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NEH's Program-Specific Audit Guide for State Humanities Councils

OFFICE OF THE INSPECTOR GENERAL

NEH's Program-Specific Audit Guide for State Humanities Councils (45.129)

  1. PROGRAM OBJECTIVES

    NEH's Federal/State Partnership provides funding to support the humanities in each state. Each state humanities council makes focused and coherent humanities programs possible in places and by methods that are appropriate to the citizens served by each council.

  2. PROGRAM PROCEDURES

    Grants are made to the state councils upon the submission and approval of a Federal/State Partnership General Support Grant Application Cover Sheet and Compliance Plan. The grants provide administrative and program support.

  3. COMPLIANCE REQUIREMENTS AND SUGGESTED AUDIT PROCEDURES

    1. TYPES OF SERVICES ALLOWED OR UNALLOWED

      Compliance Requirement

      Federal regrant funds are to be expended according to the approved budget and any amendments. Transfers can be made from other categories to regrants, but written permission from NEH's Federal/State Partnership is required to transfer funds from the regrant category.

      Suggested Audit Procedures

      Trace the regrant amounts shown in the last approved budget or last NEH grant amendment to the general ledger or working papers that reconcile to the final Financial Status Report.

      Councils that have transferred federal regrant funds to other cost categories must have written approval from NEH's Federal/State Partnership.

      Councils submitting final and interim Financial Status Reports using SF 269A (short form) must maintain working papers showing the breakdown of expenditures by the categories included in the approved budget.

    2. ELIGIBILITY

      1. REGRANTEES

        Compliance Requirements

        Program funds can only be disbursed to organizations (including institutions of higher education and units of state and local governments), groups or persons that form an association to carry out a project, not-for-profit groups (do not have to be incorporated), and individuals.

        For-profit organizations are not eligible.

        Suggested Audit Procedures

        Review the council's program guidelines and regrant application packages to ensure that a statement regarding nonprofit status is included.

        Review regrantees applications for nonprofit status.

        Compliance Requirements

        All awards of regrant funds must be made from applications received through open competition.

        All awards (regrants) and amendments must be approved by the board and recorded in the council's minutes.

        Suggested Audit Procedures

        Determine that regrant awards were based on applications reviewed in open competition by: comparing a sample of regrant award letters to the meeting minutes to determine that each award has board approval; and reconciling subsidiary regrant ledger(s) to the general ledger.

      2. GIFTS

        Compliance Requirement

        Gifts received for matching must be eligible to release federal matching funds. Noncash gifts are not eligible. Gifts may be retained by the council or its regrantee. Gifts that are restricted for use by a particular regrant must be certified and expended during the regrant period. Documentation regarding eligibility must be maintained. Councils must identify pledges when they are certified.

        Suggested Audit Procedures

        Review and evaluate the system used by the council for determining eligibility of gifts received and retained by the council, and of gifts retained by a regrantee.

        Select restricted gifts received from several regrants for each NEH grant or period under review; ascertain that each gift was certified during the regrant period.

        Review certification letters submitted to NEH to determine that the council has complied with all statements included in the NEH sample letter.

        Ascertain that 1) certified gifts met the eligibility criteria, 2) documentation will be or has been maintained for the three years following submission of the final Financial Status Report (SF 269A); and 3) if applicable, a disclosure paragraph was included that identified unpaid pledges and justification for matching.

        Reconcile documentation for third-party donations (letters, grants, etc.) to the gifts certification journal and general ledger control account.

        Review donor transmittal letters for amount and eligibility. Transmittal letters should indicate whether the gifts are restricted or unrestricted.

        Review adequacy of donor transmittal letters of gifts held by regrantees.

        Determine that all certified gifts were expended during NEH grant period.

        Compliance Requirement

        Contracts are not eligible for matching. However, "contracts" received from state and local government agencies may actually be grant awards, in which case they would be eligible to release federal matching funds. NEH's Office of Grant Management must determine eligibility in writing.

        Suggested Audit Procedures

        Review all contractual agreements to determine that they have been approved for eligibility to release federal matching funds by NEH's Office of Grant Management.

    3. MATCHING, LEVEL OF EFFORT, and/or EARMARKING REQUIREMENTS

      Compliance Requirements

      For every dollar in federal funds provided to the council by NEH, an equal amount of cash or in-kind cost sharing must be used to support budgeted project activities.(For those councils covered by the Economic Development of the Territories Act, see the July 1994 letter from the director of NEH's Office of Grant Management.)

      Suggested Audit Procedures

      Review the final Financial Status Report for reported cost sharing and trace to working papers, general ledgers, or other subsidiary ledgers. Report any differences.

    4. REPORTING REQUIREMENTS

      Compliance Requirements

      The following financial reports must be submitted:

      • interim and final Financial Status Report (SF 269A)
      • Federal Cash Transactions Report (SF 272 and SF 272A)

      Suggested Audit Procedures

      See General Requirements for Cash Management in OMB Compliance Supplement for Single Audit, and NEH award documents.

    5. SPECIAL TESTS AND PROVISIONS

      Compliance Requirement

      Accounting records should be maintained on a grant-to-date basis for obligations and disbursements. Amounts reported on the interim Financial Status Report should be reconcilable to the general ledger via working papers.

      Subsidiary ledgers should be maintained that identify all regrants awarded under each NEH grant and that are reconcilable to the general ledger control accounts.

      All unliquidated obligations should be reported on the interim Financial Status Report whether the council uses accrual or cash basis accounting.

      Suggested Audit Procedures

      Review the reconciliation of the grant-to-date records to the interim Financial Status Report.

      Reconcile the list of regrants or subsidiary records to the grant-to-date records for total obligations incurred and unliquidated obligations.

      Compliance Requirement

      Accounting records are maintained on a grant-to-date basis.

      Regrants awarded under each NEH grant are reconciled to the Financial Status Report via working papers.

      Suggested Audit Procedures

      Review reconciliation of grant-to-date records to final Financial Status Report.

      Reconcile list of regrants to the grant-to-date records

      These compliance requirements have not been reviewed and approved by the Office of Management and Budget (OMB) and, therefore, do not constitute an official addendum to the OMB Compliance Supplements. NEH's Office of Inspector General has decided not to issue them in the form of an official OMB supplement since their application is limited to the state humanities councils. However, their use is required by NEH's Office of Inspector General.

      Reference for Independent Public Accountants

      1. Application Cover Sheet and Compliance Plan.
      2. NEH Award letter, and amendments.
      3. Approved Budget Summary.
      4. Matching Guidelines for General Support Grants to State Humanities Councils (May 1998), and
      5. Notice # 5 dated May 1998, Notice to State Humanities Councils NEH Gifts and Matching Program, issued by the NEH's Office of Grants Management.
      6. General Grant Provisions for General Support Grants to State Humanities Councils (October 1997).

(10/98)