[Federal Register Volume 89, Number 217 (Friday, November 8, 2024)]
[Rules and Regulations]
[Pages 88631-88635]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25914]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

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. 

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Federal Register / Vol. 89, No. 217 / Friday, November 8, 2024 / 
Rules and Regulations

[[Page 88631]]



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update or remove any outdated references.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: 
<a href="/cdn-cgi/l/email-protection#85e6eae8f5e9ece4ebe6e0abf1e4f7e7c5f0f6e1e4abe2eaf3"><span class="__cf_email__" data-cfemail="aecdc1c3dec2c7cfc0cdcb80dacfdccceedbddcacf80c9c1d8">[email protected]</span></a>.

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

[[Page 88632]]

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 Sec.  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: <a href="/cdn-cgi/l/email-protection#b8f7f1ff95edebfcf9cbd1d6dfd4ddd9cddcd1ccf8d7d1df96cdcbdcd996dfd7ce"><span class="__cf_email__" data-cfemail="da95939df78f899e9ba9b3b4bdb6bfbbafbeb3ae9ab5b3bdf4afa9bebbf4bdb5ac">[email protected]</span></a>, or online at: http://usdaoig.oversight.gov.
    ii. For all other audits conducted in accordance with Sec.  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 Sec.  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 Sec.  1773.34. This change is recommended because the 
language more accurately fits with Sec.  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.

[[Page 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

[[Page 88634]]

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: <a href="/cdn-cgi/l/email-protection#e292908d8590838fcc8b8c96838987a297918683cc858d94"><span class="__cf_email__" data-cfemail="f8888a979f8a9995d691968c99939db88d8b9c99d69f978e">[email protected]</span></a>.

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

0
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

0
2. Amend Sec.  1773.1 by revising paragraph (d) to read as follows:


Sec.  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.
* * * * *

0
3. Amend Sec.  1773.2 by revising the definitions of ``Audit'', ``Peer 
review'', ``Regulatory asset'', and ``Regulatory liability'' to read as 
follows:


Sec.  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

0
4. Amend Sec.  1773.3 by revising paragraphs (c) and (d)(1) to read as 
follows:


Sec.  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 
Sec.  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.
* * * * *

0
5. Amend Sec.  1773.4 by revising paragraph (c)(1) to read as follows:


Sec.  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 Sec.  1773.5.
* * * * *

0
6. Amend Sec.  1773.9 by revising paragraphs (b) and (c) to read as 
follows:


Sec.  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

[[Page 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 Sec.  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: <a href="/cdn-cgi/l/email-protection#c7888e80ea92948386b4aea9a0aba2a6b2a3aeb387a8aea0e9b2b4a3a6e9a0a8b1"><span class="__cf_email__" data-cfemail="aae5e3ed87fff9eeebd9c3c4cdc6cfcbdfcec3deeac5c3cd84dfd9cecb84cdc5dc">[email protected]</span></a>, or online at: http://usdaoig.oversight.gov.
    (ii) For all other audits conducted in accordance with Sec.  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

0
7. Amend Sec.  1773.21 by revising paragraph (d) to read as follows:


Sec.  1773.21  Auditee's review and submission of the reporting 
package.

* * * * *
    (d) The auditee must include a complete reporting package as 
defined in Sec.  1773.2.
* * * * *

Subpart D--RUS Reporting Requirements

0
8. Amend Sec.  1773.32 by revising paragraph (a) and removing paragraph 
(d).
    The revision reads as follows:


Sec.  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.
* * * * *

0
9. Revise Sec.  1773.34 to read as follows:


Sec.  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 Sec.  1773.4(j).

Subpart E--RUS Audit Requirements and Documentation

0
10. Revise Sec.  1773.40 to read as follows:


Sec.  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.

0
11. Revise Sec.  1773.45 to read as follows:


Sec.  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


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