§ 66.26
used for current costs unless the Fed-
eral agency authorizes otherwise. Pro-
gram income which the grantee did not
anticipate at the time of the award
shall be used to reduce the Federal
agency and grantee contributions rath-
er than to increase the funds com-
mitted to the project.
(2) Addition. When authorized, pro-
gram income may be added to the
funds committed to the grant agree-
ment by the Federal agency and the
grantee. The program income shall be
used for the purposes and under the
conditions of the grant agreement.
(3) Cost sharing or matching. When au-
thorized, program income may be used
to meet the cost sharing or matching
requirement of the grant agreement.
The amount of the Federal grant award
remains the same.
(a) Income after the award period.
There are no Federal requirements gov-
erning the disposition of program in-
come earned after the end of the award
period (i.e., until the ending date of the
final financial report, see paragraph (a)
of this section), unless the terms of the
agreement or the Federal agency regu-
lations provide otherwise.
§66.26 Non-Federal audit.
(a) Basic rule. Grantees and sub-
grantees are responsible for obtaining
audits in accordance with the Single
Audit Act Amendments of 1996 (31
U.S.C. 7501-7507) and revised OMB Cir-
cular A-133, ‘Audits of States, Local
Governments, and Non-Profit Organi-
zations.”? The audits shall be made by
an independent auditor in accordance
with generally accepted government
auditing standards covering financial
audits.
(b) Subgrantees. State or local govern-
ments, as those terms are defined for
purposes of the Single Audit Act
Amendments of 1996, that provide Fed-
eral awards to a subgrantee, which ex-
pends $300,000 or more (or other
amount as specified by OMB) in Fed-
eral awards in a fiscal year, shall:
(1) Determine whether State or local
subgrantees have met the audit re-
quirements of the Act and whether sub-
grantees covered by OMB Circular A-
110, ‘Uniform Administrative Require-
ments for Grants and Agreements with
Institutions of Higher Education, Hos-
28 CFR Ch. | (7-1-10 Edition)
pitals, and Other Non-Profit Organiza-
tions,” have met the audit require-
ments of the Act. Commercial contrac-
tors (private for-profit and private and
governmental organizations) providing
goods and services to State and local
governments are not required to have a
single audit performed. State and local
governments should use their own pro-
cedures to ensure that the contractor
has complied with laws and regulations
affecting the expenditure of Federal
funds;
(2) Determine whether the sub-
grantee spent Federal assistance funds
provided in accordance with applicable
laws and regulations. This may be ac-
complished by reviewing an audit of
the subgrantee made in accordance
with the Act, Circular A-110, or
through other means (e.g., program re-
views) if the subgrantee has not had
such an audit;
(3) Ensure that appropriate correc-
tive action is taken within six months
after receipt of the audit report in in-
stance of noncompliance with Federal
laws and regulations;
(4) Consider whether subgrantee au-
dits necessitate adjustment of the
grantee’s own records; and
(5) Require each subgrantee to permit
independent auditors to have access to
the records and financial statements.
(c) Auditor selection. In arranging for
audit services, §66.36 shall be followed.
(Order No. 1252-88, 53 FR 8068 and 8087, Mar.
11, 1988, as amended at 62 FR 45939 and 45942,
Aug. 29, 1997]
CHANGES, PROPERTY, AND SUBAWARDS
$66.30 Changes.
(a) General. Grantees and subgrantees
are permitted to rebudget within the
approved direct cost budget to meet
unanticipated requirements and may
make limited program changes to the
approved project. However, unless
waived by the awarding agency, certain
types of post-award changes in budgets
and projects shall require the prior
written approval of the awarding agen-
cy.
(b) Relation to cost principles. The ap-
plicable cost principles (see § 66.22) con-
tain requirements for prior approval of
certain types of costs. Except where
waived, those requirements apply to all
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