Audit Guidance: FAQs on Recipients & Subrecipients

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 by early 2018.

Are Office of Management and Budget (OMB) Uniform Guidance audits required for recipients of LSC funds?

Yes.  LSC OIG has elected to adopt Code of Federal Regulations, Title 2, Subtitle A, Chapter II, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) for audits of LSC grant recipients, subject to modification in accordance with LSC OIG guidance.

Are recipients of less than $750,000 in LSC funding exempt from LSC audit requirements under the Uniform Guidance?

No. Uniform Guidance increased the threshold for a Single Audit to $750,000 of federal awards expended. LSC Appropriations Acts of 1996 and 1997  require an audit regardless of grant amount and takes precedence over the Uniform Guidance audit requirements. Accordingly, the increased audit threshold specified 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 Audit Guide for Recipients and Auditors specified in paragraph I-3 remains unchanged.

Are LSC recipients ever considered a low-risk auditee?

No. Under the LSC Act and Uniform Guidance, LSC OIG has determined that all grantees should be classified as high-risk.  The Compliance Supplement for Audits of LSC Recipients, page three, states that the LSC grant is to be considered high-risk. As a result, the LSC OIG will not accept audit submissions classified as “low-risk”. 

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 Compliance Supplement for Audits of LSC Recipients which is Appendix A of the Audit Guide for Recipients and Auditors, identifies the laws and regulations that apply to LSC funds under an OMB Uniform Guidance audit. IPAs are expected to cite the Compliance Supplement for Audits of LSC Recipients in their reports on Compliance with Requirements applicable to Major Programs and Internal Controls over Compliance in accordance with the Uniform Guidance. IPAs should be aware that if non-LSC funds (Federal or state) of a recipient are subject to consideration under an OMB Uniform Guidance audit, the OMB Compliance Supplement may otherwise apply to those funds.

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 statements 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.

Should the Property and Equipment note to the financial statements show assets purchased with LSC funds vs. non-LSC funds?

Yes. Per the Accounting Guide for LSC Recipients, Appendix IA, page 64, the property and equipment note in the financial statements should show full detail by asset category, including depreciation, for the amount shown as property and equipment and detail property purchased with LSC funds as opposed to non-LSC funds.

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