---
kind: "range"
citation: "31 U.S.C. §§ 7501–7505"
title: "31"
from: "7501"
to: "7505"
count: 5
release: "119-102"
url: "https://uscodex.org/usc/31/7501..7505"
---

# §7501. Definitions

- (a) As used in this chapter, the term—
  - (1) “Comptroller General” means the Comptroller General of the United States;
  - (2) “Director” means the Director of the Office of Management and Budget;
  - (3) “Federal agency” has the same meaning as the term “agency” in [section 551(1) of title 5](/usc/5/551.md?p=1);
  - (4) “Federal awards” means [Federal financial assistance](#a-5) and Federal cost-reimbursement contracts that [non-Federal entities](#a-13) receive directly from Federal awarding [agencies](#a-3) or indirectly from [pass-through entities](#a-15);
  - (5) “Federal financial assistance” means assistance that [non-Federal entities](#a-13) receive or administer in the form of grants, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, or other assistance, but does not include amounts received as reimbursement for services rendered to individuals in accordance with guidance issued by the [Director](#a-2);
  - (6) “Federal program” means all [Federal awards](#a-4) to a [non-Federal entity](#a-13) assigned a single number in the Catalog of Federal Domestic Assistance or encompassed in a group of numbers or other category as defined by the [Director](#a-2);
  - (7) “generally accepted government auditing standards” means the government auditing standards issued by the [Comptroller General](#a-1);
  - (8) “independent auditor” means—
    - (A) an external [State](#a-19) or [local government](#a-11) auditor who meets the independence standards included in [generally accepted government auditing standards](#a-7); or
    - (B) a public accountant who meets such independence standards;
  - (9) “Indian tribe” means any Indian tribe, band, nation, or other organized group or community, including any Alaskan Native village or regional or village corporation (as defined in, or established under, the Alaskan Native [Claims](/usc/31/3701.md?p=b-2) Settlement Act) that is recognized by the United States as eligible for the special programs and services provided by the United States to Indians because of their status as Indians;
  - (10) “internal controls” means a process, effected by an entity’s management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
    - (A) Effectiveness and efficiency of operations.[^1]
    - (B) Reliability of financial reporting.[^1]
    - (C) Compliance with applicable laws and regulations;
  - (11) “local government” means any unit of local government within a [State](#a-19), including a county, borough, municipality, city, town, township, parish, local public authority, special district, school district, intrastate district, council of governments, any other instrumentality of local government and, in accordance with guidelines issued by the [Director](#a-2), a group of local governments;
  - (12) “major program” means a [Federal program](#a-6) identified in accordance with risk-based criteria prescribed by the [Director](#a-2) under this chapter, subject to the limitations described under [subsection (b)](#b);
  - (13) “non-Federal entity” means a [State](#a-19), [local government](#a-11), or [nonprofit organization](#a-14);
  - (14) “nonprofit organization” means any corporation, trust, association, cooperative, or other organization that—
    - (A) is operated primarily for scientific, educational, service, charitable, or similar purposes in the public interest;
    - (B) is not organized primarily for profit; and
    - (C) uses net proceeds to maintain, improve, or expand the operations of the organization;
  - (15) “pass-through entity” means a [non-Federal entity](#a-13) that provides [Federal awards](#a-4) to a [subrecipient](#a-20) to carry out a [Federal program](#a-6);
  - (16) “program-specific audit” means an audit of one [Federal program](#a-6);
  - (17) “recipient” means a [non-Federal entity](#a-13) that receives awards directly from a Federal [agency](#a-3) to carry out a [Federal program](#a-6);
  - (18) “single audit” means an audit, as described under [section 7502(d)](/usc/31/7502.md?p=d), of a [non-Federal entity](#a-13) that includes the entity’s financial statements and [Federal awards](#a-4);
  - (19) “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands, any instrumentality thereof, any multi-State, regional, or interstate entity which has governmental functions, and any [Indian tribe](#a-9); and
  - (20) “subrecipient” means a [non-Federal entity](#a-13) that receives [Federal awards](#a-4) through another [non-Federal entity](#a-13) to carry out a [Federal program](#a-6), but does not include an individual who receives financial assistance through such awards.
- (b) In prescribing risk-based program selection criteria for [major programs](#a-12), the [Director](#a-2) shall not require more programs to be identified as major for a particular [non-Federal entity](#a-13), except as prescribed under [subsection (c)](#c) or as provided under [subsection (d)](#d), than would be identified if the [major programs](#a-12) were defined as any program for which total expenditures of [Federal awards](#a-4) by the [non-Federal entity](#a-13) during the applicable year exceed—
  - (1) the larger of $30,000,000 or 0.15 percent of the [non-Federal entity](#a-13)’s total Federal expenditures, in the case of a [non-Federal entity](#a-13) for which such total expenditures for all programs exceed $10,000,000,000;
  - (2) the larger of $3,000,000, or 0.30 percent of the [non-Federal entity](#a-13)’s total Federal expenditures, in the case of a [non-Federal entity](#a-13) for which such total expenditures for all programs exceed $100,000,000 but are less than or equal to $10,000,000,000; or
  - (3) the larger of $300,000, or 3 percent of such total Federal expenditures for all programs, in the case of a [non-Federal entity](#a-13) for which such total expenditures for all programs equal or exceed $300,000 but are less than or equal to $100,000,000.
- (c) When the total expenditures of a [non-Federal entity](#a-13)’s [major programs](#a-12) are less than 50 percent of the [non-Federal entity](#a-13)’s total expenditures of all [Federal awards](#a-4) (or such lower percentage as specified by the [Director](#a-2)), the auditor shall select and test additional programs as [major programs](#a-12) as necessary to achieve audit coverage of at least 50 percent of Federal expenditures by the [non-Federal entity](#a-13) (or such lower percentage as specified by the [Director](#a-2)), in accordance with guidance issued by the [Director](#a-2).
- (d) Loan or loan guarantee programs, as specified by the [Director](#a-2), shall not be subject to the application of [subsection (b)](#b).

# §7502. Audit requirements; exemptions

- (a)
  - (1)
    - (A) Each [non-Federal entity](/usc/31/7501.md?p=a-13) that expends a total amount of [Federal awards](/usc/31/7501.md?p=a-4) equal to or in excess of $300,000 or such other amount specified by the [Director](/usc/31/7501.md?p=a-2) under [subsection (a)(3)](#a-3) in any fiscal year of such [non-Federal entity](/usc/31/7501.md?p=a-13) shall have either a [single audit](/usc/31/7501.md?p=a-18) or a [program-specific audit](/usc/31/7501.md?p=a-16) made for such fiscal year in accordance with the requirements of this chapter.
    - (B) Each such [non-Federal entity](/usc/31/7501.md?p=a-13) that expends [Federal awards](/usc/31/7501.md?p=a-4) under more than one [Federal program](/usc/31/7501.md?p=a-6) shall undergo a [single audit](/usc/31/7501.md?p=a-18) in accordance with the requirements of [subsections (b) through (i)](#b..i) of this section and guidance issued by the [Director](/usc/31/7501.md?p=a-2) under [section 7505](/usc/31/7505.md).
    - (C) Each such [non-Federal entity](/usc/31/7501.md?p=a-13) that expends awards under only one [Federal program](/usc/31/7501.md?p=a-6) and is not subject to laws, regulations, or Federal award agreements that require a financial statement audit of the [non-Federal entity](/usc/31/7501.md?p=a-13), may elect to have a [program-specific audit](/usc/31/7501.md?p=a-16) conducted in accordance with applicable provisions of this section and guidance issued by the [Director](/usc/31/7501.md?p=a-2) under [section 7505](/usc/31/7505.md).
  - (2)
    - (A) Each [non-Federal entity](/usc/31/7501.md?p=a-13) that expends a total amount of [Federal awards](/usc/31/7501.md?p=a-4) of less than $300,000 or such other amount specified by the [Director](/usc/31/7501.md?p=a-2) under [subsection (a)(3)](#a-3) in any fiscal year of such entity, shall be exempt for such fiscal year from compliance with—
      - (i) the audit requirements of this chapter; and
      - (ii) any applicable requirements concerning financial audits contained in Federal statutes and regulations governing programs under which such [Federal awards](/usc/31/7501.md?p=a-4) are provided to that [non-Federal entity](/usc/31/7501.md?p=a-13).
    - (B) The provisions of subparagraph (A)(ii) of this paragraph shall not exempt a [non-Federal entity](/usc/31/7501.md?p=a-13) from compliance with any provision of a Federal statute or regulation that requires such [non-Federal entity](/usc/31/7501.md?p=a-13) to maintain records concerning [Federal awards](/usc/31/7501.md?p=a-4) provided to such [non-Federal entity](/usc/31/7501.md?p=a-13) or that permits a Federal [agency](/usc/31/7501.md?p=a-3), [pass-through entity](/usc/31/7501.md?p=a-15), or the [Comptroller General](/usc/31/7501.md?p=a-1) access to such records.
  - (3) Every 2 years, the [Director](/usc/31/7501.md?p=a-2) shall review the amount for requiring audits prescribed under [paragraph (1)(A)](#a-1-A) and may adjust such dollar amount consistent with the purposes of this chapter, provided the [Director](/usc/31/7501.md?p=a-2) does not make such adjustments below $300,000.
- (b)
  - (1) Except as provided in paragraphs [(2)](#b-2) and [(3)](#b-3), audits conducted pursuant to this chapter shall be conducted annually.
  - (2) A [State](/usc/31/7501.md?p=a-19) or [local government](/usc/31/7501.md?p=a-11) that is required by constitution or statute, in effect on January 1, 1987, to undergo its audits less frequently than annually, is permitted to undergo its audits pursuant to this chapter biennially. Audits conducted biennially under the provisions of this paragraph shall cover both years within the biennial period.
  - (3) Any [nonprofit organization](/usc/31/7501.md?p=a-14) that had biennial audits for all biennial periods ending between July 1, 1992, and January 1, 1995, is permitted to undergo its audits pursuant to this chapter biennially. Audits conducted biennially under the provisions of this paragraph shall cover both years within the biennial period.
- (c) Each audit conducted pursuant to [subsection (a)](#a) shall be conducted by an [independent auditor](/usc/31/7501.md?p=a-8) in accordance with [generally accepted government auditing standards](/usc/31/7501.md?p=a-7), except that, for the purposes of this chapter, performance audits shall not be required except as authorized by the [Director](/usc/31/7501.md?p=a-2).
- (d) Each [single audit](/usc/31/7501.md?p=a-18) conducted pursuant to [subsection (a)](#a) for any fiscal year shall—
  - (1) cover the operations of the entire [non-Federal entity](/usc/31/7501.md?p=a-13); or
  - (2) at the option of such [non-Federal entity](/usc/31/7501.md?p=a-13) such audit shall include a series of audits that cover departments, [agencies](/usc/31/7501.md?p=a-3), and other organizational units which expended or otherwise administered [Federal awards](/usc/31/7501.md?p=a-4) during such fiscal year provided that each such audit shall encompass the financial statements and schedule of expenditures of [Federal awards](/usc/31/7501.md?p=a-4) for each such department, [agency](/usc/31/7501.md?p=a-3), and organizational unit, which shall be considered to be a [non-Federal entity](/usc/31/7501.md?p=a-13).
- (e) The auditor shall—
  - (1) determine whether the financial statements are presented fairly in all [material](/usc/31/3801.md?p=a-10) respects in conformity with generally accepted accounting principles;
  - (2) determine whether the schedule of expenditures of [Federal awards](/usc/31/7501.md?p=a-4) is presented fairly in all [material](/usc/31/3801.md?p=a-10) respects in relation to the financial statements taken as a whole;
  - (3) with respect to [internal controls](/usc/31/7501.md?p=a-10) pertaining to the compliance requirements for each [major program](/usc/31/7501.md?p=a-12)—
    - (A) obtain an understanding of such [internal controls](/usc/31/7501.md?p=a-10);
    - (B) assess control risk; and
    - (C) perform tests of controls unless the controls are deemed to be ineffective; and
  - (4) determine whether the [non-Federal entity](/usc/31/7501.md?p=a-13) has complied with the provisions of laws, regulations, and contracts or grants pertaining to [Federal awards](/usc/31/7501.md?p=a-4) that have a direct and [material](/usc/31/3801.md?p=a-10) effect on each [major program](/usc/31/7501.md?p=a-12).
- (f)
  - (1) Each Federal [agency](/usc/31/7501.md?p=a-3) which provides [Federal awards](/usc/31/7501.md?p=a-4) to a [recipient](/usc/31/7501.md?p=a-17) shall—
    - (A) provide such [recipient](/usc/31/7501.md?p=a-17) the program names (and any identifying numbers) from which such awards are derived, and the Federal requirements which govern the use of such awards and the requirements of this chapter; and
    - (B) review the audit of a [recipient](/usc/31/7501.md?p=a-17) as necessary to determine whether prompt and appropriate corrective action has been taken with respect to audit findings, as defined by the [Director](/usc/31/7501.md?p=a-2), pertaining to [Federal awards](/usc/31/7501.md?p=a-4) provided to the [recipient](/usc/31/7501.md?p=a-17) by the Federal [agency](/usc/31/7501.md?p=a-3).
  - (2) Each [pass-through entity](/usc/31/7501.md?p=a-15) shall—
    - (A) provide such [subrecipient](/usc/31/7501.md?p=a-20) the program names (and any identifying numbers) from which such assistance is derived, and the Federal requirements which govern the use of such awards and the requirements of this chapter;
    - (B) monitor the [subrecipient](/usc/31/7501.md?p=a-20)’s use of [Federal awards](/usc/31/7501.md?p=a-4) through site visits, limited scope audits, or other means;
    - (C) review the audit of a [subrecipient](/usc/31/7501.md?p=a-20) as necessary to determine whether prompt and appropriate corrective action has been taken with respect to audit findings, as defined by the [Director](/usc/31/7501.md?p=a-2), pertaining to [Federal awards](/usc/31/7501.md?p=a-4) provided to the [subrecipient](/usc/31/7501.md?p=a-20) by the [pass-through entity](/usc/31/7501.md?p=a-15); and
    - (D) require each of its [subrecipients](/usc/31/7501.md?p=a-20) of [Federal awards](/usc/31/7501.md?p=a-4) to permit, as a condition of receiving [Federal awards](/usc/31/7501.md?p=a-4), the [independent auditor](/usc/31/7501.md?p=a-8) of the [pass-through entity](/usc/31/7501.md?p=a-15) to have such access to the [subrecipient](/usc/31/7501.md?p=a-20)’s records and financial statements as may be necessary for the [pass-through entity](/usc/31/7501.md?p=a-15) to comply with this chapter.
- (g)
  - (1) The auditor shall report on the results of any audit conducted pursuant to this section, in accordance with guidance issued by the [Director](/usc/31/7501.md?p=a-2).
  - (2) When reporting on any [single audit](/usc/31/7501.md?p=a-18), the auditor shall include a summary of the auditor’s results regarding the [non-Federal entity](/usc/31/7501.md?p=a-13)’s financial statements, [internal controls](/usc/31/7501.md?p=a-10), and compliance with laws and regulations.
- (h) The [non-Federal entity](/usc/31/7501.md?p=a-13) shall transmit the reporting package, in an electronic form in accordance with the data standards established under [chapter 64](/usc/31/chstV-ch64.md) and which shall include the [non-Federal entity](/usc/31/7501.md?p=a-13)’s financial statements, schedule of expenditures of [Federal awards](/usc/31/7501.md?p=a-4), corrective action plan defined under [subsection (i)](#i), and auditor’s reports developed pursuant to this section, to a Federal clearinghouse designated by the [Director](/usc/31/7501.md?p=a-2), and make it available for public inspection within the earlier of—
  - (1) 30 days after receipt of the auditor’s report; or
  - (2)
    - (A) for a transition period of at least 2 years after the effective date of the Single Audit Act Amendments of 1996, as established by the [Director](/usc/31/7501.md?p=a-2), 13 months after the end of the period audited; or
    - (B) for fiscal years beginning after the period specified in [subparagraph (A)](#h-2-A), 9 months after the end of the period audited, or within a longer timeframe authorized by the Federal [agency](/usc/31/7501.md?p=a-3), determined under criteria issued under [section 7504](/usc/31/7504.md), when the 9-month timeframe would place an undue burden on the [non-Federal entity](/usc/31/7501.md?p=a-13).
- (i) If an audit conducted pursuant to this section discloses any audit findings, as defined by the [Director](/usc/31/7501.md?p=a-2), including [material](/usc/31/3801.md?p=a-10) noncompliance with individual compliance requirements for a [major program](/usc/31/7501.md?p=a-12) by, or reportable conditions in the [internal controls](/usc/31/7501.md?p=a-10) of, the [non-Federal entity](/usc/31/7501.md?p=a-13) with respect to the matters described in [subsection (e)](#e), the [non-Federal entity](/usc/31/7501.md?p=a-13) shall submit to Federal officials designated by the [Director](/usc/31/7501.md?p=a-2), a plan for corrective action to eliminate such audit findings or reportable conditions or a statement describing the reasons that corrective action is not necessary. Such plan shall be consistent with the audit resolution standard promulgated by the [Comptroller General](/usc/31/7501.md?p=a-1) (as part of the standards for [internal controls](/usc/31/7501.md?p=a-10) in the Federal Government) pursuant to [section 3512(c)](/usc/31/3512.md?p=c).
- (j) The [Director](/usc/31/7501.md?p=a-2) may authorize pilot projects to test alternative methods of achieving the purposes of this chapter. Such pilot projects may begin only after consultation with the Chair and Ranking Minority Member of the Committee on Governmental Affairs of the Senate and the Chair and Ranking Minority Member of the Committee on Government Reform and Oversight of the House of Representatives.

# §7503. Relation to other audit requirements

- (a) An audit conducted in accordance with this chapter shall be in lieu of any financial audit of [Federal awards](/usc/31/7501.md?p=a-4) which a [non-Federal entity](/usc/31/7501.md?p=a-13) is required to undergo under any other Federal law or regulation. To the extent that such audit provides a Federal [agency](/usc/31/7501.md?p=a-3) with the information it requires to carry out its responsibilities under Federal law or regulation, a Federal [agency](/usc/31/7501.md?p=a-3) shall rely upon and use that information.
- (b) Notwithstanding [subsection (a)](#a), a Federal [agency](/usc/31/7501.md?p=a-3) may conduct or arrange for additional audits which are necessary to carry out its responsibilities under Federal law or regulation. The provisions of this chapter do not authorize any [non-Federal entity](/usc/31/7501.md?p=a-13) (or [subrecipient](/usc/31/7501.md?p=a-20) thereof) to constrain, in any manner, such [agency](/usc/31/7501.md?p=a-3) from carrying out or arranging for such additional audits, except that the Federal [agency](/usc/31/7501.md?p=a-3) shall plan such audits to not be duplicative of other audits of [Federal awards](/usc/31/7501.md?p=a-4).
- (c) The provisions of this chapter do not limit the authority of Federal [agencies](/usc/31/7501.md?p=a-3) to conduct, or arrange for the conduct of, audits and evaluations of [Federal awards](/usc/31/7501.md?p=a-4), nor limit the authority of any Federal [agency](/usc/31/7501.md?p=a-3) Inspector General or other Federal official.
- (d) [Subsection (a)](#a) shall apply to a [non-Federal entity](/usc/31/7501.md?p=a-13) which undergoes an audit in accordance with this chapter even though it is not required by [section 7502(a)](/usc/31/7502.md?p=a) to have such an audit.
- (e) A Federal [agency](/usc/31/7501.md?p=a-3) that provides [Federal awards](/usc/31/7501.md?p=a-4) and conducts or arranges for audits of [non-Federal entities](/usc/31/7501.md?p=a-13) receiving such awards that are in addition to the audits of [non-Federal entities](/usc/31/7501.md?p=a-13) conducted pursuant to this chapter shall, consistent with other applicable law, arrange for funding the full cost of such additional audits. Any such additional audits shall be coordinated with the Federal [agency](/usc/31/7501.md?p=a-3) determined under criteria issued under [section 7504](/usc/31/7504.md) to preclude duplication of the audits conducted pursuant to this chapter or other additional audits.
- (f) Upon request by a Federal [agency](/usc/31/7501.md?p=a-3) or the [Comptroller General](/usc/31/7501.md?p=a-1), any [independent auditor](/usc/31/7501.md?p=a-8) conducting an audit pursuant to this chapter shall make the auditor’s working papers available to the Federal [agency](/usc/31/7501.md?p=a-3) or the [Comptroller General](/usc/31/7501.md?p=a-1) as part of a quality review, to resolve audit findings, or to carry out oversight responsibilities consistent with the purposes of this chapter. Such access to auditor’s working papers shall include the right to obtain copies.

# §7504. Federal agency responsibilities and relations with non-Federal entities

- (a) Each Federal [agency](/usc/31/7501.md?p=a-3) shall, in accordance with guidance issued by the [Director](/usc/31/7501.md?p=a-2) under [section 7505](/usc/31/7505.md), with regard to [Federal awards](/usc/31/7501.md?p=a-4) provided by the [agency](/usc/31/7501.md?p=a-3)—
  - (1) monitor [non-Federal entity](/usc/31/7501.md?p=a-13) use of [Federal awards](/usc/31/7501.md?p=a-4);
  - (2) assess the quality of audits conducted under this chapter for audits of entities for which the [agency](/usc/31/7501.md?p=a-3) is the single Federal [agency](/usc/31/7501.md?p=a-3) determined under [subsection (b)](#b);
  - (3) participate in and furnish information for the review under [subsection (e)](#e); and
  - (4) identify [recipients](/usc/31/7501.md?p=a-17) that expend $300,000 or more in [Federal awards](/usc/31/7501.md?p=a-4) or such other amount specified by the [Director](/usc/31/7501.md?p=a-2) under [section 7502(a)(3)](/usc/31/7502.md?p=a-3) during the [recipient](/usc/31/7501.md?p=a-17)’s fiscal year but did not undergo an audit in accordance with this chapter.
- (b) Each [non-Federal entity](/usc/31/7501.md?p=a-13) shall have a single Federal [agency](/usc/31/7501.md?p=a-3), determined in accordance with criteria established by the [Director](/usc/31/7501.md?p=a-2), to provide the [non-Federal entity](/usc/31/7501.md?p=a-13) with technical assistance and assist with implementation of this chapter.
- (c) The [Director](/usc/31/7501.md?p=a-2) shall designate a Federal clearinghouse to—
  - (1) receive copies of all reporting packages developed in accordance with this chapter; and
  - (2) perform analyses to assist the [Director](/usc/31/7501.md?p=a-2) in carrying out responsibilities under this chapter.
- (d) Not later than 2 years after the date of enactment of this subsection, and every 2 years thereafter, the [Director](/usc/31/7501.md?p=a-2) shall submit to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Oversight and Accountability of the House of Representatives a report listing the [recipients](/usc/31/7501.md?p=a-17) identified under [subsection (a)(4)](#a-4).
- (e)
  - (1) The [Director](/usc/31/7501.md?p=a-2) shall designate 1 or more Federal [agencies](/usc/31/7501.md?p=a-3) to conduct a Government-wide analysis of [single audit](/usc/31/7501.md?p=a-18) quality, which may include a consideration of the results of reviews of [single audit](/usc/31/7501.md?p=a-18) quality by—
    - (A) Federal [agencies](/usc/31/7501.md?p=a-3);
    - (B) inspectors general of Federal [agencies](/usc/31/7501.md?p=a-3);
    - (C) [State](/usc/31/7501.md?p=a-19) auditors; and
    - (D) external peer reviews conducted in accordance with [generally accepted government auditing standards](/usc/31/7501.md?p=a-7).
  - (2) Not later than 3 years after the date of enactment of this subsection, and every 6 years thereafter, the Federal [agencies](/usc/31/7501.md?p=a-3) designated under [paragraph (1)](#e-1) shall complete a Government-wide analysis of [single audit](/usc/31/7501.md?p=a-18) quality.
  - (3) The [Director](/usc/31/7501.md?p=a-2) shall submit to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Oversight and Accountability of the House of Representatives and make publicly available a summary of the results of each review under [paragraph (2)](#e-2).
- (f) Not later than 2 years after the date of enactment of this subsection—
  - (1) the Administrator of General Services, in coordination with the [Director](/usc/31/7501.md?p=a-2), the Council on [Federal Financial Assistance](/usc/31/7501.md?p=a-5) (or any successor thereto), and key management [single audit](/usc/31/7501.md?p=a-18) liaisons of Federal [agencies](/usc/31/7501.md?p=a-3) designated as described in [section 200.513 of title 2, Code of Federal Regulations](/cfr/2/200.513.md) (or any successor thereto), shall develop analytic tools to use audit data in the Federal clearinghouse to identify cross-Governmental risks to Federal award funds; and
  - (2) the [Director](/usc/31/7501.md?p=a-2), in coordination with the Administrator of General Services, the Council on [Federal Financial Assistance](/usc/31/7501.md?p=a-5) (or any successor thereto), and key management [single audit](/usc/31/7501.md?p=a-18) liaisons of Federal [agencies](/usc/31/7501.md?p=a-3) designated as described in [section 200.513 of title 2, Code of Federal Regulations](/cfr/2/200.513.md) (or any successor thereto), shall develop a strategy to use audit data in the Federal clearinghouse to identify cross-Governmental risks to Federal award funds.
- (g) Not later than 4 years after the date of enactment of this subsection, the [Comptroller General](/usc/31/7501.md?p=a-1) of the United States shall complete an evaluation of—
  - (1) the effectiveness of the strategy and analytic tools developed under [subsection (f)](#f);
  - (2) reporting burdens for auditors and audited entities and the capacity of auditors and audited entities to fulfill the requirements under this chapter; and
  - (3) the responsiveness of Federal [agencies](/usc/31/7501.md?p=a-3) to repeat [single audit](/usc/31/7501.md?p=a-18) findings and corrective action plans.

# §7505. Regulations

- (a) The [Director](/usc/31/7501.md?p=a-2), after consultation with the [Comptroller General](/usc/31/7501.md?p=a-1), and appropriate officials from Federal, [State](/usc/31/7501.md?p=a-19), and [local governments](/usc/31/7501.md?p=a-11) and [nonprofit organizations](/usc/31/7501.md?p=a-14) shall prescribe guidance to implement this chapter. Each Federal [agency](/usc/31/7501.md?p=a-3) shall promulgate such amendments to its regulations as may be necessary to conform such regulations to the requirements of this chapter and of such guidance.
- (b)
  - (1) The guidance prescribed pursuant to [subsection (a)](#a) shall include criteria for determining the appropriate charges to [Federal awards](/usc/31/7501.md?p=a-4) for the cost of audits. Such criteria shall prohibit a [non-Federal entity](/usc/31/7501.md?p=a-13) from charging to any [Federal awards](/usc/31/7501.md?p=a-4)—
    - (A) the cost of any audit which is—
      - (i) not conducted in accordance with this chapter; or
      - (ii) conducted in accordance with this chapter when expenditures of [Federal awards](/usc/31/7501.md?p=a-4) are less than amounts cited in [section 7502(a)(1)(A)](/usc/31/7502.md?p=a-1-A) or specified by the [Director](/usc/31/7501.md?p=a-2) under [section 7502(a)(3)](/usc/31/7502.md?p=a-3), except that the [Director](/usc/31/7501.md?p=a-2) may allow the cost of limited scope audits to monitor [subrecipients](/usc/31/7501.md?p=a-20) in accordance with [section 7502(f)(2)(B)](/usc/31/7502.md?p=f-2-B); and
    - (B) more than a reasonably proportionate share of the cost of any such audit that is conducted in accordance with this chapter.
  - (2) The criteria prescribed pursuant to [paragraph (1)](#b-1) shall not, in the absence of documentation demonstrating a higher actual cost, permit the percentage of the cost of audits performed pursuant to this chapter charged to [Federal awards](/usc/31/7501.md?p=a-4), to exceed the ratio of total [Federal awards](/usc/31/7501.md?p=a-4) expended by such [non-Federal entity](/usc/31/7501.md?p=a-13) during the applicable fiscal year or years, to such [non-Federal entity](/usc/31/7501.md?p=a-13)’s total expenditures during such fiscal year or years.
- (c) Such guidance shall include such provisions as may be necessary to ensure that small business concerns, qualified HUBZone small business concerns, and business concerns owned and controlled by socially and economically disadvantaged individuals will have the opportunity to participate in the performance of contracts awarded to fulfill the audit requirements of this chapter.
- (d) Such guidance shall require audit-related information reported under this chapter to be reported in an electronic form in accordance with the data standards established under [chapter 64](/usc/31/chstV-ch64.md).