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Audit Requirements

Audit requirements set standards for obtaining consistency and uniformity for the audit of non-Federal entities expending Federal awards. PJs, HOME-funded state recipients, subrecipients, and CHDOs acting as subrecipients are all required to have audits.

Where can I find the audit requirements to which PJs and their partners must adhere when implementing their HOME programs?

OMB Circular A-133 "Audits of States, Local Governments, and Non-Profit Organizations"
This circular sets forth standards for obtaining consistency and uniformity among Federal agencies for the audit of States, local governments, and nonprofit organizations. Audits are automatically required for non-Federal entities that expend more than $500,000 or more in a year of Federal awards.

Who conducts the audits of states, local governments, and nonprofit organizations?

Under A-133, an auditor is defined as a public accountant or a Federal, State, or local government audit organization, which meets generally accepted government auditing standards. This definition does not include internal auditors of nonprofit organizations. The type of recipient being audited determines the organization or accountant most appropriate for the audit.

Are there audit exemptions?

Non-Federal entities who expend less than $500,000 each year in Federal awards are exempt from Federal audit requirements for that year.

How frequently are Federal audits conducted?

Typically, audits required under OMB A-133 should be performed annually. However, there are two circumstances under which audits may be performed biennially.

  1. 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 biennially. This requirement must still be in effect for the biennial period under audit.
  2. 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 biennially.

If Federal award money is passed through the Federal grantee to a for-profit organization, is it subject to Federal audit requirements?

The pass-through entity is responsible for establishing requirements, as necessary, to ensure compliance with Federal audit requirements by for-profit subrecipients. The contract with the for-profit subrecipient should describe applicable compliance requirements and the for-profit subrecipient's compliance responsibility. Methods to ensure compliance for Federal awards made to for-profit subrecipients may include pre-award audits, monitoring during the contract, and post-award audits.

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