Single Audit Act Amendments of 1996
PL 104-156 (S.1579), enacted 07/05/1996

110 STAT. 1396 
PUBLIC LAW 104-156—JULY 5, 1996 
note. 
Public Law 104-156 
104th Congress 
An Act 
July 5, 1996 
To streamline and improve the effectiveness of chapter 75 of title 31, United States 
[S. 1579] 
Code (commonly referred to as the "Single Audit Act"). 
Be it enacted by the Senate and House of Representatives 
of 
Single Audit Act 
the United States of America in Congress assembled. 
Amendments of 
_ 
_ 
1996. 
SECTION 1. SHORT TITLE; PURPOSES. 
3l^USC 7501 
(g^) SHORT TITLE.—This Act may be cited as the "Single Audit 
Act Amendments of 1996". 
(b) PURPOSES.—^The purposes of this Act are to— 
(1) promote sound financial management, including effec-
tive internal controls, with respect to Federal awards adminis-
tered 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 governments, Indian 
tribes, and nonprofit organizations; and 
(5) ensure that Federal departments and agencies, 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 responsibihties of the Comptroller General. 
"7507. Effective date. 
"§ 7501. Definitions 
"(a) As used in this chapter, the term— 
"(1) 'Comptroller General' means the Comptroller Greneral 
of the United States; 
"(2) 'Director' means the Director of the Office of Manage-
ment and Budget; 
"(3) 'Federal agency' has the same meaning as the term 
'agency in section 551(1) of title 5; 
PUBLIC LAW 104-156—JULY 5, 1996 
110 STAT. 1397 
"(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 assistance that 
non-Federal entities receive or administer in the form of grants, 
loans, loan guarantees, property, cooperative agreements, 
interest subsidies, insurance, food commodities, direct appro-
priations, or other assistance, but does not include amounts 
received as reimbursement for services rendered to individuals 
in accordance with guidance issued by the Director; 
"(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 category 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 gen-
erally accepted government auditing 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, designed to provide 
reasonable assurance regarding the achievement of objectives 
in the following categories: 
"(A) Effectiveness and efficiency of operations. 
"(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, borough, 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 accordance 
with guidelines issued by the Director, a group of local govern-
ments; 
"(12) 'major program' means a Federal program identified 
in accordance with risk-based criteria prescribed 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 corporation, trust, 
association, cooperative, or other organization that— 
"(A) is operated primarily for scientific, educational, 
service, charitable, or similar purposes in the public 
interest; 
"(B) is not organized primarily for profit; and 
110 STAT. 1398 
PUBLIC LAW 104-156—JULY 5, 1996 
"(C) uses net proceeds to maintain, improve, or expand 
the operations of the organization; 
"(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 enti-
ty'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 Islands, 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 individ-
ual who receives financial assistance through such awards. 
"(b) In prescribing risk-based program selection criteria 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 identified 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 expenditures 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 entity'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 
entity (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 subsection (b). 
PUBLIC LAW 104-156^JULY 5, 1996 
110 STAT. 1399 
*
*
§ 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-Federal 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 Federal 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 require 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 financial 
audits contained in Federal statutes and regulations governing 
programs under which such Federal 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 compliance with any 
provision of a Federal statute or regulation 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 Greneral 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 conducted annually. 
"(2) A State or local government that is required by constitution 
or statute, in effect on January 1, 1987, to undergo 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 audits 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 biennially 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, except that, for the 
110 STAT. 1400 
PUBLIC LAW 104-156-JULY 5, 1996 
purposes of this chapter, performance audits shall not be required 
except as authorized by the Director. 
"(d) Each single audit conducted pursuant to subsection (a) 
for any fiscal year shall— 
"(1) cover the operations of the entire non-Federal entity; 
or 
"(2) at the option of such non-Federal entity such audit 
shall include a series of audits that cover departments, agen-
cies, and other organizational units which expended or other-
wise administered Federal awards during such fiscal year pro-
vided that each such audit shall encompass the financial state-
ments 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 pre-
sented fairly in all material respects in conformity with gen-
erally accepted accounting principles; 
"(2) determine whether the schedule of expenditures of 
Federal awards is presented fairly in all material respects 
in relation to the financial statements taken as a whole; 
"(3) with respect to internal controls pertaining to the 
compliance requirements for each major program— 
"(A) obtain an understanding of such internal controls; 
"(B) assess control risk; and 
"(C) perform tests of controls unless the controls are 
deemed to be ineffective; and 
. 
"(4) determine whether the non-Federal entity has complied 
with the provisions of laws, regulations, and contracts or grants 
pertaining to Federal awards that have a direct and material 
effect on each major program. 
"(f)(1) Each Federal agency which provides Federal awards 
to a recipient shall— 
"(A) provide such recipient the program names (and any 
identifying numbers) from which such awards are derived, and 
the Federal requirements which govern the use of such awards 
and the requirements of this chapter; and 
"(B) review the audit of a recipient as necessary to deter-
mine whether prompt and appropriate corrective action has 
been taken with respect to audit findings, as defined by the 
Director, pertaining to Federal awards provided to the recipient 
by the Federal agency. 
"(2) Each pass-through entity shall— 
"(A) provide such subrecipient the program names (and 
any identifying numbers) from which such assistance is derived, 
and the Federal requirements which govern the use of such 
awards and the requirements of this chapter; 
"(B) monitor the subrecipient's use of Federal awards 
through site visits, limited scope audits, or other means; 
"(C) review the audit of a subrecipient as necessary to 
determine whether prompt and appropriate corrective action 
has been taken with respect to audit findings, as defined by 
the Director, pertaining to Federal awards provided to the 
subrecipient by the pass-through entity; and 
"(D) require each of its subrecipients of Federal awards 
to permit, as a condition of receiving Federal awards, the 
independent auditor of the pass-through entity to have such 
PUBLIC LAW 104-156-^ULY 5, 1996 
110 STAT. 1401 
access to the subrecipient's records and financial statements 
as may be necessary for the pass-through entity to comply 
with this chapter. 
"(g)(1) The auditor shall report on the results of any audit Reports, 
conducted pursuant to this section, in accordance with guidance 
issued by the Director. 
"(2) When reporting on any single audit, the auditor shall 
include a summary of the auditor's results regarding the non-
Federal entity's financial statements, internal controls, and compli-
ance with laws and regulations. 
"(h) The non-Federal entity shall transmit the reporting pack-
age, which shall include the non-Federal entity's financial state-
ments, schedule of expenditures of Federal awards, corrective action 
plan defined under subsection (i), and auditor's reports developed 
pursuant to this section, to a Federal clearinghouse designated 
by the Director, and make it available for public inspection within 
the earlier of— 
"(1) 30 days after receipt of the auditor's report; or 
"(2)(A) for a transition period of at least 2 years after 
the effective date of the Single Audit Act Amendments of 1996, 
as established by the Director, 13 months after the end of 
the period audited; or 
"(B) for fiscal years beginning after the period specified 
in subparagraph (A), 9 months after the end of the period 
audited, or within a longer timeframe authorized by the Federal 
agency, determined under criteria issued under section 7504, 
when the 9-month timeframe would place an undue burden 
on the non-Federal entity. 
"(i) If an audit conducted pursuant to this section discloses 
any audit findings, as defined by the Director, including material 
noncompliance with individual compliance requirements for a major 
program by, or reportable conditions in the internal controls of, 
the non-Federal entity with respect to the matters described in 
subsection (e), the non-Federal entity shall submit to Federal offi-
cials designated by the Director, a plan for corrective action to 
eliminate such audit findings or reportable conditions or a state-
ment describing the reasons that corrective action is not necessary. 
Such plan shall be consistent with the audit resolution standard 
promulgated by the Comptroller General (as part of the standards 
for internal controls in the Federal Government) pursuant to section 
3512(c). 
"(j) The Director may authorize pilot projects to test alternative 
methods of achieving the purposes of this chapter. Such pilot 
projects may begin only after consultation with the Chair and 
Ranking Minority Member of the Committee on Governmental 
Affairs of the Senate and the Chair and Ranking Minority Member 
of the Committee on Government Reform and Oversight of the 
House of Representatives. 
"§ 7503. Relation to other audit requirements 
"(a) An audit conducted in accordance with this chapter shall 
be in lieu of any financial audit of Federal awards which a non-
Federal entity is required to undergo under any other Federal 
law or regulation. To the extent that such audit provides a Federal 
agency with the information it requires to carry out its responsibil-
ities under Federal law or regulation, a Federal agency shall rely 
upon and use that information. 
29-194 O - 96 - 20 : QL 3 Part 2 
110 STAT. 1402 
PUBLIC LAW 104-156—JULY 5, 1996 
"(b) Notwithstanding subsection (a), a Federal agency may con-
duct or arrange for additional audits which are necessary to carry 
out its responsibilities under Federal law or regulation. The provi-
sions of this chapter do not authorize any non-Federal entity (or 
subrecipient thereof) to constrain, in any manner, such agency 
from carrying out or arranging for such additional audits, except 
that the Federal agency shall plan such audits to not be duplicative 
of other audits of Federal awards. 
"(c) The provisions of this chapter do not limit the authority 
of Federal agencies to conduct, or arrange for the conduct of, audits 
and evaluations of Federal awards, nor limit the authority of any 
Federal agency Inspector General or other Federal official. 
"(d) Subsection (a) shall apply to a non-Federal entity which 
undergoes an audit in accordance with this chapter even though 
it is not required by section 7502(a) to have such an audit. 
"(e) A Federal agency that provides Federal awards and con-
ducts or arranges for audits of non-Federal entities receiving such 
awards that are in addition to the audits of non-Federal entities 
conducted pursuant to this chapter shall, consistent with other 
applicable law, arrange for funding the full cost of such additional 
audits. Any such additional audits shall be coordinated with the 
Federal agency determined under criteria issued under section 7504 
to preclude duplication of the audits conducted pursuant to this 
chapter or other additional audits. 
"(f) Upon request by a Federal agency or the Comptroller Gen-
eral, any independent auditor conducting an audit pursuant to 
this chapter shall make the auditor's working papers available 
to the Federal agency or the Comptroller General as part of a 
quality review, to resolve audit findings, or to carry out oversight 
responsibilities consistent with the purposes of this chapter. Such 
access to auditor's working papers shall include the right to obtain 
copies. 
^§7504. Federal agency responsibilities and relations with 
non-Federal entities 
"(a) Each Federal agency shall, in accordance with guidance 
issued by the Director under section 7505, with regard to Federal 
awards provided by the agency— 
"(1) monitor non-Federal entity use of Federal awards, 
and 
"(2) assess the quality of audits conducted under this chap-
ter for audits of entities for which the agency is the single 
Federal agency determined under subsection (b). 
"(b) Each non-Federal entity shall have a single Federal agency, 
determined in accordance with criteria established by the Director, 
to provide the non-Federal entity with technical assistance and 
assist with implementation of this chapter. 
"(c) The Director shall designate a Federal clearinghouse to— 
"(1) receive copies of all reporting packages developed in 
accordance with this chapter; 
"(2) identify recipients that expend $300,000 or more in 
Federal awards or such other amount specified by the Director 
under section 7502(a)(3) during the recipient's fiscal year but 
did not undergo an audit in accordance with this chapter; 
and 
"(3) perform analyses to assist the Director in carrying 
out responsibilities under this chapter. 
PUBLIC LAW 104-156^JULY 5, 1996 
110 STAT. 1403 
"§ 7505. Regulations 
"(a) The Director, after consultation with the Comptroller Gen-
eral, and appropriate officials from Federal, State, and local govern-
ments and nonprofit organizations shall prescribe guidance to imple-
ment this chapter. Each Federal agency shall promulgate such 
amendments to its regulations as may be necessary to conform 
such regulations to the requirements of this chapter and of such 
guidance. 
"(b)(1) The guidance prescribed pursuant to subsection (a) shall 
include criteria for determining the appropriate charges to Federal 
awards for the cost of audits. Such criteria shall prohibit a non-
Federal entity from charging to any Federal awards— 
"(A) the cost of any audit which is— 
"(i) not conducted in accordance with this chapter; 
or 
"(ii) conducted in accordance with this chapter when 
expenditures of Federal awards are less than amounts 
cited in section 7502(a)(1)(A) or specified by the Director 
under section 7502(a)(3), except that the Director may allow 
the cost of limited scope audits to monitor subrecipients 
in accordance with section 7502(f)(2)(B); and 
"(B) more than a reasonably proportionate share of the 
cost of any such audit that is conducted in accordance with 
this chapter. 
"(2) The criteria prescribed pursuant to paragraph (1) shall 
not, in the absence of documentation demonstrating a higher actual 
cost, permit the percentage of the cost of audits performed pursuant 
to this chapter charged to Federal awards, to exceed the ratio 
of total Federal awards expended by such non-Federal entity during 
the applicable fiscal year or years, to such non-Federal entity's 
total expenditures during such fiscal year or years. 
"(c) Such guidance shall include such provisions as may be 
necessary to ensure that small business concerns and business 
concerns owned and controlled by socially and economically dis-
advantaged individuals will have the opportunity to participate 
in the performance of contracts awarded to fulfill the audit require-
ments of this chapter. 
*'§ 7506. Monitoring responsibilities of the Comptroller Gen-
eral 
"(a) The Comptroller General shall review provisions requiring 
financial audits of non-Federal entities that receive Federal awards 
that are contained in bills and resolutions reported by the commit-
tees of the Senate and the House of Representatives. 
"(b) If the Comptroller General determines that a bill or resolu-
tion contains provisions that are inconsistent with the requirements 
of this chapter, the Comptroller General shall, at the earliest prac-
ticable date, notify in writing— 
"(1) the committee that reported such bill or resolution; 
and 
"(2)(A) the Committee on Governmental Affairs of the Sen-
ate (in the case of a bill or resolution reported by a committee 
of the Senate); or 
"(B) the Committee on Government Reform and Oversight 
of the House of Representatives (in the case of a bill or resolu-
tion reported by a committee of the House of Representatives). 
110 STAT. 1404 
PUBLIC LAW 104-156^JULY 5, 1996 
"§ 7507. Effective date 
"This chapter shall apply to any non-Federal entity with respect 
to any of its fiscal years which begin after June 30, 1996.". 
31 u s e 7501 
SEC. 3. TRANSITIONAL APPLICATION. 
Subject to section 7507 of title 31, United States Code (as 
amended by section 2 of this Act) the provisions of chapter 75 
of such title (before amendment by section 2 of this Act) shall 
continue to apply to any State or local government with respect 
to any of its fiscal years beginning before July 1, 1996. 
Approved July 5, 1996. 
LEGISLATIVE HISTORY—S. 1579 (H.R. 3184): 
HOUSE REPORTS: No. 104-607 accompanying H.R. 3184 (Comm. on Government 
Reform and Oversight). 
SENATE REPORTS: No. 104-266 (Comm. on Governmental Affairs). 
CONGRESSIONAL RECORD, Vol. 142 (1996): 
June 14, considered and passed Senate. 
June 18, considered and passed House. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 32 (1996): 
July 5, Presidential statement.