Federal Register / Vol. 62, No. 168 / Friday, August 29, 1997 / Rules and Regulations 45963

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

45 CFR Part 96

RIN 0991–AA92

Block Grant Programs: Implementation

of OMB Circular A–133

AGENCY: Department of Health and

Human Services (HHS).

ACTION: Interim final rule with request

for comments.

SUMMARY: This interim final rule

implements Office of Management and

Budget (OMB) Circular A–133 for

Department of Health and Human

Services (HHS) block programs.

DATES: This interim final rule is

effective September 29, 1997. Comments

must be received on or before October

28, 1997 to be assured of consideration.

ADDRESSES: Comments should be

submitted to Charles Gale, Director,

Office of Grants Management,

Department of Health and Human

Services, Room 517–D, 200

Independence Ave. SW, Washington,

DC 20201. A copy of the comments

received will be available for public

inspection and copying during regular

business hours (9:00 a.m. to 5:30 p.m.

eastern time) at the above address.

FOR FURTHER INFORMATION CONTACT:

Charles Gale, 202–690–6377; for the

hearing impaired only: TDD 202–690–

6415.

SUPPLEMENTARY INFORMATION: Elsewhere

in this issue of the Federal Register,

Federal grant-making agencies have

published interim final amendments to

the grants management common rule for

State and local governments (codified

by HHS at 45 CFR part 92) and to their

codification of OMB Circular A–110

(codified by HHS at 45 CFR part 74) for

the purpose of implementing the Single

Audit Act Amendments of 1996 (110

Stat. 1396) and the revision of OMB

Circular A–133, ‘‘Audits of States, Local

Governments, and Non-Profit

Organizations,’’ published in the

Federal Register on June 30, 1997. (62

FR 35278.)

In addition, it is necessary for HHS to

amend its block grant regulation (45

CFR part 96) in a similar way. This

interim final rule implements the Single

Audit Act Amendments of 1996 and the

revised Circular A–133 in the same

manner as, and in conjunction with, the

common rule amendments referred to

above. The supplementary information,

impact analyses, and the justification for

the waiver of proposed rulemaking of

the common rule amendments apply

equally to this action.

This amendment of 45 CFR part 96

essentially adopts today’s amendment to

the grants management common rule

(45 CFR 92.26 (a) through (b)(1))

together with most of the remainder of

the existing audit policy found at 45

CFR 92.26(b) (2) through (5). The

provision on auditor selection, found at

45 CFR 92.26(c), has not been adopted

in part 96 because the block grant rules

do not contain procurement standards

as contemplated by that section.

List of Subjects in 45 CFR Part 96

Accounting, Administrative practice

and procedures, Audit requirements,

Block grants, Grants administration,

Reporting and recordkeeping

requirements.

(Catalog of Federal Domestic Assistance does

not apply)

Dated: August 18, 1997.

Donna E. Shalala,

Secretary.

Part 96 of title 45 of the Code of

Federal Regulations is amended as

follows:

PART 96—BLOCK GRANTS

1. The authority citation for part 96 is

revised to read as follows:

Authority: 31 U.S.C. 1243 note, 7501–7507;

42 U.S.C. 300w et seq., 300x et seq., 300y et

seq., 701 et seq., 8621 et seq., 9901 et seq.,

1397 et seq.

2. Section 96.31 is revised to read as

follows:

§ 96.31 Audits.

(a) Basic rule. Grantees and

subgrantees are responsible for

obtaining audits in accordance with the

Single Audit Act Amendments of 1996

(31 U.S.C. 7501–7507) and revised OMB

Circular A–133, ‘‘Audits of State, Local

Governments, and Non-Profit

Organizations.’’ The audits shall be

made by an independent auditor in

accordance with generally accepted

Government auditing standards

covering financial audits.

(b) Subgrantees. State or local

governments, as those terms are defined

for purposes of the Single Audit Act

Amendments of 1996, that provide

Federal awards to a subgrantee,

expending $300,000 or more (or other

amount as specified by OMB) in Federal

awards in a fiscal year, shall:

(1) Determine whether subgrantees

have met the audit requirements of the

Act. Commercial contractors (private

for-profit and private and governmental

organizations) providing goods and

services to State and local governments

are not required to have a single audit

performed. State and local governments

should use their own procedures to

ensure that the contractor has complied

with laws and regulations affecting the

expenditure of Federal funds;

(2) Determine whether the subgrantee

spent Federal assistance funds provided

in accordance with applicable laws and

regulations. This may be accomplished

by reviewing an audit of the subgrantee

made in accordance with the Act or

through other means (e.g., program

reviews) if the subgrantee has not had

such an audit;

(3) Ensure that appropriate corrective

action is taken within six months after

receipt of the audit report in instances

of noncompliance with Federal laws

and regulations;

(4) Consider whether subgrantee

audits necessitate adjustment of the

grantee’s own records; and

(5) Require each subgrantee to permit

independent auditors to have access to

the records and financial statements.

[FR Doc. 97–22832 Filed 8–28–97; 8:45 am]

BILLING CODE 4150–04–M