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Audit Requirements

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  1. Audit Requirements Ninth Annual NIH SBIR/STTR Conference Las Vegas, Nevada February 26-27, 2007

  2. Audit? Who said anything about having an audit? • The Department of Health & Human Services did! • HHS specifies requirements for audits of for-profit organizations in Title 45 CFR Part 74.26(d)* *

  3. Can we get that in plain English? A for-profit organization is required to have an audit if: • it expended $500,000 or more under HHS awards in the fiscal year AND • at least one of the awards is an HHS grant

  4. What is the audit period? • The audit period is the awardee’s fiscal year, not the grant budget period, the grant project period or the Government’s fiscal year.

  5. What type of audit is required? • Good news !You have a choice. • 45 CFR 74.26(d) provides for-profit organizations with two options regarding the type of audit that will satisfy the audit requirement.

  6. 1. A financial related audit as defined in, and in accordance with, the Government auditing Standards (a.k.a. the “Yellow Book”)* OR 2. An audit that meets the requirements of OMB Circular A-133** * **

  7. What is covered in the audit? The auditors, among other things, will be looking at: • Your internal controls and the adequacy of your accounting system • Compliance issues such as • Allowable costs/ Cost Principles • Cash Management • Property Management • Reporting

  8. Is there a due date? Yes, 45 CFR 74.26(d) essentially incorporates the deadlines of OMB Circular A-133. Audits shall be completed and submitted within the earlier of: • 30 days after receipt of the auditor’s report or • 9 months after the end of the audit period

  9. Does a for-profit auditee have to submit a completed Data Collection Form (SF-SAC) as required by OMB Cir A-133? • No. Regardless of the audit option chosen, the for-profit auditee is not required to submit a Data Collection Form.

  10. Okay, the auditors have done their work and the audit is complete. Now what? • Audit reports of for-profit organizations should be submitted to: National External Audit Review Center HHS Office of Audit Services 323 West 8th Street Lucas Place, Room 514 Kansas City, MO 64105

  11. What happens next? • NEAR will process the audits—checking for adequacy and to identify audit findings • NEAR will code each finding for tracking purposes and distribute the reports to the awarding component • The Special Reviews Branch of DFAS is responsible for resolving all findings coded by NEAR relating to NIH awards

  12. Great, I didn’t expend more than $500,000 in HHS funds this year so I’m “off the hook,” right? • While it is true you are not required to have an audit for that particular year, keep in mind that your grant-related records must be available to NIH or other designated officials for review or audit.

  13. Why? Why? Why? • Why an audit? • Why is it important to the Federal Government? • Why is it important to you?

  14. Where can I get more information? There are frequently asked questions (FAQs) related to non-federal audit requirements for commercial (for-profit) organizations at the following URL:

  15. Questions? Lorraine Trexler Chief, Special Reviews Branch Division of Financial Advisory Services 301-496-4494