DOT 4600.17A

1. PURPOSE. This Appendix provides departmental guidance for implementing Office of Management and Budget (OMB) Circular A-133, Audits of Institutions of States and Local Governments, and Non-Profit Organizations. It also provides guidance for determining audit coverage for other types of assistance recipients.

2. BACKGROUND. The Single Audit Act Amendments of 1996, 31 U.S.C. 7501-7507, established audit requirements for recipients of Federal financial assistance, and is implemented by OMB Circular A-133. The requirements for audit coverage for recipients not covered under OMB Circular A-133 are included in this Appendix.
   OMB has prepared compliance supplements for audits of major programs covered by OMB Circular A-133. Auditors are encouraged to use them when conducting single audits.

3. REQUIRED ACTIONS.
   • General: Each operating administration (OA) and secretarial office (SO) shall require recipients to have audits conducted in compliance with the provisions of OMB Circular A-133. OAs and SOs are also responsible for ensuring appropriate audit coverage for other types of assistance recipients not covered by these Circulars. Where DOT has been designated to serve as the cognizant agency, the responsibilities shall be divided between the OAs and SOs, and the Office of Inspector General (OIG).
     Recipients that expend $300,000 or more in any year in Federal funds shall have a single audit conducted in accordance with OMB Circular A-133. When the OAs, SOs or the OIG determine that additional audits are necessary, such audits shall build on the results of independent auditors if the audits meet the criteria contained in OMB Circular A-133. Recipients that expend less than $300,000 a year in Federal assistance funds are exempt from single audit requirements; however, they must retain appropriate records to document their compliance with the requirements of their Federal assistance awards.
     When a single audit is not required, the following can be used to determine recipient compliance with Federal requirements:
     1. Recipient obtained audits made in accordance with "Government Auditing Standards@ (GAS) issued by GAO.

     2. Previous audits of recipient operations.

     3. Desk reviews by Federal program officials of project documentation.

     4. Federal/non-Federal audits obtained by recipients.

     5. Evaluation of recipient operations by Federal program officials.

   • The Assistant Secretary for Administration shall:
     1. Issue any additional guidance as required.

     2. Maintain an updated list, as provided by OMB, of cognizant agency assignments for single audits.

     3. Assign cognizant administrative responsibility in instances where the OAs or SOs that provide funds are unable to make a determination as to who will carry out this responsibility.

     4. Assign a person responsible for providing annual updates to the compliance supplement to OMB.

   • The OIG shall:
     1. Provide technical advice and liaison to OAs, SOs, recipients, and independent auditors, as required.

     2. Ensure that audits are made in accordance with OMB Circular A-133, and advise the recipient of audits that are deficient in meeting requirements. The OIG shall also notify the cognizant OA or SO of audits not meeting these requirements for follow-up action.

     3. Obtain or provide quality control reviews of selected audits made by non-Federal auditors to ensure that audits are performed in compliance with OMB Circular A-133, generally accepted auditing standards and "Government Auditing Standards.” Results will be provided to the OA or SO whose program or activities are subject to audit by the entities. When appropriate, results should be provided to other interested organizations.

     4. Inform other affected Federal organizations and appropriate Federal law enforcement officials (including State and local officials if necessary) of any reported illegal acts or irregularities.

     5. Coordinate audit work performed by or for Federal/non-Federal organizations that are in addition to the audits required by OMB Circular A-133 so that additional audits build upon such audits to achieve the most efficient and cost effective results.

     6. Advise the auditor and, where appropriate, the auditee of any deficiencies found in the audit.

     7. Consider auditee requests to qualify as a low-risk audit.

     8. Coordinate the management decisions for audit findings that affect the programs of more than one agency.

   • Each OA and SO shall:
     1. Establish and maintain tracking mechanisms for recording receipt of audit reports requiring corrective actions and monitoring the status of these actions. Recipients shall be instructed to submit an appropriate number of copies of audit reports directly to the Bureau of Census Federal Audit Clearinghouse.

     2. Establish and enforce appropriate audit coverage for recipients not covered under OMB Circular A-133. Audit requirements for these recipients shall be established and performed for the program in a manner that ensures the Federal interest is adequately protected.

   • Each OA and SO assigned cognizant administrative responsibility for a recipient shall:
     1. Insure that audits are made and reports are distributed in a timely manner.

     2. Issue management decisions on audit findings within 6 months, and ensure that recipients take prompt corrective action. Copies shall be submitted to the OIG and other appropriate officials.

     3. Consider auditor requests for extensions of report submission due date, with the advice and assistance of the OIG.

     4. Negotiate with recipients to correct system deficiencies and resolve questioned costs for findings that affect two or more OAs/SOs. If agreed to by the cognizant agency and OAs/SOs, specific DOT-related deficiencies or questioned costs may be resolved by the affected OA/SO.