Audit Guidance: Recipients and Subrecipients

Are Office of Management and Budget (OMB) Circular A-133 audits required for recipients of LSC funds?

Yes.  However, The LSC OIG is currently in the process of revising and updating the Audit Guide for Recipients and Auditors (November 1996) and anticipates having it available for public comment prior to the end of this calendar year.

Current guidance for audits of LSC recipients is found in:

Audit Guide for Recipients and Auditors, November 1996 (Audit Guide or AG)
Compliance Supplement for Audits of LSC Recipients (April 2016)
Audit Bulletin 97-01 (Revisions to the 1996 Audit Guide), November 1997

Are recipients of less than $500,000 exempt from LSC audit requirements under the new OMB Circular A-133?
No. The Revised OMB Circular A-133 increased the threshold for a Single Audit from $300,000 to $500,000 of federal awards expended. LSC's 1996 and 1997 appropriation law requires an audit regardless of grant amount and takes precedence over the revised OMB Circular A-133 audit requirements. Accordingly, the increased audit threshold specified in revised OMB Circular A-133 does not apply to recipients of LSC funds. There is no change in audit requirements for recipients of LSC funds. The applicability of the requirements of the 1996 LSC Audit Guide specified in paragraph I-3 remains unchanged.

What are the audit requirements for subrecipient audits?
Subrecipient audit requirements are addressed in the subgrant agreements. Please do not arrange for, or submit, an audit of a subrecipient of LSC funds that does not comply with the executed subgrant agreement, unless you have received express approval from the OIG.

What is the cognizant agency for LSC funds?
The LSC OIG is the audit oversight agency for recipients and subrecipients of LSC funds.

Does the OMB Compliance Supplement apply to LSC funds?
The OMB Compliance Supplement does not apply to LSC funds. The LSC Compliance Supplement (Appendix A) to the LSC Audit Guide for Recipients and Auditors, identifies the laws and regulations that apply to LSC funds under an OMB Circular A-133 audit. The IPAs are expected to cite the LSC Compliance Supplement in their reports on Compliance with Requirements applicable to Major Programs and Internal Controls over Compliance in accordance with OMB Circular A-133 (AG §III-1). IPAs should be aware that if non-LSC funds (Federal or state) of a recipient are subject to consideration under an OMB Circular A-133 audit, the OMB Compliance Supplement may otherwise apply to those funds.

What are 5-day letters?
5-day letters (same as 5-day Special Reports) is a special reporting requirement established by Congress in the 1996 appropriations legislation (AG §I-9C). They are required when the auditor finds noncompliance with the restrictions and prohibitions identified by an asterisk (*) in the December 1998 Compliance Supplement. Audit Bulletin 97-01 (November 24, 1997) specifies that 5-day letters are limited to any instances of noncompliance with the practice restrictions identified in the Compliance Supplement. See Audit Reporting Requirements below for further details.


Is it a close-out audit if the recipient is merging into another LSC-funded entity?
Yes. A close-out audit consists of the financial statemnets and compliance reports, prepared according to LSC OIG guidance, for the final period in which the auditee received direct LSC funds. It is a close-out audit if it is the last financial accounting for an auditee as a separate entity even if that auditee is merging into another LSC-funded entity in the next reporting period.

Are subrecipient agreements and contracts with private attorneys for legal representation of clients related party transactions?
No. Subrecipient agreements and contracts with private attorneys for legal representation of clients are not related party transactions.

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