[Code of Federal Regulations]
[Title 45, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR96.31]

[Page 475-476]
 
                        TITLE 45--PUBLIC WELFARE
 
                           AND HUMAN SERVICES
 
PART 96--BLOCK GRANTS--Table of Contents
 
                     Subpart C--Financial Management
 
Sec. 96.31  Audits.

    (a) Basic rule. Grantees and subgrantees are responsible for 
obtaining audits in accordance with the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of 
State, Local Governments, and Non-Profit Organizations.'' The audits 
shall be made by an independent auditor in accordance with generally 
accepted Government auditing standards covering financial audits.
    (b) Subgrantees. State or local governments, as those terms are 
defined for purposes of the Single Audit Act Amendments of 1996, that 
provide Federal awards to a subgrantee, expending $300,000 or more (or 
other amount as specified by OMB) in Federal awards in a fiscal year, 
shall:
    (1) Determine whether subgrantees have met the audit requirements of 
the Act. Commercial contractors (private for-profit and private and 
governmental organizations) providing goods

[[Page 476]]

and services to State and local governments are not required to have a 
single audit performed. State and local governments should use their own 
procedures to ensure that the contractor has complied with laws and 
regulations affecting the expenditure of Federal funds;
    (2) Determine whether the subgrantee spent Federal assistance funds 
provided in accordance with applicable laws and regulations. This may be 
accomplished by reviewing an audit of the subgrantee made in accordance 
with the Act or through other means (e.g., program reviews) if the 
subgrantee has not had such an audit;
    (3) Ensure that appropriate corrective action is taken within six 
months after receipt of the audit report in instances of noncompliance 
with Federal laws and regulations;
    (4) Consider whether subgrantee audits necessitate adjustment of the 
grantee's own records; and
    (5) Require each subgrantee to permit independent auditors to have 
access to the records and financial statements.

[62 FR 45963, Aug. 29, 1997]