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e-CFR data is current as of September 24, 2020

Amendment


2 CFR--PART 200

View Printed Federal Register page 85 FR 49574 in PDF format.

Amendment(s) published August 13, 2020, in 85 FR 49574

Effective Dates: Nov. 12, 2020

114. Amend §200.518 by revising paragraphs (b)(3) and (4), (c)(1) introductory text, (c)(1)(i) and (ii), (d)(1), and (f) to read as follows:

§200.518   Major program determination.

*   *   *   *   *

(b) *  *  *

(3) The inclusion of large loan and loan guarantees (loans) must not result in the exclusion of other programs as Type A programs. When a Federal program providing loans exceeds four times the largest non-loan program it is considered a large loan program, and the auditor must consider this Federal program as a Type A program and exclude its values in determining other Type A programs. This recalculation of the Type A program is performed after removing the total of all large loan programs. For the purposes of this paragraph a program is only considered to be a Federal program providing loans if the value of Federal awards expended for loans within the program comprises fifty percent or more of the total Federal awards expended for the program. A cluster of programs is treated as one program and the value of Federal awards expended under a loan program is determined as described in §200.502.

(4) For biennial audits permitted under §200.504, the determination of Type A and Type B programs must be based upon the Federal awards expended during the two-year period.

(c) *  *  *

(1) The auditor must identify Type A programs which are low-risk. In making this determination, the auditor must consider whether the requirements in §200.519(c), the results of audit follow-up, or any changes in personnel or systems affecting the program indicate significantly increased risk and preclude the program from being low risk. For a Type A program to be considered low-risk, it must have been audited as a major program in at least one of the two most recent audit periods (in the most recent audit period in the case of a biennial audit), and, in the most recent audit period, the program must have not had:

(i) Internal control deficiencies which were identified as material weaknesses in the auditor's report on internal control for major programs as required under §200.515(c);

(ii) A modified opinion on the program in the auditor's report on major programs as required under §200.515(c); or

*   *   *   *   *

(d) *  *  *

(1) The auditor must identify Type B programs which are high-risk using professional judgment and the criteria in §200.519. However, the auditor is not required to identify more high-risk Type B programs than at least one fourth the number of low-risk Type A programs identified as low-risk under Step 2 (paragraph (c) of this section). Except for known material weakness in internal control or compliance problems as discussed in §200.519(b)(1) and (2) and (c)(1), a single criterion in risk would seldom cause a Type B program to be considered high-risk. When identifying which Type B programs to risk assess, the auditor is encouraged to use an approach which provides an opportunity for different high-risk Type B programs to be audited as major over a period of time.

*   *   *   *   *

(f) Percentage of coverage rule. If the auditee meets the criteria in §200.520, the auditor need only audit the major programs identified in Step 4 (paragraphs (e)(1) and (2) of this section) and such additional Federal programs with Federal awards expended that, in aggregate, all major programs encompass at least 20 percent (0.20) of total Federal awards expended. Otherwise, the auditor must audit the major programs identified in Step 4 (paragraphs (e)(1) and (2) of this section) and such additional Federal programs with Federal awards expended that, in aggregate, all major programs encompass at least 40 percent (0.40) of total Federal awards expended.

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