Nonprofit Audit Guide©

If your nonprofit organization in Illinois is required to have its financial documents audited, it’s important to become as acquainted with the auditing process as possible. Administrative proceeding means a non-judicial process that is adjudicatory in nature in order to make a determination of fault or liability (e.g., Securities and Exchange Commission Administrative proceedings, Civilian Board of Contract Appeals proceedings, and Armed Services Board of Contract Appeals proceedings). This includes proceedings at the Federal and State level but only in connection with performance of a Federal contract or grant.

(2) The allowable compensation for certain employees is subject to a ceiling in accordance with statute. For the amount of the ceiling for cost-reimbursement contracts, the covered compensation subject to the ceiling, the covered employees, and other relevant provisions, see 10 U.S.C. 2324(e)(1)(P), and 41 U.S.C. 1127 and 4304(a)(16). For other types of Federal awards, other statutory ceilings may apply. If the Federal awarding agency considers the extent of non-organizational professional effort excessive or inconsistent with the conflicts-of-interest terms and conditions of the Federal award, appropriate arrangements governing compensation will be negotiated on a case-by-case basis. (2) Any costs of auditing a non-Federal entity that is exempted from having an audit conducted under the Single Audit Act and subpart F of this part because its expenditures under Federal awards are less than $750,000 during the non-Federal entity’s fiscal year. (ii) Prescribe guidelines and establish internal procedures to promptly determine on behalf of the Federal Government that a DS–2 adequately discloses the IHE’s cost accounting practices and that the disclosed practices are compliant with applicable CAS and the requirements of this part.

Definitions of Entities per 45 CFR 75.2

GAAP may seem to take a “one-size-fits-all” approach to financial reporting that does not adequately address issues faced by distinct industries. For example, state and local governments may struggle with implementing GAAP due to their unique environments. New GAAP hierarchy proposals may better accommodate these government entities. Commercial organizations that are subject to single audit requirements but have not previously registered in the PRF Reporting Portal must submit their audits via email to HRSA’s Division of Financial Integrity at (b) are unallowable because they are clearly not allocable to Federal awards. These adjustments or refunds will be made regardless of the type of rate negotiated (predetermined, final, fixed, or provisional).

• (c) The non-Federal entity is exempt from the pre-procurement review in paragraph (b) of this section if the Federal awarding agency or pass-through entity determines that its procurement systems comply with the standards of this part.
• Generally, it’s discussed in a financial sense, but audits can refer to internal analysis of operations, external parties reviewing your finances, the analysis of your adherence to compliance requirements, and more.
• Establish a salary and wage distribution base, determined by deducting from the total of salaries and wages as established in subsection a from the amount of salaries and wages included under subsection b.
• GAAP aims to improve the clarity, consistency, and comparability of the communication of financial information.

The rate methodology selected by an organization needs to match a business’ operations. The allocation base should best represent the causal relationship between costs being allocated and the final cost objectives (awards, fundraising, lobbying, etc.). USAID predominantly uses the provisional and final indirect cost rate methodology when negotiating rate agreements. Responsibility for the negotiation and issuance of NICRAs for foreign organizations, with no awards law firm bookkeeping issued by USAID/Washington’s M/OAA, rests with the Mission (and handled by the Agreement Officer) providing the majority of the entities’ funding. A foreign organization is an organization located in a country other than the United States that is a non-profit and tax exempt under the laws of its country of domicile and operation. The cognizant Mission initially negotiates, and subsequently updates, the NICRA on a company-wide basis; not per grant/award.

B. Public Benefit Status

(2) Whenever possible, advance payments must be consolidated to cover anticipated cash needs for all Federal awards made by the Federal awarding agency to the recipient. (c) Nothing in this section may be construed as requiring the publication of information otherwise exempt under the Freedom of Information Act (5 U.S.C 552), or controlled unclassified information pursuant to Executive Order 13556. (e) Any additional requirements must be promptly removed once the conditions that prompted them have been satisfied. The applicant’s ability to effectively implement statutory, regulatory, or other requirements imposed on non-Federal entities. Applicability of Single Audit Requirements as required by subpart F of this part. (2) A Federal award for an experimental, pilot, or demonstration project that is also supported by a Federal award listed in paragraph (f)(1) of this section.

A negotiated fixed amount in lieu of indirect (F&A) costs may be appropriate for self-contained, off-campus, or primarily subcontracted activities where the benefits derived from an institution’s indirect (F&A) services cannot be readily determined. Such negotiated indirect (F&A) costs will be treated as an offset before allocation to instruction, organized research, other sponsored activities, and other institutional activities. The base on which such remaining expenses are allocated should be appropriately adjusted. (3) Federal programs not recently audited as major programs may be of higher risk than Federal programs recently audited as major programs without audit findings. The auditor’s determination should be based on an overall evaluation of the risk of noncompliance occurring that could be material to the Federal program.

Limitations Effecting Reimbursement of Indirect Costs

(5) The non-Federal entity expenses or capitalizes allowable interest cost in accordance with GAAP. (3) The non-Federal entity obtains the financing via an arm’s-length transaction (that is, a transaction with an unrelated third party); or claims reimbursement of actual interest cost at a rate available via such a transaction. An asset cost includes (as applicable) acquisition costs, construction costs, and other costs capitalized in accordance with GAAP. (a) Costs of insurance required or approved and maintained, pursuant to the Federal award, are allowable. (ii) The extent to which the facility was actually used to meet demands during the accounting period.

• A deficiency in operation exists when a properly designed control does not operate as designed or when the person performing the control does not possess the necessary authority or qualifications to perform the control effectively.
• (2) To provide for continuity of cognizance, the determination of the predominant amount of direct funding must be based upon direct Federal awards expended in the non-Federal entity’s fiscal years ending in 2019, and every fifth year thereafter.
• If you have a small organization that is not mandated to obtain an annual audit, that amount of money may not be worth it.
• Closeout actions include Federal awarding agency actions in the grants management and payment systems.
• Final rate means an indirect cost rate applicable to a specified past period which is based on the actual costs of the period.
• (2) Reasonable costs for the storage, transportation, protection, and disposition of property provided by the Federal Government or acquired or produced for the Federal award.

(4) Provide OMB annual updates to the compliance supplement and work with OMB to ensure that the compliance supplement focuses the auditor to test the compliance requirements most likely to cause improper payments, fraud, waste, abuse or generate audit finding for which the Federal awarding agency will take sanctions. (iii) Promptly inform other affected Federal agencies and appropriate Federal law enforcement officials of any direct reporting by the auditee or its auditor required by GAGAS or statutes and regulations. Auditees must keep one copy of the data collection form described in paragraph (b) of this section and one copy of the reporting package described in paragraph (c) of this section on file for three years from the date of submission to the FAC.