[Code of Federal Regulations]
[Title 38, Volume 2]
[Revised as of July 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 38CFR41.13]

[Page 736-737]
 
            TITLE 38--PENSIONS, BONUSES, AND VETERANS' RELIEF
 
          CHAPTER I--DEPARTMENT OF VETERANS AFFAIRS (CONTINUED)
 
PART 41--AUDITING REQUIREMENTS--Table of Contents
 
Sec. 41.13  Audit reports.

    Audit reports must be prepared at the completion of the audit. 
Reports serve many needs of State and local governments as well as 
meeting the requirements of the Single Audit Act.
    (a) The audit report shall state that the audit was made in 
accordance with the provisions of these regulations. The report shall be 
made up of at least:
    (1) The auditor's report on financial statements and on a schedule 
of Federal assistance; the financial statements; and a schedule of 
Federal assistance, showing the total expenditures for each Federal 
assistance program as identified in the Catalog of Federal Domestic 
Assistance. Federal programs or grants that have not been assigned a 
catalog number shall be identified under the caption ``other Federal 
assistance.''
    (2) The auditor's report on the study and evaluation of internal 
control systems must identify the organization's significant internal 
accounting controls, and those controls designed to provide reasonable 
assurance that Federal programs are being managed in compliance with 
laws and regulations. It must also identify the controls that were 
evaluated, the controls that were not evaluated, and the material 
weaknesses identified as a result of the evaluation.
    (3) The auditor's report on compliance containing:
    (i) A statement of positive assurance with respect to those items 
tested for compliance, including compliance with law and regulations 
pertaining to financial reports and claims for advances and 
reimbursements;
    (ii) Negative assurance on those items not tested;
    (iii) A summary of all instances of noncompliance; and
    (iv) An identification of total amounts questioned, if any, for each 
Federal assistance award, as a result of noncompliance.
    (b) The three parts of the audit report may be bound into a single 
report,

[[Page 737]]

or presented at the same time as separate documents.
    (c) All fraud, abuse, or illegal acts or indications of such acts, 
including all questioned costs found as the result of these acts that 
auditors become aware of, should normally be covered in a separate 
written report submitted in accordance with Sec. 41.13(f).
    (d) In addition to the audit report, the recipient shall provide 
comments on the findings and recommendations in the report, including a 
plan for corrective action taken or planned and comments on the status 
of corrective action taken on prior findings. If corrective action is 
not necessary, a statement describing the reason it is not should 
accompany the audit report.
    (e) The reports shall be made available by the State or local 
government for public inspection within 30 days after the completion of 
the audit.
    (f) In accordance with generally accepted government audit 
standards, reports shall be submitted by the auditor to the organization 
audited and to those requiring or arranging for the audit. In addition, 
the recipient shall submit copies of the reports to each Federal 
department or agency that provided Federal assistance funds to the 
recipient. Subrecipients shall submit copies to recipients that provided 
them Federal assistance funds. The reports shall be sent with 30 days 
after the completion of the audit, but not later than one year after the 
end of the audit period unless a longer period is agreed to with the 
cognizant agency.
    (g) Recipients of more than $100,000 Federal funds shall submit one 
copy of the audit report within 30 days after issuance to a central 
clearinghouse to be designated by the Office of Management and Budget. 
The clearinghouse will keep completed audits on file and follow up with 
State and local governments that have not submitted required audit 
reports.
    (h) Recipients shall keep audit reports on file for three years from 
their issuance.

(Authority: Pub. L. 98-502)