§ 427.7. Audits.

 (a)  The Department will determine the frequency, content and format of reporting requirements, and may include requirements for audit testing procedures, for any entity receiving funding under this chapter.

   (1)  As an element of the application process, each applicant shall provide the name, address and contact information for the certified public accounting firm engaged for the financial audit.

     (i)   The applicant shall certify that the certified public accounting firm is aware of the Department’s reporting requirements and deadlines.

     (ii)   The information shall be submitted to the Department by May 31 of the fiscal year preceding the year for which funds are requested.

   (2)  Within 90 days after the close of each fiscal year, each grant recipient will receive from the Department for confirmation an accounting of funds received from the Department during the preceding fiscal year.

   (3)  The grant recipient shall convey directly to the certified public accounting firm the Department’s confirmation of amounts identified in paragraph (2). The confirmed amounts shall become part of the financial audit report.

   (4)  Within 180 days after the close of a fiscal year, each grant recipient shall transmit to the Department an annual financial audit report prepared by the certified public accounting firm identified in paragraph (1).

     (i)   The audit shall be conducted in accordance with the generally accepted accounting principles auditing standards. Those standards require the audit firm to plan and perform the audit to obtain reasonable assurance about whether financial statements are free of material misstatement. The audit must include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and supplemental schedules.

     (ii)   The audit must meet all Department required reporting and formatting standards for presentation of information with regard to grant payments and uses.

     (iii)   The certified public accounting firm shall prepare all supplemental schedules as required by the Department.

     (iv)   Management letters and all schedules of findings based on the audit work shall become part of the annual financial audit report.

     (v)   If a single audit has been conducted, a copy of the single audit report shall also be submitted to the Department.

     (vi)   The audit may not be submitted to the Department unless the local transportation finance officer and board have reviewed the audit for accuracy and have approved it.

   (5)  The grant recipient shall review the audit report, identify inconsistencies between the supplemental schedules and other schedules and statements within the audit report and provide an explanation satisfactory to the Department for the discrepancies.

     (i)   The grant recipient shall provide a written response to the Department answering questions raised by the Department within 45 calendar days of receipt of the Department’s questions.

     (ii)   Failure to comply with reporting requirements by the due date may result in delay or withholding of payments at the discretion of the Department.

     (iii)   If the grant recipient cannot produce a written response for each finding within 45 calendar days, the grant recipient shall request a time extension in writing to the Director of the Bureau of Public Transportation with justification for the request. The Director of the Bureau of Public Transportation’s written response will accept or reject the request for a time extension.

 (b)  Failure to comply with reporting requirements may result in delay or withholding of payments at the discretion of the Department.



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