Common use of Audit Standards Clause in Contracts

Audit Standards. a. The audit will be designed to increase the accountability for the expenditure of federal, state, local, and other funds utilized by the subcontractors and subgrantees of DAODAS. The audit will apply to the entire operation of an agency. Audits of individual departments and agencies may be considered a single audit when conducted on a county government body by an independent auditor, and will comply with 2CFR 200 Uniform Guidance. b. DAODAS audit policy hereby defines “audit” as including financial as well as economy and efficiency audits according to the Generally Accepted Government Auditing Standards (also known as The Yellow Book), to include SAS 112 (Statement on Auditing Standards), which requires the auditor to report in writing to management and the governing body any control deficiencies found during the audit that are considered significant deficiencies and/or material weaknesses. c. As governmental funds are accounted for on the modified accrual basis of accounting, the audit report must be prepared on the same basis. In addition, the financial statements and schedules must be in conformity with Generally Accepted Accounting Principles (GAAP). Under the modified accrual basis of accounting, expenditures are measurable and should be recorded when the related liability is incurred. Revenues are recognized in the accounting period when they become available and measurable. DAODAS reimbursements not received before the end of the state fiscal year must be shown as accounts receivable in the programs in which they are due in order to match revenue with the proper year. d. DAODAS adopts the principles for determining allowable and unallowable costs as provided in the Uniform Guidance. All costs allocated to a program must be recorded in that program, supported by proper documentation, and procured competitively. e. The audit report shall include the following: i. An auditor’s opinion on whether the basic financial statements present fairly the financial position of the agency and the results of its financial operations in accordance with GAAP, and an opinion as to whether the schedule of expenditures of federal awards is fairly stated in relation to the financial statements taken as a whole. ii. A report on compliance and internal control over financial reporting based on an audit of financial statements in accordance with Generally Accepted Government Auditing Standards. The report shall describe the scope of testing, the results of the tests and, where applicable, refer to a separate schedule of findings and questioned costs. An opinion on the overall internal control system is not required. iii. A Supplementary Schedule of Expenditures of Federal Awards that complies with the Uniform Guidance. Federal programs or grants that have not been assigned a catalog number shall be identified under the caption “Other Federal Assistance.” In addition, an opinion on this supplementary information schedule must be provided either in the report on the financial statements or in a separate report. iv. A report on compliance with requirements applicable to each major program and internal control over compliance in accordance with the Uniform Guidance. The v. A schedule of findings and questioned costs in accordance with 2CFR 200 Uniform Guidance. vi. A schedule of findings and responses for subcontractors and subgrantees of DAODAS not subject to the 2CFR 200 Uniform Guidance audit. f. Subgrantee receiving DAODAS funds will prepare as part of the audit report, at a minimum, the following financial statements and schedules: i. Combined balance sheet – all fund types and account groups; ii. Combined statement of revenues, expenditures, and changes in fund balances – budget and actual – general and special revenue fund types; iii. Individual statements of revenues, expenditures, and changes in fund balances for each class code (i.e., program {Outpatient, ADSAP, etc.}) to demonstrate compliance with Contract provisions. These statements must be in accordance with the requirements promulgated by DAODAS and must be reconciled to the disbursement schedule issued by DAODAS. Any discrepancies must be noted in the agency’s audit. iv. A supplementary schedule concerning any investments, reporting the amount invested in each (such as money market account, certificate of deposit, savings account) and the interest earned on each investment. g. After the above mandatory schedules and statements, any of the following that pertain must be submitted: i. Any management letter associated with the audit. ii. A list of federal, state, or local agencies to which the report was distributed. iii. Any corrective actions that were recommended or taken on current or prior audit findings. iv. Status of recommendations in prior audits. h. Subgrantee shall provide – at the time of submission of any audit report to DAODAS – comments on the findings and recommendations contained in the audit report. The submission must include corrective actions planned or taken for each audit finding and comments on the status of said corrective actions taken before the finalization of the audit. If Subgrantee does not agree with a finding, or believes that corrective action is not required, the corrective action plan shall include an explanation and specific reasons. i. Subgrantee shall forward two original copies of the audit report to the DAODAS Division of Finance and Operations no later than six months following the end of the fiscal year or thirty

Audit Standards. a. The audit will be designed to increase the accountability for the expenditure of federal, state, local, and other funds utilized by the subcontractors and subgrantees of DAODAS. The audit will apply to the entire operation of an agency. Audits of individual departments and agencies may be considered a single audit when conducted on a county government body by an independent auditor, and will comply with 2CFR 200 Uniform Guidance. b. DAODAS audit policy hereby defines “audit” as including financial as well as economy and efficiency audits according to the Generally Accepted Government Auditing Standards (also known as The Yellow Book), to include SAS 112 (Statement on Auditing Standards), which requires the auditor to report in writing to management and the governing body any control deficiencies found during the audit that are considered significant deficiencies and/or material weaknesses. c. As governmental funds are accounted for on the modified accrual basis of accounting, the audit report must be prepared on the same basis. In addition, the financial statements and schedules must be in conformity with Generally Accepted Accounting Principles (GAAP). Under the modified accrual basis of accounting, expenditures are measurable and should be recorded when the related liability is incurred. Revenues are recognized in the accounting period when they become available and measurable. DAODAS reimbursements not received before the end of the state fiscal year must be shown as accounts receivable in the programs in which they are due in order to match revenue with the proper year. d. DAODAS adopts the principles for determining allowable and unallowable costs as provided in the Uniform Guidance. All costs allocated to a program must be recorded in that program, supported by proper documentation, and procured competitively. e. The audit report shall include the following: i. An auditor’s opinion on whether the basic financial statements present fairly the financial position of the agency and the results of its financial operations in accordance with GAAP, and an opinion as to whether the schedule of expenditures of federal awards is fairly stated in relation to the financial statements taken as a whole. ii. A report on compliance and internal control over financial reporting based on an audit of financial statements in accordance with Generally Accepted Government Auditing Standards. The report shall describe the scope of testing, the results of the tests and, where applicable, refer to a separate schedule of findings and questioned costs. An opinion on the overall internal control system is not required. iii. A Supplementary Schedule of Expenditures of Federal Awards that complies with the Uniform Guidance. Federal programs or grants that have not been assigned a catalog number shall be identified under the caption “Other Federal Assistance.” In addition, an opinion on this supplementary information schedule must be provided either in the report on the financial statements or in a separate report. iv. A report on compliance with requirements applicable to each major program and internal control over compliance in accordance with the Uniform Guidance. TheThe report shall include the auditor’s opinion regarding compliance and, where applicable, refer to a separate schedule of findings and questioned costs. v. A schedule of findings and questioned costs in accordance with 2CFR 200 Uniform Guidance. vi. A schedule of findings and responses for subcontractors and subgrantees of DAODAS not subject to the 2CFR 200 Uniform Guidance audit. f. Subgrantee receiving DAODAS funds will prepare as part of the audit report, at a minimum, the following financial statements and schedules: i. Combined combined balance sheet – all fund types and account groups; ii. Combined combined statement of revenues, expenditures, and changes in fund balances – budget and actual – general and special revenue fund types; iii. Individual individual statements of revenues, expenditures, and changes in fund balances for each class cost center code (i.e., program {Outpatient, ADSAP, etc.}) to demonstrate compliance with Contract provisions. These statements must be in accordance with the requirements promulgated by DAODAS and must be reconciled to the disbursement schedule issued by DAODAS. Any discrepancies must be noted in the agency’s audit.; iv. A supplementary schedule concerning any investments, reporting the amount invested in each (such as money market account, certificate of deposit, savings account) and the interest earned on each investment. g. After the above mandatory schedules and statements, any of the following that pertain must be submitted: i. Any any management letter associated with the audit.; ii. A a list of federal, state, or local agencies to which the report was distributed.; iii. Any any corrective actions that were recommended or taken on current or prior audit findings. ; and iv. Status status of recommendations in prior audits. h. Subgrantee shall provide – at the time of submission of any audit report to DAODAS – comments on the findings and recommendations contained in the audit report. The submission must include corrective actions planned or taken for each audit finding and comments on the status of said corrective actions taken before the finalization of the audit. If Subgrantee does not agree with a finding, or believes that corrective action is not required, the corrective action plan shall include an explanation and specific reasons.The i. Subgrantee shall forward two (2) original copies of the audit report to the DAODAS Division of Finance and Operations no later than six (6) months following the end of the fiscal year or thirtythirty (30) days after the audit is completed, whichever is earlier. A copy of the engagement letter and the audit firm’s peer-review document(s) must accompany the audit report. j. Subgrantee agrees to engage reliable and competent audit services by a firm licensed by the South Carolina Board of Accountancy or other State Board of Accountancy to ensure that the above deadline is met. k. Subgrantee further understands that federal funding may be suspended by DAODAS if the above deadline is not met, and that suspension of funding will exist until such time as the audit report is received and accepted by DAODAS.