§ 7502. Audit requirements; exemptions

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1984

   Pub. L. 98–502 § 2(a) · 98 Stat. 2327

   Enacted · 31 U.S.C. § 7502

   Added Pub. L. 98–502, § 2(a), Oct. 19, 1984, 98 Stat. 2329

   Source evidence

   Code source credit
   Added Pub. L. 98–502, § 2(a), Oct. 19, 1984, 98 Stat. 2329

   Enacted provision · exact public law section
   (a) Subtitle V of title 31, United States Code, is amended by adding at the end thereof the following new chapter: “CHAPTER 75— REQUIREMENTS FOR SINGLE AUDITS “Sec. “7501. Definitions. “7502. Audit requirements; exemptions. “7503. Relation to other audit requirements. “7504. Cognizant agency responsibilities. “7505. Regulations. “7506. Monitoring responsibilities of the Comptroller General. “7507. Effective date; report. “§ 7501. Definitions “As used in this chapter, the term— “(1) ‘cognizant agency’ means a Federal agency which is assigned by the Director with the responsibility for implementing the requirements of this chapter with respect to a particular State or local government. “(2) ‘Comptroller General’ means the Comptroller General of the United States. “(3) ‘Director’ means the Director of the Office of Management and Budget. “(4) ‘Federal financial assistance’ means assistance provided by a Federal agency in the form of grants, contracts, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance, or direct appropriations, but does not include direct Federal cash assistance to individuals. “(5) ‘Federal agency’ has the same meaning as the term ‘agency’ in section 551(1) of title 5, United States Code. “(6) ‘generally accepted accounting principles’ has the meaning specified in the generally accepted government auditing standards. “(7) ‘generally accepted government auditing standards’ means the standards for audit of governmental organizations, programs, activities, and functions, 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 auditing standards, or “(B) a public accountant who meets such independence standards. “(9) ‘internal controls’ means the plan of organization and methods and procedures adopted by management to ensure that— “(A) resource use is consistent with laws, regulations, and policies; “(B) resources are safeguarded against waste, loss, and misuse; and “(C) reliable data are obtained, maintained, and fairly disclosed in reports. “(10) ‘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. “(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, and any other instrumentality of local government. “(12) ‘major Federal assistance program’ means any program for which total expenditures of Federal financial assistance by the State or local government during the applicable year exceed— “(A) $20,000,000 in the case of a State or local government for which such total expenditures for all programs exceed $7,000,000,000; “(B) $19,000,000 in the case of a State or local government for which such total expenditures for all programs exceed $6,000,000,000 but are less than or equal to $7,000,000,000; “(C) $16,000,000 in the case of a State or local government for which such total expenditures for all programs exceed $5,000,000,000 but are less than or equal to $6,000,000,000; “(D) $13,000,000 in the case of a State or local government for which such total expenditures for all programs exceed $4,000,000,000 but are less than or equal to $5,000,000,000; “(E) 510,000,000 in the case of a State or local government for which such total expenditures for all programs exceed 53,000,000,000 but are less than or equal to $4,000,000,000; “(F) $7,000,000 in the case of a State or local government for which such total expenditures for all programs exceed $2,000,000,000 but are less than or equal to $3,000,000,000; “(G) $4,000,000 in the case of a State or local government for which such total expenditures for all programs exceed $1,000,000,000 but are less than or equal to $2,000,000,000; “(H) $3,000,000 in the case of a State or local government for which such total expenditures for all programs exceed $100,000,000 but are less than or equal to $1,000,000,000; and “(I) the larger of (i) $300,000, or (ii) 3 percent of such total expenditures for all programs, in the case of a State or local government for which such total expenditures for all programs exceed $100,000 but are less than or equal to $100,000,000. “(13) ‘public accountants’ means those individuals who meet the qualification standards included in generally accepted government auditing standards for personnel performing government audits. “(14) ‘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. “(15) ‘subrecipient’ means any person or government department, agency, or establishment that receives Federal financial assistance through a State or local government, but does not include an individual that receives such assistance. “§ 7502. Audit requirements; exemptions “(a) (1) (A) Each State and local government which receives a total amount of Federal financial assistance equal to or in excess of $100,000 in any fiscal year of such government shall have an audit made for such fiscal year in accordance with the requirements of this chapter and the requirements of the regulations prescribed pursuant to section 7505 of this title. “(B) Each State and local government that receives a total amount of Federal financial assistance which is equal to or in excess of $25,000 but less than $100,000 in any fiscal year of such government shall— “(i) have an audit made for such fiscal year in accordance with the requirements of this chapter and the requirements of the regulations prescribed pursuant to section 7505 of this title; or “(ii) comply with any applicable requirements concerning financial or financial and compliance audits contained in Federal statutes and regulations governing programs under which such Federal financial assistance is provided to that government. “(C) Each State and local government that receives a total amount of Federal financial assistance which is less than $25,000 in any fiscal year of such government shall be exempt for such fiscal year from compliance with— “(i) the audit requirements of this chapter; and “(ii) any applicable requirements concerning financial or financial and compliance audits contained in Federal statutes and regulations governing programs under which such Federal financial assistance is provided to that government. The provisions of clause (ii) of this subparagraph do not exempt a State or local government from compliance with any provision of a Federal statute or regulation that requires such government to maintain records concerning Federal financial assistance provided to such government or that permits a Federal agency or the Comptroller General access to such records. “(2) For purposes of this section, a State or local government shall be considered to receive Federal financial assistance whether such assistance is received directly from a Federal agency or indirectly through another State or local government. “(b) (1) Except as provided in paragraphs (2) and (3), audits conducted pursuant to this chapter shall be conducted annually. “(2) If a State or local government is required— “(A) by constitution or statute, as in effect on the date of enactment of this chapter, or “(B) by administrative rules, regulations, guidelines, standards, or policies, as in effect on such date, to conduct its audits less frequently than annually, the cognizant agency for such government shall, upon request of such government, permit the government to conduct its audits pursuant to this chapter biennially, except as provided in paragraph (3). Such audits shall cover both years within the biennial period. “(3) Any State or local government that is permitted, under clause (B) of paragraph (2), to conduct its audits pursuant to this chapter biennially by reason of the requirements of a rule, regulation, guideline, standard, or policy, shall, for any of its fiscal years beginning after December 31, 1986, conduct such audits annually unless such State or local government codifies a requirement for biennial audits in its constitution or statutes by January 1, 1987. 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 purposes of this chapter, such standards shall not be construed to require economy and efficiency audits, program results audits, or program evaluations. “(d) (1) Each audit conducted pursuant to subsection (a) for any fiscal year shall cover the entire State or local government’s operations except that, at the option of such government— “(A) such audit may, except as provided in paragraph (5), cover only each department, agency, or establishment which received, expended, or otherwise administered Federal financial assistance during such fiscal year; and “(B) such audit may exclude public hospitals and public colleges and universities. “(2) Each such audit shall encompass the entirety of the financial operations of such government or of such department, agency, or establishment, whichever is applicable, and shall determine and report whether— “(A) (i) the financial statements of the government, department, agency, or establishment present fairly its financial position and the results of its financial operations in accordance with generally accepted accounting principles; and “(ii) the government, department, agency, or establishment has complied with laws and regulations that may have a material effect upon the financial statements; “(B) the government, department, agency, or establishment has internal control systems to provide reasonable assurance that it is managing Federal financial assistance programs in compliance with applicable laws and regulations; and “(C) the government, department, agency, or establishment has complied with laws and regulations that may have a material effect upon each major Federal assistance program. In complying with the requirements of subparagraph (C), the independent auditor shall select and test a representative number of transactions from each major Federal assistance program. “(3) Transactions selected from Federal assistance programs, other than major Federal assistance programs, pursuant to the requirements of paragraphs (2)(A) and (2)(B) shall be tested for compliance with Federal laws and regulations that apply to such transactions. Any noncompliance found in such transactions by the independent auditor in making determinations required by this paragraph shall be reported. “(4) The number of transactions selected and tested under paragraphs (2) and (3), the selection and testing of such transactions, and the determinations required by such paragraphs shall be based on the professional judgment of the independent auditor. “(5) Each State or local government which, in any fiscal year of such government, receives directly from the Department of the Treasury a total of $25,000 or more under chapter 67 of this title 31 USC 6701 et seq. (relating to general revenue sharing) and which is required to conduct an audit pursuant to this chapter for such fiscal year shall not have the option provided by paragraph (1)(A) for such fiscal year. “(6) A series of audits of individual departments, agencies, and establishments for the same fiscal year may be considered to be an audit for the purpose of this chapter. “(e) (1) Each State and local government subject to the audit requirements of this chapter, which receives Federal financial assistance and provides $25,000 or more of such assistance in any fiscal year to a subrecipient, shall— “(A) if the subrecipient conducts an audit in accordance with the requirements of this chapter, review such audit and ensure that prompt and appropriate corrective action is taken on instances of material noncompliance with applicable laws and regulations with respect to Federal financial assistance provided to the subrecipient by the State or local government; or “(B) if the subrecipient does not conduct an audit in accordance with the requirements of this chapter— “(i) determine whether the expenditures of Federal financial assistance provided to the subrecipient by the State or local government are in accordance with applicable laws and regulations; and “(ii) ensure that prompt and appropriate corrective action is taken on instances of material noncompliance with applicable laws and regulations with respect to Federal financial assistance provided to the subrecipient by the State or local government. “(2) Each such State and local government shall require each subrecipient of Federal assistance through such government to permit, as a condition of receiving funds from such assistance, the independent auditor of the State or local government to have such access to the subrecipient’s records and financial statements as may be necessary for the State or local government to comply with this chapter. “(f) The report made on any audit conducted pursuant to this section shall, within thirty days after completion of such report, be transmitted to the appropriate Federal officials and made available by the State or local government for public inspection. (g) If an audit conducted pursuant to this section finds any material noncompliance with applicable laws and regulations by, or material weakness in the internal controls of, the State or local government with respect to the matters described in subsection (d)(2), the State or local government shall submit to appropriate Federal officials a plan for corrective action to eliminate such material noncompliance or weakness or a statement 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 31 USC 3512. in the Federal Government) pursuant to section 3512(b) of this title. “§ 7503. Relation to other audit requirements “(a) An audit conducted in accordance with this chapter shall be in lieu of any financial or financial and compliance audit of an individual Federal assistance program which a State or local government is required to conduct under any other Federal law or regulation. To the extend that such audit provides a Federal agency with the information it requires to carry out its responsibilities under Federal law or regulation, a Federal agency shall rely upon and use that information and plan and conduct its own audits accordingly in order to avoid a duplication of effort. “(b) Notwithstanding subsection (a), a Federal agency shall conduct any additional audits which are necessary to carry out its responsibilities under Federal law or regulation. The provisions of this chapter do not authorize any State or local government (or subrecipient thereof) to constrain, in any manner, such agency from carrying out such additional audits. “(c) The provisions of this chapter do not limit the authority of Federal agencies to conduct, or enter into contracts for the conduct of, audits and evaluations of Federal financial assistance programs, nor limit the authority of any Federal agency Inspector General or other Federal audit official. “(d) Subsection (a) shall apply to a State or local government which conducts an audit in accordance with this chapter even though it is not required by section 7502(a) to conduct such audit. “(e) A Federal agency that performs or contracts for audits in addition to the audits conducted by recipients pursuant to this chapter shall, consistent with other applicable law, arrange for funding the cost of such additional audits. Such additional audits include economy and efficiency audits, program results audits, and program evaluations. “§ 7504. Cognizant agency responsibilities “(a) The Director shall designate cognizant agencies for audits conducted pursuant to this chapter. “(b) A cognizant agency shall— “(1) ensure that audits are made in a timely manner and in accordance with the requirements of this chapter; “(2) ensure that the audit reports and corrective action plans made pursuant to section 7502 of this title are transmitted to the appropriate Federal officials; and “(3) (A) coordinate, to the extent practicable, audits done by or under contract with Federal agencies that are in addition to the audits conducted pursuant to this chapter; and (B) ensure that such additional audits build upon the audits conducted pursuant to this chapter. “§ 7505. Regulations “(a) The Director, after consultation with the Comptroller General and appropriate Federal, State, and local government officials, shall prescribe policies, procedures, and guidelines to implement 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 policies, procedures, and guidelines. “(b) (1) The policies, procedures, and guidelines prescribed pursuant to subsection (a) shall include criteria for determining the appropriate charges to programs of Federal financial assistance for the cost of audits. Such criteria shall prohibit a State or local government which is required to conduct an audit pursuant to this chapter from charging to any such program (A) the cost of any financial or financial and compliance audit which is not conducted in accordance with this chapter, 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 (A) the ratio of (i) the total charges by a government to Federal financial assistance programs for the cost of audits performed pursuant to this chapter, to (ii) the total cost of such audits, to exceed (B) the ratio of (i) total Federal financial assistance expended by such government during the applicable fiscal year or years, to (ii) such government’s total expenditures during such fiscal year or years. “(c) Such policies, procedures, and guidelines shall include such provisions as may be necessary to ensure that small business concerns and business concerns owned and controlled by socially and economically disadvantaged individuals will have the opportunity to participate in the performance of contracts awarded to fulfill the audit requirements of this chapter. “§ 7506. Monitoring responsibilities of the Comptroller General “The Comptroller General shall review provisions requiring financial or financial and compliance audits of recipients of Federal assistance that are contained in bills and resolutions reported by the committees of the Senate and the House of Representatives. If the Comptroller General determines that a bill or resolution contains provisions that are inconsistent with the requirements of this chap-ter, the Comptroller General shall, at the earliest practicable date, notify in writing— “(1) the committee that reported such bill or resolution; and “(2) (A) the Committee on Governmental Affairs of the Senate (in the case of a bill or resolution reported by a committee of the Senate); or “(B) the Committee on Government Operations of the House of Representatives (in the case of a bill or resolution reported by a committee of the House of Representatives). “§ 7507. Effective date; report “(a) This chapter shall apply to any State or local government with respect to any of its fiscal years which begin after December 31, 1984. “(b) The Director, on or before May 1, 1987, and annually thereafter, shall submit to each House of Congress a report on operations under this chapter. Each such report shall specifically identify each Federal agency or State or local government which is failing to comply with this chapter.”.

2. 1994

   Pub. L. 103–272 § 4(f)(1)(W) · 108 Stat. 745

   Substituted · 31 U.S.C. § 7502(b)(2)

   Pub. L. 103–272, § 4(f)(1)(W), substituted “October 19, 1984” for “the date of enactment of this chapter” in subpar. (A) and for “such date” in subpar. (B)

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 103–272, § 4(f)(1)(W), substituted “October 19, 1984” for “the date of enactment of this chapter” in subpar. (A) and for “such date” in subpar. (B).

   Enacted provision · exact public law section
   (W) Section 7502 is amended as follows: (i) In subsection (b)(2)(A), strike “the date of enactment of this chapter” and substitute “October 19, 1984”. (ii) In subsection (b)(2)(B), strike “such date” and substitute “October 19, 1984”. (iii) In subsection (d), strike paragraph (5) and redesignate paragraph (6) as paragraph (5). (iv) In subsection (g), strike “section 3512(b)” and substitute “section 3512(c)”.

3. 1994

   Pub. L. 103–272 § 4(f)(1)(W)(iii) · 108 Stat. 745

   1. Redesignated · 31 U.S.C. § 7502(d)(5); 31 U.S.C. § 7502(d)(6)

      Pub. L. 103–272, § 4(f)(1)(W)(iii), redesignated par. (6) as (5)

   2. Struck · 31 U.S.C. § 7502(d)(5); 31 U.S.C. § 7502(d)(6)

      Pub. L. 103–272, § 4(f)(1)(W)(iii), struck out former par. (5) which read as follows: “Each State or local government which, in any fiscal year of such government, receives directly from the Department of the Treasury a total of $25,000 or more under chapter 67 of this title (relating to general revenue sharing) and which is required to conduct an audit pursuant to this chapter for such fiscal year shall not have the option provided by paragraph (1)(A) for such fiscal year.”

   Source evidence

   Code amendment note
   Subsec. (d)(5), (6). Pub. L. 103–272, § 4(f)(1)(W)(iii), redesignated par. (6) as (5) and struck out former par. (5) which read as follows: “Each State or local government which, in any fiscal year of such government, receives directly from the Department of the Treasury a total of $25,000 or more under chapter 67 of this title (relating to general revenue sharing) and which is required to conduct an audit pursuant to this chapter for such fiscal year shall not have the option provided by paragraph (1)(A) for such fiscal year.”

   Enacted provision · exact public law section
   (iii) In subsection (d), strike paragraph (5) and redesignate paragraph (6) as paragraph (5).

4. 1994

   Pub. L. 103–272 § 4(f)(1)(W)(iv) · 108 Stat. 745

   Substituted · 31 U.S.C. § 7502(g)

   Pub. L. 103–272, § 4(f)(1)(W)(iv), substituted “section 3512(c)” for “section 3512(b)”

   Source evidence

   Code amendment note
   Subsec. (g). Pub. L. 103–272, § 4(f)(1)(W)(iv), substituted “section 3512(c)” for “section 3512(b)”.

   Enacted provision · exact public law section
   (iv) In subsection (g), strike “section 3512(b)” and substitute “section 3512(c)”.

5. 1996

   Pub. L. 104–156 § 2 · 110 Stat. 1396

   1. Amended · 31 U.S.C. § 7502

      Pub. L. 104–156 reenacted section catchline without change and amended text generally

   2. Substituted · 31 U.S.C. § 7502

      Pub. L. 104–156 reenacted section catchline without change and substituting present provisions for similar provisions relating to audit requirements and exemptions from such requirements for State and local governments receiving Federal financial assistance of $100,000 or more in any fiscal year and requiring audits to be conducted annually in most instances, to cover entirety of government operations, for reports to be made on audits in specified time period, and for appropriate corrective action plans to be submitted to Federal officials for any material State or local noncompliance with Federal laws and regulations

   Source evidence

   Code amendment note
   Pub. L. 104–156 reenacted section catchline without change and amended text generally, substituting present provisions for similar provisions relating to audit requirements and exemptions from such requirements for State and local governments receiving Federal financial assistance of $100,000 or more in any fiscal year and requiring audits to be conducted annually in most instances, to cover entirety of government operations, for reports to be made on audits in specified time period, and for appropriate corrective action plans to be submitted to Federal officials for any material State or local noncompliance with Federal laws and regulations.

   Enacted provision · exact public law section
   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 Comptroller Greneral 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 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 appropriations, 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 generally 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 governments; “((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 “(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 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 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 individual 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). “§ 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 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, 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 conformity with generally 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 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 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 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 compliance with laws and regulations. “(h) The non-Federal entity shall transmit the reporting package, which shall include the non-Federal entity’s financial statements, 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 time frame authorized by the Federal agency, determined under criteria issued under section 7504, when the 9-month time frame 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 officials designated by the Director, a plan for corrective action to eliminate such audit findings or reportable conditions or a statement 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 responsibilities under Federal law or regulation, a Federal agency shall rely upon and use that information. “(b) Notwithstanding subsection (a), a Federal agency may conduct or arrange for additional audits which are necessary to carry out its responsibilities under Federal law or regulation. The provisions 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 conducts 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 General, 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 chapter 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. “§ 7505. Regulations “(a) The Director, after consultation with the Comptroller General, and appropriate officials from Federal, State, and local governments and nonprofit organizations shall prescribe guidance to implement 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 disadvantaged individuals will have the opportunity to participate in the performance of contracts awarded to fulfill the audit requirements of this chapter. “§ 7506. Monitoring responsibilities of the Comptroller General “(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 committees of the Senate and the House of Representatives. “(b) If the Comptroller General determines that a bill or resolution contains provisions that are inconsistent with the requirements of this chapter, the Comptroller General shall, at the earliest practicable date, notify in writing— “(1) the committee that reported such bill or resolution; and “(2) (A) the Committee on Governmental Affairs of the Senate (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 resolution reported by a committee of the House of Representatives). “§ 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.”.

6. 2019

   Grant Reporting Efficiency and Agreements Transparency Act of 2019

   Pub. L. 116–103 § 5(a)(1) · 133 Stat. 3266

   Inserted · 31 U.S.C. § 7502(h)

   Pub. L. 116–103 inserted “in an electronic form in accordance with the data standards established under chapter 64 and” after “the reporting package,” in introductory provisions

   Source evidence

   Code amendment note
   Subsec. (h). Pub. L. 116–103 inserted “in an electronic form in accordance with the data standards established under chapter 64 and” after “the reporting package,” in introductory provisions.

   Enacted provision · exact public law section
   (1) Audit requirements.— Section 7502(h) of title 31, United States Code, is amended, in the matter preceding paragraph (1), by inserting “in an electronic form in accordance with the data standards established under chapter 64 and” after “the reporting package,”.

8 of 8 references resolved to an enrolled provision