[Federal Register Volume 59, Number 12 (Wednesday, January 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-1258]
[[Page Unknown]]
[Federal Register: January 19, 1994]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of the Secretary
24 CFR Parts 44, 45, 85, 92, 207, 213, 221, 232, 236, 242, 277,
280, 570, 572, 575, 576, 577, 578, 579, 880, 881, 883, 884, 885,
886, 889, and 890
[Docket No. R-94-1581; FR-2594-F-03]
RIN 2501-AB19
Implementation of OMB Circular A-133 ``Audits of Institutions of
Higher Education and Other Nonprofit Institutions''
AGENCY: Office of the Secretary, HUD.
ACTION: Final rule.
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SUMMARY: OMB Circular A-133 provides policy guidance to Federal
agencies for establishing uniform requirements for audits of awards
provided to institutions of higher education and other nonprofit
organizations. This rule makes final the interim rule that HUD
promulgated in July 1992 to incorporate the provisions of the circular.
EFFECTIVE DATE: February 18, 1994.
FOR FURTHER INFORMATION CONTACT: Steven O. App, Deputy Chief Financial
Officer for Finance, room 10166, Department of Housing and Urban
Development, 451 Seventh Street, SW., Washington, DC 20410, telephone
(202) 708-0650. TDD: (202) 708-9300. (These are not toll-free numbers.)
SUPPLEMENTARY INFORMATION: OMB Circular A-133 establishes audit
requirements and defines Federal responsibilities for implementing and
monitoring such requirements for institutions of higher education and
other nonprofit institutions receiving Federal awards. It supersedes
Attachment F, subparagraph 2h, of Circular A-110, ``Uniform
Administrative Requirements for Grants and other Agreements with
Institutions of Higher Education, Hospitals, and Other Nonprofit
Organizations.''
The provisions of Circular A-133 apply to: a. Federal departments
and agencies responsible for administering programs that involve
grants, cost-type contracts and other agreements with institutions of
higher education and other nonprofit recipients.
b. Institutions of Higher Education and Other Nonprofit
Institutions whether they are recipients receiving awards directly from
Federal agencies, or are subrecipients receiving awards indirectly
through other recipients.
On July 27, 1992, the Department published an interim rule at 57 FR
33252 to adopt the provisions of the circular. The rule adopted the
provisions of Circular A-133 by adding to Title 24 of the Code of
Federal Regulations, a new PART 45--NON-FEDERAL AUDIT REQUIREMENTS FOR
INSTITUTIONS OF HIGHER EDUCATION AND OTHER NONPROFIT INSTITUTIONS. Part
45 incorporates the requirements set forth in Circular A-133.
The rule also made numerous technical changes throughout the parts
of Title 24 in order to make the cross-referencing and conforming
changes necessary for implementation of Circular A-133. Included in
these technical changes were a number of changes needed as a result of
the definition of ``Federal financial assistance,'' as set forth in the
circular. That definition now covers loans, loan guarantees, and
insurance. Therefore, programs that make, guarantee, or insure loans to
nonprofit mortgagors have been brought within the coverage of Circular
A-133, as it is implemented at part 45.
However, for HUD programs whose regulations are set forth in 24 CFR
parts 207, 213, 221, 232, 236, 242, 277, 880, 881, 883, 884, 885, 886,
889, and 890, a nonprofit institution is the nonprofit corporation
which owns the individual property receiving the HUD assistance. Each
project under the parts 200 series and many projects under the parts
800 series are required to complete project-specific audits because
they are deemed to be separate entities. The audits currently conducted
under applicable HUD audit guides for these programs will serve as the
organization-wide audits required by OMB Circular A-133 and this part.
In performing the compliance review required by paragraph 13.c. of OMB
Circular A-133, auditors should consider the compliance requirements
set forth in the OMB Compliance Supplement. In accordance with the
regulatory agreement incident to the insured mortgage, where HUD
provides federal funding, the audit reports pertaining to nonprofit
organizations subject to these regulations are to be submitted within
60 days after the end of the fiscal year audited. Each of the parts
listed in the first sentence of this paragraph is amended to cross-
reference to part 45. The details of coverage of entities receiving
assistance under these parts is contained in section 45.1(c).1
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\1\Parts 889 and 890 are programs regarding supportive housing
for the elderly and persons with disabilities, respectively. The
regulations for these programs were developed after the publication
of the interim rule. Nonetheless, the projects under these programs
are required to complete project-specific audits because they are
deemed to be separate entities.
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Public Comments
The public was given 60 days in which to submit comments to the
interim rule published on July 27, 1992, at 57 FR 33252, and comments
were received from three commenters: One nonprofit organization, one
certified public accounting firm, and one national association of
certified public accountants. Below is a listing of the issues raised
by the commenters and the Department's response and resolution of those
issues.
Comment: The requirements for a compliance audit performed by an
independent accountant seem to be redundant, time-consuming, and
costly, especially where municipal and county requirements include
monthly financial and compliance reports, and both municipal and county
officials perform inspection of the records, programs and procedures.
Nonprofit organizations that are subrecipients should be allowed to
continue adherence to the guidelines in Circular A-110. [one nonprofit
organization and one certified public accounting firm]
Response: Accommodation of this comment is not feasible. OMB issued
Circular A-133 to supersede portions of Circular A-110 and clearly
included, under the A-133 coverage, funds received as a subrecipient.
The Department is implementing the provisions of the circular and has
no flexibility in this matter.
Comment: The rule should be effective for years beginning on or
after August 26, 1992, the effective date stated for the rule. However,
the revisions to paragraph 45.1(d) state that the requirements are
applicable to fiscal years beginning on or after January 1, 1990. An
effective date of January 1, 1990 requires institutions to
retroactively apply OMB Circular A-133, creating an undue hardship on
those institutions and their auditors. [one national association of
certified public accountants]
Response: The date in the summary of the interim rule (August 26,
1992) relates to when the audit is conducted, and the date in section
45.1 (fiscal years beginning on or after January 1, 1990) relates to
the period audited. Circular A-133 specifies that audits of periods
beginning on or after January 1, 1990 will be covered. The Department
is merely implementing OMB policy.
Comment: The revisions to paragraph 45.1(b) state that the
requirements apply to nonprofit institutions ``* * * as defined in OMB
Circular A-133 (including hospitals that are not affiliated with an
institution of higher education) * * *.'' However, section 1.k. of the
Attachment to Circular A-133 excludes hospitals that are not affiliated
with an institution of higher education. Clarification is needed. [one
national association of certified public accountants]
Response: The substitution of Circular A-133, Audits of
Institutions of Higher Education and Other Nonprofit Institutions, for
Circular A-110, Attachment F, subparagraph 2h (which covered grants to
universities, hospitals, and other nonprofit organizations) left open
the issue of coverage of hospitals. The explanation for this omission,
advanced by OMB, was that most hospitals receive reimbursement from the
federally funded Medicaid and Medicare programs, each of which has its
own statutory audit requirements. Albeit hospitals which are affiliated
with universities are covered by Circular A-133 by reason of that
affiliation and non-university affiliated hospitals, which receive
federal funds pursuant to research contracts, are subject to contract
closing audits, there still remained a policy decision of coverage of
non-university affiliated hospitals that may be receiving HUD
assistance. Therefore, under section 45.1(b) of the interim rule, the
coverage was continued under Circular A-133 for non-university
affiliated hospitals that receive HUD assistance. The decision to
extend coverage to this group of hospitals receiving HUD assistance was
made as a matter of policy. Any hospital receiving Federal funds
should, as a matter of sound fiscal management, receive audit reviews
of the use of those funds.
This Final Rule
This rule makes final the interim rule that is discussed above. The
following four programs are added to its coverage by this final rule,
since the regulations for these programs were developed after the
publication of the interim rule: PART 92--HOME INVESTMENT PARTNERSHIPS
PROGRAM, PART 572--HOPE FOR HOMEOWNERSHIP OF SINGLE FAMILY HOMES
PROGRAM (HOPE 3), PART 889--SUPPORTIVE HOUSING FOR THE ELDERLY, and
PART 890--SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES. As
discussed earlier in this preamble, the projects under parts 889 and
890 are required to complete project-specific audits.
Other Matters
Executive Order 12866.
This rule was reviewed by the Office of Management and Budget (OMB)
under Executive Order 12866 on Regulatory Planning and Review, issued
by the President on September 30, 1993. Any changes made in the rule
subsequent to its submission to OMB are identified in the docket file,
which is available for public inspection in the Office of the Rules
Docket Clerk, room 10276, Department of Housing and Urban Development,
451 Seventh Street, SW., Washington, DC 20410.
Environmental Determination.
The content of this rule does not constitute a development, nor
affect the physical condition of project areas or building sites, but
relates only to auditing and fiscal functions. Thus, the authorities
and standards of Sec. 50.4 of 24 CFR part 50 (the regulations
implementing Section 102(2)(C) of the National Environmental Policy Act
of 1969) are inapplicable to this rule; therefore, it is categorically
excluded from the NEPA requirements pursuant to Sec. 50.20(k).
Regulatory Flexibility Act
The Secretary, in accordance with the Regulatory Flexibility Act (5
U.S.C. 605(b)), has reviewed this rule before publication and by
approving it certifies that this rule does not have a significant
economic impact on a substantial number of small entities, because the
rule does not impose additional audit requirements, but merely makes
uniform the procedures that will be followed.
Executive Order 12612, Federalism
The General Counsel, as the Designated Official under section 6(a)
of Executive Order 12612, Federalism, has determined that this rule
does not have ``federalism implications'' because it does not have
substantial direct effects on the States (including their political
subdivisions), or on the distribution of power and responsibilities
among the various levels of government.
Executive Order 12606, the Family
The General Counsel, as the Designated Official under Executive
Order 12606, the Family, has determined that this rule does not have
potential significant impact on family formation, maintenance, and
general well-being.
Semiannual Agenda of Regulations
This rule was listed as item 1467 in the Department's Semiannual
Agenda of Regulations published on October 25, 1993 (58 FR 56402,
56415), in accordance with Executive Order 12866 and the Regulatory
Flexibility Act.
List of Subjects
24 CFR Part 44
Accounting, Grant programs, Grant programs--housing and community
development, Intergovernmental relations, Loan programs--housing and
community development, Reporting and recordkeeping requirements.
24 CFR Part 45
Audit requirements-nonprofits, universities; Reporting and
recordkeeping requirements.
24 CFR Part 85
Accounting, Grant programs, Intergovernmental relations, Reporting
and recordkeeping requirements.
24 CFR Part 92
Administrative practice and procedure, Grant programs--housing and
community development, Grant programs--Indians, Low and moderate income
housing, Manufactured homes, Rent subsidies, reporting and
recordkeeping requirements.
24 CFR Part 207
Manufactured homes, Mortgage insurance, Reporting and recordkeeping
requirements, Solar energy.
24 CFR Part 213
Cooperatives, Mortgage insurance, Reporting and recordkeeping
requirements.
24 CFR Part 221
Low and moderate income housing, Mortgage insurance, Reporting and
recordkeeping requirements.
24 CFR Part 232
Fire prevention, Health facilities, Loan programs--health, Loan
programs--housing and community development, Mortgage insurance,
Nursing homes, Reporting and recordkeeping requirements.
24 CFR Part 236
Grant programs--housing and community development, Low and moderate
income housing, Mortgage insurance, Rent subsidies, Reporting and
recordkeeping requirements.
24 CFR Part 242
Hospitals, Mortgage insurance, Reporting and recordkeeping
requirements.
24 CFR Part 277
Aged, Handicapped, Loan programs--housing and community
development, Low and moderate income housing.
24 CFR Part 280
Community development, Grant programs--housing and community
development, Loan programs--housing and community development, Low and
moderate income housing, Nonprofit organizations, Reporting and
recordkeeping requirements.
24 CFR Part 570
Administrative practice and procedure, American Samoa, Community
development block grants, Grant programs--housing and community
development, Grant programs--education, Guam, Lead poisoning, Loan
programs--housing and community development, Low and moderate income
housing, Northern Mariana Islands, Pacific Islands Trust Territory,
Puerto Rico, Reporting and recordkeeping requirements, Virgin Islands,
Student aid.
24 CFR Part 572
Condominiums, Cooperatives, Fair housing, Government property,
Grant programs--housing and community development, Low and moderate
income housing, Nonprofit organizations, reporting and recordkeeping
requirements.
24 CFR Part 575
Civil rights, Community facilities, Grant programs--housing and
community development, Grant programs--social programs, Homeless,
Reporting and recordkeeping requirements.
24 CFR Part 576
Community facilities, Grant programs--housing and community
development, Emergency shelter grants, Homeless, Reporting and
recordkeeping requirements.
24 CFR Part 577
Grant programs--housing and community development, Homeless,
Community facilities, Employment, Grant programs--social programs,
Handicapped, Mental health programs, Nonprofit organizations, Reporting
and recordkeeping.
24 CFR Part 578
Community facilities, Grant programs--housing and community
development, Grant programs--social programs, Handicapped, Homeless,
Reporting and recordkeeping requirements, Mental health programs,
Nonprofit organizations, Technical assistance.
24 CFR Part 579
Grant programs--housing and community development, Homeless,
Reporting and recordkeeping requirements, Community facilities, Grant
programs--social programs.
24 CFR Part 880
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 881
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 883
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements.
24 CFR Part 884
Grant programs--housing and community development, Rent subsidies,
Reporting and recordkeeping requirements, Rural areas.
24 CFR Part 885
Aged, Handicapped, Loan programs--housing and community
development, Low and moderate income housing, Reporting and
recordkeeping requirements.
24 CFR Part 886
Grant programs--housing and community development, Lead poisoning,
Rent subsidies, Reporting and recordkeeping requirements.
24 CFR Part 889
Aged, Capital advance programs, Grant programs--housing and
community development, Loan programs--housing and community
development, Low and moderate income housing, Rent subsidies, Reporting
and recordkeeping requirements.
24 CFR Part 890
Civil rights, Grant programs--housing and community development,
Individuals with disabilities, Loan programs--housing and community
development, Low and moderate income housing, Mental health programs,
Reporting and recordkeeping requirements.
Accordingly, title 24 of the Code of Federal Regulations, parts 44,
45, 85, 207, 213, 221, 232, 236, 242, 277, 280, 570, 575, 576, 577,
578, 579, 880, 881, 883, 884, 885, and 886, Implementation of OMB
Circular A-133 ``Audits of Institutions of Higher Education and Other
Nonprofit Institutions'', is amended by adopting as final the interim
rule, published in the Federal Register on July 27, 1992 at 57 FR
33252, and is further amended with the following revisions to parts 92,
572, 881, 889, and 890, to read as follows:
PART 92--HOME INVESTMENT PARTNERSHIPS PROGRAM
1. The authority for part 92 continues to read as follows:
Authority: 42 U.S.C. 3535(d) and 12701-12839.
2. Section 92.506 is revised to read as follows:
Sec. 92.506 Audit.
Audits of the participating jurisdiction and subrecipients must be
conducted in accordance with 24 CFR parts 44 and 45, as applicable.
3. Section 92.646 is revised to read as follows:
Sec. 92.646 Audit.
Audits of the Indian tribe and subrecipients must be conducted in
accordance with 24 CFR parts 44 and 45, as applicable.
PART 572--HOPE FOR HOMEOWNERSHIP OF SINGLE FAMILY HOMES PROGRAM
(HOPE 3)
4. The authority for part 572 continues to read as follows:
Authority: 42 U.S.C. 3535(d) and 12891.
5. In Sec. 572.420, the last sentence of paragraph (a)(1) is
revised to read as follows:
Sec. 572.420 Miscellaneous requirements.
(a) * * *
(1) * * *Recipients are also subject to the audit requirements of
OMB Circular A-128 (Audits of State and Local Governments) implemented
at 24 CFR part 44, and OMB Circular A-133 (Audits of Institutions of
Higher Learning and Other Nonprofit Institutions), implemented at 24
CFR part 45, as applicable.
* * * * *
PART 881--SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM FOR
SUBSTANTIAL REHABILITATION
6. The authority for part 881 is revised to read as follows:
Authority: 42 U.S.C. 1437a, 1437c, 1437f, and 3535(d).
7. In Sec. 881.211, paragraph (b) is revised to read as follows:
Sec. 881.211 Audit.
* * * * *
(b) Where a nonprofit organization is the eligible owner of a
project, receiving financial assistance under this part, the audit
requirements in 24 CFR part 45 shall apply.
PART 889--SUPPORTIVE HOUSING FOR THE ELDERLY
8. The authority for part 889 continues to read as follows:
Authority: 12 U.S.C. 1701q; 42 U.S.C. 3535(d).
9. Part 889 is amended to add a new Sec. 889.280 to subpart B, to
read as follows:
Sec. 889.280 Audit requirements.
Nonprofits receiving assistance under this part are subject to the
audit requirements in 24 CFR part 45.
PART 890--SUPPORTIVE HOUSING FOR PERSONS WITH DISABILITIES
10. The authority for part 890 continues to read as follows:
Authority: 42 U.S.C. 3535(d) and 8013.
11. Part 890 is amended to add a new Sec. 890.275 to subpart B to
read as follows:
Sec. 890.275 Audit requirements.
Nonprofits receiving assistance under this part are subject to the
audit requirements in 24 CFR part 45.
Dated: December 21, 1993.
Henry G. Cisneros,
Secretary.
[FR Doc. 94-1258 Filed 1-18-94; 8:45 am]
BILLING CODE 4210-32-P