Union Calendar No. 302
104TH CONGRESS
2D SESSION
H. R. 3184
[Report No. 104–607]
A BILL
To streamline and improve the effectiveness of
chapter 75 of title 31, United States Code (com-
monly referred to as the ‘‘Single Audit Act’’).
JUNE 6, 1996
Reported with an amendment, committed to the Commit-
tee of the Whole House on the State of the Union, and
ordered to be printed
IB
Union Calendar No. 302
104TH CONGRESS
2D SESSION
H. R. 3184
[Report No. 104–607]
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 HOUSE OF REPRESENTATIVES
MARCH 28, 1996
Mr. HORN (for himself, Mr. CLINGER, Mr. DAVIS, Mrs. MALONEY, and Mr.
PETERSON of Minnesota) introduced the following bill; which was referred
to the Committee on Government Reform and Oversight
JUNE 6, 1996
Additional sponsor: Mr. BAESLER
JUNE 6, 1996
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on March 28, 1996]
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’’).
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; PURPOSES.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Sin-
gle Audit Act Amendments of 1996’’.
(b) PURPOSES.—The purposes of this Act are to—
(1) promote sound financial management, in-
cluding effective internal controls, with respect to
Federal awards administered by non-Federal entities;
(2) establish uniform requirements for audits of
Federal awards administered by non-Federal entities;
(3) promote the efficient and effective use of
audit resources;
(4) reduce burdens on State and local govern-
ments, Indian tribes, and nonprofit organizations;
and
(5) ensure that Federal departments and agen-
cies, to the maximum extent practicable, rely upon
and use audit work done pursuant to chapter 75 of
title 31, United States Code (as amended by this Act).
SEC. 2. AMENDMENT TO TITLE 31, UNITED STATES CODE.
Chapter 75 of title 31, United States Code, is amended
to read as follows:
‘‘CHAPTER 75—REQUIREMENTS FOR
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.
‘‘§ 7501. Definitions
‘‘(a) As used in this chapter, the term—
‘‘(1) ‘Comptroller General’ means the Comptrol-
ler General of the United States;
‘‘(2) ‘Director’ means the Director of the Office
of Management and Budget;
‘‘(3) ‘Federal agency’ has the same meaning as
the term ‘agency’ in section 551(1) of title 5;
‘‘(4) ‘Federal awards’ means Federal financial
assistance and Federal cost-reimbursement contracts
that non-Federal entities receive directly from Federal
awarding agencies or indirectly from pass-through
entities;
‘‘(5) ‘Federal financial assistance’ means assist-
ance that non-Federal entities receive or administer
in the form of grants, loans, loan guarantees, prop-
erty, cooperative agreements, interest subsidies, insur-
ance, food commodities, direct appropriations, or
other assistance, but does not include amounts re-
ceived as reimbursement for services rendered to indi-
viduals in accordance with guidance issued by the Di-
rector;
‘‘(6) ‘Federal program’ means all Federal
awards to a non-Federal entity assigned a single
number in the Catalog of Federal Domestic Assistance
or encompassed in a group of numbers or other cat-
egory as defined by the Director;
‘‘(7) ‘generally accepted government auditing
standards’ means the government auditing standards
issued by the Comptroller General;
‘‘(8) ‘independent auditor’ means—
‘‘(A) an external State or local government
auditor who meets the independence standards
included in generally accepted government audit-
ing standards; or
‘‘(B) a public accountant who meets such
independence standards;
‘‘(9) ‘Indian tribe’ means any Indian tribe,
band, nation, or other organized group or community,
including any Alaskan Native village or regional or
village corporation (as defined in, or established
under, the Alaskan Native Claims Settlement Act)
that is recognized by the United States as eligible for
the special programs and services provided by the
United States to Indians because of their status as
Indians;
‘‘(10) ‘internal controls’ means a process, effected
by an entity’s management and other personnel, de-
signed to provide reasonable assurance regarding the
achievement of objectives in the following categories:
‘‘(A) Effectiveness and efficiency of oper-
ations.
‘‘(B) Reliability of financial reporting.
‘‘(C) Compliance with applicable laws and
regulations;
‘‘(11) ‘local government’ means any unit of local
government within a State, including a county, bor-
ough, municipality, city, town, township, parish,
local public authority, special district, school district,
intrastate district, council of governments, any other
instrumentality of local government and, in accord-
ance with guidelines issued by the Director, a group
of local governments;
‘‘(12) ‘major program’ means a Federal program
identified in accordance with risk-based criteria pre-
scribed by the Director under this chapter, subject to
the limitations described under subsection (b);
‘‘(13) ‘non-Federal entity’ means a State, local
government, or nonprofit organization;
‘‘(14) ‘nonprofit organization’ means any cor-
poration, trust, association, cooperative, or other or-
ganization that—
‘‘(A) is operated primarily for scientific,
educational, service, charitable, or similar pur-
poses in the public interest;
‘‘(B) is not organized primarily for profit;
and
‘‘(C) uses net proceeds to maintain, im-
prove, or expand the operations of the organiza-
tion;
‘‘(15) ‘pass-through entity’ means a non-Federal
entity that provides Federal awards to a subrecipient
to carry out a Federal program;
‘‘(16) ‘program-specific audit’ means an audit of
one Federal program;
‘‘(17) ‘recipient’ means a non-Federal entity that
receives awards directly from a Federal agency to
carry out a Federal program;
‘‘(18) ‘single audit’ means an audit, as described
under section 7502(d), of a non-Federal entity that
includes the entity’s financial statements and Federal
awards;
‘‘(19) ‘State’ means any State of the United
States, the District of Columbia, the Commonwealth
of Puerto Rico, the Virgin Islands, Guam, American
Samoa, the Commonwealth of the Northern Mariana
Islands, and the Trust Territory of the Pacific Is-
lands, any instrumentality thereof, any multi-State,
regional, or interstate entity which has governmental
functions, and any Indian tribe; and
‘‘(20) ‘subrecipient’ means a non-Federal entity
that receives Federal awards through another non-
Federal entity to carry out a Federal program, but
does not include an individual who receives financial
assistance through such awards.
‘‘(b) In prescribing risk-based program selection cri-
teria for major programs, the Director shall not require
more programs to be identified as major for a particular
non-Federal entity, except as prescribed under subsection
(c) or as provided under subsection (d), than would be iden-
tified if the major programs were defined as any program
for which total expenditures of Federal awards by the non-
Federal entity during the applicable year exceed—
‘‘(1) the larger of $30,000,000 or 0.15 percent of
the non-Federal entity’s total Federal expenditures, in
the case of a non-Federal entity for which such total
expenditures for all programs exceed $10,000,000,000;
‘‘(2) the larger of $3,000,000, or 0.30 percent of
the non-Federal entity’s total Federal expenditures, in
the case of a non-Federal entity for which such total
expenditures for all programs exceed $100,000,000 but
are less than or equal to $10,000,000,000; or
‘‘(3) the larger of $300,000, or 3 percent of such
total Federal expenditures for all programs, in the
case of a non-Federal entity for which such total ex-
penditures for all programs equal or exceed $300,000
but are less than or equal to $100,000,000.
‘‘(c) When the total expenditures of a non-Federal enti-
ty’s major programs are less than 50 percent of the non-
Federal entity’s total expenditures of all Federal awards (or
such lower percentage as specified by the Director), the
auditor shall select and test additional programs as major
programs as necessary to achieve audit coverage of at least
50 percent of Federal expenditures by the non-Federal en-
tity (or such lower percentage as specified by the Director),
in accordance with guidance issued by the Director.
‘‘(d) Loan or loan guarantee programs, as specified by
the Director, shall not be subject to the application of sub-
section (b).
‘‘§ 7502. Audit requirements; exemptions
‘‘(a)(1)(A) Each non-Federal entity that expends a
total amount of Federal awards equal to or in excess of
$300,000 or such other amount specified by the Director
under subsection (a)(3) in any fiscal year of such non-Fed-
eral entity shall have either a single audit or a program-
specific audit made for such fiscal year in accordance with
the requirements of this chapter.
‘‘(B) Each such non-Federal entity that expends Fed-
eral awards under more than one Federal program shall
undergo a single audit in accordance with the requirements
of subsections (b) through (i) of this section and guidance
issued by the Director under section 7505.
‘‘(C) Each such non-Federal entity that expends
awards under only one Federal program and is not subject
to laws, regulations, or Federal award agreements that re-
quire a financial statement audit of the non-Federal entity,
may elect to have a program-specific audit conducted in
accordance with applicable provisions of this section and
guidance issued by the Director under section 7505.
‘‘(2)(A) Each non-Federal entity that expends a total
amount of Federal awards of less than $300,000 or such
other amount specified by the Director under subsection
(a)(3) in any fiscal year of such entity, shall be exempt
for such fiscal year from compliance with—
‘‘(i) the audit requirements of this chapter; and
‘‘(ii) any applicable requirements concerning fi-
nancial audits contained in Federal statutes and reg-
ulations governing programs under which such Fed-
eral awards are provided to that non-Federal entity.
‘‘(B) The provisions of subparagraph (A)(ii) of this
paragraph shall not exempt a non-Federal entity from com-
pliance with any provision of a Federal statute or regula-
tion that requires such non-Federal entity to maintain
records concerning Federal awards provided to such non-
Federal entity or that permits a Federal agency, pass-
through entity, or the Comptroller General access to such
records.
‘‘(3) Every 2 years, the Director shall review the
amount for requiring audits prescribed under paragraph
(1)(A) and may adjust such dollar amount consistent with
the purposes of this chapter, provided the Director does not
make such adjustments below $300,000.
‘‘(b)(1) Except as provided in paragraphs (2) and (3),
audits conducted pursuant to this chapter shall be con-
ducted annually.
‘‘(2) A State or local government that is required by
constitution or statute, in effect on January 1, 1987, to un-
dergo its audits less frequently than annually, is permitted
to undergo its audits pursuant to this chapter biennially.
Audits conducted biennially under the provisions of this
paragraph shall cover both years within the biennial period.
‘‘(3) Any nonprofit organization that had biennial au-
dits for all biennial periods ending between July 1, 1992,
and January 1, 1995, is permitted to undergo its audits
pursuant to this chapter biennially. Audits conducted bien-
nially under the provisions of this paragraph shall cover
both years within the biennial period.
‘‘(c) Each audit conducted pursuant to subsection (a)
shall be conducted by an independent auditor in accordance
with generally accepted government auditing standards, ex-
cept that, for the purposes of this chapter, performance au-
dits shall not be required except as authorized by the Direc-
tor.
‘‘(d) Each single audit conducted pursuant to sub-
section (a) for any fiscal year shall—
‘‘(1) cover the operations of the entire non-Fed-
eral entity; or
‘‘(2) at the option of such non-Federal entity
such audit shall include a series of audits that cover
departments, agencies, and other organizational units
which expended or otherwise administered Federal
awards during such fiscal year provided that each
such audit shall encompass the financial statements
and schedule of expenditures of Federal awards for
each such department, agency, and organizational
unit, which shall be considered to be a non-Federal
entity.
‘‘(e) The auditor shall—
‘‘(1) determine whether the financial statements
are presented fairly in all material respects in con-
formity with generally accepted accounting prin-
ciples;