[Federal Register Volume 68, Number 209 (Wednesday, October 29, 2003)]
[Notices]
[Pages 61681-61689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-27203]



[[Page 61681]]

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DEPARTMENT OF THE INTERIOR

Fish and Wildlife Service

RIN 1018-AH69


U.S. Fish and Wildlife Service Manual Chapters on Audits

AGENCY: Fish and Wildlife Service, Interior.

ACTION: Notice and request for comments.

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SUMMARY: The U.S. Fish and Wildlife Service (Service) plans to 
establish policy on State audits accomplished by its Division of 
Federal Assistance by issuing U.S. Fish and Wildlife Service Manual 
chapters on the subject. The Service is requesting comments and 
suggestions on the chapters as described below.

DATES: Comments must be received by December 29, 2003.

ADDRESSES: Comments should be addressed to Kris E. LaMontagne, Chief, 
Division of Federal Assistance, Attn: Audit Chapters, U.S. Fish and 
Wildlife Service, Federal Assistance, MBSP 4020, 4401 N. Fairfax Drive, 
Arlington, VA 22203. Send e-mail comments to [email protected], 
with ``Audit Chapter Comment'' in the subject line.

FOR FURTHER INFORMATION CONTACT: Doug Alcorn, Region 7 Chief, Division 
of Federal Assistance, U.S. Fish and Wildlife Service, Telephone: (907) 
786-3545.

SUPPLEMENTARY INFORMATION:

Background

    Through the Federal Assistance in Sport Fish and Wildlife 
Restoration Program, the Service disburses funds to States in the form 
of grants to restore and manage the Nation's fish and wildlife 
resources. The States use the funds to conduct research, surveys, and 
management; purchase and restore habitat; operate fish hatcheries; 
build boat access sites; and provide education, outreach, and 
communications. Generally our State partners are the 50 States, the 
District of Columbia, the Commonwealths of Puerto Rico and the Northern 
Mariana Islands, Guam, the U.S. Virgin Islands, and American Samoa.
    The Program is authorized by the Federal Assistance in Sport Fish 
Restoration Act, 16 U.S.C. 777 et seq., and the Federal Assistance in 
Wildlife Restoration Act, 16 U.S.C. 669 et seq. The Program's 
regulations can be found in Title 50, Code of Federal Regulations, Part 
80, ``Administrative Requirements, Federal Assistance in Fish and 
Federal Assistance in Wildlife Restoration Acts''; title 43, Code of 
Federal Regulations, part 12, ``Administrative and Cost Principles for 
Assistance Program''; and other applicable regulations. Various Office 
of Management and Budget (OMB) circulars and guidance in the form of 
Service policy also apply to administration of the program.
    Funds for the Program are derived from excise and import taxes on 
fishing equipment, firearms, archery equipment, and certain motorboat 
fuels paid into the Sport Fish Restoration Account or the Federal 
Assistance to Wildlife Restoration Fund. The manufacturer or U.S. 
Customs (on imports) collects these taxes and pays them to the U.S. 
Department of the Treasury, which transfers the money to the Service 
for distribution to the States.
    Periodically the Service conducts audits of our State partners, 
testing for compliance with applicable Acts, regulations, accounting 
principles, and Service policy. In March 2000, the Service Director 
established the Federal Assistance Audit Policy Implementation Team 
(FAAPIT) by directing Service staff representing each Service Region 
and the Washington Headquarters Office to collaboratively develop 
policies for conducting audits of grantees of the Federal Assistance in 
Sport Fish and Wildlife Restoration Program. The FAAPIT immediately 
engaged the States through the International Association of Fish and 
Wildlife Agencies' (IAFWA) Trust Fund Committee. The Federal Assistance 
Coordinator for the State of Wyoming participated on the FAAPIT as a 
representative of the States throughout the policy development process. 
The policies were designed as six separate chapters to be contained in 
the Fish and Wildlife Service Manual (417 FW 1-6). Partners, including 
States and other Federal Assistance grantees, participated by 
submitting written suggestions for incorporation in early drafts of 
these audit chapters. The partners submitted these written suggestions 
through their Federal Assistance Coordinators and their respective Fish 
and Game Agency Directors. The purpose of the proposed chapters set 
forth below in this document is to clarify the processes and guidelines 
for conducting an audit, from beginning through closeout of the audit 
process and resolution of any findings or other issues.
    We published proposed chapters on conducting State audits under the 
Federal Assistance program in the December 14, 2001, Federal Register 
(66 FR 64845). We solicited comments until February 12, 2002. During 
the public comment period, we received numerous comments. Eighteen 
State agencies and the IAFWA responded to the Federal Register 
publication by providing written comments. The Service responded to 
each comment and incorporated changes in the draft chapters where 
feasible. In fall 2002 a Service Director-appointed/invited Task Force 
of State and Service staff made recommendations concerning the issues 
addressed by the revised 417 FW 1-6 document, and these comments were 
incorporated once again. The following Chapters (417 FW 1-6) reflect 
the input of the FAAPIT and partners over a 3-year period. Since the 
changes made were so extensive, we are now publishing revised proposed 
chapters for public comment.
    We invite comments on all chapters. Comments are welcome regarding 
completeness of the content of material in chapters; clarity and 
understandability of language; presence of any burden placed on any 
Division of the Service, the Department of the Interior, or a State 
partner; or any other aspect of these documents. Comments must be 
written, but e-mailed comments are acceptable. The administrative 
record for these chapters are available for viewing, by appointment 
only, Monday through Friday, 9:00 a.m. to 3:00 p.m., in the Division of 
Federal Assistance, U.S. Fish and Wildlife Service, 4401 North Fairfax 
Drive, Arlington, VA 22203.
    The draft chapters are as follows:

Audits--Part 417 Federal Assistance Audits

Chapter 1, Policy and Responsibilities for Grantee Audits, Part 417 
Fish and Wildlife Service Manual (417 FW 1)

    1.1 What is the purpose of this chapter? This chapter establishes 
policy and responsibilities for grantee audits, defines terms 
associated with audits, and provides an overview of the audit process. 
Other chapters in Part 417 establish policy and procedures for audit 
planning, conducting and reporting, resolution, and appeals.
    1.2 To what program does this Part apply? This Part applies to 
audits of grantees who receive grants through the Federal Assistance 
Program.
    1.3 What authorities govern the conduct of grantee audits?
    A. Wildlife and Sport Fish Restoration Programs Improvement Act of 
2000, Pub. L. 106-408, 16 U.S.C. 669 et seq., 16 U.S.C. 777 et seq.
    B. 43 CFR 12, Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments.
    C. 50 CFR 80, Administrative Requirements, Federal Assistance in

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Sport Fish and Federal Assistance in Wildlife Restoration Acts.
    D. 360 Departmental Manual (Departmental Audits).
    E. 361 Departmental Manual (Audit Followup).
    F. 415 Fish and Wildlife Service Manual (Departmental Audits).
    G. Government Auditing Standards (Yellow Book).
    H. OMB Circular A-50, Audit Followup.
    I. OMB Circular A-87, Cost Principles for State, Local, and Indian 
Tribal Governments.
    J. OMB Circular A-133, Audits of States, Local Governments, and 
Non-Profit Organizations.
    K. OMB Circular A-102, Grants and Cooperative Agreements with 
States and Local Governments.
    1.4 What is the Service's policy regarding grantee audits? We will:
    A. Audit each grantee once in each 5-year period as specified in 
the Wildlife and Sport Fish Restoration Programs Improvement Act of 
2000. The audit period will cover revenues and expenditures associated 
with protected license fees and grant funds during the two most 
recently completed State fiscal years (SFYs). This 2-year period is a 
sample of the 5-year period specified in the Improvement Act to achieve 
audits that are efficient and cost effective. Factors affecting the 
selection of the two most recently completed SFYs may be, but are not 
limited to, completion of the Single Audit, completion and submission 
of final Financial Status Reports (SF-269s), changes to the accounting 
system, or the introduction and use of new accounting software. The 
auditor should confer with the Regional Federal Assistance Office and 
the grantee to determine the feasibility of auditing the two most 
recent SFYs. The Regional Federal Assistance Office will formally 
approve the two SFYs to be audited.
    This 2-year period applies to the audit period itself and does not 
eliminate Service responsibilities for general oversight of the Federal 
Aid program outside of that timeframe. The auditor may use previous 
audits or other information from outside the audit period as reference 
to improve the effectiveness and efficiency of the audit.
    All reports will be limited to addressing the 2-year audit period 
unless there is some extraordinary finding. To be considered 
extraordinary, a finding must meet the threshold of: (a) Fraud: (b) 
direct and material illegal acts; or (c) noncompliance that could 
result in exclusion from further participation. With the exception of a 
fraud investigation, expanding the audit period to investigate 
extraordinary findings requires the express written approval of the 
Director. Justification for requesting an expanded audit period must 
address the elements of criteria, condition, and effect (measure of 
consequences) of the finding. The audit period may be expanded to 
include all unaudited Federal funds and license fee revenues.
    B. Provide adequate oversight and financial resources to ensure 
timely audit completion.
    C. Cooperate and coordinate fully with grantees, auditors, the 
Office of Inspector General (OIG), and Office of Financial Management 
(PFM).
    1.5 What are the objectives of the Federal Assistance Program 
grantee audit? The Federal Assistance Audit Program supplements Single 
Audit Act audits performed according to the requirements of OMB 
Circular A-133 (see 417 FW 6). The objectives of Federal Assistance 
grantee audits are to:
    A. Promote economy, efficiency, and effectiveness in administration 
of programs and operations.
    B. Aid in deterring and detecting of fraud and abuse in programs 
and operations.
    C. Assess financial integrity, accountability, and financial 
controls of the Federal Assistance Program in accordance with generally 
accepted accounting principles.
    D. Monitor compliance with applicable Federal laws, rules, and 
regulations.
    1.6 Who is responsible for administering the Federal Assistance 
Audit Program?
    A. The Director will:
    (1) Oversee the Federal Assistance Audit Program.
    (2) Make the final decision on internal Service disagreements 
associated with resolving audit findings and preparing Corrective 
Action Plans (CAPs).
    (3) Make the final decision on all grantee appeals to the Service.
    (4) Respond to the Department of the Interior, Office of Hearings 
and Appeals.
    B. Regional Directors will:
    (1) Ensure that Federal Assistance Program staff receive the 
training necessary to oversee audits.
    (2) Provide information to the auditor on Region-specific issues 
proposed for audit.
    (3) Provide guidance and interpret laws, rules, regulations, and 
policies for the auditor during an audit.
    (4) Promptly notify the grantee in writing of significant changes 
in audit scope, such as a change in the period being audited. The 
notification will include the reason for the change.
    (5) Work with the grantee and auditor throughout the audit to 
resolve issues as they arise and to identify those issues with 
potential national implications.
    (6) Determine to sustain or reject the auditor's findings and 
recommendations in accordance with applicable laws, regulations, and 
policies.
    (7) Negotiate with grantees to develop corrective actions to 
resolve audit findings. Approve, distribute, and monitor implementation 
of the CAP.
    (8) Brief the Director when there is a disagreement between the 
Regional Director and the Assistant Director--Wildlife and Sport Fish 
Restoration on the CAP.
    (9) Request closeout of the audit when the grantee has resolved all 
findings.
    (10) Retain the final audit report, CAP, resolutions, and appeals 
through the completion of the succeeding audit of the grantee.
    (11) Notify the grantees of the 5-year schedule of audits.
    (12) Address written complaints from grantees regarding the conduct 
or scope of an audit.
    C. The Assistant Director--Wildlife and Sport Fish Restoration 
will:
    (1) Ensure consistent interpretation and application of rules, 
regulations, and laws concerning the Federal Assistance Audit Program.
    (2) Establish the national audit schedule pursuant to the Wildlife 
and Sport Fish Restoration Programs Improvement Act of 2000.
    (3) Coordinate Washington Office review of the CAP prior to 
signature by the Regional Director.
    (4) Brief the Director when there is a disagreement with the 
Regional Director on the CAP.
    (5) Evaluate the Federal Assistance Audit Program for efficiency, 
timeliness, and effectiveness prior to initiating each national audit 
cycle. The Assistant Director consults with States and Regional 
Directors to produce a written report for the Director at least once 
every 5 years. The report identifies issues and makes recommendations 
for improving the Audit Program.
    D. The Chief, Division of Federal Assistance (Washington Office), 
will:
    (1) Advise the Assistant Director--Wildlife and Sport Fish 
Restoration on scheduling of grantee audits.
    (2) Coordinate audits and provide for an independent audit of 
grantees. Serve as a point of contact for Service staff and the 
auditor.
    (3) Require that audits are conducted in accordance with generally 
accepted Government Auditing Standards and Federal policies, 
regulations, and laws.
    (4) Identify national audit training needs and make training 
available. Ensure that appropriate Washington Office Federal Assistance 
Program staff

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receives the training necessary to oversee audits. Provide the auditor 
with orientation in Sport Fish and Wildlife Restoration program 
administrative processes, policies, and procedures.
    (5) Establish the objectives of the audit of the Federal Assistance 
Program grantees.
    (6) Develop and maintain the Audit Guide.
    (7) Ensure the auditor adheres to the Audit Guide.
    (8) Summarize and disseminate common findings from ongoing audits 
and their resolutions, without breaching the confidentiality of the 
audit process. Information will be provided on a regularly scheduled 
basis.
    (9) Provide technical assistance on audit issues to the Regional 
Office staff and the Assistant Director--Wildlife and Sport Fish 
Restoration prior to and during the development of the CAP.
    (10) Coordinate with the Chief, Division of Policy and Directives 
Management, and the OIG to determine appropriate means of responding to 
audit-related Freedom of Information Act (FOIA) requests and for 
distributing final audit reports and final CAPs.
    E. The Chief, Division of Policy and Directives Management, will:
    (1) Oversee activities of the Service Audit Liaison Officer, who, 
in turn, serves as liaison to PFM and OIG regarding Federal Assistance 
grantee audit followup as described in 417 FW 4.
    (2) Advise Service officials on audit liaison matters.
    (3) Track the implementation of audit recommendations and report to 
the Directorate and PFM on grantee audit followup.
    1.7 Who maintains audit resolution files? The Regional Director is 
responsible for maintaining audit resolution files through the 
completion of the succeeding audit of the grantee. The office or Region 
that administers the grants being audited will maintain the following 
documents in the audit resolution file:
    A. Audit resolution correspondence, incoming and outgoing.
    B. OIG final audit report.
    C. Approved CAP for audit findings.
    D. Documentation provided by the grantee and used by the Regional 
Director to verify that the grantee resolved each finding or 
implemented the auditor's recommendation.
    E. Documentation that the audit has been officially closed out.
    1.8 What are the definitions for terms used in this Part?
    A. Appeal. A deliberative process that the grantee initiates when 
he/she does not agree with the Service's determinations, corrective 
actions, or the resolutions contained in the CAP.
    B. Audit. Examination of Federal Assistance Program grantees 
conducted by the Department of the Interior, OIG, other Federal 
agencies, or independent public accountants for compliance with 
applicable Acts, regulations, accounting principles, and Service 
policy.
    (1) Audit Finding. Questioned costs, compliance issues, and other 
matters identified in the audit report.
    (2) Audit Recommendation. Actions proposed by the auditor to 
address audit findings.
    C. Audit Guide. A document prepared by the auditor in consultation 
with the Chief, Division of Federal Assistance (Washington Office). The 
Chief will consult with the Regional Director(s) and grantee(s) as 
necessary. This guide provides the information, background, and general 
guidelines necessary to conduct audits. It will be available to all 
parties.
    D. Audit Reports
    (1) Draft Audit Report. The report that is prepared by the auditor 
after the audit exit conference and provided to the Service and the 
grantee for official comments.
    (2) Final Audit Report. The auditor's report issued after the 
official comment period has expired. It includes the auditor's findings 
and recommendations, comments received on the draft audit report, and 
the auditor's response.
    E. Auditor. A public accountant or a Federal, State, or local 
government audit organization that meets the general standards 
specified in Generally Accepted Government Auditing Standards.
    F. Corrective Action. Specific action(s) to resolve an audit 
finding in a manner consistent with the Service determination.
    G. Corrective Action Plan. A plan prepared by the Service in 
consultation with the grantee for addressing all audit findings and 
implementing sustained recommendations contained in audit reports. At a 
minimum, it contains four components: Auditor's Findings and 
Recommendations, Service Determination, Corrective Action, and 
Resolution.
    H. Engagement Letter. The official notification of a pending audit 
from the auditor to the grantee, including a request for information.
    I. Entrance Conference. The meeting involving the auditor, the 
Service, the grantee, and others, if needed, that officially begins the 
audit fieldwork.
    J. Exit Conference. The optional meeting at the conclusion of the 
fieldwork, involving the auditor, the Service, the grantee, and others, 
to review the preliminary results of the audit.
    K. Federal Assistance Program. A Program that administers the 
responsibilities of the Secretary of the Interior under the Federal 
Assistance in Sport Fish Restoration Act, Federal Assistance in 
Wildlife Restoration Act, Clean Vessel Act, Coastal Wetlands Act, the 
Partnerships for Wildlife Act, and other Acts that establish grant 
programs. The Service's Division of Federal Assistance fulfills these 
responsibilities.
    L. Fieldwork. Work that the auditor performs between the entrance 
and exit conference.
    M. Final Action. The completion of all actions, including 
documentation, necessary to implement a specific audit recommendation 
and resolve an audit finding.
    N. Grantee. The entity to which the Service awards a grant and who 
is accountable for use of the Federal funds provided.
    O. Office of Financial Management (PFM). The Department of the 
Interior organization under the Assistant Secretary--Policy, 
Management, and Budget, that tracks audit recommendations to final 
action.
    P. Office of Hearings and Appeals. The Department of the Interior 
organization responsible for disposition of grantee appeals to the 
Secretary of the Interior.
    Q. Office of Inspector General (OIG). The Department of the 
Interior organization responsible for conducting, supervising, and 
coordinating audits, evaluations, investigations, and other activities 
relating to programs and operations of the Department.
    R. Planning. A dynamic process involving the auditor, the Service, 
and grantees, that continues throughout the audit and which includes 
identifying the scope of the audit, the audit schedule, and milestones; 
who will conduct the audit; points of contact; logistical requirements; 
issues of potential concern; and the detailed steps for conducting the 
audit.
    S. Resolution. A process to address and resolve each finding and 
recommendation in the audit report.
    T. Scope. The depth and coverage of work conducted to accomplish 
the audit objectives. The scope of the audit includes the financial and 
program elements, time period, and locations to be covered by the 
audit. Scope is set by the auditor, who should exercise due 
professional care, sound judgment, and consideration of the nature and 
character of the engagement.
    U. Service Audit Liaison Officer. The Washington Office 
representative who

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serves as the point of contact for followup activities pertaining to 
grantee audits.
    V. Service Determination. The Service decision to sustain (accept) 
or not sustain (reject) the auditor's finding and recommendation.
    W. Single Audit Report. An audit of a grantee completed in 
accordance with the requirements of the Single Audit Act of 1984, as 
amended, and OMB Circular A-133. These audits are separate from Federal 
Assistance Program specific audits (grantee audits).
    X. We/Us. As used throughout this Part, the terms ``we'' and ``us'' 
refer to the Fish and Wildlife Service.
    1.9 What phases are included in a Federal Assistance Program 
grantee audit?
    A. Planning (417 FW 2). The auditor, in consultation with the 
Service and the grantee, identifies programmatic and financial elements 
to be audited, establishes the period to be audited, identifies issues 
of potential concern, and ensures that the audit meets Government 
standards. The planning phase helps to ensure a nationally consistent, 
effective, and timely audit process. Audit planning establishes the 
audit schedule, identifies who will conduct the audit, identifies 
point(s) of contact, sets milestones, and describes logistical 
requirements.
    B. Conducting and Reporting (417 FW 3). The audit conducting and 
reporting phase helps to ensure independent examination of grantees 
consistent with Government auditing standards.
    C. Audit Resolution (417 FW 4). The audit resolution phase ensures 
that we track and resolve all findings and recommendations in a timely 
and efficient manner.
    D. Appeals (417 FW 5). The appeals process allows a grantee to 
appeal Service determinations, corrective actions, or resolutions.
    E. Single Audit Act Audits (417 FW 6). Policy for resolving 
findings from audits conducted under the Single Audit Act.

Chapter 2, Planning (417 FW 2)

    2.1 What is the purpose of this chapter? This chapter describes 
audit planning. See 417 FW 1 for authorities, responsibilities, and 
definitions. Other chapters in this Part establish policy and 
procedures for audit conducting and reporting, resolution, and appeals.
    2.2 What is audit planning and why do it? During the audit planning 
phase, the auditor, in conjunction with the Service and the grantee, 
identifies the scope of the audit, the audit schedule and milestones, 
the personnel who will conduct the audit, points of contact, logistical 
requirements, issues of potential concern, and the detailed steps for 
conducting the audit. The scope of the audit includes the financial and 
program elements, time period, and locations to be covered by the 
audit. Audit planning helps to ensure that we have a nationally 
consistent, effective, and timely audit process.
    2.3 What are the key coordination steps in audit planning?
    A. Engagement Letter. The auditor is responsible for notifying a 
grantee of a pending audit. The auditor sends an engagement letter to 
the grantee, with a copy to the Regional Director, approximately 90 
calendar days, or as negotiated with the grantee, prior to the audit 
entrance conference. This letter informs the grantee of the audit 
objectives, the audit period, the key program elements being audited, 
the information and documents the grantee must make available, and the 
logistical needs for conducting the fieldwork.
    B. Grantee's initial reply to the Auditor's engagement letter. The 
grantee will respond to the auditor's engagement letter within 45 
calendar days after receipt, and provide available information. The 
grantee acknowledges the auditor's engagement letter by providing a 
written response, including as much requested data as is practical at 
that time. The grantee notifies the auditor of any information that is 
not available and estimates the date when the information will be 
available or explains why it cannot be provided. Auditors should review 
data prior to arriving on site in order to ensure a more timely and 
efficient onsite audit with minimal disruption of the grantee's normal 
operations.
    C. Pre-Audit Coordination. The auditor schedules a pre-audit 
coordination meeting with the Regional Director and regional Federal 
Assistance staff. The purposes of the meeting are for the auditor to 
become familiar with grants that were active during the audit period 
and for the Service to discuss specific concerns. The regional Federal 
Assistance staff may solicit grantee input prior to this meeting.
    D. Coordination with State Auditor. The auditor contacts the audit 
agency or group that performed the statewide audit or agency-specific 
audit to obtain access to audit work papers. The auditor reviews prior 
audits of the grantee's program to aid in identifying issues to be 
evaluated, obtain a general understanding of the grantee's accounting 
and internal control systems, and avoid duplication of effort.
    E. Auditor review of past audit findings. Using Government Auditing 
Standards, the auditor is required to review corrective actions from 
prior audits to determine if the grantee has implemented them or if 
additional actions are needed.
    2.4 What could the scope of an audit include? The scope of an audit 
may include one or more of the following components:
    A. A financial compliance component to determine if:
    (1) A grantee properly conducts financial operations.
    (2) Financial reports are submitted timely in accordance with 
established due dates and conform with generally accepted accounting 
principles.
    (3) Operations comply with applicable laws and regulations.
    (4) Expenditures claimed by the grantee were eligible, approved, 
allowable, and allocable for costs necessary to accomplish the 
objectives in the approved grant.
    B. A component to determine whether or not the grantee accomplished 
the work or objectives approved in the grant.
    C. An economy and efficiency component to determine whether or not 
the grantee efficiently and economically managed resources; e.g., 
personnel, property, space.
    2.5 Who determines the scope of an audit? The auditor determines 
the scope of the audit. The auditor consults with the grantee and the 
Service, and supplements and builds upon other audits of the grantee, 
to set the scope of the audit and identify the depth and coverage of 
the audit work. Reports issued by the OIG will address only the initial 
2-year period unless there is some extraordinary finding. This 2-year 
period applies to the audit period itself and does not eliminate 
Service responsibilities for general oversight of the Federal 
Assistance program outside of that timeframe. The auditor may use 
previous audits or other information from outside the audit period as 
reference to improve the effectiveness and efficiency of the audit.
    2.6 Will the audit be limited to a 2-year period? All reports will 
be limited to addressing the 2-year audit period unless there is some 
extraordinary finding. To be considered extraordinary, a finding must 
meet the threshold of: (a) Fraud: (b) direct and material illegal acts; 
or (c) noncompliance that could result in exclusion from further 
participation. With the exception of a fraud investigation, expanding 
the audit period to investigate extraordinary findings requires the 
express written approval of the Director. Justification for requesting 
an expanded audit period must address the elements of criteria, 
condition, and effect (measure of

[[Page 61685]]

consequences) of the finding. The audit period may be expanded to 
include all unaudited Federal funds and license fee revenues.
    2.7 Will the grantee be notified of an expanded audit? Yes. The 
Regional Director promptly notifies the grantee in writing of a change 
in the period being audited. The notification will include the reason 
for the change.
    2.8 Can a grantee appeal the scope of an audit? No. An audit is an 
independent examination of the grantee's Federal Assistance Program. 
However, the grantee may contact the Regional Director if the grantee 
has concern about the programs or activities being audited that have no 
relation to the Federal Assistance program.

Chapter 3, Conducting and Reporting on Grantee Audits (417 FW 3)

    3.1 What is the purpose of this chapter? This chapter provides 
procedures for conducting and reporting on audits of Federal Assistance 
Program grantees. See 417 FW 1 for authorities, responsibilities, and 
definitions. Other chapters in this Part establish policy and 
procedures for audit planning, resolution, and appeals.
    3.2 What is the objective of the conducting and reporting phase? 
The objective of the conducting and reporting phase is to ensure that 
independent examination of grantees is consistent with Government 
auditing standards. This examination results in a final audit report 
issued by the OIG.
    3.3 What steps does the conducting and reporting phase involve? The 
conducting and reporting phase involves the following steps:
    A. Audit Entrance Conference. This meeting marks the official 
beginning of the fieldwork.
    B. Fieldwork. Fieldwork usually takes 3 to 4 months to complete, 
including site visits. The auditor, the grantee, and the Regional 
Director communicate regularly to resolve potential audit findings and 
recommendations before the auditor prepares the draft audit report.
    C. Compilations of Findings and Recommendations. Prior to the exit 
conference, the auditor will provide the grantee and the Service with a 
compilation of the findings and recommendations that were developed 
during the audit and that will be used as the basis for preparing the 
draft audit report.
    D. Audit Exit Conference. After providing the compilation of 
findings and recommendations for review, the auditor schedules an audit 
exit conference with the Regional Director and the grantee. This 
conference provides an opportunity for the grantee and Service 
representatives to ask for or provide further clarification as well as 
to address any other concerns. If significant changes are made to the 
findings and recommendations on the basis of discussions at the exit 
conference or as a result of additional audit work after the exit 
conference, the auditor will provide the revised findings and 
recommendations to the grantee and the Service, with a request for 
comments, prior to preparing the draft audit report. The completion of 
the audit exit conference marks the completion of the fieldwork.
    E. Draft Audit Report. After the exit conference, the auditor will 
provide a draft audit report to the Service and the grantee, with a 
request for written comments within 30 days. The grantee must provide 
comments to the Regional Director for forwarding to the auditor. The 
grantee can request additional review time, with justification, in 
writing to the Regional Director.
    F. Final Audit Report. The final audit report is issued by OIG to 
the Director, and includes both the grantee's response and the 
auditor's reply.
    3.4 What is an audit entrance conference? The auditor schedules 
this conference in consultation with the grantee and the Regional 
Director to mark the official beginning of the fieldwork. Participants 
include the auditor and representatives from the grantee and the 
Region. The auditor will explain the audit objectives and process, 
address logistical needs, establish a tentative schedule, and answer 
questions.
    3.5 Who provides technical guidance to the auditor on 
interpretation and application of Federal Assistance Program rules and 
regulations? The Regional Director provides routine guidance and 
interprets laws, rules, regulations, and policies for the auditor 
during the conduct of the audit. The Assistant Director--Wildlife and 
Sport Fish Restoration ensures consistent interpretation and 
application of rules, regulations, and laws nationwide.
    3.6 Will the auditor issue status reports? Yes. During the 
fieldwork, the auditor provides monthly status reports, or more 
frequently as may be specified during the entrance conference, to the 
Regional Director and the Chief, Division of Federal Assistance 
(Washington Office), and to the grantee, unless the grantee advises 
otherwise. The status report contains a brief description of 
preliminary findings and how the audit is progressing.
    3.7 Is the Service required to share monthly status reports? No. 
The auditor's monthly status reports are proprietary, and we will share 
these reports with the grantee only.
    3.8 Will the auditor consult with the Service on potential findings 
while the audit is in progress? Yes. The auditor must report all 
potential findings to the grantee, the Regional Director, and the 
Assistant Director--Wildlife and Sport Fish Restoration as soon as 
possible. However, in the case of illegal activity or suspected fraud, 
the auditor must immediately report such findings to the OIG--Division 
of Investigations without notice to the Service or grantee.
    3.9 How does the Service address major issues identified during the 
audit? If the Regional Director or the Chief, Division of Federal 
Assistance (Washington Office), has a concern about potential findings 
by the auditor, he/she contacts the Assistant Director, the auditor, 
and the grantee to deal with the issue(s) as soon as possible. If the 
Regional Director or the Chief believes that an issue is of national 
concern, he/she notifies the Assistant Director--Wildlife and Sport 
Fish Restoration. The Assistant Director determines the appropriate 
action for national application and issue resolution and issues written 
guidance to the Regional Directors.
    3.10 Can audit findings be resolved while the field audit is still 
in progress? Yes. When practical and feasible, we work with grantees to 
resolve audit findings while the auditor is still on site so that he/
she can verify and document the resolution in audit work papers and 
report the resolution in the final audit report. The auditor must 
document all reportable conditions, including those resolved during the 
audit, to meet Government Auditing Standards. Upon written request to 
the auditor, the Service and the grantee will be provided copies of the 
auditor's working papers that are needed to fully understand and 
resolve the audit findings and recommendations.
    3.11 Will the Service and the grantee have an opportunity to review 
findings and recommendations prior to the exit conference? Yes. Copies 
of findings and recommendations will be provided to the Service and 
grantee for comment as they are developed throughout the audit 
fieldwork phase. The findings and recommendations are subject to 
revision based on any comments received from the Service or the 
grantee. The findings and recommendations provide the basis for the 
draft audit report.
    3.12 Is an audit exit conference required and, if so, when does it 
occur? No, is it not required. An audit exit conference will be 
conducted at the option of the State. The auditor

[[Page 61686]]

schedules the audit exit conference with the Service and the grantee, 
to occur on a mutually agreeable date. This conference is an 
opportunity for the grantee and the Service to request or provide 
further clarification on the potential findings and to address any 
other concerns relating to the conduct of the audit. Participants 
include the auditor and representatives of the Service and the grantee.
    3.13 Can audit findings change as a result of the exit conference? 
Yes. The auditor takes information received during the exit conference 
under advisement. The auditor may modify the findings or 
recommendations before preparing the draft audit report.
    3.14 Will the grantee and the Service have an opportunity to review 
and respond to audit findings in the draft audit report? Yes.
    A. After receipt of the draft audit report, the grantee has 30 
calendar days to:
    (1) Concur with the audit findings and recommendations;
    (2) Offer clarifying language for incorporation into the report; or
    (3) Disagree with audit findings or recommendations, and provide 
additional information, if appropriate, to support the grantee's 
position on specific audit findings.
    B. The grantee may ask the Regional Director for additional review 
time. This written request must include supporting justification. The 
Regional Director responds in writing to the grantee's request and 
instructs the auditor and the grantee accordingly.
    C. The auditor will summarize the grantee's response in the final 
report and include the complete text of the grantee's response as an 
attachment.
    3.15 Will the auditor respond to the grantee's written comments on 
draft audit report findings and recommendations? Yes. The auditor 
responds to the grantee's comments in the final audit report.
    3.16 Who issues the final audit report, and to whom is it issued? 
The OIG issues the final audit report to the Service Director, with a 
copy to the Chief, Division of Federal Assistance and the Assistant 
Director--Wildlife and Sports Fish Restoration. The OIG also sends 
copies of the report to the appropriate Regional Director and the 
Service Audit Liaison Officer. The Chief, Division of Federal 
Assistance (Washington Office), distributes informational copies to all 
other Regional Directors.
    3.17 Who provides the final audit report to the grantee? The 
Regional Director immediately transmits a copy of the final audit 
report to the grantee.
    3.18 Who can distribute the final audit report to the public? The 
OIG originates the final audit report and is responsible for 
distribution per 43 CFR 2.15. The final audit report is available for 
distribution to the public by the OIG at the time it is issued.
    3.19 Will final audit reports appear on the Internet? As the 
``office of record'', the OIG makes the decision to post final audit 
reports on the Internet in accordance with Departmental regulations (43 
CFR 2.15). They will post final audit reports after appropriate review 
and as time allows. Requests for copies of final audit reports not 
found on the OIG's Internet site should be directed to the FOIA 
Officer, Office of the Inspector General.
    3.20 Can a grantee register a formal complaint regarding the 
conduct of the audit? Yes. A grantee may register a written complaint 
with the Regional Director at any point during the audit.

Chapter 4, Audit Resolution (417 FW 4)

    4.1 What is the purpose of this chapter? This chapter establishes 
policy and procedures for tracking and resolving findings and 
implementing recommendations from audits of Federal Assistance Program 
grantees. See 417 FW 1 for authorities, responsibilities, and 
definitions. Other chapters in this Part establish policy and 
procedures for audit planning, conducting and reporting, and appeals.
    4.2 When does audit resolution begin? The formal audit resolution 
process begins on the date the OIG issues the final audit report per 
361 DM. However, the Regional Director will work with the grantee while 
the audit is in progress to resolve issues that the auditor identifies. 
Exhibit 1 provides the maximum timeframes for each phase of the audit 
resolution process.
    4.3 Who prepares the CAP? The Regional Director and the grantee 
negotiate the terms of the CAP through written and oral discussions of 
the auditor's findings and recommendations, the grantee's comments, the 
auditor's response, and the Service's determination. The Regional 
Chief, Division of Federal Assistance, in coordination with the grantee 
and the Chief, Division of Federal Assistance (Washington Office), 
prepares the CAP for the Regional Director's signature.
    4.4 How much time does the Service have to prepare a CAP? The OIG 
must receive the CAP not later than 90 calendar days from the date the 
OIG issued the final audit report.
    A. The Regional Director has 45 calendar days to prepare the CAP 
and submit it to the Assistant Director--Wildlife and Sport Fish 
Restoration, attention: Division of Federal Assistance (Washington 
Office).
    B. The Assistant Director--Wildlife and Sport Fish Restoration has 
30 calendar days to review the CAP, concur, and return to the Regional 
Director.
    C. The Regional Director has 15 calendar days to approve the CAP 
and forward it to the OIG.
    D. If the Regional Director and the Assistant Director--Wildlife 
and Sport Fish Restoration do not concur with the CAP, the matter is 
referred to the Director and timeframes are as indicated in Exhibit 1.
    4.5 Can the Service request additional time to prepare the CAP? If 
the Assistant Director and Regional Director cannot resolve their 
differences, the Director will make the final decision. The Assistant 
Director may request a 30-calendar-day extension from the OIG if 
needed.
    4.6 What are the content and format for a CAP?
    A. A cover page that clearly identifies the grantee audited, the 
years audited, and the report number. Obtain this information from the 
title of the OIG's final audit report.
    B. The CAP addresses all audit findings and recommendations that 
the OIG identifies in the final audit report. The CAP contains, at a 
minimum:
    (1) Auditor's Findings and Recommendations. The OIG identifies 
findings and recommendations that we must address in the CAP.
    (2) Service Determination. The Service sustains (accepts) or does 
not sustain (rejects) each finding and recommendation. Sustained 
recommendations from the final audit report must result in planned 
corrective actions. If the Regional Director does not sustain an audit 
finding, he or she explains the basis, including legal citations, for 
that determination. The CAP addresses both sustained and nonsustained 
findings.
    (3) Corrective Action. This component identifies specific 
corrective action(s) to resolve the finding consistent with the Service 
Determination. It specifies necessary actions, target dates, and the 
person responsible for carrying out each action. It also specifies how 
the grantee should implement the corrective actions to resolve the 
issues.
    (4) Resolution. This component describes documentation that we 
require of the grantee to verify implementation of the corrective 
action(s).
    4.7 Who must review and concur with the CAP? The Assistant 
Director--Wildlife and Sport Fish Restoration will

[[Page 61687]]

review the draft CAP and decide whether to concur or not to concur 
within 30 calendar days from the date the Region forwards the CAP to 
the Washington Office.
    4.8 What happens if the Assistant Director does not concur with the 
Region's draft CAP? The Assistant Director will work with the Regional 
Director to resolve any disagreements with the CAP. If they cannot 
resolve their differences, the Director will make the final decision. 
The Assistant Director may request a 30-calendar-day extension from the 
OIG if needed.
    4.9 When is the CAP reviewed at the Department level? The 
Department reviews the CAP when it is not approved by the Regional 
Director within 90-120 calendar days. PFM reviews all CAP resolutions 
placed in tracking. If PFM does not concur with all CAP resolutions, 
PFM will notify the Service. The CAP may be returned to the Regional 
Director for revision in consultation with the grantee. PFM tracks 
resolution of all audit recommendations.
    4.10 Are all audit recommendations tracked? Yes. The Regional 
Director tracks all audit recommendations listed in the CAP and reports 
to the Assistant Director annually on progress.
    A. When OIG receives the CAP within 90-120 calendar days, PFM 
tracks only the audit recommendations that are not resolved or 
implemented.
    B. When OIG does not receive the CAP within 90-120 calendar days, 
PFM tracks all audit recommendations.
    4.11 Who forwards the CAP to the OIG? Within 15 calendar days of 
the Washington Office concurrence, the Regional Director approves and 
immediately forwards the CAP to:
    A. OIG, and
    B. The Grantee, for implementation. The Regional Director will 
provide a copy to the Assistant Director--Wildlife and Sport Fish 
Restoration. The date the Regional Director approves the CAP starts the 
21-day appeal window described in 417 FW 5.
    4.12 What happens if the OIG does not concur with one or more of 
the resolutions in the CAP? The OIG forwards the CAP to PFM. PFM will 
instruct the Regional Director to correct the CAP.
    4.13 How much time does the grantee have to implement the CAP? The 
corrective action for each finding has a specific deadline as 
negotiated during development of the CAP. A grantee may request 
additional time from the Regional Director. The request must be in 
writing and justify the time requested. The Regional Director consults 
with the Chief, Division of Federal Assistance (Washington Office), as 
needed, and responds in writing to the grantee within 10 working days 
of receipt of the grantee's request. The Regional Director notifies the 
Chief, Federal Assistance (Washington Office) of whether the Regional 
Director concurs or not, and the Chief of Federal Assistance notifies 
the Audit Liaison Officer of the change.
    4.14 Who monitors implementation of the CAP? The Regional Director 
monitors, tracks, and documents implementation of the CAP and keeps the 
Director, through the Chief, Division of Policy and Directives 
Management, informed of implementation progress.
    4.15 Who can distribute the CAP to the public? The Regional 
Director originates the CAP and makes it available to the public upon 
request, but only after the CAP has been sent to the OIG and the 
grantee has received a copy. A grantee may release a copy of the CAP at 
his or her discretion.
    4.16 Will the CAP be published on the Internet? The Chief, Division 
of Federal Assistance (Washington Office) will coordinate with the 
Chief, Division of Policy and Directives Management, and the OIG to 
determine if posting a specifically requested document on the Internet 
is appropriate. If the Service receives three or more requests from the 
public for a specific CAP, Department of the Interior guidance is that 
the Service make that CAP available on the Internet per the Freedom of 
Information Act.
    4.17 How can a final CAP be modified? Only the Director or the 
Secretary may modify the final CAP as the result of an appeal completed 
in accordance with 417 FW 5 or 50 CFR 80.7, except that deadlines for 
implementation of corrective actions may be changed upon written 
approval by the Regional Director in accordance with paragraph 4.13 and 
after consultation with the Chief, Division of Federal Assistance 
(Washington Office), as needed. If conditions change for a grantee that 
affect the grantee's ability to implement the CAP, as agreed to, the 
grantee may petition the Regional Director to modify the CAP. Upon 
receipt of this petition, the Region submits the CAP amendment to the 
AD-MBSP through the Washington Office for concurrence. The AD-MBSP 
forwards the amended CAP to PDM, who then forwards the amended CAP to 
PFM.
    4.18 Can a grantee appeal a Service determination or corrective 
action in the final CAP? Yes. A grantee may appeal a Service 
determination, corrective action, or resolution contained in the final 
CAP by the appeals process described in 417 FW 5.
    4.19 Are status reports required during implementation of the CAP? 
If PFM requires us to submit status reports on specific corrective 
actions, we will request status reports from the grantee.
    4.20 Are there penalties if a grantee does not resolve audit 
findings in the Corrective Action Plan? Yes, remedies for noncompliance 
are found at 43 CFR 12.83. Additionally, the enforcement remedies in 
this section do not preclude the grantee from being placed in a high-
risk status as discussed at 43 CFR 12.52, or being subject to debarment 
or suspension, discussed at 43 CFR 12.75.
    4.21 How is an audit closed? When resolution is being tracked by 
PFM, the Regional Director sends a memorandum to the Director 
documenting that final action is complete (all corrective actions have 
been implemented) and requesting that the audit be closed. The Regional 
Director routes this memorandum, with implementation documentation, 
through the Chief, Division of Federal Assistance (Washington Office), 
for review and concurrence. The Chief, Division of Federal Assistance 
(Washington Office), then forwards a copy of the memorandum to the 
Chief, PDM, for review and concurrence. When all concerns are 
satisfied, the Service Audit Liaison Officer forwards a copy to the 
Audit Followup Program Liaison in PFM. If PFM concurs that all 
action(s) has been implemented, PFM notifies the Service Audit Liaison 
Officer that the audit is resolved. The Service Audit Liaison Officer 
notifies the Chief, Division of Federal Assistance (Washington Office), 
who releases the original memo to the Director. If the Director 
concurs, he signs it and returns it to the Regional Director officially 
closing the audit. The Regional Director notifies the grantee that the 
audit findings are resolved and closed. When resolution is not being 
tracked by PFM, the Regional Director will receive a memorandum from 
the OIG that indicates the CAP is resolved. The Regional Director will 
notify the grantee the audit is closed.
Exhibit 1--417 FW 4

Timeframes

Audit Resolution Process for Federal Assistance Grant Audits

    Note: The OIG allows 90 calendar days for bureaus to prepare a 
corrective action plan. The number of days indicated below is the 
established maximum time period for each resolution phase. (See 417 
FW 4)


[[Page 61688]]



----------------------------------------------------------------------------------------------------------------
              Calendar day                 Responsible organization                 Action/comments
----------------------------------------------------------------------------------------------------------------
1......................................  OIG........................  OIG issues final audit report. (Resolution
                                                                       time tracking process starts.) (417 FW
                                                                       4.2)
2-45...................................  RD, grantee, Chief FA/WO...  RD prepares draft CAP in coordination with
                                                                       grantee and Chief, FA/WO. Submits the
                                                                       draft CAP to the AD-MBSP, attention:
                                                                       Chief, FA/WO. (RD must complete action
                                                                       within 45 calendar days from OIG issuance
                                                                       of final report.) (417 FW 4.4)
46-75..................................  Chief FA/WO (AD-WSF).......  Chief, FA/WO, reviews the draft CAP and
                                                                       submits to the AD-MBSP for concurrence
                                                                       and returns to the RD. (AD-WSF and Chief
                                                                       FA/WO must complete action within 30
                                                                       calendar days of date that RD forwards
                                                                       report to AD-WSR) (417 FW 4.4 and 417 FW
                                                                       4.7)
76-90..................................  RD, AD-MBSP, D, OIG........  If disagreement exists between the RD and
                                                                       AMBS, they brief the Director for
                                                                       decision, and AD-WSR formally requests a
                                                                       30-day extension from the OIG. (AD-WSR
                                                                       must complete action prior to 90-day
                                                                       resolution timeframe.) (417 FW 4.8)
76-120.................................  RD.........................  RD approves CAP. RD transmits original OIG
                                                                       with copies to the AD-WSR, attention:
                                                                       Chief, FA/WO, and the grantee within 15
                                                                       calendar days of AD/MBSP decision. (RD
                                                                       must complete action within 2 weeks of AD-
                                                                       MBSP concurrence or Director's decision.)
                                                                       * (417 FW 4.11)
90-120.................................  OIG........................  OIG reviews the final CAP and notifies
                                                                       PFM, the RD, and Chief FA/WO that either:
                                                                      --Recommendations are placed in tracking
                                                                       with PFM, or
                                                                      --FWS has failed to resolve the audit OIG
                                                                       reviews the final CAP and notifies the RD
                                                                       and Chief, FA/WO that they concur with
                                                                       resolutions.
120+...................................  PFM/Service................  PFM works with the Service to track audit
                                                                       until all resolution actions are
                                                                       complete. (417 FW 4.9)
----------------------------------------------------------------------------------------------------------------
* Appeal Process: If the Regional Director cannot resolve the audit, the grantee may appeal to the Service
  Director (see 417 FW 6).
Legend:
AD-WSR--Assistant Director--Wildlife and Sportfish Restoration
D--Director
Chief FA/WO--Chief, Division of Federal Assistance, WO
Service--U.S. Fish and Wildlife Service
OIG--Office of Inspector General
PFM--Office of Financial Management (Departmental)
RD--Regional Director
Grantee--Recipient of Federal Assistance grant

Chapter 5, Audit Appeals (417 FW 5)

    5.1 What is the purpose of this chapter? This chapter establishes 
policy and procedures for appealing audit findings or corrective 
actions for Federal Assistance Program grantee audits. See 417 FW 1 for 
authorities, responsibilities, and definitions. Other chapters in this 
Part establish policy and procedures for audit planning, conducting and 
reporting, and resolution.
    5.2 Who may appeal? A grantee affected by a CAP may appeal Service 
determinations, corrective actions, or resolutions in the CAP.
    5.3 How much time does the grantee have to appeal? A grantee must 
file a written appeal to the Director within 21 calendar days from the 
date the Regional Director approved the CAP.
    5.4 What does the appeal contain? The appeal must:
    A. Specify which Service determinations, corrective actions, or 
resolutions the grantee is appealing.
    B. Provide information as to why an appeal is being made and 
include justification and citations supporting the grantee's position. 
This justification supplements information that the grantee provided in 
the original response to the audit findings.
    C. Include a brief summary of prior discussions or negotiations 
with the Service on the action being appealed.
    5.5 How does the appeals process work? The region and the State 
would prepare a CAP that would be acceptable to the Regional Director 
as if the questioned audit findings were upheld. The CAP should note 
the specific findings and resolutions with which the State disagrees, 
and an explanation and specific reasons for the disagreement. It should 
also include the State's intention to appeal the specific finding and 
resolution recommendation. The CAP would then be processed in the usual 
manner. When the CAP has gone through the approval process and the 
Region issues the final CAP, the final CAP will go into effect and be 
monitored by the Service and the Department's Office of Financial 
Management. The State would then have 21 calendar days from the date 
the Region issues the final CAP to initiate an appeal. Only those 
findings and resolutions specifically mentioned in the appeal would be 
affected by the appeal. The other findings and resolutions would be 
final. In the event of an adverse decision, the State may appeal to the 
Secretary of the Interior.
    5.6 Who makes the final decision on an appeal to the Service? The 
Director makes the final decision on each appeal after consultation 
with technical experts. The Director will work with the grantee(s), 
appropriate Service Region(s), Washington Office staff, and others as 
needed to resolve the appeal within 30 calendar days after receipt of 
all pertinent documents.
    5.7 Can a grantee appeal the Director's decision? Yes, such an 
appeal shall be made pursuant to 43 CFR 4.700-4.704. A grantee may 
appeal the Director's decision within 30 days of the date of mailing of 
the decision. Submit appeals to the Director, Office of Hearings and 
Appeals, Department of the Interior.
    5.8 Does the Service provide information to the Department? 
Pursuant to 43 CFR 4.702, the Director--upon notification by the 
Department of the Interior, Office of Hearings and Appeals--has 10 
calendar days to provide the entire official file on the matter, 
including all records, documents, transcripts of testimony, and other 
information compiled during the proceedings leading to the decision 
being appealed.
    5.9 Who decides the issue? The Director, Office of Hearings and 
Appeals, or an ad hoc appeals board appointed by that Director may take 
any of the following actions: hold a hearing on the entire matter or 
specified portions of it; make a decision based on the information 
already available; or make other disposition of the case. The Director, 
Office of Hearings and Appeals, may grant oral arguments if good cause 
is shown. Any hearing on such appeals will be conducted by the ad hoc 
appeals board or by an

[[Page 61689]]

administrative law judge of the Office of Hearings and Appeals and will 
be governed by the regulations applicable to other hearings under this 
part. All appeals should be made pursuant to 43 CFR 4.700-4.704.

Chapter 6, Single Audit Act Report Resolution (417 FW 6)

    6.1 What is the purpose of this chapter? This chapter establishes 
Service policy for resolving findings and implementing recommendations 
from audits of Federal Assistance Program grantees under the Single 
Audit Act. See 417 FW 1 for authorities, responsibilities, and 
definitions.
    6.2 To what program does this chapter apply? This chapter applies 
to Single Audit Act audits of grantees that receive funds through the 
Federal Assistance Program.
    6.3 Is the Service responsible for resolving all audit findings? 
No. We are only responsible for resolving findings, recommendations, 
and questioned costs that directly relate to funds that we provide to 
the grantee.
    6.4 Does the OIG notify the Service when audits are completed? The 
OIG will provide excerpts from the Single Audit Report to the Director 
or Regional Director if there are issues that we must address. The 
OIG's transmittal memorandum will identify the specific findings and 
questioned costs that we must resolve. The OIG does not notify us if 
the Single Audit Report contains no findings directly related to funds 
that we provide to the grantee.
    6.5 What happens when the Service receives a Single Audit Report?
    A. When the OIG provides the report to the Washington Office, the 
Service Audit Liaison Officer:
    (1) Notifies the Chief, Division of Federal Assistance (Washington 
Office), and other Service offices, as needed, that we have received a 
Single Audit report that contains findings we must resolve.
    (2) Forwards the documents to the Chief, Division of Federal 
Assistance (Washington Office), for review and transmittal to the 
appropriate Regional Director for action.
    B. When the OIG provides the report to the Regional Office, the 
Chief, Division of Federal Assistance (Regional Office), will notify 
and provide a copy to the Chief, Division of Federal Assistance 
(Washington Office), and the Service Audit Liaison Officer. The Service 
Audit Liaison Officer will coordinate with other affected offices, as 
necessary.
    C. The Regional Director notifies the grantee of receipt of the 
Single Audit Report.
    6.6 How much time does the Service have to respond to the Single 
Audit Report? The OIG establishes a deadline in the transmittal 
memorandum submitted with the Single Audit Report. The Regional 
Director may, with concurrence of the Assistant Director--Wildlife and 
Sport Fish Restoration, request that the OIG provide additional time 
for response. The request will include a justification for the 
extension.
    6.7 How are findings resolved? The Regional Director is responsible 
for overseeing and monitoring the Service response to Single Audit 
Reports in accordance with procedures in 417 FW 4. The Regional 
Director coordinates with the grantee to ensure that the specified 
action will resolve the finding. If the Regional Director determines 
that the corrective action will not resolve the finding, he/she 
negotiates revised corrective actions with the grantee. When corrective 
actions to resolve audit findings have been documented by the grantee, 
the Regional Director notifies the OIG and the Chief, Division of 
Federal Assistance (Washington Office), in writing. The Chief, Division 
of Federal Assistance (Washington Office), notifies the Service Audit 
Liaison Officer of this action. The audit is closed when the Department 
office that is tracking the resolution concurs with the Service's 
response.
    6.8 Who maintains Single Audit Report resolution files? The 
Regional Director will maintain all files related to resolution of 
Single Audit Act audit findings. These files will include, but not be 
limited to:
    A. Copies of all relevant correspondence.
    B. Single Audit Report and OIG transmittal memorandum.
    C. Service response to OIG's transmittal memorandum.
    D. Corrective actions and revised corrective actions, as described 
in paragraph 6.7, when appropriate.
    E. Documentation that the grantee has resolved the audit findings 
and questioned costs in accordance with approved corrective actions.
    6.9 Can the grantee appeal a Single Audit corrective action? Yes. 
Grantees may appeal Service decisions using the procedures outlined in 
43 CFR 4.700-4.704. A grantee may appeal the Service's decision on a 
Single Audit corrective action within 30 calendar days of the date of 
mailing of the decision. Submit the appeal to the Director, Office of 
Hearings and Appeals, Department of the Interior. The Director, Office 
of Hearings and Appeals; an ad hoc appeals board appointed by that 
Director; or an administrative law judge of that office will review the 
record, hold a hearing on all or part of the record, or listen to oral 
arguments and then make disposition of the appeal.

    Dated: October 15, 2003.
Craig Manson,
Assistant Secretary for Fish and Wildlife and Parks.
[FR Doc. 03-27203 Filed 10-28-03; 8:45 am]
BILLING CODE 4310-55-P