- What are the audit requirements related to my grant?
- What happens if the Office of Inspector General selects my project for an audit?
- What happens if the audit determines certain costs or activities are unallowable?
- Can I appeal the Department’s decision that I must repay money?
The project activities are finished, the Department has received all the required reports, and the records of your project are safely stored away for the next few years. That just about takes care of everything, right? Not quite. During the life of a grant project, you will most likely be required to get an independent audit of your project and its expenditures and to send a copy of the audit report to the Department for its review. In some instances, the Department conducts its own audit of your grant project after the end of the project period. This is one reason that it is important that you observe and follow the record retention requirements.
The audit requirements of EDGAR, set forth in OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, implement the Single Audit Act Amendments of 1996. The Circular provides uniform requirements for all grantees--state and local governments (including Indian tribal governments), colleges and universities, hospitals and other non-profit organizations. Under these requirements, grantees that expend more than $300,000 annually in federal awards must have a single audit performed at least every two years.
It is important to remember that there are two types of audits for discretionary grant projects. The first type is the one your organization arranges to have done by independent auditors in response to requirements of OMB Circular A-133. Generally, OMB Circular A-133 audits look at expenditures of federal funds across an entire organization instead of specific costs of individual grants. The second type is an audit for fiscal and program compliance done by the Department’s Office of Inspector General (OIG). Audits conducted by OIG occur less frequently than A-133 audits and not every grantee receives one. The Office of the Chief Financial and Chief Information Officer (OCF&CIO) is the office in the Department that reviews A-133 audit reports. OIG audits are most often triggered by serious audit findings identified during an OCF&CIO review of the A-133 audit reports.
You must send copies of your audit reports to the address given in the attachments that accompany your Grant Award Notification.
The OIG audit follows several specific steps, which include an entrance conference, survey, fieldwork, exit conference, draft audit report, and final audit report. The entrance conference is held to explain the purpose of the audit, establish working arrangements, obtain copies of necessary documents from your organization, and answer any questions you may have.
During the survey phase, OIG auditors gather from you general information on your organization. In the third phase, fieldwork, auditors study specific activities or operations and examine pertinent documents, records, and procedures.
The exit conference takes place before the OIG issues its draft report. The exit conference gives your organization an opportunity to comment on OIG findings and provide additional information before the draft report is issued.
The draft report presents the preliminary OIG findings and recommendations. You will have 30 days to respond to the findings in a draft report. Your comments will be included as an attachment to the final report. The final report gives the name of an official in the Department who is responsible for resolving the issues discussed in the report. Sometimes, the final report will ask you to offer comments on that version in 30 days as well.
Sometimes an audit reveals information about deficiencies or weaknesses in activities carried out under a grant. Whether they are monetary or non-monetary concerns, such items are called audit findings. Sometimes this information is related to expenditures for items or services that the Department determines are not allowed by ED (or other federal) regulations. If this happens, the Department takes steps to recover the money from the grantee, starting with the audit resolution process. The Department’s Audit Resolution Specialist assigned to your audit conducts an objective review of the auditor’s findings and recommendations. You may be asked to provide further information in addition to your initial response to the audit.
The audit resolution process is designed both to protect the Department’s interests in Department-funded programs and activities and to be fair to its grantees. An authorized management official in the Department writes a Program Determination Letter (PDL), notifying you of management’s decisions on the auditor’s findings and recommendations. If there are audit findings, the letter will indicate the corrective action you are asked to take and/or the amount you are required to repay. Detailed instructions regarding the method of repayment accompany repayment requests.
The Program Determination Letter will include any information on appeal procedures that might be available to you. You need to adhere to these procedures carefully, particularly with respect to the deadline for submitting an appeal.
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