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**Program-Specific Audit Guidelinesfor Advanced Technology Program (ATP)Cooperative Agreements with Single Companies**

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## U.S. Department of CommerceOffice of Inspector General
National Institute of Standards and Technology
**November 1996**
*Office of Audits, Atlanta Regional Office*

**TABLE OF CONTENTS**
**Chapter 1 - General Guidance
Audit Requirements   
        Objectives      
        Frequency       
        Engagement Letter       
        Protection of Confidential Information  
        Criteria        
**Chapter 2 - Reporting Requirements 
        Report Package  
        Submission of Reports 
**Chapter 3 - The Schedule of Fund Sources and Project Costs 

**Chapter 4 - Auditor's Opinion on the Schedule of Fund Sources and Project Costs**
     Overview        
        Cost Principles 
        Cost Limitations        
        Direct Costs *vs.* Indirect Costs  
        Suggested Audit Procedures
**Chapter 5  - The Attestation Engagement 
        Overview 
        Management Assertions, Compliance Requirements and Suggested         Examination Procedures
            1.  Property Management
                2.  Procurement 
                3.  Federal Reporting   
                4.  Subcontractors
*Appendices*
*Appendix A
*Appendix B
*Appendix C

Chapter 1.   General  Guidance

**Audit Requirements**:  The Advanced Technology Program (ATP) is a cost-sharing program designed to assist United States industry and businesses pursue high risk, enabling technologieswith significant commercial and economic potential. The statutory authority for ATP, incorporated into Section 28, Subpart C of the National Institute of Standards and Technology(NIST) Act of 1988, and as amended in 1991, requires that NIST establish procedures regardingfinancial reporting and auditing to ensure that cooperative agreements are used for their specifiedpurposes.  Federal legislation requires that all audits of financial assistance be performed inaccordance with Government Auditing Standards issued by the Comptroller General of theUnited States. These audit requirements can be met by conducting an audit of the ATP financialstatement, "Schedule of Fund Sources and Project Costs" and an examination-level attestationengagement of  management's assertions regarding compliance with laws and regulations.  

The ATP financial statement will be audited using generally accepted auditing standards whichhave been incorporated into the Government Auditing Standards. The examination-levelcompliance attestation engagement will be conducted in accordance with Government AuditingStandards and the standards contained in the Statement on Standards for Attestation Engagement(SSAE) No. 3, *Compliance Attestation*, issued by the American Institute of Certified PublicAccountants (AICPA).  An engagement conducted in accordance with SSAE No. 3, *ComplianceAttestation,* is a type of financial-related audit under Government Auditing Standards.

These guidelines are not intended to be a complete manual of procedures, nor are they intendedto supplant the auditor's judgment of the work required to meet the program-specific auditobjectives.  These guidelines may not cover all circumstances encountered while performing theprogram-specific audit, similarly not all procedures will apply to every situation.  Auditors mustuse their professional judgment in determining the work necessary to render the requiredopinions.  
Different guidelines will be used by single companies from those used by joint ventureparticipants  because of differing requirements for each of these types of award recipients.  Asingle company is defined by NIST as a small,  medium, or large for-profit company.  A singlecompany can receive up to $2 million of ATP funds over a period not to exceed three (3) years. Single companies do not have to provide matching funds but are reimbursed for direct costs only.   

All federal programs are assigned a number in the Catalog of Federal Domestic Assistance(CFDA).  The CFDA number for the Advanced Technology Program is 11.612.

**Objectives**:  The opinions on the program financial statement and management's assertionsregarding compliance will be used as a tool by program managers and grant officials in meetingtheir responsibilities for ensuring that federal funds were spent for their intended purposes and inaccordance with laws and regulations.

**Frequency:  ATP recipients shall have a program-specific audit performed in accordance withthe following schedule:  

- For awards less than 24 months, a program-specific audit is required only at the end ofthe project.   For 2- and 3-year awards,  a program-specific audit is required after the first year andat the end of the project.
The program-specific audit is to cover the period elapsed since the last program-specific auditof the company or since the project began if the audit is the initial audit.  In the case of a no-cost extension to the first year of an award, the audit should include project funds and projectcosts for the first year and the extension period.

**Engagement Letter**:  A letter of engagement between the ATP awardee and the auditorconducting the program-specific audit shall specifically include a provision that the auditor isrequired to provide the Secretary of Commerce, the Office of Inspector General, and the U.S.General Accounting Office or their representatives access to working papers or relateddocuments.  Access to working papers includes making necessary photocopies.  

**Protection of Confidential Information**: Certain information obtained in this engagement isexempt from disclosure under the Freedom of Information Act (FOIA).  Exempt from FOIAdisclosure is information on the ATP awardee's business operation and trade secretspossessed by the company. 

**Criteria**: The auditor should review the cooperative agreement which stipulates all requiredawards terms and conditions including the applicable administrative requirements and costprinciples.  In addition, the following documents should be available: 

***Department of Commerce Requirements***

Department of Commerce  (DOC) Financial Assistance Standard Terms andConditions.

        Financial Assistance Award (Form CD-450) and any amendment to the FinancialAssistance Award (Form CD-451) which incorporates the approved budget, asdescribed on Form NIST-1262.

        General Terms and Conditions - Advanced Technology Program.

        Special Award Conditions - Advanced Technology Program

        Advanced Technology Program Proposal Preparation Kit which includes: 
-     Advanced Technology Program (ATP) Public Law 100-418 as amended by Public Law 102-245     Advanced Technology Program (ATP) Rule - Title 15, CFR Part 295 
***Administrative Requirements*** (As Applicable)

        Office of Management and Budget (OMB), Circular A-110, "Uniform AdministrativeRequirements for Grants and Agreements with Institutions of Higher Education,Hospitals and Other Nonprofit Organizations."

        "Uniform Administrative Requirements for Grants and Cooperative Agreements toState and Local Governments," (Common Rule) Title 15, CFR Part 24.

***Cost Principles***  (As Applicable) 

        Federal Acquisition Regulations (FAR) System, Part 31, "Contract Cost Principlesand Procedures."

        Office of Management and Budget (OMB), Circular A-21, "Cost Principles forEducational Institutions."

        Office of Management and Budget (OMB), Circular A-87, "Cost Principles for State,Local and Indian Tribal Governments."

        Office of Management and Budget (OMB), Circular A-122, "Cost Principles forNonprofit Organization."
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**Chapter 2.   Reporting Requirements

**Report Package**:  The report package should include the following:

-          A Schedule of Fund Sources and Project Costs including disclosure notes prepared bythe ATP awardee.  The Schedule should include the most recently approved projectbudget.  The budget information is found on Form NIST-1262.  Chapter 3 of theseguidelines provides further details on the preparation of the Schedule.  Appendix Aprovides an illustrative example.    
    An opinion on the Schedule of Fund Sources and Project Costs of the ATP award.      Chapter 4 of these guidelines includes a discussion of the cost principles governing theproject costs.  The auditor's opinion should be issued in accordance with the AICPA'sCodification of Statement of Auditing Standards, Section 623, Paragraph 22,  
SpecialPurpose Financial Presentation to Comply with Contractual Agreement or RegulatoryProvisions
.  Appendix B provides an illustrative example. 

       An opinion on management's assertions on the entity's compliance with specifiedrequirements applicable to the ATP program. The practitioner's opinion should beissued in accordance with the AICPA's Statement on Standards for AttestationEngagements  No. 3, 
Compliance Attestation
.  The management assertions are found in Chapter 5 of         these guidelines.  Appendix C provides an illustrative example.    

       A written communication of any reportable conditions or material weaknesses whichwere noted in the audit of the Schedule of Fund Sources and Project Costs or duringthe compliance attestation engagement that could adversely affect the entity's ability toreport financial data or comply with the specified compliance requirements.  AICPAStatement of Auditing Standards (SAS) No. 60, 
Communication of Internal ControlStructure Related Matters Noted in an Audit
, requires these internal controldeficiencies be communicated to management. These guidelines require thecommunication be in writing.  A report on the Internal Controls prepared inaccordance with Government Auditing Standards is not required for financial-relatedaudits.  

   A Schedule of Findings and Questioned Costs when applicable.  This schedule will    include all material findings and questioned costs resulting from the compliancetesting or identified through the audit of the Schedule of Fund Sources and ProjectCosts.  The findings should be developed with information necessary to facilitate theaudit resolution process (i.e., the size of the universe and corresponding dollar amount,size and dollar amount of the sample, and number and corresponding dollar amount ofthe instances of noncompliance). Because independent auditors do not disallow costs,questioned costs are identified for possible disallowance by the Department ofCommerce.

    A Corrective Action Plan when applicable.  Management should describe the  corrective action taken or planned in response to the findings and questioned costs identified by the auditor.  The plan should also include the status of corrective actionstaken on prior findings resulting from independent audits or audits performed by theOffice of Inspector General.

**Submission of Reports:**   The report package should be submitted within 90 days of the end ofthe reporting period.  The ATP awardee should submit with the report package the company's most recent audited or reviewed financial statements. Two copies should be submitted to theDepartment of Commerce.  One copy should be submitted to the NIST Grants Officer at thefollowing address:

**NIST Grants Office**                       Cooperative Agreement No. ______________                       Building 301, Room B129                       Gaithersburg, Maryland  20899-0001
The other copy should be forwarded to the Office of Inspector General at the followingaddress: 

**U.S. Department of Commerce                        Office of Inspector General**                       ATTN:   ATP Program-Specific Audit Report                       401 West Peachtree Street, NW, Suite 2342                       Atlanta, Georgia  30308

In the accompanying transmittal letter, please provide the name and phone number of thecompany's designated contact person in the event of questions about the submitted reports. 

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Chapter 3.  The Schedule of Fund Sources and Project Costs
The Schedule of Fund Sources and Project Costs as presented in Appendix A will be preparedby the ATP awardee from the company's accounting records.  The Schedule should report thelatest approved budget as identified on Form NIST-1262,  the total fund sources, and projectcosts for the reporting period.  Projects costs include costs allowable under the applicable costprinciples subject to all limitations and exclusions set forth in the award including the award'sspecial and general terms and conditions, and DOC's financial assistance standard terms andconditions.  In addition, the recipient should review the guidance included in ATP's ProposalPreparation Kit for the allowability or valuation of a specific cost element.  If theaforementioned documents are silent on the accounting for a specific item of cost, thengenerally accepted accounting principles should be used.

The ATP awardee should prepare adequate disclosure notes to describe the basis of theschedule's presentation and any significant accounting policies used in preparing theschedule.  In addition, the notes should include a general description of the companyreceiving the ATP award, a general project description and basic award terms such as theamount of federal funding and the length of the award.  When appropriate, disclosure notesshould also include related party transactions, subsequent events, and material questionedcosts.
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Chapter 4.  The Auditor's Opinion on the Schedule of Fund Sources and Project Costs
**Overview**:  The Schedule of Fund Sources and Project Costs is the ATP financial statement. This program financial statement should be audited under generally accepted auditingstandards incorporated into Government Auditing Standards.  The opinion on the Schedule ofFund Sources and Project Costs should be prepared in accordance with the AICPA'sCodification of Statement of Auditing Standards, Section 623, Paragraph 22, *Special PurposeFinancial Presentation to Comply with Contractual Agreement or Regulatory Provisions.

The Schedule of Fund Sources and Project Costs is prepared in conformance with the termsof the award and consistent with the cost principles which govern the expenditures of funds. This presentation of project income and expenditures is referred to as an other comprehensivebasis of accounting.  If material questioned costs are found while the auditor is forming anopinion of the ATP financial statement or during the attestation engagement,  the Schedule ofFund Sources and Project Costs should remain unchanged and include the total project costsincurred, including the material questioned costs.  The costs questioned should be disclosed inthe accompanying notes to the ATP financial statement.  With adequate note disclosure, theauditor can issue an unqualified opinion with an explanatory paragraph following theopinion, as appropriate.  

**Cost Principles**:  There are federal cost principles for each type of recipient receiving federalassistance.  The cost principles applicable to the recipient are stated in the award document.Allowability of costs is determined as follows:

For-profit organizations
    -    Federal Acquisition Regulations (FAR) Part 31,  "Contract Cost      Principles and Procedures"
*Non-profit organizations*   -     OMB Circular A-122, "Cost Principles for NonprofitOrganizations"
*Educational organizations*-      OMB Circular A-21, "Cost Principles for Educational          Organizations"                       
*Government organizations*-       OMB Circular A-87, "Cost Principles for State, Local andIndian Tribal Governments"  

The ATP program was created as a cost reimbursement research and development vehicle. NIST built the cost reimbursement theory into the ATP regulation and cooperative agreementsby requiring compliance with applicable federal administrative requirements and cost principles. Reimbursement claims to NIST using a basis other than cost (e.g., GSA Schedule, commercialprice, list price, etc.) are not allowable under the terms of ATP cooperative agreements.

**Cost Limitations**: The following costs are not allowable under the ATP program regardless ofwhether they are allowable under the FAR or OMB cost principles:

-   Reimbursement to single company recipients for any indirect costs.  Single company                     awardees  do not provide matching funds but are limited to direct costs only.    Cost of tuition for students working on the ATP project. 
  Profit, management fees, interest on borrowed funds, and facilities capital cost of money
  Marketing surveys, pre-commercialization or commercialization studies.
  Bid and proposal costs.
  Costs incurred in prior time periods, i.e. "sunk" costs.
  Independent Research and Development (IR&D) costs when funded from federal sources.
  Direct charges for the construction of new buildings or extensive renovations of existing               laboratory buildings. 

Refer to the ATP Proposal Preparation Kit for further details regarding the unallowable costs cited above.

The award terms and conditions stipulate prior approval requirements.  As of the date of theseguidelines, the following are allowable ONLY IF prior approval is obtained from the NISTGrants Officer:

-    All sole source subcontracts over $100,000.    Budget transfers among direct cost categories exceeding 10 percent of the total budget.
   Capital expenditures in excess of $100,000.
   Changes to key personnel.
   Changes to the scope of work.  

**Direct Costs vs. Indirect Costs** - Single company ATP awardees are reimbursed for allowabledirect costs only.  While the budget may include an indirect cost commitment by the company,the indirect cost commitment is not subject to audit.  Single companies must pay all indirectcosts from their own funds.**Suggested Audit Procedures - The following are the suggested audit procedures fordetermining the allowability of costs in accordance with the cost principles:

-   Obtain the latest approved budget (Form NIST-1262) for the project period under audit. 
  Test that the costs are within the approved budget.

    Test that the costs are direct costs incurred for the ATP award in accordance with theapplicable cost principles.

    Test that the cost conforms to any limitations or exclusions set forth in the cooperativeagreement award, applicable terms and conditions incorporated in the award, i.e.,Special
        Award Conditions, ATP General Terms and Conditions or DOC Financial AssistanceStandard Terms and Conditions. 

    Ascertain that the cost has been given consistent accounting treatment within andbetween accounting periods.  

    Test on a sample basis that the cost charged to ATP is a net cost, i.e., all applicablecredits, volume or cash discounts, refunds, rental income, trade-ins, scrap sales, etc.,have been subtracted.

    Examine on a sample basis the underlying documentation, i.e., time and attendancepayroll records, time and effort records for employees charged to more than oneactivity, approved purchase orders, vendor invoices, canceled checks, etc., asappropriate, and determine that the cost is correctly charged as to project, account,amount and period. 

    For wages, salaries and fringe benefits, test on a sample basis that the employee's totalcompensation is consistent with established company practices for that category ofemployee.  

    For wages, salaries and fringe benefits, compare a representative sample of  individualcompensation levels to prior years and test that the escalation clause in the approvedbudget is not exceeded.

 Test, on a sample basis, that charges for fringe benefits including sick leave, vacation   leave, life and health insurance, and pension plans are supported by a plan and these   benefits are directly charged to the ATP award.   

Test, on a sample basis, that depreciation is not being claimed on assets or a portion ofthe assets purchased with federal funds.
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Chapter 5.  The Attestation Engagement
**Overview:**  The practitioner is required to obtain written assertions from management as part ofthe compliance attestation engagement performed in accordance with the AICPA's Statement onStandards for Attestation Engagement (SSAE) No. 3, *Compliance Attestation*.  In addition to thefive specific assertions that follow, management's written representations should include thegeneral matters required by paragraph 70 of SSAE No. 3, *Compliance Attestation*.Management's written assertions are an integral part of the engagement.  Materiality relates toeach specific management assertion.  

**Management Assertions, Compliance Requirements and Suggested Examination Procedures:

1.  Property Management

***Management Assertion**.   Equipment acquired with the ATP funds has been accounted for in accordance with federal property management standards found in OMB Circular A-110,Subpart C, Paragraphs 30-37.*

**Compliance Requirement  -**  Title to equipment acquired using federal financial assistance vests with the recipient.  The recipient agrees to use the equipment for theauthorized purpose of the project as long as it is needed and will not encumber the asset. There are no requirements pertaining to equipment with a cost of less than $5,000. NIST hasdisposition authority as described in OMB Circular A-110, Subpart C, Paragraph 34.    

While title to property and equipment vests with the recipient, the recipient has no cost basis inthe assets purchased with government funds.  The recipient's fixed asset system, therefore,must clearly identify that federal funds are the source of funding for the assets.  The companyis neither entitled to a depreciation deduction on their corporate tax return nor the R & Dcredit based on federal expenditures under this program.  

**Suggested Examination  Procedures**

-     Ascertain that the recipient has a fixed asset system to identify equipment purchased, including the source of funds for equipment, percentage of federal ownership,location, cost and other pertinent information.   
    Ascertain that a physical inventory is conducted at least once every two years.

    Inquire as to the disposal of ATP funded equipment during the award period. Ascertain whether disposition instructions were requested from NIST and, if so, werethey followed. If disposition instructions were not requested, did the disposition ofproperty meet the requirements of OMB A-110, Subpart C, Paragraph 34.

2.  Procurement 

*M**anagement Assertion**.  Federal procurement standards described in OMB Circular A-110,Subpart C, Paragraphs 40-48 have been incorporated into the  purchasing policies and adheredto for ATP award expenditures.*

**Compliance Requirement  -**  The purpose of federal procurement requirements is to provide tothe maximum extent practical open and free competition.  Recipients will use their ownwritten procurement procedures provided these procedures conform to federal law andregulations identified in OMB Circular A-110 Subpart C, Paragraphs 40-48.   

**Suggested Examination Procedures**

-     Review the recipient's written procurement policies.  If the previous program-specificaudit did not disclosed any problems with the recipient's procurement policies thenexamine only changes to those policies since the previous audit.   
    Test a representative sample of procurement transactions.  Evaluate whether thecontract files maintain sufficient detail to document the significant history of theprocurement, including the rationale for method of procurement, selection of contracttype, contractor selection or rejection, including contract modifications. 

    Inquire about the rationale for any procurement with limited competition.

    Review correspondence to determine that documentation for procurement transactionsexceeding $100,000 was submitted to the NIST grants officer for approval if any of thefollowing conditions exist: 1) the award was made by noncompetitive negotiation,  2) only a single bid or offer was received, 3) the award was made to other than theapparent low bidder, or 4) a brand name product was specified.   

3.  Federal Reporting 

***Management Assertion**.  The amounts in the quarterly financial status reports and the monthlyand quarterly requests for reimbursements agree with the underlying accounting records andsummary records.*

**Compliance Requirement**  - Quarterly financial status report (SF 269) and a monthly orquarterly request for reimbursement (SF 270) are required.  The financial status report andclaims for reimbursement contain information that can be reconciled to the accountingrecords from which the Schedule of Fund Sources and Project Costs was prepared.  A reportof federal cash transactions (SF 272) is required if federal funds are provided under a cashadvance.

**Suggested Examination Procedures**

-     Test that required reports are filed on a timely basis. 
    Obtain an understanding of the awardee's procedures for preparing and reviewing thefinancial status reports and the request for reimbursement.

    Select a sample of financial status reports and requests for reimbursement to determinethat the reports are prepared according to DOC instructions.  For the sample, tracesignificant data to supporting documentation, i.e. summary worksheets, ledgers, etc. Report all material differences between financial reports and the company'saccounting records.

    Review the company's system for monitoring payment requests from subcontractors. Test for controls which will limit payments to actual reimbursements.  

    Review significant adjustments made to the general ledger accounts or otheraccounting records affecting the ATP award and evaluate for propriety.  Ascertainwhether amended federal reports were submitted for these adjustments.

4.  Subcontractors
***Management Assertion**.  The contracts entered into with subcontractors, as defined below,require that the subcontractors adhere to federal laws and regulations as specified by the ATPaward and sanctions are specified for the subcontractor's noncompliance.*

**Compliance Requirement  -**The ATP awardee is ultimately responsible to NIST for fundspassed to a subcontractor.  For the purpose of these guidelines, a subcontractor is defined asan organization which receives a portion of the financial assistance from the awardee andassists the ATP awardee in meeting the project's goals. The ATP awardee should include ineach subcontract adherence to the federal laws and regulations required by the ATP project.

**Suggested Examination Procedures**

-     Test subcontracts to determine that the ATP awardee required adherence to federallaws and regulations as specified by the ATP award. 
    Test subcontracts to determine that there are sanctions in place for noncompliancewith laws and regulations as specified by the ATP award and if noncompliance wasfound that the sanctions were enforced.   

    Ascertain whether the ATP awardee received the subcontractor's audit reports and/orhas performed other monitoring of the subcontractor. 

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*Appendix A
Schedule of Fund Sources and Project Costsfor NIST's Cooperative Agreement 70xxxx#x####CFDA 11.612 For the Period of xx/xx/xx - xx/xx/xx

 Approved  Budget Actual Receipts &                             Project Costs**Fund Sources**ATP Award Funds ______________ ______________Direct Costs Absorbed By Single Company ______________ ______________Program Income  ______________    ______________Other**______________**
**______________**
**Total Fund Sources**    ==============
    ==============

**Direct Project Costs**Direct Costs  Personnel Salaries Technical    ______________    ______________ Administrative ______________ ______________ Fringe Benefits Technical ______________ ______________ Administrative ______________ ______________ Travel ______________ ______________ Equipment ______________ ______________ Materials/Supplies ______________ ______________ Subcontracts ______________ ______________ Other**______________**
**______________**

**Total Direct Project Costs
 ==============     
 ============== 

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*Appendix B
**Independent Auditor's Report on The Schedule of Fund Sources and Project Costsfor NIST ATP Cooperative Agreement Number 70xxxx#x####For the Period of xx/xx/xx to xx/xx/xx**

Independent Auditor's Report 

[Addressee]

We have audited the accompanying Schedule of Fund Sources and Project Costs of [ singlecompany ] as of [date of this report].  This Schedule of Fund Sources and Project Costs is theresponsibility of [ single company's] management.  Our responsibility is to express an opinionon the Schedule of Fund Sources and Project Costs based on our audit.  

We conducted our audit in accordance with generally accepted auditing standards andGovernment Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the Schedule of Fund Sources and Project Costs are free of materialmisstatement.  An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the Schedule of Fund Sources and Project Costs.  An audit also includesassessing the accounting principles used and significant estimates made by management, aswell as evaluating the overall presentation of the Schedule of Fund Sources and Project Costs. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Schedule of Fund Sources and Project Costs was prepared for the purposeof complying with the award requirements of the ATP cooperative agreement number70xxxx#x#### entered into by [single company] and the U.S. Department of Commerce asdescribed in Note X.  This Schedule was prepared in conformance with the awardrequirements which is a comprehensive basis of accounting other than generally acceptedaccounting principles.  

In our opinion, the Schedule of Fund Sources and Project Costs referred to above presentsfairly, in all material respects¹, the source of funds and project costs of [single company ] forthe period [year end (date)/period from (date) to (date)] in conformity with the basis ofaccounting described in Note X.

This report is intended solely for the information and use of the audit committee, managementand the
 U.S. Department of Commerce and should not be used for any other purpose. 

[Signature]
[Date]    

____________________

¹  The auditor should modify the standard report and issue a qualified, adverse or disclaimerof opinion, as appropriate, in the following circumstances:
                - The ATP awardee does not adjust the Schedule of Fund Sources and ProjectCost or disclose the material questioned costs in the accompanying notes.
                - In forming an opinion on the Schedule of Fund Sources and Project Costs theextent of other potentially  unallowable costs in transactions not tested should beconsidered.   

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*Appendix C

Opinion on Management's Assertions on Compliancewith Specified Requirements Applicable to theNIST Advanced Technology ProgramCooperative Agreement Number 70xxxxx#x####
Independent Accountant's Report
[Addressee]

We have examined management's assertions included in its representation letter dated [date],that [single company ] complied with [list specified compliance requirements or attach inaccompanying schedule], relative to [single company's] Schedule of Fund Sources and ProjectCosts which is part of this report package.   As discussed in that representation letter,management is responsible for [single company's] compliance with those requirements.  Ourresponsibility is to express an opinion on management's assertions about [single company's]compliance based on our examination.

Our examination was made in accordance with Government Auditing Standards, issued by theComptroller General of the United States; standards established by the American Institute ofCertified Public Accountants; and the NIST Program- Specific Audit Guidelines for AdvancedTechnology Program (ATP) Cooperative Agreements with Single Companies, issued by theU.S. Department of Commerce, Office of Inspector General, dated October 1996 and,accordingly, included examining, on a test basis, evidence about [single company's]compliance with those requirements and performing such other procedures as we considerednecessary in the circumstances.  We believe that our examination provides a reasonable basisfor our opinion.  Our examination does not provide a legal determination on [singlecompany's] compliance with specified requirements.

In our opinion, management's assertions that [single company ] complied with theaforementioned requirements relative to the [single company's] ATP Award CooperativeAgreement No. 70xxxx#x#### during the [year ended (date)/period from(date) to (date)] arefairly stated, in all material respects².

This report is intended solely for the information of the audit committee, management, and theU.S. Department of Commerce.

[Signature]
[Date]

____________________
²    The practitioner should modify the standard report if any of the following conditionsexist: 
                - There is a material noncompliance with specified requirements.
                - There is a matter involving a material uncertainty
                - There is a restriction on the scope of the engagement, or 
                - The practitioner decides to refer to the report of another practitioner as the basis,in part, for the practitioner's report.

        When an examination of management's assertions about an entity's compliance withspecified requirements discloses material noncompliance, the practitioner should followthe guidance in paragraph 62 through 68 of SSAE No. 3.

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