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Resolution 127-1989 James R. Paros, A.C.A. Division of Public Safety RESOLUTION NO. 127 -1989 A RESOLUTION OF THE BOARD OF COUNTY COMMIS- SIONERS OF MONROE COUNTY, FLORIDA, AUTHORIZING THE MAYOR/CHAIRMAN OF THE BOARD TO EXECUTE AGREEMENT 189EM-16-11-54-10-039 BETWEEN THE STATE OF FLORIDA DEPARTMENT OF COMMUNITY AFFAIRS AND MONROE COUNTY CONCERNING CERTAIN EMERGENCY Y~NAGEMENT-RELATED ACTIVITES. BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA, that the Mayor/Chairman of the Board is hereby authorized to execute Agreement 189EM-16-11-54-10-039 between the State of Florida Department of Community Affairs and Monroe County, a copy of same being attached hereto and made a part hereof, concerning certain emergency management-related activities. PASSED AND ADOPTED by the Board of County Commissioners of Monroe County, Florida, at a regular meeting of said Board held on the 7tA day of /Y!Qre.' , A. D. 1989. BOARD OF COUNTY COMMISSIONERS OF MONROE COUNTY, FLORIDA BY, ~~~ (Seal) Attest :DANNY L. KOLHAGE, Clerk ~/~/'&.~ APPROVED AS T(J FORM AND LEGAL sUFnCfFNCY. :rWW flY ~kJ:_,fJJ1~ AttDn-',"'\' r Itfll' 17 S;: Z d [Z ~VI~ 68, ....; ~~: .....; _...1 ,", j-Ilj AGREEMENT #89EM-16-11-54-10-039 AGREEMENT BETWEEN THE STATE OF FLORIDA DEPARTMENT OF COMMUNITV AFFAIRS ~D Monroe county (NAME OF SUBGRANTEE) This Agreement, entered into between the Department of Community Affairs (Grantee) and Monroe county (Subgrantee), shall govern certain emergency management-related activities to be financed by the Grantee. THEREFORE, the parties agree as follows: I. TERMS OF AGREEMENT A. This Agreement shall commence on October 1, 1988, and shall continue in full force and effect to, and including, September 30, 1989. B. The Grantee agrees to allocate the Subgrantee the maximum sum of $22,445.85 /50% which the Subgrantee will match with $22,445.85 /50% for a total subgrant of $44,891.70 /100% for the successful completion of the items of performance agreed to herein. o C. It is agreed that liability of the Grantee under this Agreement shall not exceed the total funds received by the Grantee for this purpose. D. The Grantee or Subgrantee may terminate this Agreement for breach of contract or in the event of non- availability of funds with such notice as is reasonable under the circumstances. The State of Florida's performance and obligation to pay under this Agreement is contingent upon an annual appropriation by the Legislature. Either'party may terminate this Agreement without cause by giving thirty (30) days written notice to the other party. E. The Grantee or Subgrantee may, from time to time, request changes in the services to be provided under this Agreement. Such requested changes must be submitted in writing, agreed to and signed by both parties in order to amend this Agreement. F. The Subgrantee, in performing the requirements of this Agreement, shall comply with applicable laws, rules, regulations, ordinances and codes of the federal, state and local governments. II. REQUIREMENTS AND ASSURANCES A. General Provisions. The Subgrantee hereby assures and certifies that it will comply with regulations, policies, guidelines and requirements, ~nciuding 44 CFR (Code of Federal Regulations), Part 302, the Federal Emergency Management Agency Civil Preparedness Guide (CPG) 1-3 and 1-5, Office of Management and Budget .(OMB) Circular A-87 and A-128 as they relate to application, acceptance and use of federal funds. B. Scope of Work. The Subgrantee will comply with the "Scope of Work" describing the activities/projects to be accomplished under this Emergency Management Assistance (EMA) Agreement. Such Scope of Work is attached to and incorporated herein as Exhibit A. C. Compensation and Financial Reporting Requirements. 1. The Subgrantee shall use the funds available from this Agreement to pay for Emergency Management Assistance administrative expenditures in accordance with CPG 1-3, June, 1987, Chapter 2, Parts 9 and 10. The Subgrantee shall be reimbursed for costs incurred in the satisfactory performance of work hereunder in an amount not to exceed the total allocation as shown in Paragraph I.B. of this Agreement. Q 2. Administrative Expenditure and Progress Reports must be submitted on a quarterly basis. Progress reports are due within fifteen (15) days after the end of each quarter. Administrative Expenditure Reports are due within forty-five (45) days after the end of each quarter. A final Administrative Expenditure Report, serving as the close-out report, is due within forty-five (45) days after the termination of this Agreement. The Subgrantee shall not receive reimbursement for quarterly expenditures until the quarterly progress report is received by the Grantee. D. Fiscal and Proqram Accountabilitv. The Subgrantee must establish fiscal control of subgrant funds and required matching expenditures. The Subgrantee acknowledges that it has full responsibility for fiscal and programmatic accountability for this subgrant. In the. event the Subgrantee is unable to produce records capable of being audited without reconstruction by Auditors, all funds paid under this Agreement by the Grantee to the Subgrantee shall be disallowed and subject to repayment. The accounting system established and maintained by the Subgrantee must have internal controls adequate to safeguard the assets of the Subgrantee, check the accuracy and reliability of accounting data, promote operating efficiency and encourage compliance with described management pOlicies of this Agreement. -2- E. Recordinq and Documentation of Receipts and Expenditures. Accounting procedures must provide for an accurate and timely recording of receipt of funds by type of expenditures made from such funds and of unexpended balances. Accounting procedures must be adequate to ensure that expenditures charged to this subgrant are for allowable purposes and that documentation is readily available to verify that such charges are accurate. F. Unexpended Funds. Un~xpended funds which are reflected on the final Administrative Expenditure Report referred to in Paragraph II.C. above will automatically revert to the Grantee and the Grantee reserves the right to unilaterally reobligate such funds. G. Obligation of Grant Funds. Subgrant funds shall not be obligated prior to the effective date, or subsequent to the termination date, of the subgrant period. Obligations outstanding as of the termination date shall be liquidated within forty-five (45) days. Such obligations must be related to goods or services provided and utilized within the subgrant period. o H. Audit. The audit requirements as set forth in OMB CircularA-128, Audits of State and Local Governments (attached hereto and incorporated herein as Exhibit B) are to be adhered to by the Subgrantee. These requirements shall be utilized in negotiating contracts with independent auditors. I. Retention of Records. The Subgrantee shall maintain all records, documents and files pertaining to this Agreement for a period of three (3) years from the date of conclusion of the Agreement unless informed by the Grantee that said records may be disposed of earlier. Access to those records must be provided at reasonable times to the Grantee, its employees and agents, and to the federal grant agency, its employees and agents. J. Leqal Authorization. The Subgrantee certifies with respect to this subgrant that it possesses legal authority to apply for the grant and names the authorized official signing below to act in connection with this Agreement. K. Requirements of Section 287.058. Florida Statutes. 1. Bills for fees or other compensation for services or expenses must be submitted in detail sufficient for a proper pre-audit and post-audit thereof. 2. Bills for any travel expenses must be submitted in accordance with section 112.061, Florida Statutes. -3- 3. units of deliverables, including reports, findings, and drafts as specified in Paragraph II.C. of this Agreement, must be received and accepted by the contract manager prior to payment. 4. Subgrantee must comply with the criteria and final date by which criteria must be met for completion of this contract as specified in ParagraphI.A. of this Agreement. 5. The Grantee may unilaterally cancel this agreement for refusal by the subgrantee'to allow public access to all documents, papers, letters or other material subject to the provisions of Chap~er .119, Florida statutes, and made or received by the subgrantee in conjunction with this Agreement. It is expressly understood that substantial evidence of the subgrantee's refusal to comply with this provision shall constitute a breach of contract. The Subgrantee acknowledges that the responsibility for complying with the approved subgrant award rests with the recipient Subgrantee and acknowledges that failure to do so constitutes grounds for the recession or suspension of this subgrant and may influence future sUbgrant awards. IN WITNESS HEREOF, the Grantee and the Subgrantee have executed this Agreement; FOR THE SUBGRANTEE: FOR THE GRANTEE: STATE OF FLORIDA DEPARTMENT OF COMMUNITY AFFAIRS BY: ~~~- Authorized County Official BY: Authorized Department Official () MaYor/Chairman Name/Title Gordon L. Guthrie Division Director Name/Title 3-7-89 Date Date Federal Employer ID # Catalog of Federal Domestic Assistance Number and Program CFDA# 83.503 Emergency Management Assistance (EMA) (SEAL) Attest :DANNY r.. KOLHAGE, Clerlt ~~ 111fJ./ CLERK -4- APPfJCJV.ZAS TO'" AN1'r ;j~ ." .-.,/1----- BY . J Attorney'. ~ ~Atllblr 6 - SCOPE OF WORK ..' , , t.. . . . . lnmE COUNTY Category/Item Quarter to be Completed Action(s) I. EMA Comoliance Reouirements A. Submit Quarterly Progress Report 15 days after end of All each quarter. B. Submit Quarterly Financial Report 30 days after end of All each quarter., . C. Submi t prior year Financial ' 3 Audit OMB-A-128 by . April 30; 1989. II. Plan Develonment and Undate A. Submit Peacetime Emergency 3 Plan Update, if required. B. Submit Nuclear Civil. Protection Plan Triennial Update J if required.' N/A C. Develop and/or update N/A Standard Operating Procedures. III. Exercises o A. Submit revised Five Year -Exercise Plan. 2 B. Conduct a functional National Becurity Exercise- 3. IV. Countv Canabilitv Assessments A. Revise and submit ~he Hazard 2 Identification/Multi-Year Development Plan (HICA/MYDP). ':'~ '~ : " r .... .' ~'.,;..,. . . B. Complete and submit a 2 Continuity of Government Self- Assessment (CPG 1-10). C. Revise and submit the Communications Inventory and Development Plan (CPG 1-18). if required. . 3 D. Revise and submit an updated 2 Radiological Protection Data Base (RPDB-001) form in accordance ~ith the State Radiological 'Instrument Maintenance and Calibration Facility schedule. E. Pe~form 1nspection and 2 Operational test of Radiological Source sets. F. Perform Leak Test on Cobalt N/A 60 Radiological Source Sets. V. Tr~jning A. EM Director/Program Manager. o 1. Attend the EMA Workshop 2. Complete Preparedness Planning for a Nuclear Crisis (Home StudY-4) 3. Attend the Exercise Design Course or the Emergency .Planning Course B. EM Professional Staff. I As Sched. As Sched. 1. Complete Preparedness As Planning for a Nuclear Sched. Crisis (Home StudY-4) 2,.. Attend the Exercise Design As Course or the Emergency Sched. Planning Course . ~ C. EM Clerical Staff. 1. Complete Preparedness Planning for a Nuclear Crisis (Home StudY-4) As Sched. ~ . ~.... VI. Re~istration of Peoole with Soecial Needs A. Maintain current registration of people with special needs in accordance with F.S. 252. VII. IMA Particioants A. Submit IMA Reservist Work Schedule. B. Submit Quarterly Work Activities (Forms DA 1380 and AF 40a). C. Submit Annual Training Request. D. Submit Annual Performance Evaluation Report. VIII. Public Education Pro~ram A. Develop and maintain 'Emergency Public Information materials ( EPI ) . B. Conduct Public Information Awareness programs. All N/A C. Distribute seasonal Public' 3 Information materials. o IX. Include ~ctivities commensuratA with the needs of the County and oroonsed bud~et as required by Rule 9G-ll.04 (2) N/A .~r l ~ o .... . .-:) EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON.'D.C. 20503 EXHIBIT B April 12, 1985 CIRCULAR No. A-128 TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS SUBJECT: Audits of State and Local Gov~rnments. 1. Purpose. This Circular is issued Qursuant. to the Single Audit Act of 1984, P.L. 98-502. It establishes audit requirements for State and local governments that receive Federal aid, and defines Federal responsibilities for implementing and monitoring those requirements. . 2. Supersession. The Circular supersedes Attachment P, "Audit Requirements," of Circular A-l02, "Uniform requirements for grants to State and local governments." 3. Backaround. The Single Audit Act builds upon earlier efforts to improve audits of Federal aid programs. The Act requires State or local governments that receive $100,000 or more a year in Federal funds to have an audit made for that year. Section 7505 of the Act requires the Director of the Office qf Management and Budget to prescribe policies, procedures and guidelines to implement the Act. It specifies that the Director shall designate "cognizant" Federal agencies, determine criteria for making appropriate charges to Federal programs for the cost of audits, and provide procedures to assure that small firms or firms owned and controlled by disadvantaged individuals have the opportunity to participate in contracts for single ?udits. 4. Policy. The Single Audit Act requires the following: a. State or local governments that receive $100,000 or more a year in Federal financial assistance shall have an audit made in accordance with this Circular. b. State or local governments that receive between S25,OOO and SIOO,OOO a year shall have an audit made in accordance with this Circular, 'or in accordance with Federal laws and regulations governing the programs. ~hey participate in. c. State or local governments that receive less than S25,OOO a year shall be exempt from compliance with the Act and other Federal audit requirements. These State and local . governments shall be governed by audit requirements prescribed by State or local law or regulation. .' 2 d. Nothing in, this paragraph exempts State or local governments from maintaining records of Federal financial assistance or from providing access to such records to Federal agencies, as provided for in Federal law or in Circular A-102, "Uniform requirements for grants to State or local governments." s. Definitions. For the purposes of this Circular the following definitions from the Single Audit Act apply: a. "Cogni zant agency" mea ns the Federa 1 agency assigned by the Office of Management and Budget to carry out the responsibil- ities described in paragraph 11 of this Circular. b. "Federal financial assistance" means assistance provided by a Federal agency in the form of grants, contracts, cooperative agreements, loans, loan guarantees, property, interest sUbsidies, insurance, or direct appropriations, but ~oes not include ~irect Federal cash assistance to individuals~-- It includes awards received directly from Federal agencies) or indirectly through other units of State and local governments. c. "Federal ag~ncy" has lthe same meaning as the term 'agency' in section 551(1) of Title 5, United States Code. d. "Genera lly accepted accounting principles" has the meaning specified in the general~y accepted government auditing standa rds. e. "Generally accepted government auditing standards" means the Standards For Audit of Government Organizations, Programs, Activities,:and Functions, developed by the Comptroller General, dated Fehr.uary 27, 1981. f. "Independent auditor" means: o (1)' a State or local government auditor who meets the independence standards specified in generally accepted government auditing standards: or (2) a public accountant who meets such independence standards. - g. "Internal controls" means the plan of organization and methods and procedures adopted by management to ensure that: (1) resource use is consistent with laws, regulations, a nd pol icies: (2) resources are safeguarded against waste, loss, and misuse: and (3) reliable data are obtained, mclintained, and fairly disclosed in reports. 3 h. "lnoL,n trihe" means any Indian tribe, band, nations, or other organized group or community, including any Alaskan Native village or regional or village corporations (as defined in, or established under, the Alaskan Native Claims Settlement Act) that is recognized by the United States as eligible for the special progra~s and services provided by the United States to Indians because of their status as Indians. i. "Local government" means any unit of local government within a, State, includi~g a county, a borough, municipality, city,- town, township, parish, local public authority, special district, school district, intrastate district, council of governments, and any other instrumentality of local government. j. "Major Federal Assistance Program," as defined by P.L. 98-502, is described i~ the Attachment to this Circular. k. "Pu~lic accountants" ~eans'those individuals who meet the qualification standards included in generally accepted government auditing standards for personnel performing government audits. 1. "State" means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands, any instrumentality thereof, and any multi-Stat~, regional, or interstate entity that has governmental functions and any Indian tribe. o m. "Subrecipient" means any person or government department, agency, or establishment that receives Federal financial assistance to carry out a program through a State or local government, but does not include an individual that is-a beneficiary of such a program. A subrecipient may also be a direct recipient of Federal financial assistance. 6. Scope of audit. The Single Audit Act provides that: a. The audit shall be made by an independent auditor in accordance with generally accepted government auditing standards covering financial and compliance audits.' b. The audit shall cover the entire operations of a State or local government or,' at the option of that government, it may cover departments, agencies or establishments that received, expended, or otherwise administered Federal financial assistance during the year. However, if a State or local government receives $25,000 or more in General Revenue Sharing Funds in a fiscal year, it shall have an audit of its entire operations. A series of audits of individual departments, agencies, and establishments for the same fiscal year may be considered a single audit. 4 c. ,Public hospitals and public cnlleges and universities may be excluded from State and local audits and the requirements of this Ci~cular. However, if such entities are excluded, audits of these entities shall be made in accordance with statutory requirements and the provisions of Circular A-lID, "Uniform requirements for grants to univarsitias, hospitals, and other nonprofit organizations." d. The auditor shall determine whether: (1) the financial statements of the government, department, agency or establishment present fairly its financial position and the results of its financial operations in accordance with generally accepted accounting principles: (2) the organization has internal accounting and other control systems to provide reasonabl~"assurance that it is managing Federal financial assistance. programs in compliance with applicable laws and regulations: and (3) the organization has complied with laws and regula- tions that may have material effect on its financial statements and on each major Federal assistance program. 7. Frequency of audit. Audits shall be made annually unless the State or local government has, by January 1, 1987, a constitu- tional or statutory requirement for less frequent audits. For those governments, the cognizant agency shall permit biennial audits, covering both years, if the government so requests. It shall also honor requests for biennial audits by governments that have an administrative policy calling for audits less frequent than annual, but only for fiscal years beginning before January 1, 1987. o 8. Internal control and compliance reviews. The Single Audit Act requires that the independent auditor determine and report on whether the organization has internal control systems to provide reasonable assurance that it is managing Federal assistance programs in compliance with applicable laws and regulations. a. Internal control review. In order to provide this assurance the auditor must make a study and evaluation ofi-nternal control systems used in administering Federal assistance programs. The study and evaluation must be made whether or not the auditor intends to place reliance on such systems. As part of this review, the auditor shalli (I), Test whether these internal control systems are functioning in accordance with prescribed procedures. (2) Examine the recipient's system for monitoring subrecipients and obtaining and actiny on subrecipierit audit reports. . . 5 b. Compliance review. The law also requires the auditor to determine whether the organization has complied with laws and regulations that may have a material effect on each major Federal assistance program. (1) In order to determine which major programs are to be tested for compliance, State and local governments shall identify in their accounts all Federal funds received and expended, and the programs under which they were received. This shall include funds received directly from Federal agencies and through other State and local governments. (2) The review must include the selection and testing of a representa ti ve number of cha rges. from ea ch ma jor Federa I assistance program. The selection and-- testing of transactions shall be based on the auditor's professional judgment considering such factors as the amount of expenditures for the program and the individual awards; the newness of the program or changes in its conditions; prior experience with the program, particularly as revealed in audits and other evaluations (e.g., inspections, program reviews); the extent to which the program is carried out through sUbrecipients; the extent to which the program contracts for goods or services; the level to which the program is already subject to program reviews or other forms of independent oversight; the adequacy of the controls for ensuring compliance; the expectation of adherence 'or lack of adherence "to the applicable laws and regulations; and the potential impact of adverse findings. (a) In making the test of tri'insactions, the auditor shall determine whether: o the amounts reported as expenditures were for allowable services, and the records show that those who received services or benefits were eligible to receive them. (b) In addition to transaction testing, the auditor shall determine whether: matching requirements, levels of effort and earmarking limitations were met, o '. ,\ 6 Federal financial reports and advances and reimbursements contain information that is by the books and records from which the basic financial have been prepared, and cIa ims for supported sta tements amounts claimed or used for matching were determined in accordance with OMB Circular A-87, "Cost principles for State and local governments," and Attachment F of Circular A-l02, "Uniform requirements far grants to State and loca 1 governments." ' (c) The principal compliance requirements of the largest Federal aid programs may be ascertained by referring to the Comoliance Suoplement'for Single Audits of State and Local Governments, issued by OMB and available from the Government Printing Office. For those programs not covered in the Compliance Supplement, the auditor may ascertain compliance requirements by researching the statutes, regulations, and agreements governing individual programs. (3) Transactions related to other Federal assistance programs that are selected in connection with examinations of financial statements and eva1uations'of internal controls shall be tested for compliance with Federal laws and regulations that apply to such transactions. 9. ~ubrecipients. State or local governments that receive federal financial assistance and provide $25,000 or more of it in a fiscal year to a subrecipient shall: a. determine whether State or local subrecipients have met the audit requirements of this Circular and whether subrecipients covered by Circular A-IIO, "Uniform requirements for grants to ~ universities, ,hospitals, and other nonprofit organizations," have met that requirement; b. determine whether the subrecipient spent Federal assistance funds provided in accordance' with applicable laws and regulations. This may be accomplished by reviewing an audit of the subrecipient made in accordance with this Circular, Circular A-lID, .9r thtough other means (e.g., progra~ re~iews) if the subrecipient has not yet had such an audit: c. ensure that appropriate corrective action is taken within six months after receipt of the audit report in instances of noncompliance with Federal laws and regulations; d. consider whether sUbrecipient audits nece9sitate adjustment of the recipient's own records: and e. require each subrecipient to permit independent auditors to have access to the records and financial statements as necessary to comply with this Circular. 7 10. Relation to other audit requirements. The Single Audit Act provides that an audit made in accordance with this Circular shall be in lieu of any financial or financial compliance audit required under individual Federal assistance programs. To the extent that a single audit provides Federal agencies with information and assurances they need to carry out their overall responsibilities, they shall rely upon and use such information. However, a Federal agency shall make any additional audits which are necessary to carry out its responsibilities under Federal law and regulation. Any additional Federal audit effort shall be planned and carried out in such a way as to avoid ~uplication. a. The provisions of this Circular do not limit the authority of Federal agencies to make, or contract for audits and evaluations of Federal financial assistance programs; nor do they limit the authority of any Federal agency Inspector General or other Federal audit official. b. The provisions of this Circular do not authorize any State or local government or subrecipient thereof to constrain Federal agencies, in any manner, from car.rying out additional audits. c. A Federal agency that makes or contracts for audits in addition to the audits made by recipients pursuant to this Circular shall, consistent with other applicable laws and regulations, arrange for funding the cost of such additional audits. Such additional audits include economy and efficiency audits, program results audits, and program evaluations. o 11. Cognizant aaency responsibilities. The Single Audit Act provides for cognizant Federal agencies to oversee the implementation of this Circular. a. The Office of Management and Budget will assign cognizant agencies for States and their subdivisions and larger local governments and their subdivisions. Other Federal agencies may participate with an assigned cogn.izant agency, in order to fulfill the cognizance responsibilities. Smaller governments not assigned a cognizant agency will be under the general oversight of the Federal agency that provides them the 'most funds whether direc~ly or indirectly. b. A cognizant ag~ncy shall have the following responsibilities: (1) Ensure that audits are made and reports are received in a timely manner and in accordance with the requirements of this Circular. (2) Provide technical advice and liaison to State and local governments and independent auditors. 8 (3) Obtain or make quality control reviews of selected audits made by non-Federal ~udit organizations, and provide the results, when appropriate, .~o otp~r interested organizations. (4) Promptly inform otper affected Federal agencies and appropriate Federal law enforcement officials of any reported illegal acts or irregularities. They should also inform State or local law enforcement and prosecuting authorities, if not advised by the recipient, of any violation of law within their jurisdiction. (5) Advise the recipient of audits that have been found not to have met the requirements set forth in this Circular. In such instances, the recipient will be expected to work with the auditor to take corrective action. If corrective action is not taken, the cognizant agency shall notify the recipient and Federal awarding agencies of the facts and make recommendations for followup act ion. Ma jor ina dequac ies or. repet i t i ve subs ta nda rd performance of independent auditors sh~ll be referred to appropriate professional bodies for disciplinary action. (6) Coordinate, to the extent practicable, audits made by or for Federal agencies that are in addition to the audits made pursuant to this Circular; so that the additional audits build upon such audits. (7) Oversee the r.esolution of audit findings that affect the programs of more than one agency. o 12. Illegal acts or irregularities. If the auditor becomes aware of illegal acts or other irregularities, prompt notice shall be given to recipient management offiGials above the level of involve- ment. (See also paragraph 13(a)(3) below for the auditor's report- iny responsibilities.) The recipient, in turn, shall promptly notify the cognizant agency of the illegal acts or irregularities and of proposed and actual actions, if any. Illegal acts and irregularities include such matters as conflicts of interest, - falsification of records or reports, and misappropriations of funds or other assets. 13. A~dit Reports. Audit reports must be prepared at the completion of the audit. Reports serve many needs of State and local governments as well as meeting the requirements of the Single Audit Act. a. The audit report shall state that the audit was made in accordance with the provisions of this Circular. The report shall be made up of at least: (1) The auditor's report on financial statements and on a schedule of Federal assistance; the financial statements; and a schedule of Federal assistance, showing the total expenditures for ......... 9 each Federal assistance program as identified in the Catalog of Federal Domestic Assistance. Federal programs or grants that have not been assigned a catalog number shall be identified under the caption "other Federal assistance." (2) The auditor's report on the study and evaluation of internal control systems must identify the organization's significant internal accounting controls, and those controls designed to provide reasonable assurance that Pederal programs are being managed in compliance with laws and regulations. It must also identify the controls that were evaluated, the controls that were not evaluated, and the material weaknesses identified as a result of the evaluation. (3) The' auditor's report on compliance containing: a statement of positive assurance with respect to those items tested for compliance, including compliance with law and regulations pertaining to financial reports and claims for advances and reimbursements; negative a~surance on those items not tested: a summary of all instances of noncompliance; and an irlentification of total amounts questioned, if any, for each Federal assistance awar.d, as a result of noncompliance. b. The three parts of the audit report may be bound into a single report, or presented at the same time as separate documents. c. All fraud abuse, or illegal acts or indications of such acts, including all questioned costs found as the result of these acts that auditors become aware of, should normally be covered in a o separate written report submitted in acco~dance with paragraph 13f. d. In addition to the audit report, the recipient shall provide comments on the findings and recommendations in the report, including a plan for corrective action taken or planned and com- ments 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. . e. The reports shall be made available by the State or local government for public inspection within 30 days after the completion of the audit..' f. In accordance with generally accepted government audit standards, reports shall be submitted by the auditor to the organi- zation audited and to those requiring or arranging for the audit. In addition, the recipient shall submit copies of the reports to each Federal department or agency that provided Federal assistance funds to the recipient. Subrecipients shall submit copies to recipients that provided them Federal assistance funds. The reports shall be sent within 30 days after the completion of the audit, but no later than one year after the end of the audit period unless a longer period is agreed to with the cognizant agency. 10 g. Recipients of more than $100,000 in Federal funds shall submit one copy of the audit report within 30 days after issuance to a central clearinghouse to be Qesignated by the Office of Management and Budget. The clearinghouse will keep completed audits on file and follow up with State and local governments that have not submitted required audit reports, h. Recipients shall keep audit reports on file for three years from their issuance. 14. Audit Resolution. As provided in ~aragraph 11, the cognizant agency shall be responsible for monitoring the resolution of audit findings that affect the programs of more than one Federal agency. Resolution of findings that relate to the programs of a single Federal agency will be the responsibility of the recipient and that agency. Alternate arrangements may be made on a case-by-case basis by agreement .among the agencies conceined. Resolution shall be made within six months after receipt of the report by the Federal dep~rtments and agencies. Corrective action should proceed as rapidly as possible. 15. Audit workpapers and reports. Workpapers and reports shall be retained for. a minimum of three years from the date of the audit report, unless the auditor is notified in writing by the cognizant agency to extend the retention period. Audit workpapers shall be made available upon request to the cognizant agency or its designee or the General Accounting Office, at the completion of the audit. 16. Audit Costs. The cost of audits made in accordance with the provisions of this Circular are allowable charges to Federal assistance programs. Q a. The charges may be considered a direct cost or an allocated indirect cost, determined in accordance with the provision of Circular A-a7, "Cost principles for State and local governments." b. Generally, the percentage of costs charged to Federal assistance programs for a single audit shall not exceed the percentage that Federal funds expended represent of total funds expended by the recipient during the fiscal year. The percentage may be exceeded, however, if appropriate documentation demonstrates higher actual cost. 17. Sanctions. The Single Audit Act provides that no cost may be charged to Federal assistance programs for audits required by the Act that are not made -in accordance with this Circular. In cases of continued inability or unwillingness to have a proper audit, Federal agencies must consider other appropriate sanctions including: -- withholding a percentaye of assistance payments until the audit is complete~satisfactorily, 11 withholding or disallowing overhead costs, and suspending the federal assistance agreement until the nudit is made. lB. Auditor Selection. In arranging for audit services State and local governments shall follow the procurement standards prescribed by Attachment 0 of Circular A-102, "Uniform requirements for gr~nts to State and local governments." The standards provide that while recipients are encouraged to enter into intergovernmental agree- ments for audit and other services, analysis should be made to determine whether it would be more economical to purchase the services from private firms. In instances where use of such inter- governmental agreements are required by State statutes (e.g., nudit services) these statutes will take precedence. 19. Small and Minoritv Audit Firm~. Small audit firms and audit firms owned and controlled by socially and economically disadvan- taged individuals shall have the maximum practicable opportunity to participate in contracts awarded to fulfill the requirements of this Circular. Recipients of Federal assistance shall take the following steps to further this goal: a. Assure that small audit firms and audit firms owned and controlled by socially and economically disadvantaged individuals are used to the fullest extent practicable. b. Make information on forthcoming oppor.tunities available and arrange timeframes for the audit ~o as to encourage and facili- tate participation by small audit firms and audit firms owned and controlled by socially and economically disadvantaged individuals. c. Consider in the contract process whether firms competing for larger audits intend to subcontract with small audit firms and audit firms owned and controlled by socially and economically rfisadvantaged individuals. o d. Encourage contracting with small audit firms or audit firms owned and controlled by socially and economically disadvan- taged individuals which have traditionally audited government programs and, in such cases where this id not possible, assure that these firms are given consideration for audit subcontracting o p po r tun i tie s . e. Encourage contract~ng with consortiums of small audit firms as described in paragraph (a) above when a contr~ct is too large for an individual small audit firm or audit firm owner! and controlled by socially and economically disadvantaged individuals. f. Use the services and assistance, -as appropriate, ()f such organizations as the Small Business Administration in the solicita- tion and utilization of small audit firms or audit firms owned and controlled by socially and economically disadvantaged individuals. , o : 12 20. Reporting. Each Federal ~gency will report to the Director of OMB on or before March 1, 1987. and annually thereafter on the effectiveness of State and local governments in carrying out the provisions of this Ci~cular. The report must identify each State or local government o~ Indian ~Fibe that, in t~e opinion of the agency, is failing to comply w~th the Circular. 21. Requ1ations. Each Federal agency shall include the provisions of this Circular in its regulations implementing the Single Audit Act. 22. Effec~ive date. This Circular is effective upon publication and shall apply to fiscal years of State and local governments that begin after December 31, 1984. r.arlier implementation is encouraged. However, until it is implemented, the audit provisions of Attachment P to Circular A-102 s~all continue to be observed. 23. Inquiries. All questio~s or inquiries should be addressed to Financial Management Division, Office of Management and ~udget, telephone number 202/395-3993. 24. ~unset review date. This Circular shall have an independent policy review to ascertain its effectiveness three years from the date of issuance. ~~~ David A.. Stockman Director Circular A-128 Attachment Definition of Major Program as Provided in P.L. 98-502 "Major Federal Assistance Program,.' for State and local governments having Federal assistance expenditures between $100,000 and $100,000,000, means ~nyprogram for which Federal expenditures during the applicable year exceed the larger of $300,000, cr 3 percent of such total expenditures. Where total expenditures of Federal assistance exceed $100,000,000, the following criteria apply: Total Expenditures of Federal Financial Assis'tance for All Proqr ams more than but less than Major Federal Assistance Program Means any Program That Exceeds $10Q million 1 billion 1 billion 2 billion 2 billion 3 billion 3 billion 4 billion 4- billion 5 billion 5 billion 6 billion 6 billion 7 billion over 7 billion $ 3 million 4 million 7 million 10 million 13 million 16 million 19 million 20 rniilion o '.