§ 29b.18 - Audit reports.

(a) Audit reports must be prepared at the completion of the audit.

(b) The audit report shall state that the audit was made in accordance with the provisions of this part and OMB Circular A-133, “Audits of Institutions of Higher Education and Other Nonprofit Organizations.”

(c) The report shall be made up of at least the following three parts:

(1) The financial statements and a schedule of Federal awards and the auditor's report on the statements and the schedule. The schedule should identify the major programs and show the total expenditures for each program. Individual major programs other than Research and Development and Student Aid should be listed by catalog number as identified in the CFDA. Expenditures for Federal programs other than major programs shall be shown under the caption “other Federal assistance.” Also, the value of non-cash assistance such as loan guarantees, food commodities or donated surplus properties or the outstanding balance of loans should be disclosed in the schedule.

(2) A written report of the independent auditor's understanding of the internal control structure and the assessment of control risk. The auditor's report should include at a minimum:

(i) The scope of the work in obtaining understanding of the internal control structure and in assessing the control risk;

(ii) The nonprofit institution's significant internal controls or control structure. The auditor should identify the controls established to ensure compliance with laws and regulations that have a material impact on the financial statements and those that provide reasonable assurance that Federal awards are being managed in compliance with applicable laws and regulations; and

(iii) The reportable conditions, including the identification of material weaknesses, identified as a result of the auditor's work in understanding and assessing the control risk. If the auditor limits consideration of the internal control structure for any reason, the circumstances should be disclosed in the report.

(3) The auditor's report on compliance containing:

(i) An opinion as to whether each major Federal program was being administered in compliance with laws and regulations applicable to the matters described in § 29b.16(c)(3) of this part, including compliance with laws and regulations pertaining to financial reports and claims for advances and reimbursements;

(ii) A statement of positive assurance of those items that were tested for compliance and negative assurance on those items not tested;

(iii) Material findings of noncompliance presented in their proper perspective:

(A) The size of the universe in number of items and dollars,

(B) The number and dollar amount of transactions tested by the auditors, and

(C) The number and corresponding dollar amount of instances of noncompliance.

(iv) Where findings are specific to a particular Federal award, an identification of total amounts questioned, if any, for each Federal award, as a result of noncompliance and the auditor's recommendations for necessary corrective action.

(d) The three parts of the audit report may be bound into a single document, or presented at the same time as separate documents.

(e) Nonmaterial findings need not be disclosed with the compliance report but should be reported in writing to the recipient in a separate communication. The recipient, in turn, should forward the findings to the Federal grantor agencies or subgrantor sources.

(f) All fraud or illegal acts or indications of such acts, including all questioned costs found as the result of these acts that auditors become aware of, may be covered in a separate written report submitted in accordance with the “Government Auditing Standards.”

(g) The auditor's report should disclose the status of known but uncorrected significant material findings and recommendations from prior audits that affect the current audit objective as specified in the “Government Auditing Standards.”

(h) In addition to the audit report, the recipient shall provide a report of its 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.

(i) Copies of the audit report shall be submitted in accordance with the reporting standards for financial audits contained in the “Government Auditing Standards.” Sub-recipient auditors shall submit copies to recipients that provided Federal awards. The report shall be due within 30 days after the completion of the audit, but the audit should be completed and the report submitted not later than 13 months after the end of the recipient's fiscal year unless a longer period is agreed to with the cognizant or oversight agency.

(j) Recipients of more than $100,000 in Federal awards shall submit one copy of the audit report within 30 days after issuance to a central clearinghouse to be designated by OMB. The clearinghouse will keep completed audit reports on file.

(k) Recipients shall keep audit reports, including sub-recipient reports, on file for free three years from their issuance. (OMB control number: 0991-0003)