[Code of Federal Regulations]

[Title 32, Volume 1]

[Revised as of July 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 32CFR37.645]



[Page 240]

 

                       TITLE 32--NATIONAL DEFENSE

 

              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE

 

PART 37_TECHNOLOGY INVESTMENT AGREEMENTS--Table of Contents

 

 Subpart F_Award Terms Affecting Participants' Financial, Property, and 

                           Purchasing Systems

 

Sec.  37.645  Must I require periodic audits, as well as award-specific 

audits, of for-profit participants?



    You need to consider requirements for both periodic audits and 

award-specific audits (as defined in Sec.  37.1325 and Sec.  37.1235, 

respectively). The way that your expenditure-based TIA addresses the two 

types of audits will vary, depending upon the type of for-profit 

participant.

    (a) For for-profit participants that are audited by the DCAA or 

other Federal auditors, as described in Sec. Sec.  37.650(b) and 37.655, 

you need not add specific requirements for periodic audits because the 

Federal audits should be sufficient to address whatever may be needed. 

Your inclusion in the TIA of the standard access-to-records provision 

for those for-profit participants, as discussed in Sec.  37.915(a), 

gives the necessary access in the event that you or administrative 

agreements officers later need to request audits to address award-

specific issues that arise.

    (b) For each other for-profit participant, you:

    (1) Should require that the participant have an independent auditor 

(i.e., the DCAA or an independent public accountant) conduct periodic 

audits of its systems if it expends $500,000 or more per year in TIAs 

and other Federal assistance awards. A prime reason for including this 

requirement is that the Federal Government, for an expenditure-based 

award, necessarily relies on amounts reported by the participant's 

systems when it sets payment amounts or adjusts performance outcomes. 

The periodic audit provides some assurance that the reported amounts are 

reliable.

    (2) Must ensure that the award provides an independent auditor the 

access needed for award-specific audits, to be performed at the request 

of the cognizant administrative agreements officer if issues arise that 

require audit support. However, consistent with the government-wide 

policies on single audits that apply to nonprofit participants (see 

Sec.  37.665), you should rely on periodic audits to the maximum extent 

possible to resolve any award-specific issues.