May 28, 2013
TO THE ADMINISTRATOR ADDRESSED:
SUBJECT: Overview of process related to A-133 single audits
The purpose of this letter is to provide you with details of a process that may affect local educational agencies (LEAs)-school districts and open-enrollment charter schools-that receive federal grant funds and that are also required to complete single audits under the requirements given in Office of Management and Budget (OMB) Circular A-133.
An LEA is required to complete a single audit when it expends $500,000 or more in federal grant funds in a fiscal year. The audit is conducted by the LEA's independent auditor for fiscal each year in which the $500,000 threshold is reached, and the resulting report is submitted to TEA's Division of Financial Compliance with the LEA's annual financial and compliance report. TEA reviews each single audit report and identifies LEAs whose report contains single audit findings related to federal grants awarded through TEA by a federal agency. The process described in this letter only applies to LEAs with findings in their single audit reports, and does not address findings related to federal grants awarded directly to an LEA by other agencies.
TEA will notify those LEAs whose single audit findings require them to participate in this process. You do not need to take any action unless you receive a letter from TEA about your LEA's single audit findings.
Please note that LEAs that expend less than $500,000 in a fiscal year, while exempt from the single audit requirement, must still make their records available for review or audit as appropriate. [See OMB Circular A-133, Subpart B,§___.200(d).]
After LEAs with single audit findings have been identified, staff from TEA's Office for Grants and Federal Fiscal Compliance do the following:
- Carefully review each finding. The findings may indicate that the LEA failed to comply with certain grant requirements, and may include questioned costs. Depending on the nature of the findings, TEA may require the LEA to complete an assurance form that indicates if the LEA agrees or disagrees with each finding. TEA may also require the LEA to submit additional documents, such as the independent auditor's working papers and a corrective action plan. [See OMB Circular A-133, Subpart E, §___.515(b) and Subpart C, §___.320(c)(4).]
- Issue a management decision for each finding. The management decision may include an enforcement action that will require the LEA to return federal funds to TEA. [See OMB Circular A-133, Subpart D, §___.400(d)(5).]
- Follow up with the LEA as necessary to ensure that its corrective action plan is implemented. [See OMB Circular A-133, Subpart C, §___.315 and Subpart D, §___.400(d)(5).]
The Office for Grants and Federal Fiscal Compliance carries out this process to comply with Subpart D of OMB Circular A-133, and, in addition, to carry out its fiduciary responsibility to monitor subrecipient compliance with federal grant requirements.
TEA is required to issue a management decision regarding single audit findings by OMB Circular A-133, Subpart D, §___.400(d)(5).
Consequences of Failing to Cooperate
Please be advised that LEAs must comply with all requests from the Office for Grants and Federal Fiscal Compliance related to the single audit process described in this letter. Failure to cooperate in a timely and adequate manner can result in TEA seeking to take enforcement action against an LEA unrelated to any subsequent actions that may be taken because of findings in the single audit. TEA is authorized by Title 34 of the Code of Federal Regulations, §80.43 or §74.62, as applicable, to take one or more of the following enforcement actions related to federal grants as appropriate:
- Temporarily withhold cash payments pending correction of the deficiency or more severe enforcement action.
- Disallow all or part of the cost of an activity or action not in compliance.
- Wholly or partly suspend or terminate the current award.
- Withhold further awards for the program.
- Take other remedies that may be legally available.
If you have questions about this process, please contact Mary Aleman at (512) 463-9918.
Nora Ibáñez Hancock, EdD
Office for Grants and Federal Fiscal Compliance