§ 3051.6 - Assignment of responsibilities.

(a) USDA OFM shall:

(1) Have lead responsibility for assuring implementation and compliance with the regulations in this part; and

(2) Coordinate, consolidate, and prepare any reports concerning the effectiveness of implementation of the regulations in this part.

(b) Each USDA awarding agency shall:

(1) Require as a term of their Federal financial assistance provided to, or cost-reimbursement contract awarded to institutions of higher education and other nonprofit institutions that an audit be conducted and report submitted in a timely manner to a designated official in the awarding agency and the OMB assigned cognizant agency, if one has been assigned. In a timely manner means the audit report shall be due within 30 days after the completion of the audit. 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 awarding agency.

(2) Require that the recipient maintain records identifying the source and amounts of Federal awards received by using the Catalogue of Federal Domestic Assistance (CFDA) Numbers. CFDA numbers are not required for Research and Development and Student Financial Aid.

(3) Provide a copy of the regulations in this part to recipients or subrecipients, upon request.

(4) Ensure required audit reports are received from recipients to which awards have been made.

(5) Determine if an audit report adequately addresses the agency's needs or, if not, determine if a followup audit is necessary. Advise the Office of Inspector General (OIG) of any problem audits.

(6) Ensure that appropriate action is taken on all audit findings and recommendations pursuant to the Supplemental Appropriations and Rescission Act of 1980 (Pub. L. 96-304); OMB Circular A-50, Audit Followup; and Departmental Regulation 1720-1 which prescribes USDA's internal process for audit followup, management decisions and final action.

(7) Coordinate with the recipient to seek corrective action on system deficiencies and resolution of other issues identified in the audit. Seek the views of affected awarding agencies before entering into negotiations and obtain their concurrences before entering into a final agreement.

(8) Take appropriate action when the recipient neglects to obtain an audit or provide a report or take action to resolve findings and/or recommendations, and/or when the report does not meet the requirements of OMB Circular A-133, including the imposition of sanctions. If a cognizant Federal agency determines the audit is unacceptable, the cost of the audit shall not be reimbursed and other sanctions shall be considered if the recipient fails to obtain an acceptable audit.

(9) Establish and maintain appropriate records as to the effectiveness of institutions of higher education and other nonprofit organizations in carrying out the provisions of OMB Circular A-133.

(10) Coordinate the responses on audit reports from other USDA agencies when assigned as the lead agency.

(c) OIG shall:

(1) Follow the requirements set forth in OMB Circular A-133 when USDA is assigned as the cognizant agency or has general oversight responsibility.

(2) Provide or arrange for additional audit coverage, as appropriate, or when requested by an awarding agency.

(3) Designate the USDA lead agency for coordinating audit followup for cross-cutting audit findings that affect the programs of more than one USDA or non-USDA awarding agency. OIG will also coordinate the responses from other Federal agencies.

(4) Upon request or when required, if OMB has not designated a cognizant agency, OIG shall coordinate with other Federal Departments to determine which Department has general oversight responsibility.

(d) Institutions of higher education and other nonprofit institutions shall:

(1) Follow the audit arrangements and requirements set forth in appendix A to this part and the following:

(i) Use their own procedures to arrange for and prescribe the scope of independent audits, provided that such audits comply with the requirements set forth in this part.

(ii) Include provisions in audit contracts requiring the audit organization to retain audit working papers and reports in accordance with OMB Circular A-133.

(iii) Ensure that their independent auditor is responsible for:

(A) Reviewing their system for monitoring subrecipients as well as obtaining and considering the impact of the subrecipient's audit reports.

(B) Testing to determine whether these systems are functioning in accordance with prescribed procedures.

(C) Commenting on their monitoring procedure, if warranted by the circumstances.

(D) Considering whether subrecipient audits require adjustment of their financial statements, footnote disclosure, or modification of the auditor's report.

(iv) Failure of recipients to arrange for the required audits set forth in appendix A of this part, or failure to assure that acceptable audits are performed, will result in OIG coordinating with the USDA awarding agency to arrange for the necessary audit work. Recipients or subrecipients shall not charge USDA any portion of the cost of an audit not meeting USDA requirements. If a cognizant Federal agency determines the audit is unacceptable, the cost of the audit shall not be reimbursed and other sanctions shall be considered if the recipient fails to obtain an acceptable audit.

(v) Recipients are responsible for imposing like requirements upon subrecipients and may not pass on the cost of an audit that does not meet the requirements of OMB Circular A-133. However, if there is an indirect cost allocation plan with audit costs included, the following year's indirect cost allocation plan will offset the cost. In addition to sanctions, the USDA awarding agency may incorporate into the agreement that reimbursement for the additional audit costs incurred by the agency will either be withheld from future Federal financial assistance awards or by other means.

(2) Recipients must establish a system for:

(i) Assuring that subrecipients meet the requirements of the regulations in this part.

(ii) Evaluating the acceptability of subrecipient audits.

(iii) Following up on results of subrecipient audits.

(3) Recipients must ensure that subrecipient reports are transmitted by the subrecipient to the recipient. These reports shall not be routinely transmitted to USDA. Instead, the recipient shall retain all subrecipient audit reports on file as required by appendix A of this part and make them available to the awarding agency, OIG, GAO officials, or their designees, upon request.

(4) Take appropriate action on subrecipient audits and incorporate the results of these audits into their financial records and related reports. Questioned costs at the subrecipient level may be contingent liabilities as far as the recipient is concerned and should be reported as such, when appropriate.

(5) Each recipient shall establish a systematic method to assure timely and appropriate resolution of audit findings and recommendations.