Calendar No. 401

104TH CONGRESS

2D SESSION S. 1579

[Report No. 104–266]

A BILL

To streamline and improve the effectiveness of

monly referred to as the ‘‘Single Audit Act’’).chapter 75 of title 31, United States Code (comMAY 13, 1996

Reported with amendments
II

Calendar No. 401

104TH CONGRESS

2D SESSION S. 1579

[Report No. 104–266]

To streamline and improve the effectiveness of chapter 75 of title 31, United

States Code (commonly referred to as the ‘‘Single Audit Act’’).

IN THE SENATE OF THE UNITED STATES

FEBRUARY 27 (legislative day, FEBRUARY 23), 1996

Mr. GLENN (for himself, Mr. STEVENS, Mr. LEVIN, Mr. COCHRAN, Mr.

PRYOR, Mr. COHEN, Mr. LIEBERMAN, Mr. BROWN, and Mr. GRASSLEY)

introduced the following bill; which was read twice and referred to the

Committee on Governmental Affairs

MAY 13, 1996

Reported by Mr. STEVENS, with amendments

[Omit the part struck through and insert the part printed in italic]

A BILL

To streamline and improve the effectiveness of chapter 75

of title 31, United States Code (commonly referred to

as the ‘‘Single Audit Act’’).

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
2

•S 1579 RS

1 SECTION 1. SHORT TITLE; PURPOSES.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Single Audit Act Amendments of 1996’’.

4 (b) PURPOSES.—The purposes of this Act are to—

5 (1) promote sound financial management, in6 cluding effective internal controls, with respect to

7 Federal awards administered by non-Federal enti8 ties;

9 (2) establish uniform requirements for audits of

10 Federal awards administered by non-Federal enti11 ties;

12 (3) promote the efficient and effective use of

13 audit resources;

14 (4) reduce burdens on State and local govern15 ments, Indian tribes, and nonprofit organizations;

16 and

17 (5) ensure that Federal departments and agen18 cies, to the maximum extent practicable, rely upon

19 and use audit work done pursuant to chapter 75 of

20 title 31, United States Code (as amended by this

21 Act).

22 SEC. 2. AMENDMENT TO TITLE 31, UNITED STATES CODE.

23 Chapter 75 of title 31, United States Code, is amend24 ed to read as follows:
3

•S 1579 RS

1 ‘‘CHAPTER 75—REQUIREMENTS FOR

2 SINGLE AUDITS

‘‘Sec.

‘‘7501. Definitions.

‘‘7502. Audit requirements; exemptions.

‘‘7503. Relation to other audit requirements.

‘‘7504. Federal agency responsibilities and relations with non-Federal entities.

‘‘7505. Regulations.

‘‘7506. Monitoring responsibilities of the Comptroller General.

‘‘7507. Effective date.

3 ‘‘§ 7501. Definitions

4 ‘‘(a) As used in this chapter, the term—

5 ‘‘(1) ‘Comptroller General’ means the Comptrol6 ler General of the United States;

7 ‘‘(2) ‘Director’ means the Director of the Office

8 of Management and Budget;

9 ‘‘(3) ‘Federal agency’ has the same meaning as

10 the term ‘agency’ in section 551(1) of title 5;

11 ‘‘(4) ‘Federal awards’ means Federal financial

12 assistance and Federal cost-reimbursement contracts

13 that non-Federal entities receive directly from Fed14 eral awarding agencies or indirectly from pass15 through entities;

16 ‘‘(5) ‘Federal financial assistance’ means assist17 ance that non-Federal entities receive or administer

18 in the form of grants, loans, loan guarantees, prop19 erty, cooperative agreements, interest subsidies, in20 surance, donated surplus property, food commod21 ities, direct appropriations, or other assistance, but
4

•S 1579 RS

1 does not include amounts received as reimbursement

2 for services rendered to individuals in accordance

3 with guidance issued by the Director;

4 ‘‘(6) ‘Federal program’ means all Federal

5 awards to a non-Federal entity assigned a single

6 number in the Catalog of Federal Domestic Assist7 ance or encompassed in a group of numbers or other

8 category as defined by the Director;

9 ‘‘(7) ‘generally accepted government auditing

10 standards’ means the government auditing stand11 ards issued by the Comptroller General;

12 ‘‘(8) ‘independent auditor’ means—

13 ‘‘(A) an external State or local government

14 auditor who meets the independence standards

15 included in generally accepted government au16 diting standards; or

17 ‘‘(B) a public accountant who meets such

18 independence standards;

19 ‘‘(9) ‘Indian tribe’ means any Indian tribe,

20 band, nation, or other organized group or commu21 nity, including any Alaskan Native village or re22 gional or village corporation (as defined in, or estab23 lished under, the Alaskan Native Claims Settlement

24 Act) that is recognized by the United States as eligi25 ble for the special programs and services provided by
5

•S 1579 RS

1 the United States to Indians because of their status

2 as Indians;

3 ‘‘(10) ‘internal controls’ means a process, ef4 fected by an entity’s management and other person5 nel, designed to provide reasonable assurance re6 garding the achievement of objectives in the follow7 ing categories:

8 ‘‘(A) Effectiveness and efficiency of oper9 ations.

10 ‘‘(B) Reliability of financial reporting.

11 ‘‘(C) Compliance with applicable laws and

12 regulations;

13 ‘‘(11) ‘local government’ means any unit of

14 local government within a State, including a county,

15 borough, municipality, city, town, township, parish,

16 local public authority, special district, school district,

17 intrastate district, council of governments, any other

18 instrumentality of local government and, in accord19 ance with guidelines issued by the Director, a group

20 of local governments;

21 ‘‘(12) ‘major program’ means a Federal pro22 gram identified in accordance with risk-based cri23 teria prescribed by the Director under this chapter,

24 subject to the limitations described under subsection

25 (b);
6

•S 1579 RS

1 ‘‘(13) ‘non-Federal entity’ means a State, local

2 government, or nonprofit organization;

3 ‘‘(14) ‘nonprofit organization’ means any cor4 poration, trust, association, cooperative, or other or5 ganization that—

6 ‘‘(A) is operated primarily for scientific,

7 educational, service, charitable, or similar pur8 poses in the public interest;

9 ‘‘(B) is not organized primarily for profit;

10 and

11 ‘‘(C) uses net proceeds to maintain, im12 prove, or expand the operations of the organiza13 tion;

14 ‘‘(15) ‘pass-through entity’ means a non-Fed15 eral entity that provides Federal awards to a sub16 recipient to carry out a Federal program;

17 ‘‘(16) ‘program-specific audit’ means an audit

18 of one Federal program;

19 ‘‘(17) ‘recipient’ means a non-Federal entity

20 that receives awards directly from a Federal agency

21 to carry out a Federal program;

22 ‘‘(18) ‘single audit’ means an audit, as de23 scribed under section 7502(d), of a non-Federal en24 tity that includes the entity’s financial statements

25 and Federal awards;
7

•S 1579 RS

1 ‘‘(19) ‘State’ means any State of the United

2 States, the District of Columbia, the Commonwealth

3 of Puerto Rico, the Virgin Islands, Guam, American

4 Samoa, the Commonwealth of the Northern Mariana

5 Islands, and the Trust Territory of the Pacific Is6 lands, any instrumentality thereof, any multi-State,

7 regional, or interstate entity which has governmental

8 functions, and any Indian tribe; and

9 ‘‘(20) ‘subrecipient’ means a non-Federal entity

10 that receives Federal awards through another non11 Federal entity to carry out a Federal program, but

12 does not include an individual who receives financial

13 assistance through such awards.

14 ‘‘(b) In prescribing risk-based program selection cri15 teria for major programs, the Director shall not require

16 more programs to be identified as major for a particular

17 non-Federal entity, except as prescribed under subsection

18 (c) or as provided under subsection (d), than would be

19 identified if the major programs were defined as any pro20 gram for which total expenditures of Federal awards by

21 the non-Federal entity during the applicable year exceed—

22 ‘‘(1) the larger of $30,000,000 or 0.15 percent

23 of the non-Federal entity’s total Federal expendi24 tures, in the case of a non-Federal entity for which
8

•S 1579 RS

1 such total expenditures for all programs exceed

2 $10,000,000,000;

3 ‘‘(2) the larger of $3,000,000, or 0.30 percent

4 of the non-Federal entity’s total Federal expendi5 tures, in the case of a non-Federal entity for which

6 such total expenditures for all programs exceed

7 $100,000,000 but are less than or equal to

8 $10,000,000,000; or

9 ‘‘(3) the larger of $300,000, or 3 percent of

10 such total Federal expenditures for all programs, in

11 the case of a non-Federal entity for which such total

12 expenditures for all programs equal or exceed

13 $300,000 but are less than or equal to

14 $100,000,000.

15 ‘‘(c) When the total expenditures of a non-Federal

16 entity’s major programs are less than 50 percent of the

17 non-Federal entity’s total expenditures of all Federal

18 awards (or such lower percentage as specified by the Di19 rector), the auditor shall select and test additional pro20 grams as major programs as necessary to achieve audit

21 coverage of at least 50 percent of Federal expenditures

22 by the non-Federal entity (or such lower percentage as

23 specified by the Director), in accordance with guidance is24 sued by the Director.
9

•S 1579 RS

1 ‘‘(d) Loan or loan guarantee programs, as specified

2 by the Director, shall not be subject to the application of

3 subsection (b).

4 ‘‘§ 7502. Audit requirements; exemptions

5 ‘‘(a)(1)(A) Each non-Federal entity that expends a

6 total amount of Federal awards equal to or in excess of

7 $300,000 or such other amount specified by the Director

8 under subsection (a)(3) in any fiscal year of such non9 Federal entity shall have either a single audit or a pro10 gram-specific audit made for such fiscal year in accord11 ance with the requirements of this chapter.

12 ‘‘(B) Each such non-Federal entity that expends Fed13 eral awards under more than one Federal program shall

14 undergo a single audit in accordance with the require15 ments of subsections (b) through (i) of this section and

16 guidance issued by the Director under section 7505.

17 ‘‘(C) Each such non-Federal entity that expends

18 awards under only one Federal program and is not subject

19 to laws, regulations, or Federal award agreements that re20 quire a financial statement audit of the non-Federal en21 tity, may elect to have a program-specific audit conducted

22 in accordance with applicable provisions of this section and

23 guidance issued by the Director under section 7505.

24 ‘‘(2)(A) Each non-Federal entity that expends a total

25 amount of Federal awards of less than $300,000 or such
10

•S 1579 RS

1 other amount specified by the Director under subsection

2 (a)(3) in any fiscal year of such entity, shall be exempt

3 for such fiscal year from compliance with—

4 ‘‘(i) the audit requirements of this chapter; and

5 ‘‘(ii) any applicable requirements concerning fi6 nancial audits contained in Federal statutes and reg7 ulations governing programs under which such Fed8 eral awards are provided to that non-Federal entity.

9 ‘‘(B) The provisions of subparagraph (A)(ii) of this

10 paragraph shall not exempt a non-Federal entity from

11 compliance with any provision of a Federal statute or reg12 ulation that requires such non-Federal entity to maintain

13 records concerning Federal awards provided to such non14 Federal entity or that permits a Federal agency, pass15 through entity, or the Comptroller General access to such

16 records.

17 ‘‘(3) Every 2 years, the Director shall review the

18 amount for requiring audits prescribed under paragraph

19 (1)(A) and may adjust such dollar amount consistent with

20 the purposes of this chapter, provided the Director does

21 not make such adjustments below $300,000.

22 ‘‘(b)(1) Except as provided in paragraphs (2) and

23 (3), audits conducted pursuant to this chapter shall be

24 conducted annually.
11

•S 1579 RS

1 ‘‘(2) A State or local government that is required by

2 constitution or statute, in effect on January 1, 1987, to

3 undergo its audits less frequently than annually, is per4 mitted to undergo its audits pursuant to this chapter bien5 nially. Audits conducted biennially under the provisions of

6 this paragraph shall cover both years within the biennial

7 period.

8 ‘‘(3) Any nonprofit organization that had biennial au9 dits for all biennial periods ending between July 1, 1992,

10 and January 1, 1995, is permitted to undergo its audits

11 pursuant to this chapter biennially. Audits conducted bien12 nially under the provisions of this paragraph shall cover

13 both years within the biennial period.

14 ‘‘(c) Each audit conducted pursuant to subsection (a)

15 shall be conducted by an independent auditor in accord16 ance with generally accepted government auditing stand17 ards, except that, for the purposes of this chapter, per18 formance audits shall not be required except as authorized

19 by the Director.

20 ‘‘(d) Each single audit conducted pursuant to sub21 section (a) for any fiscal year shall—

22 ‘‘(1) cover the operations of the entire non-Fed23 eral entity; or

24 ‘‘(2) at the option of such non-Federal entity

25 such audit shall include a series of audits that cover
12

•S 1579 RS

1 departments, agencies, and other organizational

2 units which expended or otherwise administered

3 Federal awards during such fiscal year provided that

4 each such audit shall encompass the financial state5 ments and schedule of expenditures of Federal

6 awards for each such department, agency, and orga7 nizational unit, which shall be considered to be a

8 non-Federal entity.

9 ‘‘(e) The auditor shall—

10 ‘‘(1) determine whether the financial statements

11 are presented fairly in all material respects in con12 formity with generally accepted accounting prin13 ciples;

14 ‘‘(2) determine whether the schedule of expendi15 tures of Federal awards is presented fairly in all ma16 terial respects in relation to the financial statements

17 taken as a whole;

18 ‘‘(3) with respect to internal controls pertaining

19 to the compliance requirements for each major pro20 gram—

21 ‘‘(A) obtain an understanding of such in22 ternal controls;

23 ‘‘(B) assess control risk; and

24 ‘‘(C) perform tests of controls unless the

25 controls are deemed to be ineffective; and
13

•S 1579 RS

1 ‘‘(4) determine whether the non-Federal entity

2 has complied with the provisions of laws, regula3 tions, and contracts or grants pertaining to Federal

4 awards that have a direct and material effect on

5 each major program.

6 ‘‘(f)(1) Each Federal agency which provides Federal

7 awards to a recipient shall—

8 ‘‘(A) provide such recipient the program names

9 (and any identifying numbers) from which such

10 awards are derived, and the Federal requirements

11 which govern the use of such awards and the re12 quirements of this chapter; and

13 ‘‘(B) review the audit of a recipient as nec14 essary to determine whether prompt and appropriate

15 corrective action has been taken with respect to

16 audit findings, as defined by the Director, pertaining

17 to Federal awards provided to the recipient by the

18 Federal agency.

19 ‘‘(2) Each pass-through entity shall—

20 ‘‘(A) provide such subrecipient the program

21 names (and any identifying numbers) from which

22 such assistance is derived, and the Federal require23 ments which govern the use of such awards and the

24 requirements of this chapter;
14

•S 1579 RS

1 ‘‘(B) monitor the subrecipient’s use of Federal

2 awards through site visits, limited scope audits, or

3 other means;

4 ‘‘(C) review the audit of a subrecipient as nec5 essary to determine whether prompt and appropriate

6 corrective action has been taken with respect to

7 audit findings, as defined by the Director, pertaining

8 to Federal awards provided to the subrecipient by

9 the pass-through entity; and

10 ‘‘(D) require each of its subrecipients of Fed11 eral awards to permit, as a condition of receiving

12 Federal awards, the independent auditor of the pass13 through entity to have such access to the subrecipi14 ent’s records and financial statements as may be

15 necessary for the pass-through entity to comply with

16 this chapter.

17 ‘‘(g)(1) The auditor shall report on the results of any

18 audit conducted pursuant to this section, in accordance

19 with guidance issued by the Director.

20 ‘‘(2) When reporting on any single audit, the auditor

21 shall include a summary of the auditor’s results regarding

22 the non-Federal entity’s financial statements, internal

23 controls, and compliance with laws and regulations.

24 ‘‘(h) The non-Federal entity shall transmit the re25 porting package, which shall include the non-Federal enti-
15

•S 1579 RS

1 ty’s financial statements, schedule of expenditures of Fed2 eral awards, corrective action plan defined under sub3 section (i), and auditor’s reports developed pursuant to

4 this section, to a Federal clearinghouse designated by the

5 Director, and make it available for public inspection within

6 the earlier of—

7 ‘‘(1) 30 days after receipt of the auditor’s re8 port; or

9 ‘‘(2)(A) for a transition period of at least 2

10 years after the effective date of the Single Audit Act

11 Amendments of 1996, as established by the Direc12 tor, 13 months after the end of the period audited;

13 or

14 ‘‘(B) for fiscal years beginning after the period

15 specified in subparagraph (A), 9 months after the

16 end of the period audited, or within a longer time17 frame authorized by the Federal agency, determined

18 under criteria issued under section 7505 7504, when

19 the 9-month timeframe would place an undue bur20 den on the non-Federal entity.

21 ‘‘(i) If an audit conducted pursuant to this section

22 discloses any audit findings, as defined by the Director,

23 including material noncompliance with individual compli24 ance requirements for a major program by, or reportable

25 conditions in the internal controls of, the non-Federal en-
16

•S 1579 RS

1 tity with respect to the matters described in subsection

2 (e), the non-Federal entity shall submit to Federal officials

3 designated by the Director, a plan for corrective action

4 to eliminate such audit findings or reportable conditions

5 or a statement describing the reasons that corrective ac6 tion is not necessary. Such plan shall be consistent with

7 the audit resolution standard promulgated by the Comp8 troller General (as part of the standards for internal con9 trols in the Federal Government) pursuant to section

10 3512(c).

11 ‘‘(j) The Director may authorize pilot projects to test

12 alternative methods of achieving the purposes of this chap13 ter. Such pilot projects may begin only after consultation

14 with the Chair and Ranking Minority Member of the Com15 mittee on Governmental Affairs of the Senate and the

16 Chair and Ranking Minority Member of the Committee

17 on Government Reform and Oversight of the House of

18 Representatives.

19 ‘‘§ 7503. Relation to other audit requirements

20 ‘‘(a) An audit conducted in accordance with this

21 chapter shall be in lieu of any financial audit of Federal

22 awards which a non-Federal entity is required to undergo

23 under any other Federal law or regulation. To the extent

24 that such audit provides a Federal agency with the infor25 mation it requires to carry out its responsibilities under
17

•S 1579 RS

1 Federal law or regulation, a Federal agency shall rely

2 upon and use that information.

3 ‘‘(b) Notwithstanding subsection (a), a Federal agen4 cy may conduct or arrange for additional audits which are

5 necessary to carry out its responsibilities under Federal

6 law or regulation. The provisions of this chapter do not

7 authorize any non-Federal entity (or subrecipient thereof)

8 to constrain, in any manner, such agency from carrying

9 out or arranging for such additional audits, except that

10 the Federal agency shall plan such audits to not be dupli11 cative of other audits of Federal awards.

12 ‘‘(c) The provisions of this chapter do not limit the

13 authority of Federal agencies to conduct, or arrange for

14 the conduct of, audits and evaluations of Federal awards,

15 nor limit the authority of any Federal agency Inspector

16 General or other Federal official.

17 ‘‘(d) Subsection (a) shall apply to a non-Federal en18 tity which undergoes an audit in accordance with this

19 chapter even though it is not required by section 7502(a)

20 to have such an audit.

21 ‘‘(e) A Federal agency that provides Federal awards

22 and conducts or arranges for audits of non-Federal enti23 ties receiving such awards that are in addition to the au24 dits of non-Federal entities conducted pursuant to this

25 chapter shall, consistent with other applicable law, arrange
18

•S 1579 RS

1 for funding the full cost of such additional audits. Any

2 such additional audits shall be coordinated with the Fed3 eral agency determined under criteria issued under section

4 7504 to preclude duplication of the audits conducted pur5 suant to this chapter or other additional audits.

6 ‘‘(f) Upon request by a Federal agency or the Comp7 troller General, any independent auditor conducting an

8 audit pursuant to this chapter shall make the auditor’s

9 working papers available to the Federal agency or the

10 Comptroller General as part of a quality review, to resolve

11 audit findings, or to carry out oversight responsibilities

12 consistent with the purposes of this chapter. Such access

13 to auditor’s working papers shall include the right to ob14 tain copies.

15 ‘‘§ 7504. Federal agency responsibilities and relations

16 with non-Federal entities

17 ‘‘(a) Each Federal agency shall, in accordance with

18 guidance issued by the Director under section 7505, with

19 regard to Federal awards provided by the agency—

20 ‘‘(1) monitor non-Federal entity use of Federal

21 awards, and

22 ‘‘(2) assess the quality of audits conducted

23 under this chapter for audits of entities for which

24 the agency is the single Federal agency determined

25 under subsection (b).
19

•S 1579 RS

1 ‘‘(b) Each non-Federal entity shall have a single Fed2 eral agency, determined in accordance with criteria estab3 lished by the Director, to provide the non-Federal entity

4 with technical assistance and assist with implementation

5 of this chapter.

6 ‘‘(c) The Director shall designate a Federal clearing7 house to—

8 ‘‘(1) receive copies of all reporting packages de9 veloped in accordance with this chapter;

10 ‘‘(2) identify recipients that expend $300,000

11 or more in Federal awards or such other amount

12 specified by the Director under section 7502(a)(3)

13 during the recipient’s fiscal year but did not undergo

14 an audit in accordance with this chapter; and

15 ‘‘(3) perform analyses to assist the Director in

16 carrying out responsibilities under this chapter.

17 ‘‘§ 7505. Regulations

18 ‘‘(a) The Director, after consultation with the Comp19 troller General, and appropriate officials from Federal,

20 State, and local governments and nonprofit organizations

21 shall prescribe guidance to implement this chapter. Each

22 Federal agency shall promulgate such amendments to its

23 regulations as may be necessary to conform such regula24 tions to the requirements of this chapter and of such guid25 ance.
20

•S 1579 RS

1 ‘‘(b)(1) The guidance prescribed pursuant to sub2 section (a) shall include criteria for determining the appro3 priate charges to Federal awards for the cost of audits.

4 Such criteria shall prohibit a non-Federal entity from

5 charging to any Federal awards—

6 ‘‘(A) the cost of any audit which is—

7 ‘‘(i) not conducted in accordance with this

8 chapter; or

9 ‘‘(ii) conducted in accordance with this

10 chapter when expenditures of Federal awards

11 are less than amounts cited in section

12 7502(a)(1)(A) or specified by the Director

13 under section 7502(a)(3), except that the Direc14 tor may allow the cost of limited scope audits

15 to monitor subrecipients in accordance with sec16 tion 7502(f)(2)(B); and

17 ‘‘(B) more than a reasonably proportionate

18 share of the cost of any such audit that is conducted

19 in accordance with this chapter.

20 ‘‘(2) The criteria prescribed pursuant to paragraph

21 (1) shall not, in the absence of documentation demonstrat22 ing a higher actual cost, permit the percentage of the cost

23 of audits performed pursuant to this chapter charged to

24 Federal awards, to exceed the ratio of total Federal

25 awards expended by such non-Federal entity during the
21

•S 1579 RS

1 applicable fiscal year or years, to such non-Federal entity’s

2 total expenditures during such fiscal year or years.

3 ‘‘(c) Such guidance shall include such provisions as

4 may be necessary to ensure that small business concerns

5 and business concerns owned and controlled by socially and

6 economically disadvantaged individuals will have the op7 portunity to participate in the performance of contracts

8 awarded to fulfill the audit requirements of this chapter.

9 ‘‘§ 7506. Monitoring responsibilities of the Comptrol10 ler General

11 ‘‘(a) The Comptroller General shall review provisions

12 requiring financial audits of non-Federal entities that re13 ceive Federal awards that are contained in bills and reso14 lutions reported by the committees of the Senate and the

15 House of Representatives.

16 ‘‘(b) If the Comptroller General determines that a bill

17 or resolution contains provisions that are inconsistent with

18 the requirements of this chapter, the Comptroller General

19 shall, at the earliest practicable date, notify in writing—

20 ‘‘(1) the committee that reported such bill or

21 resolution; and

22 ‘‘(2)(A) the Committee on Governmental Af23 fairs of the Senate (in the case of a bill or resolution

24 reported by a committee of the Senate); or
22

•S 1579 RS

1 ‘‘(B) the Committee on Government Reform

2 and Oversight of the House of Representatives (in

3 the case of a bill or resolution reported by a commit4 tee of the House of Representatives).

5 ‘‘§ 7507. Effective date

6 ‘‘This chapter shall apply to any non-Federal entity

7 with respect to any of its fiscal years which begin after

8 June 30, 1996.’’.

9 SEC. 3. TRANSITIONAL APPLICATION.

10 Subject to section 7507 of title 31, United States

11 Code (as amended by section 2 of this Act) the provisions

12 of chapter 75 of such title (before amendment by section

13 2 of this Act) shall continue to apply to any State or local

14 government with respect to any of its fiscal years begin15 ning before July 1, 1996.