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Summary: Subpart F outlines the "Single Audit" process, the definitive annual "check-up" for any organization spending more than $750,000 in federal funds. This "system-wide" audit replaces the need for dozens of individual agency audits, providing a holistic view of the municipality's financial and compliance health. It mandates that auditors evaluate both the financial statements and the "Internal Controls" used to manage each major grant program. The results of this audit are filed in the "Federal Audit Clearinghouse" (FAC) and serve as a "Report Card" for federal agencies to see which municipalities are "High Risk." For the municipality, Subpart F is the "final exam" that validates their "Fiscal Resiliency" and "Audit-Ready" status. It requires the creation of "Corrective Action Plans" for every finding, ensuring that mistakes are never repeated. Subpart F is the ultimate "Accountability" mechanism in the federal grant system.
● §200.501 Audit Requirements: You must procure an external auditor if you spend over
$750k in federal funds. This is essential as "Skipping the Audit" is a "Death Penalty" for future federal funding eligibility.
● §200.502 Basis for Determining Federal Awards Expended: You must use the "Schedule of Expenditures of Federal Awards" (SEFA) to track your spending. This is essential for the auditor to know which grants to "Test" for compliance.
● §200.503 Relation to Other Audit Requirements: You must recognize that the Single Audit is the "Primary" audit, but agencies can still do "Spot Checks." This is essential for being prepared for a "Deep Dive" OIG audit at any time.
● §200.504 Frequency of Audits: You must perform this audit "Annually." This is essential for providing "Real-Time" assurance to the federal government that your systems haven't degraded.
● §200.505 Sanctions: You must be aware that "Late Audits" lead to "Withholding" of cash. This is essential for ensuring your "Finance Department" prioritizes the audit deadline above all else.
● §200.506 Audit Costs: You must treat the "Cost of the Audit" as an allowable expense. This is essential because the federal government wants to pay for its own "Oversight" to ensure it’s done correctly.
● §200.507 Program-Specific Audits: You must follow special rules if you only have one grant and don't need a full Single Audit. This is essential for "Simplified Compliance" for
smaller municipalities.
● §200.508 Auditee Responsibilities: You must provide the auditor with "Access to Personnel and Records." This is essential because "Cooperation" is a mandatory condition of the grant; "Obstruction" leads to termination.
● §200.509 Auditor Selection: You must use "Competitive Procurement" to hire your auditor. This is essential to ensure the auditor is "Independent" and hasn't been "Captured" by the municipality.
● §200.510 Financial Statements: You must prepare "Accurate and Complete" financial statements for the auditor. This is essential because "Inaccurate Statements" result in a "Qualified Opinion," which is a mark against your risk profile.
● §200.511 Audit Findings Follow-Up: You must create a "Summary Schedule of Prior Audit Findings." This is essential to show that you have "Learned your Lesson" and "Fixed the Holes" in your system.
● §200.512 Report Submission: You must upload the "Audit Package" to the FAC within 30 days of receipt. This is essential for "Public Transparency" and federal monitoring of your "Fiscal Health."