Section 3: Single Audit ProceduresAnchor: #i1000217
The single audit concept provides that recipients of federal funds use their own procedures to arrange for independent audits to be made on an organization-wide basis, rather than on a grant or project basis. If the organization-wide audit complies with the specific requirements of 2 C.F.R. Part 200, then no additional audit requirements are normally imposed and all grantor agencies will rely on such audits.
The State and TxDOT have subscribed to the spirit and principles of the single audit concept. Therefore, the audit work of others will be relied upon to the extent indicated by prudent judgment. Acceptance will be on the basis of written notice or other valid document, wherein, the validity of the audit work involved is reasonably assured.Anchor: #i1000232
The basic directive pertaining to the audit of state and local governments, institutions of higher education, and other non-profit organizations is 2 C.F.R. Part 200 (formerly OMB revised Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.) Circular A-133 implemented the Single Audit Act amendments of 1996 and provided uniform single audit requirements for all non-federal grantees including state and local governments, colleges and universities, hospitals, and other non-profit organizations. This circular, which was issued June 30, 1997, applies to audits for fiscal years beginning after June 30, 1996, and supersedes prior versions of Circular A-133, as well as rescinds Circular A-128, Audits of State and Local Governments.
Under 2 C.F.R. Part 200, TxDOT is considered a pass-through entity for federal funds and is charged with the following responsibilities:
- informing each subgrantee of the Catalog of Federal Domestic Assistance (CFDA) number and title, amount of funding awarded, award number, and award year
- advising subgrantees of the requirements imposed on them by federal laws, regulations, and provisions of contracts and grant agreements as well as any supplemental requirements imposed by the State
- monitoring the activities of subgrantees as necessary to ensure that federal awards are used for authorized purposes in compliance with laws, regulations and contract provisions, and to ensure that performance goals are achieved
- ensuring that subgrantees expending $750,000 or more during the subgrantee’s fiscal year have met the audit requirements of 2 C.F.R. Part 200 for that fiscal year
- issuing management decisions on audit findings within six (6) months of the receipt of the subgrantee’s audit report and ensuring that the subgrantee takes appropriate and timely corrective action
- considering whether subgrantee audits necessitate adjustments to the State’s own records
- requiring each subgrantee to permit the State and other auditors to have access to records and financial statements as necessary for the State to comply with 2 C.F.R. Part 200, and
- maintaining subgrantee report submissions (or other written notification when no reports are required to be submitted) on file for four years from the date of receipt.
The TxDOT Traffic Operations Division - Traffic Safety Section (TRF-TS) provides a substantial amount of federal and state funding to a large number and variety of governmental and non-governmental entities. Audits and on-going grant monitoring are two tools that the Department uses to carry out its management oversight responsibilities. Part of TxDOT’s audit-related responsibilities for subgrantees include obtaining, reviewing, and resolving subgrantee audit reports.
DUNS and 2 C.F.R. Part 200 Compliance Page
Potential Traffic Safety Program subgrantees must complete the Data Universal Numbering System (DUNS) and 2 C.F.R. Part 200 Compliance Page in eGrants when applying for grants with TRF-TS.
DUNS assigns a unique nine-digit number recognized as the universal standard for identifying and tracking businesses worldwide. The Federal Spending Transparency Directive and the previous Federal Funding Accountability and Transparency Act (FFATA) require grantees and subgrantees to have a DUNS number. Most agencies and organizations have DUNS numbers established. Agency personnel that submit proposals through eGrants should check with their agency’s accounting staff. To obtain a DUNS number, applicants should go to the Dun and Bradstreet Website.
Traffic Safety subgrantees are also required to comply with 2 C.F.R. Part 200 and/or the State of Texas audit circular requirements; therefore, all potential subgrantees must check one of the following on the eGrants DUNS and 2 C.F.R. Part 200 Proposal Compliance page to indicate if their expenditures were more or less than $750,000, and follow the instructions below to carry out the appropriate action.
- If threshold expenditures of $750,000 or more are met during the agency’s fiscal year, the agency must submit a Single Audit Report and Management Letter (if applicable) to TxDOT’s Compliance Office, 3712 Jackson Ave., Suite 331, Austin, TX 78731-6004, or contact TxDOT’s Compliance Office at email@example.com.
- If expenditures are less than $750,000 during the agency’s fiscal year, the agency must submit a statement to TxDOT’s Compliance Office as follows: “We did not meet the $750,000 expenditure threshold, and therefore we are not required to have a single audit performed for FY ####.”
TRF-TS creates a list of subgrantees who received reimbursements from TxDOT that are required to submit a single audit report and subgrantees that are not required to submit a single audit report, but must submit statements that they do not meet the expenditure threshold, and therefore, are not required to submit a single audit report. This list is compiled annually (on October 1) by TRF-TS from information captured on the DUNS and 2 C.F.R. Part 200 Compliance Page of eGrants after the grant award process has been completed for the year. The subgrantee list is then forwarded to the TxDOT Compliance Office (CMP) so that CMP can determine which agencies have submitted their single audit report or a statement that a single audit report is not required, within nine months after the end of their fiscal year.Anchor: #i1000245
TRF-TS is responsible for:
- determining whether the subgrantee spent federal pass-through funds in accordance with applicable laws or regulations
- obtaining copies of single audit reports from subgrantees in accordance with the guidelines established under 2 C.F.R. Part 200, or obtaining copies of statements from subgrantees that they are not required to have an audit conducted as the $750,000 expenditure threshold for the year was not met.
- reviewing lists provided by CMP on subgrantees that have not yet submitted their single audit report, or a statement that a single audit report is not required, and following up with those subgrantees to obtain the missing items.
Single Audit Reports
TRF-TS coordinates with TxDOT’s Compliance Office (CMP) to obtain and review single audit reports, issue management decision letters, and follow up on corrective action plans. For more information, see TxDOT’s Compliance Manual, scheduled for publication in 2016.
TxDOT TRF-TS is responsible for:
- following up with subgrantees that have not submitted the required single audit reports or statements that they are not required to submit a single audit report, or that have audit findings to be resolved, and
- imposing sanctions, when necessary, on subgrantees that prevent TRF-TS from obtaining, reviewing, and resolving audit reports in a timely manner by not submitting these documents by their due dates and/or when requested by TRF-TS.
The primary goal of TxDOT is to fulfill its responsibilities to obtain, review, and resolve audit reports in a timely manner and to monitor for contract compliance. Audit reports should be received by the Department by their due date, reviewed within 90 days of receipt of a complete report, and resolved within six months of receipt. To accomplish this, TRF-TS will impose sanctions when necessary to ensure that audit reports and materials needed for audit report review and resolution are submitted on time, and that contract provisions are adhered to.
For more information on sanction procedures, see the Grant Sanction Rules in the Texas Administrative Code, Title 43, Part I, Chapter 9, Subchapter H.
The following procedures will be followed to ensure that information needed for audit review or resolution activities is submitted/received in a timely manner.
- Whenever an audit report is not received by the Department by its due date, or whenever additional material is needed from an audited entity in order to proceed with audit review and resolution activities, TRF-TS staff will write to the entity requesting that the report, or other material, be submitted within 30 days. If the requested information is submitted, the matter will be considered closed.
- If the information is not submitted by the end of the 30-day period, TRF-TS staff will write a second notification letter to the audited entity indicating that this is a second notice, and request again that the material be submitted within 30 days, or that the entity provide a written explanation of why the material cannot be provided within the second 30-day time frame. If the requested material cannot be provided within the second 30-day period, the explanation of the delay should also specify a date by which the material will be provided. The second notification letter should also inform the audited entity that TRF-TS is considering the imposition of a fiscal sanction unless the requested information (or an acceptable explanation for not submitting it) is received.
- If the audit report and/or other requested materials are not received by the end of the second 30-day period, and the audited entity has not provided an acceptable explanation of why the material could not be submitted within that time frame, TRF-TS staff will write to the audited entity and indicate either that the requested material has not been received or that an acceptable explanation for not submitting it has not been provided, and inform the organization that TxDOT is now in the process of considering the imposition of a fiscal sanction because of their failure to comply with previous requests.
- When it becomes necessary to inform an entity that TRF-TS
is considering the imposition of a fiscal sanction, TRF-TS staff
will research the status of the grant award and the Department’s payments
to determine the possible sanctions available. Possible sanctions
- withholding the administrative and/or overhead costs (if the subgrantee’s expenditure reports clearly indicate an administrative expense amount) until the requested material is supplied
- disallowing the administrative and/or overhead costs until the requested material is supplied
- withholding 10% of the subgrantee’s reported allowable expenses (if the subgrantee’s expenditure reports do not clearly identify an administrative expense amount) until the requested material is supplied
- suspending the grant until the requested material is supplied, and
- terminating the grant.
Generally, audit reports are due substantially after the close of a period for which funding has been provided, and requests for additional information needed to proceed with audit review and/or resolution will occur later. In most cases where TRF-TS is considering the imposition of a fiscal sanction, it will have to be imposed in a current period for a failure to submit an audit report and/or other material related to funding provided in a prior period.
In cases in which an entity has not provided an audit report and/or other information necessary for the review and resolution of audits for a period that is now closed, and TRF-TS is not providing any funding to the entity for the current period, TRF-TS will not provide any new funding to the entity for any program, from any source, until the requested material is provided.
- Once TRF-TS staff has identified an appropriate sanction,
they will prepare a brief report for review and approval by the
TxDOT TRF Director.
The report will explain the circumstances leading to the tentative decision to impose a sanction (e.g. what the entity failed to provide, what actions TRF-TS took to obtain the information prior to considering the imposition of a sanction) and explain the reasons for the particular sanction being recommended. TRF-TS staff will also prepare a proposed sanction letter to the entity describing the circumstances leading up to the decision to impose the sanction, what sanction will be imposed, when the sanction will begin, and what the entity will need to do to have the sanction lifted.
- Once a sanction has been determined and a proposed sanction letter prepared, the letter is sent to the audited entity indicating the imposition of a fiscal sanction which will remain in place until the audit or other requested material, or a satisfactory explanation of why it cannot be submitted, is received by TRF-TS.
- If the imposition of the initial sanction does not result in the subgrantee providing the audit report or other requested materials, the sanction will remain in place for a period of up to three months from the effective date of the initial sanction. TRF-TS will inform the sanctioned entity in writing each month that the sanction is being continued because of the organization’s failure to submit the audit report and/or other requested materials.
- Prior to the expiration of the three month period following the imposition of an initial sanction, TRF-TS shall inform the audited entity, in writing, that TRF-TS will impose further sanctions if the audit report or other requested material has not been provided within three months after the effective date of the initial sanction.
- When a sanctioned entity has submitted the information
requested by TRF-TS, and TRF-TS has found it to be acceptable, the
sanction will be lifted and any funds withheld during the sanction
period will be returned to the subgrantee by the most convenient
method as determined by TRF-TS.
However, if compliance with the audit requirements has been too late and TRF-TS no longer has the withheld funds available to return, the funds previously withheld will not be returned when the sanction is lifted. If, at any time during the period in which a subgrantee is under sanction, TRF-TS’s normal grant renewal process is underway, TRF-TS will not enter into a grant with the subgrantee during the next contract period unless the entity first provides the audit report and/or other requested material for the period for which the sanction is being imposed.
- If the audited entity has not submitted an audit report or other requested material necessary for the audit review and/or resolution process by the expiration of the three-month period following the effective date of the initial sanction, TRF-TS will consider terminating all funding to the organization for failure to comply with the audit requirements of the grant.