[Federal Register Volume 62, Number 168 (Friday, August 29, 1997)]
[Rules and Regulations]
[Page 45963]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-22832]



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

[[Page 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.

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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:


Sec. 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]
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