Audits of States, Local Governments, and Non-Profit Organizations, 34985-34986 [05-11840]

Agencies

• Office of the Chief Financial Officer
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 70, Number 115 (Thursday, June 16, 2005)]
[Rules and Regulations]
[Pages 34985-34986]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-11840]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 70, No. 115 / Thursday, June 16, 2005 / Rules 
and Regulations

[[Page 34985]]



DEPARTMENT OF AGRICULTURE

Office of the Chief Financial Officer

7 CFR Part 3052


Audits of States, Local Governments, and Non-Profit Organizations

AGENCY: Office of the Chief Financial Officer, USDA.

ACTION: Direct final rule.

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SUMMARY: The United States Department of Agriculture (USDA) is amending 
7 CFR part 3052 to implement the Office of Management and Budget (OMB) 
revisions to Circular No. A-133. These amendments increase the 
threshold for audit from $300,000 to $500,000; increase the threshold 
for cognizant agency for audit from $25 million to $50 million; make 
related technical changes to facilitate the determination of cognizant 
agency for audit; and provide for Federal agency reassignment of 
oversight agency for audit.

DATES: This rule will be effective August 15, 2005, unless written 
adverse comments within the scope of this rulemaking or written notice 
of intent to submit them are received by August 30, 2005. If USDA 
receives adverse comments, the Federal Register will report on the 
rule's nullification.

ADDRESSES: You may submit comments by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: matthew.faulkner@usda.gov. Include Regulatory 
Information Number (RIN) number 0505-AA12 in the subject line of the 
message.
     Fax: (202) 690-1529.
     Mail: OCFO/CTGP Room 3425A-S, Stop 9010, 1400 Independence 
Avenue, SW., Washington, DC 20250-9020.
     Hand Delivery/Courier: OCFO/CTGP Room 3425A-S, Stop 9010, 
1400 Independence Avenue, SW., Washington, DC 20250-9010.
    Instructions: All submissions received must include the agency name 
and docket number or RIN for this rulemaking. All comments received 
will be posted without change to https://www.regulations.gov, including 
any personal information provided. For detailed instructions on 
submitting comments and additional information on the rulemaking 
process, see the ``Public Participation'' heading of the SUPPLEMENTARY 
INFORMATION section of this document.
     Docket: For access to the docket to read background 
documents or comments received, contact Matthew Faulkner at 
matthew.faulkner@usda.gov or at: OCFO/CTGP Room 3425A-S, Stop 9010, 
Room 1400 Independence Avenue, SW., Washington, DC 20250-9020.

FOR FURTHER INFORMATION CONTACT: Matthew Faulkner, Office of the Chief 
Financial Officer, Credit, Travel and Grants Policy Division, United 
States Department of Agriculture, (202) 720-1307, 
matthew.faulkner@usda.gov.

SUPPLEMENTARY INFORMATION: Previously, USDA promulgated 7 CFR part 3052 
to implement OMB Circular No. A-133, ``Audits of States, Local 
Governments, and Non-Profit Organizations.'' The Office of Management 
and Budget (OMB) has published the aforementioned final revisions (68 
FR 38401, June 27, 2003). Through this rulemaking, USDA is amending its 
implementing regulations at part 3052 to conform to the revised 
circular.
    OMB made the following changes in the final revision to Circular 
No. A-133, ``Audits of States, Local Governments, and Non-Profit 
Organizations.'' The revisions (1) increase the threshold for audit 
from $300,000 to $500,000; (2) increase the threshold for cognizant 
agency for audit from $25 million to $50 million; and (3) make related 
technical changes to facilitate the determination of cognizant agency 
for audit and provide for Federal agency reassignment of oversight 
agency for audit. There are not additional substantive changes. For a 
discussion of the rationale and public comments regarding the OMB 
revisions, please see the published final OMB notices in the June 27, 
2003, Federal Register (68 FR 38401).
    Through this Direct Final Rule, USDA is implementing these changes 
verbatim.

Impact Analysis

Executive Order 12866

    Executive Order 12866 requires that a regulatory impact analysis be 
prepared for ``significant regulatory actions.'' This order defines a 
significant regulatory action as any rule that affects the national 
economy by at least $100 million or has other specified effects.
    USDA does not believe that the rule will be a significant 
regulatory action.

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988, Civil Justice Reform. The provisions of this proposed rule 
neither preempt State laws nor involve administrative appeals. These 
amendments are effective retroactively to January 1, 2004.

Executive Order 13132

    It has been determined that this rule does not have sufficient 
federalism implications to warrant a Federalism Assessment. The 
provisions contained in this rulemaking will not affect States or their 
political subdivisions substantially. They also will not impact the 
distribution of power and responsibilities among the various levels of 
government substantially.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires an 
analysis to be prepared for each rule with a significant economic 
impact on a substantial number of small entities. The analysis should 
describe the rule's impact on small entities and identify any 
significant alternatives to the rule that would minimize the economic 
impact on such entities. Section 605 of the Regulatory Flexibility Act 
allows USDA to certify a rule, in lieu of preparing an analysis, if the 
proposed rulemaking is not expected to have such an impact.
    USDA certifies that this rule would not have the aforementioned 
impact. The final rule will have a positive impact on small businesses 
because of the assistance these entities receive from other agencies. 
It also will ease the administrative requirements for USDA to offer 
financial assistance.

[[Page 34986]]

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) requires agencies to prepare several analyses before 
proposing any rule that may result in annual expenditures of at least 
$100 million annually by State, local and Indian tribal governments, or 
the private sector. USDA certifies that this rule will not result in 
expenditures of this magnitude.

Paperwork Reduction Act of 1995

    This rule will not impose additional reporting or record keeping 
requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35).

List of Subjects in 7 CFR Part 3052

    Accounting, Grant programs, Intergovernmental relations, Nonprofit 
organizations, Reporting and recordkeeping requirements.


0
For the reasons set forth in the preamble, part 3052 of Chapter XXX of 
Title 7 of the Code of Federal Regulations is amended as follows:

PART 3052--AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON-
PROFITORGANIZATIONS

0
1. The authority citation for part 3052 continues to read as follows:

    Authority: 5 U.S.C. 301.

0
2. Amend Sec.  3052.105 by revising the definition of ``Oversight 
agency for audit'' to read as follows:


Sec.  3052.105  Definitions.

* * * * *
    Oversight agency for audit means the Federal awarding agency that 
provides the predominant amount of direct funding to a recipient not 
assigned a cognizant agency for audit. When there is no direct funding, 
the Federal agency with the predominant indirect funding shall assume 
the oversight responsibilities. The duties of the oversight agency for 
audit are described in Sec.  3052.400(b). A Federal agency with 
oversight for an auditee may reassign oversight to another Federal 
agency, which provides substantial funding and agrees to be the 
oversight agency for audit. Within 30 days after any reassignment, both 
the old and the new oversight agency for audit shall notify the 
auditee, and, if known, the auditor of the reassignment.
* * * * *

0
3. Amend Sec.  3052.400 by revising paragraph (a) to read as follows:


Sec.  3052.400  Responsibilities.

    (a) Cognizant agency for audit responsibilities. Recipients 
expending more than $50 million in a year in Federal awards shall have 
a cognizant agency for audit. The designated cognizant agency for audit 
shall be the Federal awarding agency that provides the predominant 
amount of direct funding to a recipient unless OMB makes a specific 
cognizant agency for audit assignment. The determination of the 
predominant amount of direct funding shall be based upon direct Federal 
awards expended in the recipient's fiscal years ending in 2004, 2009, 
2014, and every fifth year thereafter. For example, audit cognizance 
for periods ending in 2006 through 2010 will be determined based on 
Federal awards expended in 2004. (However, for 2001 through 2005, the 
cognizant agency for audit is determined based on the predominant 
amount of direct Federal awards expended in the recipient's fiscal year 
ending in 2000.) Notwithstanding the manner in which audit cognizance 
is determined, a Federal awarding agency with cognizance for an auditee 
may reassign cognizance to another Federal awarding agency which 
provides substantial direct funding and agrees to be the cognizant 
agency for audit. Within 30 days after any reassignment, both the old 
and the new cognizant agency for audit shall notify the auditee, and, 
if known, the auditor of the reassignment. The cognizant agency for 
audit shall:
    (1) Provide technical audit advice and liaison to auditees and 
auditors.
    (2) Consider auditee requests for extensions to the report 
submission due date required by Sec.  3052.320(a). The cognizant agency 
for audit may grant extensions for good cause.
    (3) Obtain or conduct quality control reviews of selected audits 
made by non-Federal auditors, and provide the results, when 
appropriate, to other interested organizations.
    (4) Promptly inform other affected Federal agencies and appropriate 
Federal law enforcement officials of any direct reporting by the 
auditee or its auditor of irregularities or illegal acts, as required 
by GAGAS or laws and regulations.
    (5) Advise the auditor and, where appropriate, the auditee of any 
deficiencies found in the audits when the deficiencies require 
corrective action by the auditor. When advised of deficiencies, the 
auditee shall work with the auditor to take corrective action. If 
corrective action is not taken, the cognizant agency for audit shall 
notify the auditor, the auditee, and applicable Federal awarding 
agencies and pass-through entities of the facts and make 
recommendations for follow-up action. Major inadequacies or repetitive 
substandard performance by auditors shall be referred to appropriate 
State licensing agencies and professional bodies for disciplinary 
action.
    (6) Coordinate, to the extent practical, audits or reviews made by 
or for Federal agencies that are in addition to the audits made 
pursuant to this part, so that the additional audits or reviews build 
upon audits performed in accordance with this part.
    (7) Coordinate a management decision for audit findings that affect 
the Federal programs of more than one agency.
    (8) Coordinate the audit work and reporting responsibilities among 
auditors to achieve the most cost-effective audit.
    (9) For biennial audits permitted under Sec.  3052.220, consider 
auditee requests to qualify as a low-risk auditee under Sec.  
3052.530(a).
* * * * *


Sec. Sec.  3052.200, 3052.230, 3052.400  [Amended]

0
4. In addition to the amendments set forth above, in 7 CFR part 3052 
remove the term ``$300,000'' and add, in its place, the term 
``$500,000'' in the following places:
    (a) Section 3052.200(a), (b), and (d);
    (b) Section 3052.230(b)(2); and
    (c) Section 3052.400 (d)(4).

    Dated: May 9, 2005.
Patricia E. Healy,
Acting Chief Financial Officer.
    Dated: May 11, 2005.
Mike Johanns,
Secretary, United States Department of Agriculture.
[FR Doc. 05-11840 Filed 6-15-05; 8:45 am]
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