§ 200.513 - Responsibilities.

§ 200.513 Responsibilities.

(a)

(1)

Cognizant agency for audit responsibilities.

(1) A non-Federal entity expending more than $50 million a year in Federal awards must have a cognizant agency for audit. The designated cognizant agency for audit must be the Federal awarding agency that provides the predominant largest amount of funding directly ( direct funding ) (as listed on the non-Federal entity's Schedule of expenditures of Federal awards, see § 200.510(b)) to a non-Federal entity unless OMB designates a specific cognizant agency for audit. When the direct funding represents less than 25 percent of the total expenditures (as direct and subawards) by the non-Federal entity, then the Federal agency with the predominant amount of total funding is the designated cognizant agency for audit.

(2) To provide for continuity of cognizance, the determination of the predominant amount of direct funding must be based upon direct Federal awards expended in the non-Federal entity's fiscal years ending in 2019 , and every fifth year thereafterafter that.

(3) Notwithstanding the manner in which how audit cognizance is determined, a Federal awarding agency with cognizance for an auditee may reassign cognizance to another Federal awarding agency that provides substantial funding and to an auditee if it agrees to be the cognizant agency for audit. Within 30 calendar days after any reassignment, both the old and the new cognizant agency for audit must provide notice of the change to the notify the FAC, the auditee, and , the auditor (if known, ) of the auditorchange.

(4) The cognizant agency for audit must:

(i) Provide technical audit advice and liaison assistance to auditees and auditors.

(ii) Obtain or conduct quality control reviews on selected audits made by non-Federal auditors

,

and provide the results to other interested organizations.

(iii) Cooperate and

provide

support

to

the Federal agency designated by OMB to lead a

governmentwide project to determine

government-wide analysis to assess the quality of single audits

by providing a reliable estimate of the extent that single audits conform to applicable requirements, standards, and procedures; and to make recommendations to address noted audit quality issues, including recommendations for any changes to applicable requirements, standards and procedures indicated by the results of the project. The governmentwide project can

. The government-wide analysis may rely on the current and

on-going

ongoing quality control review work performed by

the

Federal agencies, State auditors, and professional audit associations. This

governmentwide audit quality project

government-wide audit analysis must be performed

once every 6 years (or at such other interval as

at an interval determined by OMB

)

, and the results must be

public.(iii) Promptly inform other affected Federal agencies and

posted publicly. In providing support to the government-wide analysis, a Federal agency must provide the following:

(A) An assessment of the extent to which single audits conform to the requirements, standards, and procedures of this part; and

(B) Recommendations to address audit quality issues, including recommendations for any changes to this part's requirements, standards, and procedures.

(iv) Promptly inform the appropriate Federal law enforcement officials and impacted Federal agencies of any direct reporting by the auditee or its auditor required by GAGAS

or statutes and regulations

, Federal statute, or regulation.

(

iv

v) Advise the community of independent auditors of any noteworthy or important factual trends related to the quality of audits stemming from quality control reviews. Significant problems or quality issues consistently identified through quality control reviews of audit reports must be referred to appropriate

state

State licensing agencies and professional bodies.

(

v

vi) Advise the auditor, Federal awarding agencies, and, where appropriate, the auditee of any deficiencies found in the audits when the deficiencies require corrective action by the auditor. When advised of deficiencies, the auditee must work with the auditor to take corrective action. If corrective action is not taken, the cognizant agency for audit must notify the auditor, the auditee, and applicable Federal awarding agencies and pass-through entities of the facts and make recommendations for follow-up action. Major inadequacies or repetitive substandard performance by auditors must be referred to appropriate

state

State licensing agencies and professional bodies for disciplinary action.

(

vi

vii) Coordinate, to the extent practical, audits or reviews made by or for Federal agencies that are in addition to the audits made pursuant to this part, so that the additional audits or reviews build upon, rather than duplicate, audits performed in accordance with this part.

(

vii

viii) Coordinate a management decision for cross-cutting audit findings

(see in § 200.1 of this part)

that affect the Federal programs of more than one agency when requested by any Federal

awarding

agency whose awards are included in the audit finding of the auditee.

(viii)

Cross-cutting audit finding means an audit finding where the same underlying condition or issue affects all Federal awards (including Federal awards of more than one Federal agency or pass-through entity); for example, a cross-cutting audit finding may include an issue related to the recipient's accounting system.

(ix) Coordinate the audit work and reporting responsibilities among auditors to achieve the most cost-effective audit.

(

ix

x) Provide advice to auditees as to how to handle changes in fiscal

years

year.

(b) Oversight agency for audit responsibilities. An auditee who does not have a designated cognizant agency for audit will be under the general oversight of the Federal agency determined in accordance with § 200.1 oversight agency for audit. A Federal agency with oversight for an auditee may reassign oversight to another Federal agency that agrees to be the oversight agency for audit. Within 30 calendar days after any reassignment, both the old and the new oversight agency for audit must provide notice of the change to the FAC, the auditee, and, if known, the auditor. The oversight agency for audit:

(1) Must provide technical advice and assistance to auditees and auditors as requested.

(2) May assume all or some of the responsibilities normally performed by a cognizant agency for audit.

(c) Awarding Federal awarding agency responsibilities. The Federal awarding agency must perform the following for the Federal awards it makes (See also the requirements of § 200.211) In addition to all other requirements of this part, the awarding Federal agency must:

(1) Ensure that audits are completed, and reports are received in a timely manner and in accordance with the requirements of this part.

(2) Provide technical advice and counsel assistance to auditees and auditors as requested.

(3) Follow-up on audit findings to ensure that the recipient takes non-Federal entities take appropriate and timely corrective action. As part of audit followFollow-up , the Federal awarding agency mustincludes:

(i) Issue Issuing a management decision as prescribed in accordance with § 200.521;

(ii) Monitor the recipient taking appropriate and timely Monitoring the non-Federal entity's progress implementing a corrective action;

(iii) Use Using a cooperative audit resolution mechanisms (see the definition of cooperative audit resolution in § 200.1 of this part) approach to improve Federal program outcomes through better audit resolution, follow-up, and corrective action, which means the use of audit follow-up techniques promoting prompt corrective action by improving communication, fostering collaboration, promoting trust, and developing an understanding between the Federal agency and the non-Federal entity. This approach is based upon:

(A) A strong commitment by Federal agency and non-Federal entity leadership to Federal program integrity;

(B) Federal agencies strengthening partnerships and

(iv) Develop a baseline, metrics, and targets to track, over time,

working cooperatively with non-Federal entities and their auditors; non-Federal entities and their auditors working cooperatively with Federal agencies;

(C) A focus on current conditions and corrective action going forward;

(D) Federal agencies offering appropriate relief for past noncompliance when audits show prompt corrective action has occurred; and

(E) Federal agency leadership sending a clear message that continued failure to correct conditions identified by audits likely to cause improper payments, fraud, waste, or abuse is unacceptable and will result in sanctions.

(iv) Tracking the effectiveness of the Federal agency's process to follow-up on audit findings and on processes, the effectiveness of Single Audits single audits in improving non-Federal entity accountability, and their use by Federal awarding agencies the use of single audits in making Federal award decisions. The Federal agency should develop a baseline, metrics, and targets to track, over time, the effectiveness of the Federal agency's process to follow up on audit findings.

(4) Provide OMB with annual updates to the compliance supplement and work . These updates include working with OMB to ensure that the compliance supplement focuses the auditor to test on testing the compliance requirements most likely to cause improper payments, fraud, waste, abuse, or generate audit finding findings for which the Federal awarding agency will take sanctions.

(

action in accordance with § 200.505. Prior to submitting compliance supplement drafts to OMB, Federal agencies should engage with external audit stakeholders, the Federal agency's Office of Inspector General, and the National Single Audit Coordinator (NSAC).

(5) Provide OMB with the name of a single audit accountable official from among the senior policy officials of the Federal awarding agency who . The accountable official must be:

(i) Responsible for ensuring that the Federal agency fulfills all the requirements of paragraph (c) of this section and effectively uses the single audit process to reduce improper payments and improve Federal program outcomes.

(ii) Held accountable to improve Accountable for improving the effectiveness of the Federal agency's single audit process based upon metrics as described in processes in accordance with paragraph (c)(3)(iv) of this section.

(iii) Responsible for designating the Federal agency's key management single audit liaison.

(6) Provide OMB with the name of a key management single audit liaison who . The liaison must:

(i) Serve as the Federal awarding agency's management point of contact for the single audit process both within and outside the Federal Government.

(ii) Promote interagency coordination, consistency, and sharing in areas such as information sharing. This includes coordinating audit follow-up; , identifying higher - risk non-Federal entities; , providing input on single audit and follow-up policy; , enhancing the utility of the FAC; , and studying identifying ways to use single audit results to improve Federal award accountability and best practices.

(iii) Oversee training for the Federal awarding agency's program management personnel related to the single audit process.

(iv) Promote the Federal awarding agency's use of a cooperative audit resolution mechanismsapproach as described in paragraph (c)(3)(iii) of this section.

(v) Coordinate the Federal awarding agency's activities to ensure appropriate and timely audit follow-up processes and corrective action on ensure non-Federal entities implement corrective actions for audit findings.

(vi) Organize Ensure the Federal agency fulfills its responsibility, as a cognizant agency for audit's follow-up on , to coordinate a management decision for cross-cutting audit findings that affect the Federal programs under (a)(4)(viii) of this section. Cross-cutting audit findings means an audit finding where the same underlying condition or issue affects all Federal awards (including Federal awards of more than one Federal awarding agency or pass-through entity). For example, this may include an issue related to the recipient's accounting system.

(vii) Ensure the Federal awarding agency provides OMB with annual updates of to the compliance supplement to OMBconsistent with the compliance supplement preparation guide.

(viii) Support the mission of the Federal awarding agency's single audit accountable official 's mission.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75887, Dec. 19, 2014; 85 FR 49573, Aug. 13, 2020]

and coordinate with the Federal agency's Office of Inspector General and National Single Audit Coordinator (NSAC).