Slide 2 Copyright Texas Education Agency 2012 1 Audit
Requirements for Nonprofits Slide 3 Copyright Texas Education
Agency 2012 2 Two Sources of Audit Requirements or Financial
Reporting Texas Non-Profit Corporation Act, Vernons Texas Civil
Statutes, Article 1396-2.23A. Financial Records and Annual Reports
Office of Management and Budget (OMB) Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations Slide 4
Copyright Texas Education Agency 2012 3 Texas Non-Profit
Corporation Act Article 1396-2.23A. Financial Records and Annual
Reports A.Corporations shall maintain current true and accurate
financial records with full and correct entries made with respect
to all financial transactions of the corporation, including all
income and expenditures, in accordance with generally accepted
accounting practices. B.Based on these records, the board of
directors shall annually prepare or approve a report of the
financial activity of the corporation for the preceding year. C.All
records, books, and annual reports of the financial activity of the
corporation shall be kept at the registered office or principal
office of the corporation in this state for at least three years
after the closing of each fiscal year. Slide 5 Copyright Texas
Education Agency 2012 4 OMB Circular A-133 Requires a Single Audit
if the grantee expends more than $500,000 total in each fiscal year
in federal grant funds (all federal grants added together) 34 CFR
74.26 requires nonprofit organizations to comply with the
requirements in the Single Audit Act and OMB Circular A-133 Single
Audits are conducted by an independent auditor hired by the
nonprofit organization Slide 6 Copyright Texas Education Agency
2012 5 Single Audit Requirements A single audit encompasses a
grantees financial statements and schedule of expenditures of
federal awards for the entire organization. A program-specific
audit focuses on one particular program and may be selected by the
auditee if they expend federal awards under only one federal
program and the federal programs laws, regulations, or grant
agreements do not require a financial statement audit of the
auditee (primarily for grantees that receive only one federal grant
even if they expend more than $500,000 annually) Slide 7 Copyright
Texas Education Agency 2012 6 Single Audit Requirements Cont. In
cases of continued inability or unwillingness to have an audit
conducted in accordance with A-133, TEA can: (a) withhold a
percentage of federal awards until the audit is completed
satisfactorily; (b) withhold or disallow overhead costs; (c)
suspend federal awards until the audit is conducted; or (d)
terminate the federal award. Slide 8 Copyright Texas Education
Agency 2012 7 Cost of Audits The cost of audits conducted under OMB
Circular A-133 are allowable charges to a federal grant Slide 9
Copyright Texas Education Agency 2012 8 Your Responsibilities Under
OMB Circular A-133, Auditees (i.e., YOUR ORGANIZATION) shall:
Identify, in your accounts, all Federal awards received and
expended and the federal programs under which they were received.
Maintain internal control over federal programs that provides
reasonable assurance that you are managing federal awards in
compliance with laws, regulations, and provisions. Comply with
laws, regulations, and provisions of grant agreements. Prepare
appropriate financial statements, including the schedule of
expenditures of federal awards. Ensure audits are properly
performed and submitted when due. Follow up and take corrective
action on audit findings, including preparation of a summary
schedule of prior audit findings and a corrective action plan.
Slide 10 Copyright Texas Education Agency 2012 9 Audit Report
Submission Audit must be completed and the data collection form and
reporting package submitted with 30 days after receipt of the
independent auditors report, or 9 months after the end of the audit
period, whichever is earlier. Data Collection Form (completed by
the auditor) - states the audit was completed in accordance with A-
133 and provides information about your organization, your federal
programs, and the results of the audit Slide 11 Copyright Texas
Education Agency 2012 10 Audit Report Submission Cont. Reporting
Package: Financial statements and schedule of expenditures of
federal awards Summary schedule of prior audit findings Auditors
report Corrective action plan Slide 12 Copyright Texas Education
Agency 2012 11 Audit Report Submission You must submit a copy of
the Data Collection Form and the reporting package to the Federal
Clearinghouse designated by OMB http://harvester.census.gov/sac/
Click on Search the Single Audit Database Slide 13 Copyright Texas
Education Agency 2012 12 TEAs Responsibilities TEAs Division of
Financial Audits: Ensure subrecipients expending $500,000 or more
in federal awards during the past fiscal year have met the audit
requirements Issue a management decision on audit findings within 6
months after receipt of the audit report and ensure that the
grantee takes appropriate and timely corrective action Slide 14
Copyright Texas Education Agency 2012 13 Management Decision
Clearly states whether or not the audit finding is sustained, the
reasons for the decision, and the expected action to repay
disallowed costs, make financial adjustments, or take other action.
If the grantee has not completed corrective action, a timetable for
follow-up should be given.
