This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations Federal Register

88631 

Vol. 89, No. 217 

Friday, November 8, 2024 

DEPARTMENT OF AGRICULTURE 

Rural Utilities Service 

7 CFR Part 1773 

[Docket No. RUS–24–AGENCY–0033] 

RIN 0572–AC67 

Policy on Audits of RUS Awardees 

AGENCY: Rural Utilities Service, USDA. 

ACTION: Final rule. 

SUMMARY: The Rural Utilities Service 

(RUS or Agency), a Rural Development 

agency of the United States Department 

of Agriculture (USDA), is issuing a final 

rule. The intent of this final rule is to 

revise the Policy on Audits to remove an 

unnecessary report, update terminology, 

clarify Agency contacts and filing 

requirements, and update or remove any 

outdated references. These changes will 

provide uniformity and consistency for 

all RUS awardees. 

DATES: This final rule is effective 

December 9, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Jurleme Grey, Chief, Technical 

Accounting Review Branch, External 

Compliance Division, Rural 

Development, U.S. Department of 

Agriculture, 1400 Independence Avenue 

SW, Washington, DC 20250, Telephone: 

(202) 540–9200, Email: 

compliance.tarb@usda.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Rural Development is a mission area 

within the USDA comprising RUS, 

Rural Housing Service, and Rural 

Business-Cooperative Service. Rural 

Development’s mission is to increase 

economic opportunity and improve the 

quality of life for all rural Americans. 

The mission is met by providing loans, 

loan guarantees, grants, and technical 

assistance through numerous programs 

aimed at creating and improving 

housing, business, and infrastructure 

throughout rural America. 

The RUS loan, loan guarantee, and 

grant programs act as a catalyst for 

economic and community development. 

By financing improvements to rural 

electric, water and waste, and 

telecommunications and broadband 

infrastructure, RUS also plays a 

significant role in improving other 

measures of quality of life in rural 

America, including public health and 

safety, environmental protection and 

cultural and historic preservation. 

An update to this policy occurred on 

February 2, 2023 (88 FR 7557), to 

incorporate changes made to 7 CFR 

parts 1709, 1719, 1734, 1738, 1739 and 

1770. These changes addressed the 

streamlined procedures, and clarified 

when entities must follow RUS’ own 

audit regulations or 2 CFR part 200. 

Since publication, RUS has continued 

to evaluate and obtain input from 

stakeholders. There appears to still be 

areas that are prone to misinterpretation 

and confusion. RUS has determined that 

the proposed changes will provide more 

clarity to awardees and auditors and 

conform with Generally Accepted 

Government Auditing Standards 

(GAGAS) and American Institute of 

Certified Public Accountants (AICPA) 

guidelines. 

To implement these changes, RUS 

will publish this action as a final rule. 

The Administrative Procedures Act 

exempts from prior notice rules any 

action ‘‘relating to agency management 

or personnel or to public property, 

loans, grants, benefits, or contracts’’ (5 

U.S.C. 553(a)(2)). As the proposed 

changes came from the previous 

comment period, it would be 

unnecessary to solicit more comments 

from the public. 

II. Summary of Changes to the Final 

Rule 

The changes made to 7 CFR part 1773 

include: 

1. Section 1773.1(d), ‘‘an audit’’ will 

be updated to ‘‘audited financial 

statements.’’ This change is 

recommended because ‘‘audited 

financial statements’’ is a more accurate 

term for the information to be provided 

and to conform with American Institute 

of Certified Public Accountants (AICPA) 

suggested changes. 

2. Section 1773.2, Definitions, will be 

updated as follows: 

a. Audit means an examination of 

financial statements by an independent 

auditor or audit firm for the purpose of 

expressing an opinion on the fairness 

with which the financial statements 

present the financial position, results of 

operations, and changes in cash flows in 

accordance with U.S. generally accepted 

accounting principles (GAAP) and for 

determining whether the auditee has 

complied with provisions of laws, 

regulations, contracts, or grant 

agreements that could have a material 

effect on the financial statements. 

This change is recommended because 

adding ‘‘or audit firm’’ after ‘‘an 

independent auditor’’ is more accurate 

and a clear use of an audit firm was 

implied or inferred with the prior 

language. Also changing ‘‘applicable 

laws, regulations, and provisions of’’ to 

‘‘provisions of laws, regulations,’’ 

conforms with current language in 

GAGAS and AICPA guidelines. 

b. Peer review means an external 

review of one or more aspects of the 

accounting and auditing practice, not 

subject to Public Company Accounting 

Oversight Board permanent inspection, 

performed once every three years by a 

CPA firm that is not affiliated with the 

auditor. 

This change is recommended because 

replacing ‘‘approved study, appraisal, 

or’’ with ‘‘external’’ conforms with 

changes suggested by AICPA. 

c. Regulatory asset means an asset 

resulting from an action of a regulator as 

defined by Financial Accounting 

Standards Board (FASB) and 

Governmental Accounting Standards 

Board (GASB). 

This change is recommended because 

adding GASB to the definition 

acknowledges GASB is the regulatory 

body for accounting by Government 

entities. 

d. Regulatory liability means a 

liability imposed on a regulated 

enterprise when there is an enforceable 

present obligation to deduct an amount 

in determining the regulated rate to be 

charged to customers in future periods, 

as defined by FASB and GASB. 

This change is recommended because 

adding ‘‘as defined by FASB and GASB’’ 

to the definition, acknowledges both as 

the regulatory bodies for accounting for 

Government and non-government 

entities. 

3. Section 1773.3(c), was updated to 

include ‘‘not subject to 2 CFR part 200, 

subpart F’’ in the first sentence for 

clarification. This change is 

recommended because adding ‘‘not 


ddrumheller on DSK120RN23PROD with RULES1
88632 Federal Register / Vol. 89, No. 217 / Friday, November 8, 2024 / Rules and Regulations 

subject to 2 CFR part 200, subpart F’’ 

provides clarity regarding entities 

subject to this regulation and conforms 

with AICPA suggested changes. 

4. Section 1773.3(d)(1), update the 

citation to ‘‘2 CFR 200.503 (b) and (c).’’ 

This change is recommended to better 

align with the current language in 2 CFR 

200.503. 

5. Section 1773.4(c)(1), ‘‘as identified’’ 

will be updated to ‘‘based on criteria 

described’’. This change is 

recommended because replacing ‘‘as 

identified’’ with ‘‘based on criteria 

described’’ is more accurate language 

and conforms with changes suggested 

by AICPA. 

6. Section 1773.9(b) will be updated 

to, ‘‘If specific information comes to the 

auditor’s attention that provides 

evidence concerning the existence of 

possible violations of provisions of 

laws, regulations, contracts, or grant 

agreements that could have a material 

indirect effect on the financial 

statements, the auditor should apply 

audit procedures specifically directed to 

obtain sufficient, appropriate audit 

evidence regarding those possible 

violations of provisions of laws, 

regulations, contracts, or grant 

agreements.’’ This change is 

recommended because replacing 

‘‘ascertaining whether a violation’’ with 

‘‘obtain sufficient appropriate audit 

evidence regarding those possible 

violations’’ is more accurate language 

for the goal of the audit procedure and 

conforms with changes suggested by 

AICPA. 

7. Section 1773.9(c) will be updated 

to, ‘‘Pursuant to the terms of its audit 

engagement letter with the auditee, the 

auditor must, as soon as practical, report 

through the methods indicated below, 

all instances of fraud, illegal acts, and 

all indications or instances of 

noncompliance with laws, whether 

material or not, to: 

a. The president of the auditee’s 

governance board via the auditor’s 

preferred method; 

b. RUS via email; 

c. OC–ECD via email; and 

d. OIG, as follows: 

i. For all audits performed in 

accordance with § 1773.3(d) (audits 

conducted in accordance with 2 CFR 

part 200), report to the USDA–OIG– 

Audit, National Single Audit 

Coordinator for USDA, 1400 

Independence Ave. SW, Ste. 419, 

Washington, DC 20250, email: OIGUSDAsingleaudit@oig.usda.gov, or 

online at: http://usdaoig.oversight.gov. 

ii. For all other audits conducted in 

accordance with § 1773.3 report to the 

USDA Office of Inspector General 

online at: usdaoig.oversight.gov. 

This change is recommended because 

replacing ‘‘immediately report, in 

writing via email’’ with ‘‘as soon as 

practical, through the methods 

indicated below,’’ provides more 

realistic timing for notification, and 

enables the auditor to determine the 

method of notification to the auditee’s 

governance board, specifies the 

notification method for RUS and OC– 

ECD, and conforms with changes 

suggested by AICPA. The methods of 

notification below will be added for 

clarity. 

8. Section 1773.21(d) will be updated 

to, ‘‘The auditee must include a 

complete reporting package as defined 

in § 1773.2.’’ This change is to clarify 

requirements, remove redundant 

language, and conform with changes 

suggested by AICPA. 

9. Section 1773.32(a) ‘‘that the tests’’ 

will be updated to ‘‘state whether the 

tests’’ and remove ‘‘digital’’ in reference 

to the signature options. This change is 

recommended because replacing ‘‘that’’ 

with ‘‘state whether’’ conforms with 

changes suggested by AICPA. 

10. Section 1773.32(a) paragraphs (1) 

through (4) will be updated to more 

accurate language and to conform to 

GAGAS. The additional language also 

presents a more accurate description. 

Changes include: 

1. Significant deficiencies and 

material weaknesses in internal control; 

2. Identified or suspected instances of 

noncompliance with provisions of laws, 

regulations, contracts and grant 

agreements that have a material effect 

on the financial statements or other 

financial data significant to the audit 

objectives and any other instances that 

warrant the attention of those charged 

with governance; 

3. Identified or suspected instances of 

fraud that have a material effect, either 

quantitatively or qualitatively, to the 

financial statements or other financial 

data significant to the audit objectives; 

and 

4. Identified or suspected instances of 

abuse that have a material effect, either 

quantitatively or qualitatively, to the 

financial statements or other financial 

data significant to the audit objectives. 

11. Section 1773.32(d) will be deleted 

and the language will be included in 

§ 1773.34. This change is recommended 

because the language more accurately 

fits with § 1773.34 as this is part of the 

schedule of findings and 

recommendations and will be added to 

the end of that paragraph. 

12. Section 1773.40, ‘‘ASC 980’’ will 

be updated to ‘‘FASB Accounting 

Standards Codification (ASC) 980 or 

GASB Statement (GASBS) 62, as 

appropriate.’’ This change is 

recommended because adding the 

specific guidance of FASB ASC 980 or 

GASB Statement 62 provides more 

specific information and criteria for 

reporting regulatory assets. 

13. Section 1773.45 will be updated 

to, ‘‘The auditor’s audit documentation 

shall support that all regulatory 

liabilities comply with the requirements 

of FASB Accounting Standards 

Codification (ASC) 980 or GASB 

Statement (GASBS) 62, as appropriate. 

For electric auditees only, the auditor’s 

audit documentation shall document 

whether all regulatory liabilities have 

received RUS approval.’’ This change is 

recommended because adding the 

specific guidance of FASB ASC 980 or 

GASB Statement 62 provides more 

specific information and criteria for 

reporting regulatory liabilities. 

III. Executive Orders and Acts 

Executive Order 12866 

This final rule has been determined to 

be not significant for the purposes of 

Executive Order (E.O.) 12866 and, 

therefore, has not been reviewed by the 

Office of Management and Budget 

(OMB). 

Congressional Review Act 

Pursuant to the Congressional Review 

Act (5 U.S.C. 801 et seq.), the Office of 

Information and Regulatory Affairs 

designated this final rule as not a major 

rule, as defined by 5 U.S.C. 804(2). 

Executive Order 12372, 

Intergovernmental Review of Federal 

Programs 

This final rule is excluded from the 

scope of E.O. 12372, Intergovernmental 

Consultation, which may require 

consultation with state and local 

officials. See the final rule related notice 

entitled, ‘‘Department Programs and 

Activities Excluded from Executive 

Order 12372’’ (50 FR 47034) advising 

that RUS loans and loan guarantees 

were not covered by E.O. 12372. 

Executive Order 12988, Civil Justice 

Reform 

This final rule has been reviewed 

under E.O. 12988, Civil Justice Reform. 

In accordance with this final rule: (1) 

All State and local laws and regulations 

that are in conflict with this rule will be 

preempted; (2) No retroactive effect will 

be given to this rule; and (3) 

Administrative proceedings of the 

National Appeals Division (7 CFR part 

11) must be exhausted before bringing 

suit in court challenging action taken 

under this rule. 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 89, No. 217 / Friday, November 8, 2024 / Rules and Regulations 88633 

Regulatory Flexibility Act Certification 

RUS has determined that this final 

rule will not have significant impact on 

a substantial number of small entities 

defined in the Regulatory Flexibility Act 

(5 U.S.C. 601 et seq.). The RUS loan 

programs provide borrowers with loans 

at interest rates and terms that are more 

favorable than those generally available 

from the private sector. Borrowers, as a 

result of obtaining Federal financing, 

receive economic benefits that exceed 

any direct cost associated with RUS 

regulations and requirements. 

National Environmental Policy Act 

In accordance with the National 

Environmental Policy Act of 1969, 

Public Law 91–190, this final rule has 

been reviewed in accordance with 7 

CFR part 1970 (‘‘Environmental Policies 

and Procedures’’). The Agency has 

determined that (i) this action meets the 

criteria established in 7 CFR 1970.53(f); 

(ii) no extraordinary circumstances 

exist; and (iii) the action is not 

‘‘connected’’ to other actions with 

potentially significant impacts, is not 

considered a ‘‘cumulative action’’ and is 

not precluded by 40 CFR 1506.1. 

Therefore, the Agency has determined 

that the action does not have a 

significant effect on the human 

environment, and therefore neither an 

Environmental Assessment nor an 

Environmental Impact Statement is 

required. 

Assistance Listing Number (Formally 

Known as the Catalog of Federal 

Domestic Assistance) 

The Assistance Listing Numbers 

assigned to the programs described by 

this final rule are as follows: 10.751— 

Rural Energy Savings Program; 10.752— 

Rural eConnectivity Pilot Program; 

10.850—Rural Electrification Loans and 

Loan Guarantees; 10.851—Rural 

Telephone Loans and Loan Guarantees; 

10.855—Distance Learning and 

Telemedicine Loans and Grants; 

10.858—Denali Commission Grants and 

Loans; 10.859—Assistance to High 

Energy Cost Rural Communities; 

10.863—Community Connect Grant 

Program and 10.886—Rural Broadband 

Access Loans and Loan Guarantees. 

Information Collection and 

Recordkeeping Requirements 

The information collection and 

record-keeping requirements contained 

in this rule are approved by OMB under 

OMB Control Number 0572–0095. This 

final rule contains no new reporting or 

recordkeeping burdens. The 3-year 

renewal for this package is pending 

approval by OMB. 

Administrative Pay-As-You-Go-Act of 

2023 

The Administrative Pay-As-You-Go 

Act of 2023 (Act) (see Fiscal 

Responsibility Act of 2023, Public Law 

118–5, 137 Stat. 31, div. B, title III), 

requires the U.S. Government 

Accountability Office (GAO) to assess 

agency compliance with the Act, which 

establishes requirements for 

administrative actions that affect direct 

spending, in GAO’s major rule reports. 

The Act does not apply to this rule 

because it does not increase direct 

spending. 

Unfunded Mandates 

This final rule contains no Federal 

mandates (under the regulatory 

provision of Title II of the Unfunded 

Mandates Reform Act of 1995) for state, 

local, and tribal governments or the 

private sector. Thus, this final rule is 

not subject to the requirements of 

sections 202 and 205 of the Unfunded 

Mandates Reform Act of 1995. 

Executive Order 13132—Federalism 

The policies contained in this final 

rule do not have any substantial direct 

effect on States, on the relationship 

between the National Government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. Nor does 

this final rule impose substantial direct 

compliance costs on state and local 

governments. Therefore, consultation 

with the States is not required. 

Executive Order 13175—Consultation 

and Coordination With Indian Tribal 

Governments 

This final rule has been reviewed in 

accordance with the requirements of 

E.O. 13175, Consultation and 

Coordination with Indian Tribal 

Governments. E.O. 13175 requires 

Federal agencies to consult and 

coordinate with Tribes on a 

government-to-government basis on 

policies that have tribal implications, 

including regulations, legislative 

comments, or proposed legislation, or 

other policy statements or actions that 

have substantial direct effects on one or 

more Indian Tribes, on the relationship 

between the Federal Government and 

Indian Tribes or on the distribution of 

power and responsibilities between the 

Federal Government and Indian Tribes. 

The Agency has determined that this 

final rule does not, to our knowledge, 

have Tribal implications that require 

formal Tribal consultation under E.O. 

13175. If a Tribe request consultation, 

RUS will work with the Office of Tribal 

Relationships to ensure meaningful 

consultation is provided where changes, 

additions and modifications identified 

herein are not expressly mandated by 

Congress. 

E-Government Act Compliance 

The Agency is committed to 

complying with the E-Government Act 

of 2002, Public Law 107–347, which 

requires Government agencies in general 

to provide the public the option of 

submitting information or transacting 

business electronically to the maximum 

extent possible and to promote the use 

of the internet and other information 

technologies to provide increased 

opportunities for citizen access to 

Government information and services, 

and for other purposes. 

Severability 

It is USDA’s intention that the 

provisions of this final rule shall operate 

independently of each other. In the 

event that this final rule or any portion 

of this final rule is ultimately declared 

invalid or stayed as to a particular 

provision, it is USDA’s intent that the 

final rule nonetheless be severable and 

remain valid with respect to those 

provisions not affected by a declaration 

of invalidity or stayed. USDA concludes 

it would separately adopt all of the 

provisions contained in this final rule. 

Civil Rights Impact Analysis 

Rural Development, a mission area for 

which RUS is an agency, has reviewed 

this final rule in accordance with USDA 

Regulation 4300–4, Civil Rights Impact 

Analysis, to identify any major civil 

rights impacts the final rule might have 

on program participants on the basis of 

age, race, color, national origin, sex, 

disability, gender identity (including 

gender expression), genetic information, 

political beliefs, sexual orientation, 

marital status, familial status, parental 

status, veteran status, religion, reprisal 

and/or resulting from all or a part of an 

individual’s income being derived from 

any public assistance program. After 

review and analysis of the final rule and 

available data, it has been determined 

that based on the analysis of the 

program purpose, application 

submission and eligibility criteria, 

issuance of this final rule is not likely 

to negatively impact very low, low and 

moderate-income populations, minority 

populations, women, Indian tribes or 

persons with disability, by virtue of 

their race, color, national origin, sex, 

age, disability, or marital or familial 

status. No major civil rights impact is 

likely to result from this final rule. 

USDA Non-Discrimination Statement 

In accordance with Federal civil 

rights laws and USDA civil rights 


ddrumheller on DSK120RN23PROD with RULES1
88634 Federal Register / Vol. 89, No. 217 / Friday, November 8, 2024 / Rules and Regulations 

regulations and policies, the USDA, its 

Mission Areas, agencies, staff offices, 

employees, and institutions 

participating in or administering USDA 

programs are prohibited from 

discriminating based on race, color, 

national origin, religion, sex, gender 

identity (including gender expression), 

sexual orientation, disability, age, 

marital status, family/parental status, 

income derived from a public assistance 

program, political beliefs, or reprisal or 

retaliation for prior civil rights activity, 

in any program or activity conducted or 

funded by USDA (not all bases apply to 

all programs). Remedies and complaint 

filing deadlines vary by program or 

incident. 

Program information may be made 

available in languages other than 

English. Persons with disabilities who 

require alternative means of 

communication to obtain program 

information (e.g., Braille, large print, 

audiotape, American Sign Language) 

should contact the responsible Mission 

Area, agency, or staff office or the 711 

Relay Service. 

To file a program discrimination 

complaint, a complainant should 

complete a Form AD–3027, USDA 

Program Discrimination Complaint 

Form, which can be obtained online at 

https://www.usda.gov/sites/default/ 

files/documents/ad-3027.pdf, from any 

USDA office, by calling (866) 632–9992, 

or by writing a letter addressed to 

USDA. The letter must contain the 

complainant’s name, address, telephone 

number, and a written description of the 

alleged discriminatory action in 

sufficient detail to inform the Assistant 

Secretary for Civil Rights (ASCR) about 

the nature and date of an alleged civil 

rights violation. The completed AD– 

3027 form or letter must be submitted to 

USDA by: 

(1) Mail: U.S. Department of 

Agriculture, Office of the Assistant 

Secretary for Civil Rights, 1400 

Independence Avenue SW, Washington, 

DC 20250–9410; or 

(2) Fax: (833) 256–1665 or (202) 690– 

7442; or 

(3) Email: program.intake@usda.gov. 

List of Subjects in 7 CFR Part 1773 

Accounting, Auditing, Electric power, 

Grant programs, Loan programs— 

communications, Loan programs— 

energy, Reporting and recordkeeping 

requirements, Rural areas, Telephone. 

Accordingly, for the reasons 

discussed in the preamble, the Agency 

amends 7 CFR 1773 as follows: 

PART 1773—POLICY ON AUDITS OF 

RUS AWARDEES 

■ 1. The authority citation for part 1773 

continues to read as follows: 

Authority: 7 U.S.C. 901 et seq., 7 U.S.C. 

1921 et seq., 7 U.S.C. 6941 et seq. 

Subpart A—General Provisions 

■ 2. Amend § 1773.1 by revising 

paragraph (d) to read as follows: 

§ 1773.1 General. 

* * * * * 

(d) Failure of an auditee to provide 

audited financial statements in 

compliance with this part is a serious 

violation of the RUS security agreement. 

RUS relies on audited financial 

statements in order to assess and 

monitor the financial condition of its 

awardees and to fulfill its fiduciary 

responsibilities. 

* * * * * 

■ 3. Amend § 1773.2 by revising the 

definitions of ‘‘Audit’’, ‘‘Peer review’’, 

‘‘Regulatory asset’’, and ‘‘Regulatory 

liability’’ to read as follows: 

§ 1773.2 Definitions. 

* * * * * 

Audit means an examination of 

financial statements by an independent 

auditor or audit firm for the purpose of 

expressing an opinion on the fairness 

with which the financial statements 

present the financial position, results of 

operations, and changes in cash flows in 

accordance with U.S. generally accepted 

accounting principles (GAAP) and for 

determining whether the auditee has 

complied with provisions of laws, 

regulations, contracts, or grant 

agreements that could have a material 

effect on the financial statements. 

* * * * * 

Peer review means an external review 

of one or more aspects of the accounting 

and auditing practice, not subject to 

Public Company Accounting Oversight 

Board permanent inspection, performed 

once every three years by a CPA firm 

that is not affiliated with the auditor. 

Regulatory asset means an asset 

resulting from an action of a regulator as 

defined by FASB and GASB. 

Regulatory liability means a liability 

imposed on a regulated enterprise when 

there is an enforceable present 

obligation to deduct an amount in 

determining the regulated rate to be 

charged to customers in future periods, 

as defined by FASB and GASB. 

* * * * * 

Subpart B—RUS Audit Requirements 

■ 4. Amend § 1773.3 by revising 

paragraphs (c) and (d)(1) to read as 

follows: 

§ 1773.3 Annual audit. 

* * * * * 

(c) Auditees not subject to 2 CFR part 

200, subpart F, must furnish a reporting 

package to RUS within 120 days of the 

audit date. (See § 1773.21) Until all 

loans made or guaranteed by RUS are 

repaid and unliquidated obligations 

rescinded, auditees must continue to 

provide annual audited financial 

statements. Auditees with grant funding 

only must furnish annual audited 

financial statements in the year of the 

first advance and until all funds have 

been advanced or rescinded, and all 

financial compliance requirements have 

been fully satisfied. 

(d) * * * 

(1) For auditees expending less than 

the threshold for expenditure in Federal 

awards during the year, RUS reserves its 

right under 2 CFR 200.503(b) and (c) to 

arrange for an audit performed in 

accordance with this part. 

* * * * * 

■ 5. Amend § 1773.4 by revising 

paragraph (c)(1) to read as follows: 

§ 1773.4 Auditee’s responsibilities. 

* * * * * 

(c) * * * 

(1) Within 30 days of the date of 

receipt of such notice, RUS or its 

designated representative will notify the 

auditee, in writing via email, if the 

selection or change in auditor is not 

satisfactory based on criteria described 

in § 1773.5. 

* * * * * 

■ 6. Amend § 1773.9 by revising 

paragraphs (b) and (c) to read as follows: 

§ 1773.9 Disclosure of fraud, and 

noncompliance with provisions of law, 

regulations, contracts, and grant 

agreements. 

* * * * * 

(b) If specific information comes to 

the auditor’s attention that provides 

evidence concerning the existence of 

possible violations of provisions of 

laws, regulations, contracts, or grant 

agreements that could have a material 

indirect effect on the financial 

statements, the auditor should apply 

audit procedures specifically directed to 

obtain sufficient, appropriate audit 

evidence regarding those possible 

violations of provisions of laws, 

regulations, contracts, or grant 

agreements. 

(c) Pursuant to the terms of its audit 

engagement letter with the auditee, the 


ddrumheller on DSK120RN23PROD with RULES1
Federal Register / Vol. 89, No. 217 / Friday, November 8, 2024 / Rules and Regulations 88635 

auditor must, as soon as practical, report 

through the methods indicated below, 

all instances of fraud, illegal acts, and 

all indications or instances of 

noncompliance with laws, whether 

material or not, to: 

(1) The president of the auditee’s 

governance board via the auditor’s 

preferred method; 

(2) RUS via email; 

(3) OC–ECD via email; and 

(4) OIG, as follows: 

(i) For all audits performed in 

accordance with § 1773.3(d) (audits 

conducted in accordance with 2 CFR 

part 200), report to the USDA–OIG– 

Audit, National Single Audit 

Coordinator for USDA, 1400 

Independence Ave. SW, Ste. 419, 

Washington, DC 20250, email: OIGUSDAsingleaudit@oig.usda.gov, or 

online at: http://usdaoig.oversight.gov. 

(ii) For all other audits conducted in 

accordance with § 1773.3 report to the 

USDA Office of Inspector General 

online at: https://usdaoig.oversight.gov. 

Subpart C—RUS Requirements for the 

Submission and Review of the 

Reporting Package 

■ 7. Amend § 1773.21 by revising 

paragraph (d) to read as follows: 

§ 1773.21 Auditee’s review and 

submission of the reporting package. 

* * * * * 

(d) The auditee must include a 

complete reporting package as defined 

in § 1773.2. 

* * * * * 

Subpart D—RUS Reporting 

Requirements 

■ 8. Amend § 1773.32 by revising 

paragraph (a) and removing paragraph 

(d). 

The revision reads as follows: 

§ 1773.32 Reports on internal control; 

compliance with provisions of laws, 

regulations, contracts, and grant 

agreements; and instances of fraud. 

(a) As required by GAGAS, the 

auditor must prepare a written report 

describing the scope of the auditor’s 

testing of internal control over financial 

reporting and of compliance with 

provisions of laws, regulations, 

contracts, and grant agreements, and 

state whether the tests provided 

sufficient, appropriate evidence to 

support opinions on the effectiveness of 

internal control and on compliance with 

provisions of laws, regulations, 

contracts, and grant agreements. This 

report must include the manual or 

printed signature of the audit firm and 

must include the following items as 

appropriate: 

(1) Significant deficiencies and 

material weaknesses in internal control; 

(2) Identified or suspected instances 

of noncompliance with provisions of 

laws, regulations, contracts and grant 

agreements that have a material effect 

on the financial statements or other 

financial data significant to the audit 

objectives and any other instances that 

warrant the attention of those charged 

with governance; 

(3) Identified or suspected instances 

of fraud that have a material effect, 

either quantitatively or qualitatively, to 

the financial statements or other 

financial data significant to the audit 

objectives; and 

(4) Identified or suspected instances 

of abuse that have a material effect, 

either quantitatively or qualitatively, to 

the financial statements or other 

financial data significant to the audit 

objectives. 

* * * * * 

■ 9. Revise § 1773.34 to read as follows: 

§ 1773.34 Schedule of findings and 

recommendations. 

The auditor must prepare a schedule 

of findings and recommendations to be 

included with the reports on internal 

control; compliance with laws, 

regulations, contracts, and grant 

agreements; and instances of fraud. The 

report must contain the status of known 

but uncorrected deficiencies from prior 

audits that affect the current audit 

objective. The schedule of findings and 

recommendations shall be developed 

and presented utilizing the elements of 

a finding discussed in GAGAS and shall 

include recommendations for 

remediation. If the schedule does not 

include responses from management, as 

well as any planned corrective actions, 

those items must be submitted directly 

to RUS by management in accordance 

with § 1773.4(j). 

Subpart E—RUS Audit Requirements 

and Documentation 

■ 10. Revise § 1773.40 to read as 

follows: 

§ 1773.40 Regulatory assets. 

The auditor’s audit documentation 

shall support that the auditor tested 

whether all regulatory assets comply 

with the requirements of FASB 

Accounting Standards Codification 

(ASC) 980 or GASB Statement (GASBS) 

62, as appropriate. For Electric auditees 

only, the auditor’s audit documentation 

shall support that all regulatory assets 

have received RUS approval. 

■ 11. Revise § 1773.45 to read as 

follows: 

§ 1773.45 Regulatory liabilities. 

The auditor’s audit documentation 

shall support that all regulatory 

liabilities comply with the requirements 

of FASB Accounting Standards 

Codification (ASC) 980 or GASB 

Statement (GASBS) 62, as appropriate. 

For electric auditees only, the auditor’s 

audit documentation shall document 

whether all regulatory liabilities have 

received RUS approval. 

Andrew Berke, 

Administrator, Rural Utilities Service, Rural 

Development. 

[FR Doc. 2024–25914 Filed 11–7–24; 8:45 am] 

BILLING CODE 3410–15–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

21 CFR Part 80 

[Docket No. FDA–2022–N–1635] 

RIN 0910–AI69 

Color Additive Certification; Increase 

in Fees for Certification Services 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Final rule. 

SUMMARY: The Food and Drug 

Administration is amending the 

regulation setting fees for color additive 

certification services to increase these 

fees. This increase will allow FDA to 

continue to provide, maintain, and 

equip an adequate color additive 

certification program as required by the 

Federal Food, Drug, and Cosmetic Act 

(FD&C Act). 

DATES: This rule is effective December 9, 

2024. 

ADDRESSES: For access to the docket to 

read background documents or 

comments received, go to https://

www.regulations.gov and insert the 

docket number found in brackets in the 

heading of this final rule into the 

‘‘Search’’ box and follow the prompts, 

and/or go to the Dockets Management 

Staff, 5630 Fishers Lane, Rm. 1061, 

Rockville, MD 20852, 240–402–7500. 

FOR FURTHER INFORMATION CONTACT: 

With regard to the final rule: Bryan 

Bowes, Office of the Chief Scientist, 

Office of Cosmetics and Colors, Food 

and Drug Administration, 5001 Campus 

Dr., College Park, MD 20740, 240–402– 

1122; or Carrol Bascus, Office of Policy, 

Regulations and Information, Human 

Foods Program, Food and Drug 

Administration, 5001 Campus Dr., 

College Park, MD 20740, 240–402–2378. 


ddrumheller on DSK120RN23PROD with RULES1