Monitoring of Single-Audit Findings
As part of its subrecipient monitoring functions, the Federal Fiscal Monitoring Division reviews the single-audit reports for federal grant subrecipients that receive federal grants from TEA. This monitoring is done to ensure that federal grants are used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of federal awards, a requirement given to TEA in Title 2 of the Code of Federal Regulations (CFR), 200.331. This web page describes single-audit requirements for both subrecipients and TEA, the monitoring process, and what you can expect if your organization’s single-audit contains findings.
Subrecipient Single-Audit Requirements
An organization must have a single-audit conducted by an independent auditor if it expends $750,000 or more in federal grant funds in that fiscal year. This requirement is given in 2 CFR 200.501(a).
Submitting the Single-Audit Report to TEA
Subrecipients that are local education agencies (LEAs), such as school districts and open-enrollment charter schools, must submit the single-audit report to TEA with their annual financial and compliance reports (AFRs) and must also submit their AFRs to the Federal Audit Clearinghouse. More information about submitting the AFR to TEA is available online from the TEA Financial Compliance Division.
Subrecipients that are not LEAs, such as nonprofit organizations, must also submit their single-audit reports to TEA. If your organization receives federal grants funds, TEA will send you a letter each fiscal year asking you to submit your single-audit report or to certify that the requirement does not apply to your organization because you did not expend more than $750,000 in federal grant funds.
Other Requirements for Subrecipients
Subrecipients of federal grant funds must comply with all of the single-audit requirements for auditees given in 2 CFR 200.508.
Single-Audit Requirement for TEA
TEA is required by 2 CFR 200.331(d)(3) and 200.521(a) and (c) to issue a management decision for all findings in a subrecipient’s single-audit report that involve federal grants awarded by TEA. The management decision states whether the agency sustains or does not sustain each single-audit finding and the reason for doing so.
The agency must issue the management decision within six months of either the date it receives the single-audit report or the date the report is accepted by the Federal Audit Clearinghouse, whichever is earliest.
TEA is also required to follow up with subrecipients to ensure they complete corrective actions that address the findings. The management decision includes any corrective actions that need to be completed and a deadline for completion. Some corrective actions may include an enforcement action that requires the subrecipient to return federal funds to TEA. TEA's requirements to follow up on single-audit findings are given in 2 CFR 200.331(d)(2) and 200.521(a).
TEA’s Single-Audit Monitoring Process
Federal Fiscal Monitoring Division staff review each single-audit report and each finding related to federal grants administered by TEA identified by an independent auditor.
Sustaining or Not Sustaining Each Finding
Division staff carefully review the single-audit report and the subrecipient's management response for each finding in making the determination to sustain or not sustain the finding. In general, division staff sustain a finding, unless they determine that at least one of the following is true:
- The independent auditor misinterpreted federal statute.
- There is new federal guidance that was not available to the auditor when the single-audit was conducted.
As part of their review, division staff verify that the independent auditor applied the correct federal regulations when conducting the single audit. If the independent auditor did not apply the correct regulations, division staff may not sustain the finding.
Findings with Questioned Costs
If your single-audit findings include questioned costs, staff may correspond with you about specific questions related to the questioned costs.
TEA may also ask you about questioned costs not identified in the single-audit report, but which staff believe the independent auditor should have associated with a certain finding. In this situation, staff will instruct you to contact your independent auditor, who must calculate a questioned cost amount.
The Management Decision
Once division staff decide to sustain or not sustain each of your organization's findings, they issue the management decision, which will give the reason for each decision. The management decision will include corrective actions required to address the findings and timeline to complete them.
If you have not already completed corrective actions to address each single-audit finding, your organization's management decision will include a specific required action and a deadline for completion. For example, if a finding was related to missing time and effort documentation, TEA may require you to submit a copy of your internal policies and procedures to demonstrate that you have addressed the documentation issue.
If TEA sustains findings with questioned costs, it will usually disallow the costs and impose a corrective action that requires your organization to return funds to TEA. Your organization's management decision will include the refund amount, the deadline for submitting the refund, and other information.
Your organization may also have to complete corrective actions for findings with questioned costs.
Please see the Corrective Actions Related to Federal Grants and Opportunity for a Hearing page for more information about corrective actions and enforcement actions.
Notice of Agency Policy
TEA conducts federal fiscal grant subrecipient monitoring and compliance reviews, and implements related enforcement actions, in accordance with its established policies and procedures. These policies and procedures incorporate best practices and standards that may be similar to common auditing standards, but the agency does not apply a specific set of external standards, such as the US Government Accountability Office’s Generally Accepted Government Auditing Standards (Yellow Book), nor is it required to do so.