appropriate rates established by law, 
including general pay increases, and that employees be paid at least 
minimum wage; 

Does the entity's payroll expense for the audit period 
exceed planning materiality or are related provisions of the Pay and 
Allowance System for Civilian Employees (as provided primarily in 
Chapters 51-59 of Title 5, U.S. Code) otherwise considered to be 
significant? 

(OMB audit guidance requires auditors of CFO Act 
agencies to test for compliance with this law.); 

Payroll expense: (Preliminary; Final)
Planning materiality: (Preliminary; Final)

If yes, complete compliance supplement 812; 

It is not expected that the entity's 
expense for performance awards, cash awards, overtime, travel, 
transportation, subsistence, or allowances for the audit period would 
exceed planning materiality. However, if these items or related 
provisions of the Pay and Allowance System for Civilian Employees are 
otherwise considered to be significant, the auditor should consult with 
the Office of General Counsel (OGC) for specific provisions to be 
considered for compliance testing; 

Civil Service Retirement Act, 5 U.S.C. 8331 et seq: 

This law 
provides retirement benefits to employees who were hired prior to 
January 1, 1984. For each employee, the entity withholds a percentage 
of basic pay from the employee's compensation and contributes an equal 
amount for retirement. The employee and entity amounts are remitted to 
Treasury; 

Does the entity's expense for retirement costs under the 
Civil Service Retirement Act for the audit period exceed planning 
materiality or are provisions of the Civil Service Retirement Act 
otherwise considered to be significant? 

Expense for retirement contributions: (Preliminary; Final)
Planning materiality: (Preliminary; Final)

If yes, complete compliance supplement 813.

Federal Employees Health Benefits Act, 5 U.S.C. 8901 et seq: 

This 
law provides health insurance coverage to employees who elect health 
insurance benefits. For each employee who elects coverage, the entity 
pays an amount set by OPM for insurance costs. The entity portion 
cannot exceed 75 percent of the insurance cost. The employee pays the 
remainder of the total cost. Information on the employee and entity 
cost of the insurance is published by OPM. The entity withholds the 
amount of the employee's portion of the cost from the employee's pay 
and remits this amount, along with its own contribution, to Treasury; 

Does the entity's expense for health insurance costs for the audit 
period exceed planning materiality or are provisions of the Federal 
Employees Health Benefits Act otherwise considered to be significant? 

Expense for health insurance: (Preliminary; Final);
Planning materiality:  (Preliminary; Final); 

If yes, complete compliance supplement 814; 

Federal Employees' Compensation Act, 5 U.S.C. 8101 et seq: 

This law 
provides for the compensation of employees injured or disabled while 
performing their duties. Claims are paid out of the Federal Employees' 
Compensation Fund. Federal entities are billed annually by the fund for 
claims paid on their behalf; 

Does the entity's expense for the audit 
period for benefits paid by the Federal Employees' Compensation Fund on 
the entity's behalf exceed planning materiality or are provisions of 
the Federal Employees' Compensation Act otherwise considered to be 
significant?

Expense for Compensation Fund claims: (Preliminary; Final);
Planning materiality: (Preliminary; Final); 

If yes, complete compliance supplement 816; 

Federal Employees' Retirement System Act of 1986, 5 U.S.C. 8401 et 
seq:

This law provides retirement benefits for employees who were 
hired after December 31, 1983. For each employee, the entity withholds 
a percentage of basic pay from the employee's compensation and 
contributes an amount equal to the employing agency's applicable normal 
cost percentage less the employee deduction rate for retirement. The 
employee and entity amounts are remitted to Treasury; 

Does the 
entity's expense for retirement costs under the Federal Employees' 
Retirement System Act for the audit period exceed planning materiality 
or are provisions of the Federal Employees' Retirement System Act of 
1986 otherwise considered to be significant? 

Expense for retirement contributions: (Preliminary; Final);
Planning materiality: (Preliminary; Final); 

If yes, complete compliance supplement 817.

Other laws; Perform the following procedures and include references 
to supporting documentation: 

1. As described in FAM 245.02, read the 
list of laws and regulations identified by the entity as significant to 
others. (See [EMPTY].); 

2. With OGC assistance, identify any other laws or 
regulations that have a direct effect on determining financial 
statement amounts. Determine whether any such laws or regulations are 
material to the financial statements. (See [EMPTY].); 

3. Consider whether to 
test compliance with any indirect laws or regulations and make 
inquiries of management as discussed in FAM 245.04-.06. 
(See [EMPTY].); 

4. For all laws or regulations identified for testing above, identify 
significant provisions using the criteria in FAM 245.02. Test 
compliance controls and compliance as described in FAM 300 and 460; 

Are any other laws or regulations identified for compliance testing? 

If yes, attach a list of the laws or regulations identified to this 
form and reference it to control and compliance work performed.

[End of table]

INSTRUCTIONS FOR COMPLIANCE SUPPLEMENTS:

.07: 
Each compliance supplement consists of (1) a compliance summary, (2) a 
compliance audit program, and (3) notes.

Compliance Summary:

.08: 
For each law identified for compliance testing on the General 
Compliance Checklist, the auditor generally should complete the related 
compliance summary or equivalent. The compliance summary is designed to 
assist the auditor in planning compliance control tests and summarizing 
the results of compliance control tests and compliance tests for 
reporting the results of the work performed.

.09: 
The first column contains a description of the specific provisions of 
the law that have been identified for compliance testing, the type of 
provision, and the reference to the law.

.10: 
The second column contains the objective related to the specific 
provision to be used for both compliance control and compliance 
testing.

.11: 
The auditor should identify the control activities that the entity has 
in place to achieve each objective and document the control activity in 
the third column. If the entity does not have a control activity that 
achieves the objective, the auditor should document this condition in 
the third column.

.12:
The fourth column is used to indicate whether the control activity is 
information system (IS)-related as described in FAM 270.04. IS controls 
are those the effectiveness of which depends on computer processing. 
They can generally be classified into general, application, and user 
controls. Testing of IS controls generally should be performed by an IS 
auditor, although the audit team may assist the IS auditor.

.13: 
The auditor should design control tests to determine whether the 
control activities that have been identified in the third column are in 
place and operating effectively. A control activity is considered to be 
effective if it achieves the control objective. The control testing 
program and the control tests should be recorded in the documentation. 
The results of these tests and the auditor's conclusions on the 
effectiveness of the compliance controls should be documented in the 
fifth column of the Compliance Summary. A reference to supporting 
documentation should be included in this column.

.14: 
Compliance tests should be performed using the related Compliance Audit 
Program as described below. The results of the compliance tests should 
be indicated in the last column of the Compliance Summary along with a 
reference to the supporting documentation.

Compliance Audit Program:

.15: 
A compliance audit program has been developed for the provisions 
identified on the related compliance summary for each law. For each law 
identified for compliance testing on the General Compliance Checklist, 
the auditor generally should perform each step of the related 
compliance audit program. Because the subject matter of some laws is 
closely related to matters the auditor will be planning to test for 
other parts of the audit, the auditor should consider coordinating with 
that other testing and designing multipurpose tests. For example, 
payroll compliance testing could be performed using multipurpose tests 
of payroll controls and/or substantive payroll testing. The auditor 
generally should initial in the "performed by" column of the compliance 
audit program when he or she performs the procedure. A reference to the 
documentation recording the work performed for each step generally 
should be included in the last column of the compliance audit program.

803 - ANTIDEFICIENCY ACT: 

Note: Complete this compliance summary or prepare equivalent 
documentation only if provisions of the Antideficiency Act are 
considered to be significant as indicated on Form 802 - General 
Compliance Checklist.

OMB guidance on budget execution, including the Antideficiency Act, is 
included in OMB Circular A-11, Part 4.

[See PDF for image]

[End of table]

Note: Complete this program or prepare equivalent documentation only if 
provisions of the Antideficiency Act are considered to be significant 
as indicated on Form 802 - General Compliance Checklist. The procedures 
in this program are designed to test compliance with the provisions 
listed on the Compliance Summary for this law.

Audit Procedures:

1. List the appropriations or other budget authority and the related 
budget accounts that were identified for compliance testing on Form 802 
- General Compliance Checklist. Per page 802-3, the auditor should 
identify all legally binding restrictions on budget execution, from 
sources such as appropriation legislation;  

(The following tests for 
compliance with the Antideficiency Act should be coordinated with tests 
of the Statement of Budgetary Resources and with tests of expenses.)

2. As discussed in FAM 460.03, the auditor needs assurance that the 
summarized budget information (obligations and expenditures) used for 
compliance tests is reasonably accurate and complete. This assurance 
may be provided through effective controls (usually the budget 
controls) or, if the controls are not effective, through substantive 
testing of budget amounts for validity, completeness, cutoff, 
recording, classification, and summarization as described in FAM 495 
B; 

For the accounts listed in step 1, document if this assurance is 
provided through effective controls (as indicated on Form 803 - 
Compliance Summary) or if substantive tests of the budget information 
are necessary; 

If the controls are not considered to be effective in 
meeting some or all of the budget control objectives listed in FAM 395 
F, perform substantive tests of the budget amounts (obligations and 
expenditures) as discussed in FAM 495 B. These substantive tests should 
be performed only for those potential misstatements for which the 
entity does not have effective budget controls; 

After the auditor is 
satisfied as to the reasonableness of the budget amounts to be used for 
the compliance tests, perform the compliance tests in steps 3 and 4. 

3. Compare the actual amounts of budget obligations and expenditures 
with the related appropriation or other budget authority listed in step 
1. If the entity does not appear to have complied with the provision, 
perform step 5. (31 U.S.C. 1341(a)(1)(A) and (C)).

4. Determine the entity's legally binding level of budget authority 
(below the appropriation level) that was identified during the planning 
phase. This level is usually the apportionment level unless the entity 
has elected a lower level, such as allotments; 

Compare the amount of 
actual obligations and expenditures to the legally binding level of 
restrictions on budget authority identified for compliance testing (the 
apportionment or allotment level). If the entity does not appear to 
have complied with the provision, perform step 5. (31 U.S.C. 1517(a)).

5. If the entity does not appear to be in compliance based on the 
results of tests performed, discuss these matters with OGC and, when 
appropriate, the Special Investigator Unit to conclude if noncompliance 
actually has occurred and the implications of such noncompliance; 

For any noncompliance noted, the auditor should 

* identify the 
weakness in controls that allowed the noncompliance to occur, if not 
previously identified during control testing;

* report the nature of 
any weakness in controls and consider modification of the opinion on 
internal control as appropriate (see FAM 580.32-.61);

* consider the 
implications of any instances of noncompliance on the financial 
statements, and 

* report instances of noncompliance, as appropriate 
(see FAM 580.67-.75.).

6. Document conclusions on compliance with each provision on Form 803 
- Compliance Summary.

[End of table]

Note 1: Entities are required to establish regulations that provide for 
a system of administrative controls over their execution of budget 
authority (31 U.S.C. 1514(a)). As discussed in FAM 250.03, the entity 
may elect to lower the level at which budget limitations are legally 
binding in these regulations. For example, the entity may elect to 
reduce the legally binding limit on the obligation and expenditure of 
budget funds from the apportionment to the allotment level. The auditor 
should determine the level at which the entity's legally binding limit 
has been established.

Note 2: The auditor should consider the results of the evaluation and 
testing of budget controls. These controls relate to the execution of 
budget authority and usually are the same controls that are used to 
comply with the Antideficiency Act. Accordingly, additional 
consideration of controls that achieve the compliance objective 
generally is not necessary if the auditor has assessed whether the 
entity achieves all of the budget control objectives listed in FAM 395 
F. The auditor should reference this compliance summary to the budget 
control evaluation and testing and perform any additional procedures 
considered necessary to conclude if compliance controls are effective.

[End of section]

808 - FEDERAL CREDIT REFORM ACT OF 1990: 

Note: Complete this compliance summary or prepare equivalent 
documentation only if provisions of the Federal Credit Reform Act of 
1990 (FCRA) are considered to be significant as indicated on Form 802 - 
General Compliance Checklist.

OMB guidance on FCRA is included in OMB Circular A-11, part 5, Federal 
Credit Programs.

[See PDF for image]

[End of table]

Note: Complete this program or prepare equivalent documentation only if 
provisions of the Federal Credit Reform Act (FCRA) are considered to be 
significant as indicated on Form 802 - General Compliance Checklist. 
The procedures in this program are designed to test compliance with the 
provisions listed on the Compliance Summary.

OMB guidance on FCRA is included in OMB Circular A-11, part 5, Federal 
Credit Programs.

Audit Procedures: 

1. List the appropriations or other budget authority and the related 
budget accounts that were identified for compliance testing on Form 802 
- General Compliance Checklist.

2. As discussed in FAM 460.03, the auditor needs assurance that the 
summarized budget information (obligations and expenditures) used for 
compliance tests is reasonably accurate and complete. This assurance 
may be provided through effective controls (usually the budget 
controls) or, if the controls are not effective, through substantive 
testing of budget amounts for validity, completeness, cutoff, 
recording, classification, and summarization as described in FAM 495 
B.

For the accounts listed in step 1, document whether this 
assurance is provided through effective controls (as indicated on Form 
808 - Compliance Summary) or whether substantive tests of the budget 
information are necessary.

If the controls are not considered to be 
effective in meeting some or all of the budget control objectives 
listed in FAM 395 F, plus the supplemental objectives for FCRA listed 
in FAM 395 F Sup, perform substantive tests of the budget amounts 
(obligations and expenditures) as discussed in FAM 495 B. These 
substantive tests should be performed only for those potential 
misstatements for which the entity does not have effective budget 
controls.

After the auditor is satisfied as to the reasonableness of 
the budget amounts to be used for the compliance tests, perform the 
compliance tests in steps 3 and 4.

3. For each appropriation account or other budget authority listed in 
step 1, perform the following procedures that are applicable for direct 
and guaranteed loan programs that have a positive subsidy (i.e., cash 
outflows exceed cash inflows); (for direct and guaranteed loan programs 
that have a negative subsidy (i.e., cash inflows exceed cash outflows), 
perform step 4). 

(a) Compare the amount of obligations for direct 
loans to the amount of the available appropriation or other budget 
authority. (Note: This budget restriction is applicable only to 
obligations for direct loans made on or after October 1, 1991.).

3. (b) Compare the amount of obligations for modifications of direct 
loan obligations or outstanding direct loans to the amount of available 
budget authority. (Note: The sale of a direct loan is considered a 
modification. Discuss applicability of this budget restriction to 
direct loans and direct loan obligations that were outstanding prior to 
October 1, 1991, with OGC prior to performing compliance test.).

3. (c) Compare the amount of obligations for loan guarantee commitments 
to the amount of the available appropriation or other budget authority. 
(Note: This budget restriction is only applicable to obligations for 
loan guarantee commitments made on or after October 1, 1991.).

3. (d) Compare the amount of obligations for modifications of loan 
guarantee commitments or outstanding loan guarantees to the amount of 
available budget authority. (Note: Discuss applicability of this budget 
restriction to loan guarantees and loan guarantee commitments that were 
outstanding prior to October 1, 1991, with OGC prior to performing 
compliance test.) (2 U.S.C. 661c(b) and (e)).

If the amounts of 
obligations in any of these comparisons exceed the available budget 
authority, the entity may not be in compliance. Perform step 5;

4. Direct and guaranteed loan programs that have a negative subsidy 
(cash inflows exceed cash outflows) do not receive an appropriation. 
However, such programs have a loan limit that cannot be exceeded, i.e., 
a maximum number of loans that can be made or guaranteed. For these 
programs, compare the total number and dollar volume of loans made to 
the loan limit in the applicable Presidents' Budget. Perform step 5.

5. If the entity does not appear to be in compliance based on the 
results of tests performed, discuss these matters with OGC and, when 
appropriate, the Special Investigator Unit to conclude if noncompliance 
actually has occurred and the implications of such noncompliance.

For any noncompliance noted, the auditor should: 

* identify the 
weakness in controls that allowed the noncompliance to occur, if not 
previously identified during control testing;

* report the nature of 
any weakness in controls and consider modification of the report on 
internal control as appropriate (see FAM 580.32-.61);

*consider the 
implications of any instances of noncompliance on the financial 
statements; and

* report instances of noncompliance, as appropriate (see FAM 580.67-
.75).

6. Document conclusions on compliance with each provision on Form 808 
- Compliance Summary.

[End of table]

Note 1: A direct loan is a disbursement of funds by the government to a 
non-federal borrower under a contract that requires the repayment of 
such funds with or without interest. The term also includes the 
purchase of, or participation in, a loan made by another lender. The 
term does not include the acquisition of a federally guaranteed loan in 
satisfaction of default claims or the price support loans of the 
Commodity Credit Corporation. (2 U.S.C. 661a(1)):

Note 2: A direct loan obligation is a binding agreement by a federal 
agency to make a direct loan when specified conditions are fulfilled by 
the borrower. (2 U.S.C. 661a(2)):

Note 3: A loan guarantee is any guarantee, insurance, or other pledge 
with respect to the payment of all or a part of the principal or 
interest on any debt obligation of a nonfederal borrower to a 
nonfederal lender, but does not include the insurance of deposits, 
shares, or other withdrawable accounts in financial institutions. (2 
U.S.C. 661a(3)):

Note 4: A loan guarantee commitment is a binding agreement by a federal 
agency to make a loan guarantee when specified conditions are fulfilled 
by the borrower, the lender, or any other party to the guarantee 
agreement. (2 U.S.C. 661a(4)):

Note 5: Appropriations or other budget authority to cover the cost of 
budget obligations for direct loan obligations and loan guarantee 
commitments must be made in advance by Congress. For revolving or other 
funds that otherwise would be available for these budget obligations, 
Congress must enact a limit on the use of such funds for these purposes 
to make them available for use. (2 U.S.C. 661c(b)):

Note 6: Costs are defined as the estimated long-term cost to the 
government of a direct loan or loan guarantee, calculated on a net 
present value basis, excluding administrative costs and any incidental 
effects on governmental receipts or outlays. These calculations are 
described in further detail under the valuation control objective for 
obligations in FAM 395 F. (2 U.S.C. 661a(5)):

Note 7: There is an exemption from this requirement for entitlements 
(mandatory programs such as the guaranteed student loan program and the 
VA home loan guaranty program) and credit programs of the Commodity 
Credit Corporation existing on the date of enactment of the act 
(November 5, 1990). (2 U.S.C. 661c(c)):

Note 8: Modifications are government actions that alter the estimated 
net present value of a direct loan or loan guarantee for which an 
obligation has been recorded, for example, the sale of a direct loan, 
per SFFAS No. 2, paragraph 53, or a policy change affecting the 
repayment period or interest rate for a group of existing loans. 
(Changes within the terms of existing contracts or through other 
existing authorities are not considered to be modifications. Also, 
"work outs" of individual loans, such as a change in the amount or 
timing of payments to be made, are not considered modifications.) The 
effects of these changes should be included in the annual reestimates 
of the estimated net present value of the obligations. Permanent 
indefinite authority is provided by FCRA for these reestimates.

Note 9: Discuss applicability of this budget restriction to direct 
loans, direct loan obligations, loan guarantees, or loan guarantee 
commitments that were outstanding prior to October 1, 1991, with OGC 
prior to performing control or compliance tests.

Note 10: The auditor should consider the results of the evaluation and 
testing of budget controls and testing of the Statement of Budgetary 
Resources. These controls relate to the execution of budget authority 
and usually are the same controls that are used to comply with the 
Antideficiency Act and the Federal Credit Reform Act. Accordingly, 
additional consideration of controls that achieve the compliance 
objective generally is not necessary if the auditor has assessed 
whether the entity achieves all of the budget control objectives listed 
in FAM 395 F, including the supplemental control objectives for the 
Federal Credit Reform Act. The auditor should reference to the budget 
control evaluation and testing and perform any additional procedures 
considered necessary to conclude if compliance controls are effective.

[End of section]

809 - PROVISIONS GOVERNING CLAIMS OF THE U.S. GOVERNMENT (31 U.S.C.
3711-3720) (INCLUDING THE DEBT COLLECTION IMPROVMENT ACT OF 1996 
(DCIA)): 

Note: Complete this compliance summary or prepare equivalent 
documentation only if provisions governing claims of the U.S. 
government, as provided primarily in sections 3711-3720E of Title 31, 
U.S. Code (including provisions of the Debt Collection Improvement Act 
of 1996), are considered significant, as indicated on Form 802 - 
General Compliance Checklist.

OMB Guidance on FCRA is included in OMB Circular A-11, part 5, Federal 
Credit Programs:

[See PDF for image]

[End of table]

Note: Complete this program or prepare equivalent documentation only if 
provisions governing claims of the United States government as provided 
primarily in sections 3711-3720E of Title 31, U.S. Code (including 
provisions of the Debt Collection Act of 1996) are considered 
significant, as indicated on Form 802 - General Compliance Checklist. 
The procedures in this program are designed to test compliance with the 
provisions listed on the Compliance Summary.

OMB Guidance on FCRA is included in OMB Circular A-11, part 5, Federal 
Credit Programs:

Audit Procedures: 

1. Based on the preliminary assessment of compliance control 
effectiveness (as documented on Form 809 - Compliance Summary), select 
a sample of amounts owed to the entity during or at the end of the 
audit period. (The sample size will vary based on the expected 
effectiveness of compliance controls, as discussed in FAM 460.02). 
Document the sampling approach using the documentation in FAM section 
495 E. See note 8 regarding sampling efficiencies and completeness of 
the sample population.

2. For each item selected in step 1 obtain the loan file or other 
supporting documentation and note the following information as of the 
date selected for testing:

* due date of debt;

* amount owed;

* date the notice of the amount due and the interest policies is first 
mailed to the debtor;

* amount of interest accrued and other administrative 
charges and penalties charged, if any; and

* number of days the debt is 
past due, if any; 

Perform step 3 if the debt is past due; 
Perform step 4 if the debt is not past due.

3. If the amount selected is past due:

(a) Calculate the number of 
days that interest should be accrued on the debt as of the date 
selected for testing. Interest generally accrues from the date that the 
notice of the amount due is first mailed to the debtor. (See note 1.) 
Compare the auditor's calculation with the calculation performed by the 
entity and obtain explanation and examine support for any differences. 
(31 U.S.C. 3717(b)).

3. (b) Determine the interest rate that should be used to accrue 
interest on the debt. The rate is published in the Federal Register and 
should be the rate that was in effect on the date that the notice of 
the amount due is first mailed to the debtor. (The web site for the 
Federal Register is: http://www.access.gpo.gov/su_docs/aces/
aces140.html.) Compare the auditor's determination of the rate to the 
rate used by the entity and obtain explanation and examine support for 
any differences. (31 U.S.C. 3717(a) and (c)).

3. (c) Calculate the amount of interest that should be owed as of the 
date selected for testing using the number of days tested in (a) and 
the interest rate tested in (b). Compare the auditor's calculation to 
the amount calculated by the entity and obtain explanation and examine 
support for any differences. See notes 2 and 3 regarding the waiver of 
interest.

3. (d) Obtain the entity's schedule of administrative charges and late 
payment penalties and determine if the appropriate amounts were charged 
to the debtor. See note 3 regarding the waiver of these charges. (31 
U.S.C. 3717(e) and (f)).

4. If the debt is not past due, determine through examination of the 
entity's records whether 

(a) interest, administrative charges, or penalties are not being 
charged; and

(b) the debtor had no 
outstanding nontax delinquent federal debt at the time the loan was 
obtained. (31 U.S.C. 3720 B).

5. The objectives listed below relate to procedural-based provisions. As 
discussed in FAM 460.06, sufficient procedures usually are performed in 
conjunction with tests of compliance controls for these procedural-
based provisions to conclude on the entity's compliance without 
performing additional procedures. Additional procedures should not be 
performed to obtain evidence regarding compliance with the provisions 
related to the following objectives unless sufficient evidence 
regarding compliance was not obtained during compliance control tests 
documented on Form 809 - Compliance Summary; 

(a) Claims of more than 
$100,000 (excluding interest, penalties, and administrative costs) are 
referred to the Justice Department for compromise, termination, or 
suspension. See note 4. (31 U.S.C. 3711 ); 

(b) Claims delinquent for a 
period of 180 days have been referred to Treasury for collection. See 
notes 5, 6, and 7. (31 U.S.C. 3711 (g)).

6. If the entity does not appear to be in compliance based on the 
results of tests performed, discuss these matters with OGC and, when 
appropriate, the Special Investigator Unit to conclude if noncompliance 
actually has occurred and the implications of such noncompliance; 

For any noncompliance noted, the auditor should 

*identify the 
weakness in compliance controls that allowed the noncompliance to 
occur, if not previously identified during compliance control testing

* report the nature of any weakness in compliance controls and consider 
modification of the conclusion on internal control as appropriate (see 
FAM 580.32-.61)

* consider the implications of any instances of 
noncompliance on the financial statements; and

* report instances of noncompliance, as appropriate (see FAM 580.67-
.75).

7. Document conclusions on compliance with each provision on Form 809 
- Compliance Summary.

[End of table]

Note 1: Claims are amounts owed to the government, including amounts 
owed for loans insured or guaranteed by the government. The term 
"claim" is used interchangeably with the term "debt" in this law. (31 
U.S.C. 3701(b))

Interest normally accrues from the date that notice of the debt and the 
agency's interest policies is first mailed to the debtor. If the agency 
sends a bill to the debtor in advance of the due date and that bill 
states the interest policies, interest would accrue from the due date 
specified in the bill.

The provisions regarding accrual of interest and other charges do not 
apply to the extent that a statute, related regulation, loan agreement, 
or contract provides otherwise, or if a claim is under a contract 
executed before October 25, 1982, that is in effect on October 25, 
1982. (31 U.S.C. 3717(g)) Accrual of interest and penalties under this 
law does not apply to amounts owed by other agencies of the federal 
government, a state government or a unit of general local government or 
to amounts payable to the entity under the Internal Revenue Code, the 
Social Security Act, or tariff laws. (31 U.S.C. 3701 (c) and (d)) This 
law, however, does not preclude the charging of interest to state and 
local governments under authority provided under other laws.

Note 2:
The entity shall waive the collection of interest on a claim (or 
any portion of the claim) that is paid within 30 days after the date on 
which interest began to accrue. The agency may extend this 30-day 
period. (31 U.S.C. 3717(d)) Interest that is either accrued or 
collected on claims that are paid within the 30-day period would 
usually not be material or otherwise significant for purposes of 
compliance testing. If the auditor considers this provision to be 
significant for compliance testing, this form should be tailored to 
include the appropriate testing procedures.

Note 3:
The entity has the authority to waive the collection of 
interest, penalties, and administrative charges. The entity should 
follow its own regulations when determining whether a waiver is 
appropriate. Such regulations should be in conformity with the 
standards set jointly by the Comptroller General, the Attorney General, 
and the Secretary of the Treasury described in 31 CFR 901.9. (31 U.S.C. 
3717(h)):

The entity may increase an administrative claim (debt not based on an 
extension of government credit through direct loans, guarantees, or 
insurance, including fines, penalties, and overpayments) annually by 
the cost of living adjustment in lieu of charging interest and 
penalties. (31 U.S.C. 3717(i)):

Note 4:
Compromise is the term used when an amount less than the total 
amount of the claim is accepted by the entity as payment in full. 
Suspension refers to the temporary deferral of collection activities 
until collection activity is expected to be more successful. 
Termination refers to stopping of collection activities.

Only the Justice Department has the authority to compromise, terminate, 
or suspend collection on claims that are greater than $100,000 
(excluding interest, penalties, and administrative charges). Pursuant 
to 31 CFR Parts 902.1 and 903.1, entities generally should use a Claims 
Collection Litigation Report (CCLR) to refer such matters to the 
Justice Department.

Note 5:
Exceptions to the requirement to transfer nontax debt delinquent 
for a period of 180 days to Treasury for collection are:

(a)a debt or claim that:

(1)is in litigation or foreclosure;

(2)will be disposed of under an asset sales program within 1 year after 
becoming eligible for sale, or later than 1 year if consistent with an 
asset sales program and a schedule established by the entity and 
approved by OMB;

(3)has been referred to a private collection contractor for collection 
for a period determined by Treasury;

(4)has been referred by, or with the consent of, Treasury to a debt 
collection center for a period determined by Treasury; or:

(5)will be collected under internal offset, if such offset is 
sufficient to collect the claim within 3 years after the date the debt 
or claim is first delinquent; and:

(b) 
to any other specific class of debt or claim, as determined by Treasury 
at the request of an entity. (31 U.S.C. 3711(g)(2)) Examples include:

(1) 
debts in bankruptcy meeting the criteria for an automatic stay (11 
U.S.C. 362),

(2) foreign debt considered uncollectable by Treasury due to foreign 
diplomacy considerations and affairs of state,

(3) debts in forbearance or appeals.

Note 6: Exceptions to the requirement to notify Treasury of nontax debt 
delinquent over 180 days for administrative offset are a claim that has 
been outstanding for more than 10 years or when a statute explicitly 
prohibits using administrative offset or setoff to collect the type of 
claim involved. (31 U.S.C. 3716(e)) Also, this section does not 
prohibit the use of any other administrative offset authority existing. 
(31 U.S.C. 3716 (d)):

Prior to referring debts to Treasury, an agency shall inform the debtor 
of the amount and nature of the debt (such as overpayment, etc.), and 
actions which may be taken to enforce recovery of a delinquent debt. 
These include:

(a) offset of any payments which the debtor is due, including tax 
refunds, and salary;

(b) referral of the debt to a private collection agency;

(c) referral of the debt to the Department of Justice or agency 
counsel for litigation;

(d) reporting of the debt to a credit bureau;

(e) 
reporting of the debt, if discharged, to IRS as a potential taxable 
income.

In the future, the agency also will need to inform the debtor that the 
debt may be subject to administrative wage garnishment, his/her 
identity may be published or publicly disseminated, and/or the debt may 
be sold.

The notice must tell the debtor that he/she has the opportunity:

(a) to inspect and copy records relating to the debt,

(b) for a review by the agency; and:

(c) to enter into a written repayment agreement.

Note 7: Before an entity refers past-due debt to Treasury for reduction 
of tax refund, it must:

(a) notify the person incurring such debt that the entity proposes to 
refer to Treasury for tax refund offset,

(b) give such person at least 60 days to present evidence that all or 
part of the debt is not past due or not legally enforceable,

(c) 
consider any evidence presented by such person and determine that an 
amount of such debt is past due and legally enforceable,

(d) 
satisfy such other conditions Treasury may prescribe to ensure the 
above determination is valid and that the entity has made reasonable 
efforts to obtain payment, and:

(e) 
certify that reasonable efforts have been made by the entity to obtain 
payment. (31 U.S.C. 3720A (b)):

Treasury issues regulations prescribing the times at which entities 
shall submit notices of past-due legally enforceable debts, the manner 
of submitting them, and the information to be contained in them. The 
regulations also specify the minimum amount of debt that may be 
referred for tax refund offset and the fee the entity shall pay to 
reimburse Treasury for its costs.

Note 8: If multipurpose testing is used for the compliance test and/or 
compliance control test and/or a substantive test of accounts or loans 
receivable details, the sample items for the compliance test and/or 
compliance control test should be selected using the sampling method 
used for the substantive test as described in FAM 430. Otherwise, the 
items should be selected using attribute sampling as discussed in FAM 
460.02.

As with all sampling applications, the auditor should consider the 
completeness of the test population. For efficiency, the auditor should 
consider using records that were tested for validity, accuracy, and 
completeness (as well as the other financial statement assertions) in 
conjunction with substantive tests of the population.

[End of section]

810 - PROMPT PAYMENT ACT: 

Note: Complete this compliance summary or prepare equivalent 
documentation only if provisions of the Prompt Payment Act are 
considered to be significant as indicated on Form 802 - General 
Compliance Checklist.

OMB guidance on the Prompt Payment Act is included in 5 CFR Part 1315.

[See PDF for image]

[End of table]

Note: Complete this program or prepare equivalent documentation only if 
provisions of the Prompt Payment Act are considered to be significant 
as indicated on Form 802 - General Compliance Checklist. The procedures 
in this program are designed to test compliance with the provisions 
listed on the Compliance Summary.

OMB Guidance on the Prompt Payment Act is included in 5 CFR Part 1315.

Audit Procedures: 

1. Based on the preliminary assessment of compliance control 
effectiveness (as documented on Form 810 - Compliance Summary), select 
a sample of payments from throughout the audit period. (The sample size 
will vary based on the expected effectiveness of compliance controls as 
discussed in FAM 460.02.) Document the sampling approach using the 
documentation in FAM section 495 E. See note 6 regarding sampling 
efficiencies and completeness of the population; 

2. For each item selected in step 1, obtain the supporting 
documentation for the payment such as the invoice voucher package; 

(a) Document the following items in the documentation: 

* invoice number; 

* payee; 

* invoice amount; 

* invoice date; 

* invoice receipt date 
(or other date used for determining compliance with this law - see step 
2 (b)); 

* payment date; 

* amount of interest penalty paid, if any; 

* amount of discount taken, if any; and appropriation account(s) 
charged for the expenditure and interest penalty, if any.

2. (b) For each item selected, note whether the payment was made by the 
required due date. The required due date may be the date specified in 
the contract or, if a date is not specified, 30 days after receipt of 
the invoice (31 U.S.C. 3903(a)(1)(A) and (B)). If payment is for meat 
or meat food products, perishable agricultural products, dairy products 
or construction contracts, consult with OGC to determine payment due 
date. Specific payment due dates to avoid interest penalties are 
established by law for these items. (31 U.S.C. 3903(a)(2), (3), (4), 
and (6)); 

The invoice receipt date is the later of (1) the date the 
entity's designated representative or office actually receives a proper 
invoice or (2) the 7th day after the date on which, in accordance with 
the terms and conditions of the contract, the property is actually 
delivered or performance of the services is actually completed (unless 
the entity accepted the property or services before the 7th day or a 
longer acceptance period is specified in the contract). If the date of 
actual invoice receipt is not indicated, the entity must use the 
invoice date. (31 U.S.C. 3901(a)(4)(A) and (B)); 

If the payment was made prior to the payment due date, perform step 3; 

If the payment was made after the payment due date, perform step 4; 

If a discount was taken, perform step 5.

3. If the payment was made prior to the payment due date, and no 
discount was taken, determine that no interest penalty was paid; 

(Note: If the entity did not take advantage of a discount for which it 
was eligible or if an interest penalty was paid when it was not owed, 
the auditor generally should determine the cause of these items for 
purposes of reporting findings.).

4. If the payment was made after the payment due date, determine 
whether; 

(a) an interest penalty was paid;  

(b) the amount of the interest penalty was properly calculated; and 

(c) the interest penalty was paid out of the appropriation used to pay 
the related expenditures; 

Review the accounting codes indicated on the expense 
voucher. Determine whether the accounting codes used to record the 
interest penalty are the same as those used for the related expenditure 
and whether the codes and amounts agree with those recorded in the 
budgetary accounting records. (See step 6 regarding proper 
summarization of amounts.) (31 U.S.C. 3902 (a), (b), and (f)); 

Investigate any differences between the amount of interest penalty 
calculated by the auditor and the amount paid by the entity, including 
any instances when an interest penalty was owed but not paid. See note 
5. Investigate any instances when the proper appropriation account was 
not charged; 

See note 2 regarding the interest rate to be used. See 
notes 3 and 4 regarding the period the penalty should cover.

5. If a discount was taken, determine whether it was taken during the 
specified period the discount was available. If the discount was taken 
during the specified period, further consideration is not necessary; 

If any discounts are taken after the appropriate time period, determine 
whether; 

(a) an interest penalty was paid,; 
(b) the amount of the 
interest penalty was properly calculated, and 
(c) the interest 
penalty was charged against the appropriation used for the related 
expenditures; 

Review the budget accounting codes indicated on the 
expense voucher. Determine whether the budget accounting codes 
indicated on the voucher for the interest penalty are the same as those 
used for the related expenditure. Determine whether the codes and 
amounts on the voucher agree with those recorded in the budgetary 
accounting records. (See step 6 regarding proper summarization of the 
budgetary amounts.) (31 U.S.C. 3902 (a), (b), and (f), and 31 U.S.C. 
3904); 

Interest penalties should be calculated on the amount of the 
discount. The penalty accrues on the amount of the discount from the 
last date specified that the discounted amount may be paid (31 U.S.C. 
3904). See note 2 regarding the interest rate to be used to calculate 
the interest penalty;  

Investigate any differences between the amount of 
interest penalty calculated by the auditor and the amount paid by the 
entity, including any instances when an interest penalty was owed but 
not paid. Investigate any instances when the proper appropriation 
account was not charged.

6. Consider the procedures performed on the entity's budget controls 
over summarization of expenditure balances as discussed in FAM 395 F; 

If the auditor has assessed the entity's controls as effective in 
achieving the control objective of summarization of expenditure 
balances, further procedures are not necessary to obtain assurance as 
to whether interest penalties are paid out of the proper appropriation 
account; 

If the auditor has assessed the controls as ineffective, 
the auditor should perform procedures to determine if the entity has 
properly summarized the expenditure balances as described in FAM 495 
B.

7. If the entity does not appear to be in compliance based on the 
results of tests performed, discuss these matters with OGC and, when 
appropriate, the Special Investigator Unit to conclude if noncompliance 
actually has occurred and the implications of such noncompliance; 

For any noncompliance noted, the auditor should: 

* identify the 
weakness in compliance controls that allowed the noncompliance to 
occur, if not previously identified during compliance control testing; 

* report the nature of any weakness in compliance controls and consider 
modification of the opinion on internal control as appropriate (see FAM 
580.32-.61); 

* consider the implications of any instances of 
noncompliance on the financial statements; and 

* report instances of 
noncompliance, as appropriate (see FAM 580.67-.75).

8. Document conclusions on compliance with each provision on Form 810 
- Compliance Summary.

[End of table]

Note 1: The required due date is generally the date specified in the 
contract or, if a date is not specified, 30 days after receipt of the 
invoice (31 U.S.C. 3903(a)(1)(A) and (B)) If payment is for meat or 
meat food products, perishable agricultural products, dairy products or 
construction contracts, consult with OGC to determine payment due date. 
Specific payment due dates to avoid interest penalties are established 
by law for these items. (31 U.S.C. 3903(a)(2), (3), (4), and (6)):

The invoice receipt date is established as the later of (1) the date 
the entity's designated representative or office actually receives a 
proper invoice or (2) the 7th day after the date on which, in 
accordance with the terms and conditions of the contract, the property 
is actually delivered or performance of the services is actually 
completed, unless the entity accepted the property or services before 
the 7th day or a longer acceptance date is specified in the contract. 
If the date of actual invoice receipt is not indicated, the entity must 
use the invoice date. (31 U.S.C. 3901(a)(4)(A) and (B)):

Note 2: Interest shall be calculated at the rate set by the Secretary of 
the Treasury under section 12 of the Contract Disputes Act of 1978 (41 
U.S.C. 611) that is in effect at the time the entity accrues the 
obligation to pay a late payment interest penalty. The rates are 
published in the Federal Register. (31 U.S.C. 3902(a)):

Note 3: The interest penalty shall be paid for the period beginning on 
the day after the required payment date and ending on the date on which 
payment is made. (31 U.S.C. 3902(b)):

An interest penalty not paid after any 30-day period shall be added to 
the principal amount of the debt, and a penalty accrues thereafter on 
the combined amount of principal and interest. (31 U.S.C. 3902(e)):

Note 4: A payment is deemed to be made on the date a check for payment 
is dated or an electronic transfer is made. (31 U.S.C. 3901 (a)(5)):

Note 5: The temporary unavailability of funds to make a timely payment 
due for property or services does not relieve the entity head of the 
obligation to pay interest penalties under this law. (31 U.S.C. 3902 
(d)):

Note 6: If multipurpose testing is used for the compliance test and/or 
compliance control test and/or a substantive test of payments details, 
the sample items for the compliance test and/or compliance control test 
should be selected using the sampling method used for the substantive 
test as described in FAM 430. Otherwise, the items should be selected 
using attribute sampling as discussed in FAM 460.02.

As with all sampling applications, the auditor should consider the 
completeness of the test population. For efficiency, the auditor should 
consider using records that were tested for validity, accuracy, and 
completeness (as well as the other financial statement assertions) in 
conjunction with substantive tests of the population.

[End of section]

812 - PAY AND ALLOWANCE SYSTEM FOR CIVILIAN EMPLOYEES, AS PROVIDED 
PRIMARILY IN CHAPTERS 51-59 OF TITLE 5, U.S. CODE: 


Note: Complete this compliance summary or prepare equivalent 
documentation only if provisions of the Pay and Allowance System for 
Civilian Employees, as provided primarily in Chapters 51-59 of Title 5, 
U.S. Code, are considered to be significant as indicated on Form 802 - 
General Compliance Checklist.

[See PDF for image]

[End of table]

Note: Complete this program or prepare equivalent documentation only if 
provisions of the Pay and Allowance System for Civilian Employees, as 
provided primarily in Chapters 51-59 of Title 5, U.S. Code, are 
considered to be significant as indicated on Form 802 - General 
Compliance Checklist. The procedures in this program are designed to 
test compliance with the provisions listed on the Compliance Summary.

Audit Procedures: 

Note: These tests are closely related to procedures performed for 
substantive tests of payroll expense details. Use of multipurpose 
testing in this situation is strongly encouraged.

1. Based on the preliminary assessment of compliance control 
effectiveness (as documented on Form 812 - Compliance Summary), select 
an appropriate sample of disbursements from the payroll records 
throughout the audit period. (The sample size will vary based on the 
expected effectiveness of compliance controls as discussed in FAM 
460.02). Document the sampling approach using the documentation in FAM 
section 495 E. See note 2 regarding sampling efficiencies and 
completeness of the population. 

2. For each item selected in 1, note the following information: 

* employee name; 

* pay period (number and dates); 

* amount of gross pay for the period; 

* pay rate; 

* total hours worked; and number of hours worked 
at regular pay and other pay (i.e., overtime, premium pay, etc.). 

3. For each item selected in 1, obtain the employee's personnel file 
and note the following in effect for the pay period selected: the 
employee's grade and step and the employee's pay rate.

4. For each item selected in 1,

(a) Calculate the amount of gross 
pay using the hours worked and the employee's pay rate indicated on the 
payroll records. Compare the amount of gross pay calculated by the 
auditor to the amount shown on the payroll records for the selected pay 
period and obtain explanation and examine support for any differences.

Note:  To convert basic annual amount to a daily, weekly or biweekly 
amount, divide the annual rate by 2,087 for an hourly rate. Multiply 
the hourly rate by number of either daily hours, 40 for weekly, or 80 
for biweekly amounts. (5 U.S.C. 5504)  

4. (b) Compare the employee's pay rate in the payroll records to the 
appropriate pay rate for the employee's approved grade and step on the 
pay schedules established by executive order. (Use the approved grade 
and step indicated in the employee's personnel records for this test.) 
Obtain explanation and examine support for any differences between the 
actual pay rate for the period selected and the authorized amounts. (5 
U.S.C. 5332, 5343, and 5383); 

If the employee's pay is not set by 
these pay schedules, determine whether the amount paid is properly 
authorized and whether the pay rate is at least minimum wage. (29 
U.S.C. 206)  

5. If the entity does not appear to be in compliance based on the 
results of tests performed, discuss these matters with OGC and, when 
appropriate, the Special Investigator Unit to conclude if noncompliance 
actually has occurred and the implications of such noncompliance.; 

For any noncompliance noted, the auditor should; identify the 
weakness in compliance controls that allowed the noncompliance to 
occur, if not previously identified during compliance control testing; 

* report the nature of any weakness in compliance controls and consider 
modification of the opinion on internal control as appropriate (see FAM 
580.32-.61); 

* consider the implications of any instances of 
noncompliance on the financial statements; and

* report instances of noncompliance, as appropriate (see FAM 580.67-
.75)

6. Document conclusions on compliance with each provision on Form 812 
- Compliance Summary.  

[End of table]

Note 1: To convert basic annual amount to a daily, weekly, or biweekly 
amount, divide the annual rate by 2,087 for an hourly rate. Multiply 
the hourly rate by number of either daily hours, 40 for weekly, or 80 
for biweekly amounts. (5 U.S.C. 5504):

Note 2: If multipurpose testing is used for the compliance test and/or 
compliance control test and a substantive test of payroll expense 
details, the sample items for the compliance test and/or compliance 
control test should be selected using the sampling method used for the 
substantive test. Otherwise, the items should be selected using 
attribute sampling, as discussed in FAM 460.02.

As with all sampling applications, the auditor should consider the 
completeness of the population. For efficiency, the auditor should 
consider using records that were tested for validity and completeness 
(as well as the other financial statement assertions) in conjunction 
with substantive tests of payroll or other payroll related compliance 
tests.

Note 3: If the entity outsources payroll processing, the entity remains 
responsible for compliance. Dividing responsibility for payroll 
processing activities between the entity and the service organization 
could make payroll testing more complicated, although the same testing 
should be performed. The auditor may accomplish that testing with the 
assistance of the service organization's auditor, who may issue an 
internal control report on the service organization under AU 324 
(SAS 70). Or the service organization's auditor may assist the entity 
auditor by performing agreed-upon procedures at the service 
organization (e.g., substantive testing) under AT 201 (see FAM 660).

[End of section]


813 - CIVIL SERVICE RETIREMENT ACT: 

Note: Complete this compliance summary or prepare equivalent 
documentation only if provisions of the Civil Service Retirement Act 
are considered to be significant as indicated on Form 802 - General 
Compliance Checklist.

[See PDF for table]

[End of table]

Note: Complete this program or prepare equivalent documentation only if 
provisions of the Civil Service Retirement Act are considered to be 
significant as indicated on Form 802 - General Compliance Checklist. 
The procedures in this program are designed to test compliance with the 
provisions listed on the Compliance Summary.

Audit Procedures: 

1. Based on the preliminary assessment of compliance control 
effectiveness (as documented on Form 813 - Compliance Summary), select 
a sample of expense amounts for individuals' gross pay from the payroll 
disbursement records for the audit period for employees covered by the 
Civil Service Retirement Act system (CSRS). (See note 1.); 

(The 
sample size will vary based on the expected effectiveness of compliance 
controls, as discussed in FAM 460.02). Document the sampling approach 
using the documentation in FAM section 495 E. See note 3 regarding 
sampling efficiencies and completeness of the population; 

These tests should be coordinated with other tests of payroll-related 
expenses and with the agreed-upon procedures agency auditors perform 
for the Office of Personnel Management (OPM), per OMB audit guidance, 
if performed; 

2. For each selection made in 1, document the following for the pay 
period selected: 

* the amount withheld for the cost of retirement benefits; 

* the amount of basic pay; and 

* if indicated in the 
payroll disbursement records, document the retirement plan under which 
the withholdings were made (CSRS or FERS). (Only employees covered by 
CSRS should be included in this compliance test. See FAM 817 for the 
FERS compliance test.).

3. For each item selected in 1, obtain the employee's personnel file 
and note the following: 

* employee hire date,

* amount of basic pay, and 

*the retirement plan under which the employee is covered.

4. For each selection made in 1, 

(a) Compare the amount of basic pay 
indicated in the employee's personnel file with the amount indicated in 
the payroll records and obtain an explanation and examine support for 
any differences. (This procedure would be performed only if not already 
performed as part of other testing.).

(b) Calculate the amount of the withholdings for retirement costs 
based on 7 percent of basic pay for executive branch employees (see 
note 2 for percentages for other employees) for the selected pay period 
and document the amount in the documentation. Compare to the actual 
amount withheld for the selected pay period and obtain an explanation 
and examine support for any differences. (5 U.S.C. 8334(a)(1)).

(c) Determine whether the entity contributed an equal amount for the 
employee's retirement for the selected pay period. Obtain explanation 
and examine support for any differences between the employee and entity 
contributions. (5 U.S.C. 8334(a)(1)).

5. Determine whether amounts contributed by the entity are charged to 
the appropriation or fund used to pay the employee for the selected pay 
period by performing the following procedures: 

(a) Review the accounting codes indicated on the supporting 
documentation; 

(b) Determine whether the accounting codes used to record the entity 
contribution are the same as those used for the related payroll 
expenditure and whether the codes and amounts agree with those recorded 
in the budgetary accounting records. (This step assumes other payroll 
testing would have included checking that the codes represent the 
proper appropriation.).

(c) Consider the procedures performed on the entity's budget 
controls over summarization of expenditure balances as discussed in FAM 
395 F; If the auditor has assessed the entity's controls as 
effective in achieving the control objective of summarization of 
expenditure balances, further procedures are not necessary to obtain 
assurance as to whether the entity's contributions are paid out of the 
proper appropriation account; If the auditor has assessed the 
controls as ineffective, the auditor should perform procedures to 
determine whether the entity has properly summarized the expenditure 
balances as described in FAM 495 B. (5 U.S.C. 8334 (a)(1)).

6. Determine whether the entity has effective controls over the proper 
summarization of (a) the amounts withheld from employees for retirement 
costs under this law and (b) the entity contributions for remittance to 
Treasury. If the entity does not have effective controls for 
summarization, test the summarization of the totals that include the 
items selected for testing in step 1.

7. Compare the combined totals of employee withholdings and entity 
contributions that include each selection made in step 1 to the deposit 
made to Treasury and the remittance sent to OPM and obtain an 
explanation and examine support for any differences. The funds should 
be deposited in the Treasury to the credit of the Civil Service 
Retirement and Disability Fund. (5 U.S.C. 8334(a)(2)).[Empty].
[Empty].

8. If the entity does not appear to be in compliance based on the 
results of tests performed, discuss these matters with OGC and, when 
appropriate, the Special Investigator Unit to conclude if noncompliance 
actually has occurred and the implications of such noncompliance; 

For any noncompliance noted, the auditor should; 

* identify the 
weakness in compliance controls that allowed the noncompliance to 
occur, if not previously identified during compliance control testing; 

* report the nature of any weakness in compliance controls and consider 
modification of the opinion on internal control as appropriate (see FAM 
580.32-.61); 

* consider the implications of any instances of 
noncompliance on the financial statements; and 

* report instances of 
noncompliance, as appropriate (see FAM 580.67-.75).

9. Document conclusions on compliance with each provision on Form 813 
- Compliance Summary.

[End of table]

Note 1: Employees may be covered by the Civil Service Retirement Act 
(CSRS) or the Federal Employees' Retirement System Act (FERS), 
generally depending on their employment date.

Note 2: The percentage to be withheld for the service period after 
December 31, 2000, for (1) executive branch employees is 7 percent and 
(2) Congressional employees is 7.5 percent. The percentage to be 
withheld for the service period between January 1, 2001 and 
December 31, 2002, for Members of Congress is 8.5 percent. The 
percentage withheld for service after December 31, 2002, for Members of 
Congress is 8 percent. (5 U.S.C. 8334(a)(1)):

Note 3: If multipurpose testing is used for the compliance test and/or 
compliance control test and a substantive test of payroll expense 
details, the sample items for the compliance test and/or compliance 
control test should be selected using the sampling method used for the 
substantive test. Otherwise, the items should be selected using 
attribute sampling, as discussed in FAM 460.02.

As with all sampling applications, the auditor should consider the 
completeness of the population. For efficiency, the auditor should 
consider using records that were tested for validity and completeness 
(as well as the other financial statement assertions) in conjunction 
with substantive tests of payroll or other payroll related compliance 
tests.

Note 4: If the entity outsources payroll processing, the entity remains 
responsible for compliance. Dividing responsibility for payroll 
processing activities between the entity and the service organization 
could make payroll testing more complicated, although the same testing 
should be performed. The auditor may accomplish that testing with the 
assistance of the service organization's auditor, who may issue an 
internal control report on the service organization under AU 324 
(SAS 70). Or the service organization's auditor may assist the entity 
auditor by performing agreed-upon procedures at the service 
organization (e.g., substantive testing) under AT 201 (see FAM 660).

[End of section]

814 - FEDERAL EMPLOYEES HEALTH BENEFITS ACT: 


Note: Complete this compliance summary or prepare equivalent 
documentation only if provisions of the Federal Employees Health 
Benefits Act are considered to be significant as indicated on Form 802 
- General Compliance Checklist.

[See PDF for image]

[End of table]

Note: Complete this program or prepare equivalent documentation only if 
provisions of the Federal Employees Health Benefits Act are considered 
to be significant as indicated on Form 802 - General Compliance 
Checklist. The procedures in this program are designed to test 
compliance with the provisions listed on the Compliance Summary.

Audit Procedures: 

1. Based on the preliminary assessment of compliance control 
effectiveness (as documented on Form 814 - Compliance Summary), select 
a sample of expense amounts for individuals' gross pay from the payroll 
disbursement records for the audit period; 

(The sample size will 
vary based on the expected effectiveness of compliance controls, as 
discussed in FAM 460.02). Document the sampling approach using the 
documentation in FAM section 495 E. See note 2 regarding sampling 
efficiencies and completeness of the population. 

These tests should 
be coordinated with other tests of payroll-related expenses and with 
the agreed-upon procedures agency auditors perform for OPM, per OMB 
audit guidance, if performed. 

2. For each selection made in step 1, document the employee, the pay 
period selected, and the amount withheld for the pay period selected, 
if any, for the cost of health insurance. If available, document the 
health plan enrollment code. 

3. For each selection made in step 1, obtain the employee's personnel 
file and note whether the employee elected health insurance coverage 
for the period to which payroll disbursement relates. Such coverage 
should be indicated on OPM form SF 2809; 

If the employee did not 
elect health insurance coverage, ask why amounts are being withheld for 
the cost of insurance and determine whether any entity contributions 
are being made inappropriately as well. 

4. If the employee identified in step 3 elected coverage, perform the 
following steps:

(a) Obtain the schedule of health insurance costs 
for all plans published by OPM. Using the enrollment code for the plan 
selected by the employee on OPM form SF 2809, calculate the employee's 
portion of the health insurance cost and record it in the 
documentation. Compare it to the amount actually withheld for the 
selected pay period and obtain an explanation and examine support for 
any differences. (5 U.S.C. 8906(d)); 

(b) For each employee in (a), determine the appropriate amount of 
the entity's contribution for its share of health insurance costs by 
using the OPM schedule of costs. Compare it to the amount actually 
contributed by the entity for the employee's health insurance for the 
selected pay period and obtain an explanation and examine support for 
any differences. (See note 1 for part-time career employees.) (5 U.S.C. 
8906(b)(1)); 

(c) For each employee in (b), determine if amounts contributed by 
the entity are charged to the appropriation or fund that is used to pay 
the employee for the selected pay period by performing the following 
procedures:

(1) Review the accounting codes indicated on the 
supporting documentation; 

(2) Determine whether the accounting codes 
used to record the entity contribution are the same as those used for 
the related payroll expenditure and whether the codes and amounts agree 
with those recorded in the budgetary accounting records. (This step 
assumes other payroll testing would have included checking that the 
codes represent the proper appropriation.); 

(c) (3) Consider the procedures performed on the entity's budget 
controls over summarization of expenditure balances as discussed in FAM 
395 F; 

If the auditor has assessed the entity's controls as 
effective in achieving the control objective of summarization of 
expenditure balances, further procedures are not necessary to obtain 
assurance as to whether the entity's contributions are paid out of the 
proper appropriation account; 

If the auditor has assessed the 
controls as ineffective, the auditor should perform procedures to 
determine whether the entity has properly summarized the expenditure 
balances as described in FAM 495 B. (5 U.S.C. 8906(f)).

5. Determine whether the entity has effective controls over the proper 
summarization of the amounts withheld from employees for health 
insurance costs under this law and the entity contributions for 
remittance to Treasury. If the entity does not have effective controls 
for summarization, test the summarization of the totals that include 
the items selected for testing in step 1.; 

6. Compare the total cost of health insurance on the entity's records 
(employee and employer portions) for the selected pay period to the 
deposit made to Treasury and the documentation sent to OPM and obtain 
an explanation and examine support for any differences. The funds 
should be deposited in the Treasury to the credit of the Employees 
Health Benefits Fund. (5 U.S.C. 8909); 

7. If the entity does not appear to be in compliance based on the 
results of tests performed, discuss these matters with OGC and, when 
appropriate, the Special Investigator Unit to conclude if noncompliance 
actually has occurred and the implications of such noncompliance; 
For any noncompliance noted, the auditor should

* identify the 
weakness in compliance controls that allowed the noncompliance to 
occur, if not previously identified during compliance control testing;

* report the nature of any weakness in compliance controls and consider 
modification of the opinion on internal control as appropriate (see FAM 
580.32-.61);

* consider the implications of any instances of 
noncompliance on the financial statements; and

* report instances of noncompliance, as appropriate (see FAM 580.67-
.75).

8. Document conclusions on compliance with each provision on Form 814 
- Compliance Summary.; 

[End of table]

Note 1: 
For part-time career employees, the biweekly entity contribution 
shall be calculated on a prorata basis based on the ratio of number of 
scheduled part-time hours to the number of scheduled regular hours for 
an employee serving in a comparable position on a full-time basis. (5 
U.S.C. 8906(b)(3)):

Note 2: If multipurpose testing is used for the compliance test and/or 
compliance control test and a substantive test of payroll expense 
details, the sample items for the compliance test and/or compliance 
control test should be selected using the sampling method used for the 
substantive test. Otherwise, the items should be selected using 
attribute sampling, as discussed in FAM 460.02.

As with all sampling applications, the auditor should consider the 
completeness of the test population. For efficiency, the auditor should 
consider using records that were tested for validity and completeness 
(as well as the other financial statement assertions) in conjunction 
with substantive tests of payroll or other payroll related compliance 
tests.

Note 3: If the entity outsources payroll processing, the entity remains 
responsible for compliance. Dividing responsibility for payroll 
processing activities between the entity and the service organization 
could make payroll testing more complicated, although the same testing 
should be performed. The auditor may accomplish that testing with the 
assistance of the service organization's auditor, who may issue an 
internal control report on the service organization under AU 324 
(SAS 70). Or the service organization's auditor may assist the entity 
auditor by performing agreed-upon procedures at the service 
organization (e.g., substantive testing) under AT 201 (see FAM 660).

[End of section]

816 - FEDERAL EMPLOYEES COMPENSATION ACT: 

Note: Complete this compliance summary or prepare equivalent 
documentation only if provisions of the Federal Employees' Compensation 
Act are considered to be significant as indicated on Form 802 - General 
Compliance Checklist.

[See PDF for figure]

[End of table]

Note: Complete this program or prepare equivalent documentation only if 
provisions of the Federal Employees' Compensation Act are considered to 
be significant as indicated on Form 802 - General Compliance Checklist. 
The procedures in this program are designed to test compliance with the 
provisions listed on the Compliance Summary for this law.

Audit Procedures:

Note: The provisions identified for testing are procedural-based 
provisions. As discussed in FAM 460.06, sufficient procedures usually 
are performed in conjunction with tests of compliance controls for 
these procedural-based provisions to conclude on the entity's 
compliance without performing additional procedures. Additional 
procedures should not be performed to obtain evidence regarding 
compliance with the provisions related to the following objectives 
unless sufficient evidence regarding compliance was not obtained during 
compliance control tests documented on Form 816 - Compliance Summary.

1. Reference to conclusions on compliance controls on Form 816 - 
Compliance Summary and indicate whether any additional procedures are 
necessary.

2. If the entity does not appear to be in compliance based on the 
results of tests performed, discuss these matters with OGC and, when 
appropriate, the Special Investigator Unit to conclude if noncompliance 
actually has occurred and the implications of such noncompliance; 

For any noncompliance noted, the auditor should; 

* identify the weakness in compliance controls that allowed the 
noncompliance to occur, if not previously identified during compliance 
control testing; 

* report the nature of any weakness in compliance controls and consider 
modification of the opinion on internal control as appropriate (see FAM 
580.32-.61); 

* consider the implications of any instances of 
noncompliance on the financial statements; and report instances of 
noncompliance, as appropriate (see FAM 580.67-.75).

3. Document conclusions on compliance with each provision on Form 816 
- Compliance Summary.

[End of table]

Note 1: A statement showing the total cost of benefits and other 
payments made from the Employees' Compensation Fund during the 
preceding July 1 through June 30 expense period on account of the 
injury or death of employees or individuals under the jurisdiction of 
the entity is required to be provided by the Secretary of Labor to the 
entity by August 15 of each year. (5 U.S.C. 8147):

Note 2: Entities not dependent on an annual appropriation shall make the 
required deposit to Treasury from funds under its control during the 
first 15 days of October after receipt of the statement showing the 
costs paid on the entity's behalf. (5 U.S.C. 8147):

[End of section]

817 - FEDERAL EMPLOYEES' RETIREMENT SYSTEM ACT OF 1986: 

Note: Complete this compliance summary or prepare equivalent 
documentation only if provisions of the Federal Employees' Retirement 
System Act of 1986 are considered significant as indicated on Form 802 
- General Compliance Checklist.

[See PDF for image] 

[End of table]

Note: Complete this program or prepare equivalent documentation only if 
provisions of the Federal Employees' Retirement System Act of 1986 are 
considered significant as indicated on Form 802 - General Compliance 
Checklist. The procedures in this program are designed to test 
compliance with the provisions listed on the Compliance Summary.

Audit Procedures: 

1. Based on the preliminary assessment of compliance control 
effectiveness (as documented on form 817 - Compliance Summary), select 
a sample of expense amounts for individuals' gross pay from the payroll 
disbursement records for the audit period for employees covered by the 
Federal Employees' Retirement System (FERS). (See note 1.); 

(The 
sample size will vary based on the expected effectiveness of compliance 
controls as discussed in FAM 460.02). Document the sampling approach 
using the documentation in FAM section 495 E. See note 4 regarding 
sampling efficiencies and completeness of the sample population; 


These tests should be coordinated with other tests of payroll-related 
expenses and with the agreed-upon procedures agency auditors perform 
for OPM, per OMB audit guidance, if performed.

2. For each selection made in 1, document the following for the pay 
period selected: 

* the amount withheld for the cost of retirement 
benefits,

* the amount of basic pay, and 

* if indicated in the 
payroll disbursement records, document the retirement plan under which 
the withholdings were made (CSRS or FERS). (Only employees covered by 
FERS should be included in this compliance test. See FAM 813 for the 
CSRS compliance test.).

3. For each item selected in 1, obtain the employee's personnel file 
and note the following: 

* employee hire date, 
* amount of basic pay, and 
* the retirement plan under which the employee is covered.

4. For each selection made in 1, 

(a) Compare the amount of basic pay 
indicated in the employee's personnel file with the amount indicated in 
the payroll records and obtain an explanation and examine support for 
any differences. (This procedure would be performed only if not already 
performed as part of other testing.).

(b) Calculate the amount of the withholdings for retirement costs 
based on 0.8% of basic pay for most employees (see note 2 for 
percentages for certain employees) for the selected pay period and 
record the amount in the documentation. Compare to the actual amount 
withheld for the selected pay period and obtain an explanation and 
examine support for any differences. (5 U.S.C. 8422(a)(1)).

(c) Determine whether the entity contributed the correct amount for 
the employee's retirement for the selected pay period. Obtain an 
explanation and examine support for any differences between the entity 
contributions and the amount calculated using OPM's normal cost 
percentage. (5 U.S.C. 8423(a)(1) and 5 U.S.C. 8401(23)).

5. Determine if amounts contributed by the entity are charged to the 
appropriation or fund used to pay the employee for the selected pay 
period by performing the following procedures: 

(a) Review the accounting 
codes indicated on the supporting documentation; 

(b) Determine whether 
the accounting codes used to record the entity contribution are the 
same as those used for the related payroll expenditure and whether the 
codes and amounts agree to those recorded in the budgetary accounting 
records. (This step assumes other payroll testing would have included 
checking that the codes represent the proper appropriation.); 


(c) Consider the procedures performed on the entity's budget controls 
over summarization of expenditure balances as discussed in FAM 395 F; 

If the auditor has assessed the entity's controls as effective in 
achieving the control objective of summarization of expenditure 
balances, further procedures are not necessary to obtain assurance as 
to whether the entity's contributions are paid out of the proper 
appropriation account; 

If the auditor has assessed the controls as 
ineffective, the auditor should perform procedures to determine whether 
the entity has properly summarized the expenditure balances as 
described in FAM 495 B. (5 U.S.C. 8423(a)(1)).

6. Determine whether the entity has effective controls over the proper 
summarization of the amounts withheld from employees for retirement 
costs under this law and the entity contributions for remittance to 
Treasury. If the entity does not have effective controls for 
summarization, test the summarization of the totals that include the 
items selected for testing in step 1.

7. Compare the combined totals of employee withholdings and entity 
contributions that include each selection made in step 1 to the deposit 
made to Treasury and the remittance sent to OPM and obtain explanation 
and examine support for any differences. The funds should be deposited 
in the Treasury to the credit of the Civil Service Retirement and 
Disability Fund. (5 U.S.C. 8422(c) and 5 U.S.C. 8401(6)).


8. If the entity does not appear to be in compliance based on the 
results of tests performed, discuss these matters with OGC and, when 
appropriate, the Special Investigator Unit to conclude if noncompliance 
actually has occurred and the implications of such noncompliance; 

For any noncompliance noted, the auditor should; 

* identify the 
weakness in compliance controls that allowed the noncompliance to 
occur, if not previously identified during compliance control testing; 

* report the nature of any weakness in compliance controls and 
consider modification of the conclusion on internal control as 
appropriate (see FAM 580.32-.61); 

* consider the implications of any instances of 
noncompliance on the financial statements; and 

* report instances of 
noncompliance, as appropriate (see FAM 580.67-.75).

9. Document conclusions on compliance with each provision on Form 813 - 
Compliance Summary.

[End of table]

Note 1: Employees may be covered by the Civil Service Retirement Act 
(CSRS) or the Federal Employees' Retirement System Act (FERS), 
generally depending on their employment dates.

Note 2: For most employees, the percentage to be withheld is 0.8 percent 
(7 percent less the Social Security tax rate). For congressional 
employees, Members of Congress, and law enforcement officers, 
firefighters, air traffic controllers, and nuclear materials couriers, 
the withholding rates are higher. (See 5 U.S.C. 8422(a)(1).).

Note 3: The Office of Personnel Management (OPM) computes the normal 
cost percentage. For FY 2002, it is 11.5 percent for regular employees. 
For congressional employees, Members of Congress, and law enforcement 
officers, firefighters, air traffic controllers, and nuclear materials 
couriers, the normal cost percentages are higher. OPM lists the 
percentages in its Benefits Administration Letters, accessible on its 
Internet site, http://www.opm.gov/asd/htm/bal01.htm (where the 2 
digits after "bal" represent the calendar year of the letters). (5 
U.S.C. 8401(23)):

Note 4: If multipurpose testing is used for the compliance test and/or 
compliance control test and a substantive test of payroll expense 
details, the sample items for the compliance test and/or compliance 
control test should be selected using the sampling method used for the 
substantive test. Otherwise, the items should be selected using 
attribute sampling, as discussed in FAM 460.02.

As with all sampling applications, the auditor should consider the 
completeness of the test population. For efficiency, the auditor should 
consider using records that were tested for validity and completeness 
(as well as the other financial statement assertions) in conjunction 
with substantive tests of payroll or other payroll related compliance 
tests.

Note 5: If the entity outsources payroll processing, the entity remains 
responsible for compliance. Dividing responsibility for payroll 
processing activities between the entity and the service organization 
could make payroll testing more complicated, although the same testing 
should be performed. The auditor may accomplish that testing with the 
assistance of the service organization's auditor, who may issue an 
internal control report on the service organization under AU 324 (SAS 
70). Or the service organization's auditor may assist the entity 
auditor by performing agreed-upon procedures at the service 
organization (e.g., substantive testing) under AT 201 (see FAM 660).

[End of section]