PCIE STANDARDS SUBCOMMITTEE
                       PCIE POSITION STATEMENT Mo. 5
                             September 9, 1989

                                   ISSUE

OMB Circular A-110, "Uniform Administrative Requirements - Grants
and Agreements with Institutions of Higher Education, Hospitals and
other Nonprofit organizations" contains an audit requirement for
those types of entities that the circular covers.  What audit
guidance should Inspectors General provide to auditors of "other
nonprofit" (i.e., those that are not institutions of higher
education or hospitals) recipients and subrecipients ?

                                BACKGROUND

The requirement in Circular A-110 is for an organizationwide audit
to be conducted by an independent auditor.  Beyond this, the
Circular itself does not provide much guidance.  The American
Institute of Certified Public Accountants (AICPA) has several audit
and accounting guides covering various types of nonprofit
organizations; however, these guides primarily offer accounting and
financial statement presentation and audit guidance and do not
provide guidance on the unique aspects of auditing Federal
financial assistance programs.

To fill this void in audit guidance, the HHS-OIG developed an audit
guide entitled "Guidelines for Audits of Federal Awards to
Nonprofit organizations" and presented it to the PCIE Audit
Committee for publication.  The PCIE Standards Subcommittee
circulated the guide to the PCIE IGs for comments.  The responses
received indicated support for the concept of a governmentwide
guide and were generally favorable towards the HHS guide.

After requesting HHS to make changes based on the comments and
after giving the AICPA an opportunity to publish the guide (the
AICPA committee working on nonprofit issues was working on a guide
for audits under proposed OMB Circular A-133 and didn't think it
would be able to get an A-110 guide out in time for it to be
useful), the PCIE Subcommittee decided to issue a position
statement endorsing the guide.

                                 POSITION

Inspectors General should require the use of the guide for A-I 10
audits of its "other nonprofit" recipients and subrecipients.  When
OMB Circular A-133 is finalized, the Standards Subcommittee will
evaluate whether there will be a need to issue a revised Federal
guide.  This will be based in part on the likelihood of timely
guidance by the AICPA.  In the interim, copies of the HHS guide are
available from the HHS Regional Offices of Inspector General for
Audit.