[Federal Register Volume 62, Number 222 (Tuesday, November 18, 1997)]
[Rules and Regulations]
[Pages 61616-61618]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-30181]
[[Page 61615]]
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Part III
Department of Housing and Urban Development
_______________________________________________________________________
24 CFR Part 5, et al.
Adoption of Revised OMB Circular A-133; Administrative Requirements for
Grantees to Reflect the Single Audit Act Amendments of 1996; Interim
Rule
Federal Register / Vol. 62, No. 222 / Tuesday, November 18, 1997 /
Rules and Regulations
[[Page 61616]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 5, 44, 45, 84, and 85
[Docket No. FR-4258-I-01]
RIN 2501-AC40
Adoption of Revised OMB Circular A-133; Administrative
Requirements for Grantees to Reflect the Single Audit Act Amendments of
1996
AGENCY: Office of the Chief Financial Officer, HUD.
ACTION: Interim rule.
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SUMMARY: On June 30, 1997, OMB published revised Circular A-133 to
implement the Single Audit Act Amendments of 1996. The Act sets forth
requirements for obtaining consistency and uniformity among Federal
agencies for the audit of States, local governments, and non-profit
organizations expending Federal awards. This rule adopts the revised
requirements.
DATES: Effective date: December 18, 1997.
Comment Due Date: January 20, 1998.
ADDRESSES: Interested persons are invited to submit comments regarding
this interim rule to the Office of the General Counsel, Rules Docket
Clerk, Room 10276, Department of Housing and Urban Development, 451
Seventh Street, S.W., Washington, D.C. 20410-0500. Comments should
refer to the above docket number and title. A copy of each
communication submitted will be available for public inspection and
copying during regular business hours (weekdays 7:30 a.m. to 5:30 p.m.
Eastern time) at the above address. Facsimile (FAX) comments are not
acceptable.
FOR FURTHER INFORMATION CONTACT: William E. Dobrzykowski, Deputy Chief
Financial Officer for Finance, (202) 708-0650. (This is not a toll-free
number.) Hearing-impaired or speech-impaired individuals may access the
voice telephone number listed above by calling the Federal Information
Relay Service during working hours at 1-800-877-8339.
SUPPLEMENTARY INFORMATION: On June 30, 1997, the Office of Management
and Budget (OMB) published revised Circular No. A-133, re-titled
``Audits of States, Local Governments, and Non-Profit Organizations,''
which established uniform audit requirements for non-Federal entities
that administer Federal awards and implemented the Single Audit Act
Amendments of 1996 (Pub.L. 104-156, enacted July 5, 1996). OMB Circular
No. A-128, ``Audits of States and Local Governments,'' which was issued
in 1985, was rescinded as a result of the consolidation of audit
requirements under Circular A-133.
One of the more significant revisions is that the threshold for
when an entity is required to have an audit is raised from $25,000 to
$300,000. Other significant changes are: a report submission due date
which is shortened from 13 to 9 months and a report submission process
that includes a data collection form and streamlined filing
requirements; a new risk-based approach for major program
determination; and additional guidance for program-specific audits,
audit findings, and audit findings follow-up.
Through this interim rule the Department of Housing and Urban
Development (HUD) adopts these requirements. In addition, HUD is adding
a provision to set forth a clarification regarding the uniform audit
requirements for non-profit organizations participating in HUD programs
whose regulations are set forth in 24 CFR in the part 200 and 800
series, such as parts 207, 213, 220, 221, 231, 232, 234, 236, 241, 242,
244, 266, 880, 881, 882, 883, 884, 886, and 891. The clarification
provides that non-profit organizations subject to regulations in the
part 200 and part 800 series of 24 CFR shall comply with the audit
requirements of revised OMB Circular A-133. Audits of non-profit
organizations under these programs were previously subject to the
requirements of the Consolidated Audit Guide for Audits of HUD Programs
(HUD Handbook 2000.04). This audit guide no longer applies to audits of
non-profit organizations. For HUD programs, a non-profit organization
is the mortgagor or owner and not a related or affiliated organization
or entity. The terms ``mortgagor'' or ``owner'' are defined in the
regulations in the part 200 and part 800 series, such as Secs. 207.251,
891.205 and 891.305.
HUD is also removing and reserving 24 CFR parts 44 and 45 since
these parts are no longer applicable because of the revised circular. A
number of conforming technical revisions are needed throughout HUD's
regulations in title 24 of the CFR as a result of HUD's adoption of the
uniform audit requirements. Those revisions will be set forth in a
subsequent separate rulemaking.
Findings and Certifications
Environmental Impact
This amendment is excluded from the environmental review
requirements of the National Environmental Policy Act (42 U.S.C. 4321-
4347) and the other related Federal environmental laws and authorities,
as set forth in 24 CFR part 50. In keeping with the exclusion provided
for in 24 CFR 50.19(c)(1), this amendment does not ``direct, provide
for assistance or loan and mortgage insurance for, or otherwise govern
or regulate property acquisition, disposition, lease, rehabilitation,
alteration, demolition, or new construction, or set out or provide for
standards for construction or construction materials, manufactured
housing, or occupancy.''
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this interim rule before publication and
by approving it certifies that this interim rule will not have a
significant economic impact on a substantial number of small entities.
This interim rule merely adopts government-wide requirements related to
auditing. The interim rule does not affect the amount of funds provided
in the covered programs, but rather increases the threshold for non-
Federal entities subject to audit, thereby reducing burden on some
small entities.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that this interim
rule does not have ``federalism implications'' because it does not have
substantial direct effects on the States (including their political
subdivisions), or on the distribution of power and responsibilities
among the various levels of government.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-
4; approved March 22, 1995) (UMRA) establishes requirements for Federal
agencies to assess the effects of their regulatory actions on State,
local, and tribal governments, and on the private sector. This interim
rule would not impose any Federal mandates on any State, local, or
tribal governments, or on the private sector, within the meaning of the
UMRA.
List of Subjects
24 CFR Part 5
Administrative practice and procedure, Aged, Claims, Drug abuse,
Drug traffic control, Grant programs--housing and community
development, Grant programs-Indians, Grant programs--low and moderate
income housing, Indians, Individuals with
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disabilities, Intergovernmental relations, Loan programs--housing and
community development, Low and moderate income housing, Mortgage
insurance, Penalties, Pets, Public housing, Rent subsidies, Reporting
and recordkeeping requirements, Social security, Unemployment
compensation, Wages.
24 CFR Part 44
Accounting, Grant programs, Indians, Intergovernmental relations,
Loan programs, Reporting and recordkeeping requirements.
24 CFR Part 45
Accounting, Colleges and universities, Grant programs, Loan
programs, Non-profit organizations, Reporting and recordkeeping
requirements.
24 CFR Part 84
Accounting, Audit requirements, Colleges and universities, Grant
programs--housing and community development, Loan programs--housing and
community development, Non-profit organizations, Reporting and
recordkeeping requirements.
24 CFR Part 85
Accounting, Audit requirements, Grant programs, Indians,
Intergovernmental relations, Reporting and recordkeeping requirements.
Accordingly, parts 5, 44, 45, 84, and 85 of title 24 of the Code of
Federal Regulations are amended as follows:
PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS
1. The authority citation for part 5 continues to read as follows:
Authority: 42 U.S.C. 3535(d), unless otherwise noted.
2. Subpart A is amended to add a new Sec. 5.107 to read as follows:
Sec. 5.107 Audit requirements for non-profit organizations
Non-profit organizations subject to regulations in the part 200 and
part 800 series of title 24 of the CFR shall comply with the audit
requirements of revised OMB Circular A-133, ``Audits of States, Local
Governments, and Non-Profit Organizations'' (see 24 CFR 84.26). For HUD
programs, a non-profit organization is the mortgagor or owner (as these
terms are defined in the regulations in the part 200 and part 800
series) and not a related or affiliated organization or entity.
PARTS 44 AND 45--[REMOVED AND RESERVED]
3. Parts 44 and 45 are removed and reserved.
PART 84--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND
AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND
OTHER NON-PROFIT ORGANIZATIONS
4. The authority citation for part 84 continues to read as follows:
Authority: 42 U.S.C. 3535(d).
5. Section 84.26 is amended by revising paragraphs (a), (b), and
(c) to read as follows:
Sec. 84.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher
education or other non-profit organization (including hospitals) shall
be subject to the audit requirements contained in the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-
133, ``Audits of States, Local Governments, and Non-Profit
Organizations.''
(1) Non-profit organizations subject to regulations in the part 200
and part 800 series of this title which receive awards subject to part
84 shall comply with the audit requirements of revised OMB Circular A-
133, ``Audits of States, Local Governments, and Non-Profit
Organizations.'' For HUD programs, a non-profit organization is the
mortgagor or owner (as these terms are defined in the regulations in
the part 200 and part 800 series) and not a related or affiliated
organization or entity.
(2) Reserved.
(b) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act Amendments of 1996 (31
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States,
Local Governments, and Non-Profit Organizations.''
(c) For-profit hospitals not covered by the audit provisions of
revised OMB Circular A-133 shall be subject to the audit requirements
of the Federal awarding agencies.
* * * * *
6. Section 84.82 is amended by revising paragraphs (e)(1), (2), and
(3) to read as follows:
Sec. 84.82 Provisions applicable only to lump sum grants.
* * * * *
(e) Non-Federal audits. (1) Recipients and subrecipients that are
institutions of higher education or other non-profit organizations
(including hospitals) shall be subject to the audit requirements
contained in the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-
7507) and revised OMB Circular A-133, ``Audits of States, Local
Governments, and Non-Profit Organizations.''
(i) Non-profit organizations subject to regulations in the part 200
and part 800 series of this title which receive awards subject to part
84 shall comply with the audit requirements of revised OMB Circular A-
133, ``Audits of States, Local Governments, and Non-Profit
Organizations.'' For HUD programs, a non-profit organization is the
mortgagor or owner (as these terms are defined in the regulations in
the part 200 and part 800 series) and not a related or affiliated
organization or entity.
(ii) [Reserved].
(2) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act Amendments of 1996 (31
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States,
Local Governments, and Non-Profit Organizations.''
(3) For-profit hospitals not covered by the audit provisions of
revised OMB Circular A-133 shall be subject to the audit requirements
of the Federal awarding agencies.
* * * * *
PART 85--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND
COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS
7. The authority citation for part 85 continues to read as follows:
Authority: 42 U.S.C. 3535(d).
8. Section 85.26 is amended by revising paragraphs (a), (b)
introductory text, and (b)(1), to read as follows:
Sec. 85.26 Non-Federal audits.
(a) Basic rule. Grantees and subgrantees are responsible for
obtaining audits in accordance with the Single Audit Act Amendments of
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of
States, Local Governments, and Non-Profit Organizations.'' The audits
shall be made by an independent auditor in accordance with generally
accepted government auditing standards covering financial audits.
(b) Subgrantees. State or local governments, as those terms are
defined for purposes of the Single Audit Act Amendments of 1996, that
provide Federal awards to a subgrantee which expends $300,000 or more
(or other amount as specified by OMB) in Federal awards in a fiscal
year, shall:
(1) Determine whether State or local subgrantees have met the audit
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requirements of the Act and whether subgrantees covered by OMB Circular
A-110, ``Uniform Administrative Requirements for Grants and Agreements
with Institutions of Higher Education, Hospitals, and Other Non-Profit
Organizations,'' have met the audit requirements of the Act. Commercial
contractors (private for-profit and private and governmental
organizations) providing goods and services to State and local
governments are not required to have a single audit performed. State
and local governments should use their own procedures to ensure that
the contractor has complied with laws and regulations affecting the
expenditure of Federal funds;
* * * * *
Dated: October 22, 1997.
Andrew Cuomo,
Secretary.
[FR Doc. 97-30181 Filed 11-17-97; 8:45 am]
BILLING CODE 4210-01-P
