[Code of Federal Regulations]
[Title 32, Volume 1]
[Revised as of January 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 32CFR37.645]

[Page 217-218]
 
                       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.

[[Page 218]]

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.