Sec. 4-231. Single audit or program-specific audit requirements. Exemption. Records.
Sec. 4-232. Designation of independent auditor to conduct audit. Audit report filing.
Sec. 4-233. Conduct and scope of audits. When corrective action required.
Sec. 4-234. Audits in lieu of financial or financial and compliance audits. Additional audits.
Secs. 4-237 to 4-249. Reserved
Sec. 4-230. Definitions. As used in sections 4-230 to 4-236, inclusive:
(1) “Cognizant agency” means a state agency which is assigned by the secretary the responsibility for implementing the requirements of sections 4-230 to 4-236, inclusive;
(2) “Secretary” means the Secretary of the Office of Policy and Management;
(3) “State financial assistance” means assistance that a nonstate entity receives or administers which is provided by a state agency or pass-through entity in the form of grants, contracts, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance or direct appropriations, but does not include direct state cash assistance to individuals or payments to a vendor;
(4) “State agency” means any department, board, commission, institution or other agency of the state;
(5) “Generally accepted accounting principles” has the meaning specified in the generally accepted auditing standards issued by the American Institute of Certified Public Accountants (AICPA);
(6) “Generally accepted government auditing standards” (GAGAS) means the generally accepted government auditing standards issued by the Comptroller General of the United States that are applicable to financial audits;
(7) “Independent auditor” means a public accountant who is licensed to practice in the state and meets the independence standards included in generally accepted government auditing standards;
(8) “Internal controls” means a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in: (A) Reliability of financial reporting, (B) effectiveness and efficiency of operations, and (C) compliance with applicable laws and regulations;
(9) “Municipality” means a town, consolidated town and city, consolidated town and borough, city or borough, including a local board of education as described in subsection (c) of section 7-392;
(10) “Audited agency” means a district, as defined in section 7-324, the Metropolitan District of Hartford County, a regional board of education, a regional council of governments, any other political subdivision of similar character which is created or any other agency created or designated by a municipality to act for such municipality whose annual receipts from all sources exceed one million dollars or any tourism district established under section 10-397;
(11) “Nonprofit agency” means any organization that is not a for-profit business and provides services contracted for by (A) the state or (B) a nonstate entity. It also means private institutions of higher learning which receive state financial assistance;
(12) “Major state program” means any program, excluding an exempt program, determined to be a major state program by the independent auditor pursuant to the requirements of the risk-based approach, provided such requirements shall (A) encompass factors consistent with requirements established by the United States Office of Management and Budget, and (B) include, but not be limited to, current and prior audit experience, oversight by state agencies and pass-through entities and the risk inherent in state programs;
(13) “Public accountant” means an individual who meets the standards included in generally accepted government auditing standards for personnel performing government audits and the licensing requirements of the State Board of Accountancy;
(14) “Subrecipient” means a nonstate entity that receives state financial assistance from a pass-through entity, but does not include an individual who receives such assistance;
(15) “Tourism district” means a district established under section 10-397;
(16) “Nonstate entity” means a municipality, tourism district, audited agency or nonprofit agency;
(17) “Pass-through entity” means a nonstate entity that provides state financial assistance to a subrecipient;
(18) “Program-specific audit” means an audit of a single state program conducted in accordance with the regulations adopted under section 4-236;
(19) “Expended” and “expenditures” have the meanings attributed to those terms in generally accepted accounting principles, except that (A) state financial assistance received which does not specify a required use shall be assumed to be fully expended in the fiscal year of receipt, and (B) exempt programs shall be assumed to be expended in the fiscal year that the state financial assistance is received;
(20) “Exempt program” means any state program designated to be exempt by the secretary after consultation with the Auditors of Public Accounts and the commissioner of the state agency that awarded the state financial assistance;
(21) “Vendor” means a dealer, distributor, merchant or other seller providing goods or services that are required for the conduct of a state program. Such goods or services may be for an organization's own use or for the use of beneficiaries of the state program; and
(22) “Single audit” means an audit, as provided in section 4-235, that encompasses an entity's financial statements and state financial assistance.
(P.A. 91-401, S. 1, 20; P.A. 97-238, S. 5; P.A. 98-143, S. 17, 24; P.A. 00-66, S. 9; June 30 Sp. Sess. P.A. 03-6, S. 233, 234; Sept. Sp. Sess. P.A. 09-7, S. 44; P.A. 13-247, S. 263.)
History: P.A. 97-238 redefined “audited agency” to include tourism districts; P.A. 98-143 revised definitions in Subdivs. (3), (5) to (8), inclusive, and (11) to (14), inclusive, and added new Subdivs. (15) to (21), inclusive, defining “tourism district”, “nonstate entity”, “pass-through entity”, “program-specific audit”, “expended” and “expenditures”, “exempt program” and “vendor”, effective June 4, 1998, and applicable to audits conducted for fiscal years commencing on and after July 1, 1998; P.A. 00-66 made a technical change in Subdiv. (19); June 30 Sp. Sess. P.A. 03-6 amended Subdivs. (10) and (15) to change section reference for “tourism district”, effective August 20, 2003; Sept. Sp. Sess. P.A. 09-7 redefined “audited agency” in Subdiv. (10), “major state program” in Subdiv. (12) and “exempt program” in Subdiv. (20) and added Subdiv. (22) defining “single audit”, effective October 5, 2009; P.A. 13-247 amended Subdiv. (10) to redefine “audited agency” by substituting “council of governments” for “planning agency”, effective January 1, 2015.
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Sec. 4-231. Single audit or program-specific audit requirements. Exemption. Records. (a)(1) Each nonstate entity which expends a total amount of state financial assistance equal to or in excess of three hundred thousand dollars in any fiscal year of such nonstate entity beginning on or after July 1, 2009, shall have either a single audit or a program-specific audit made for such fiscal year, in accordance with the provisions of subdivision (2) or (3) of this subsection and the requirements of regulations adopted pursuant to section 4-236.
(2) If the total amount of state financial assistance expended in any such fiscal year is for a single program, such nonstate entity may elect to have a program-specific audit made in lieu of a single audit, provided a grant agreement or a statutory or regulatory provision governing the program of state financial assistance does not require a financial statement audit of such nonstate entity.
(3) If the total amount of state financial assistance expended in any such fiscal year is for more than one program, such entity shall have a single audit made for such fiscal year.
(b) Notwithstanding any provision of the general statutes or any regulation adopted under any provision of the general statutes, each nonstate entity that expends total state financial assistance of less than three hundred thousand dollars in any fiscal year of such nonstate entity beginning on or after July 1, 2009, shall be exempt with respect to such year from complying with any statutory or regulatory requirements concerning financial or financial and compliance audits that would otherwise be applicable.
(c) No provision of this section shall be deemed to exempt a nonstate entity from complying with any statutory or regulatory provision requiring the entity to (1) maintain records concerning state financial assistance or (2) provide access to such records to a state agency.
(P.A. 91-401, S. 2, 20; P.A. 92-121, S. 1, 3; May 25 Sp. Sess. P.A. 94-1, S. 43, 130; P.A. 98-143, S. 18, 24; Sept. Sp. Sess. P.A. 09-7, S. 45.)
History: P.A. 92-121 amended Subsec. (a) by requiring each municipality and audited agency subject to the federal Single Audit Act to have a comprehensive audit each fiscal year and delaying the compliance of the single comprehensive audit for certain nonprofit agencies for one year; May 25 Sp. Sess. P.A. 94-1 amended Subsec. (a)(1) by making technical changes, effective July 1, 1994; P.A. 98-143 deleted all former provisions and substituted new provisions re auditing requirements, effective June 4, 1998, and applicable to audits conducted for fiscal years commencing on and after July 1, 1998; Sept. Sp. Sess. P.A. 09-7 amended Subsec. (a) to increase total state financial assistance from $100,000 to $300,000, delete provision re biennial audit and make a conforming change in Subdiv. (1) and add proviso re financial statement audit in Subdiv. (2), and amended Subsec. (b) to increase total state financial assistance from $100,000 to $300,000 and make a conforming change, effective October 5, 2009.
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Sec. 4-232. Designation of independent auditor to conduct audit. Audit report filing. (a) Each nonstate entity which is required to be audited pursuant to sections 4-230 to 4-236, inclusive, shall designate an independent auditor to conduct such audit. Not later than thirty days before the end of the fiscal period for which the audit is required, the nonstate entity shall file the name of such auditor with the cognizant agency. If a nonstate entity fails to make such filing, the cognizant agency may designate an independent auditor to conduct the audit. A nonstate entity shall be responsible for paying the costs of any audit conducted by an independent auditor designated by a cognizant agency.
(b) (1) Upon the completion of the audit, pursuant to sections 4-230 to 4-236, inclusive, the nonstate entity shall file a copy of the audit report with the cognizant agency and, if applicable, state grantor agencies and pass-through entities. Once filed, such report shall be made available by the nonstate entity for public inspection. Copies of the report shall be filed not later than thirty days after completion of such report, if possible, but not later than six months after the end of the audit period. The cognizant agency may grant an extension of not more than thirty days, if the auditor conducting the audit and the chief executive officer of the nonstate entity jointly submit a request in writing to the cognizant agency that includes the reasons for such extension and an estimate of the time needed for completion of such audit, at least thirty days prior to the end of such six-month period. If the reason for the extension relates to deficiencies in the accounting system of the nonstate entity, the request shall be accompanied by a corrective action plan. The auditor or chief executive officer shall promptly provide any additional information the cognizant agency may require. Before determining whether to grant an extension request, the cognizant agency may require the auditor and officials of the nonstate entity to meet with representatives of the cognizant agency.
(2) Any nonstate entity, or auditor of such nonstate entity, which fails to have the audit report filed on its behalf within six months after the end of the fiscal year or within the time granted by the cognizant agency may be assessed, by the Secretary of the Office of Policy and Management, a civil penalty of not less than one thousand dollars but not more than ten thousand dollars. In addition to, or in lieu of such penalty, the cognizant agency may assign an auditor to perform the audit of such nonstate entity. In such case, the nonstate entity shall be responsible for the costs related to the audit. The secretary may, upon receipt of a written request from an official of the nonstate entity or its auditor, waive all such penalties if the secretary determines that there appears to be reasonable cause for the entity not having completed or provided the required audit report.
(P.A. 91-401, S. 3, 20; P.A. 98-143, S. 19, 24; Sept. Sp. Sess. P.A. 09-7, S. 46.)
History: P.A. 98-143 designated existing provisions as Subsec. (a), amended Subsec. (a) by substituting “nonstate entity” for “municipality, audited agency and nonprofit agency” and deleting requirement that auditor be subject to approval of cognizant agency and added new Subsec. (b) re filing of audit report, effective June 4, 1998, and applicable to audits conducted for fiscal years commencing on and after July 1, 1998; Sept. Sp. Sess. P.A. 09-7 amended Subsec. (a) to add provision requiring nonstate entity to pay costs of any audit conducted by designated independent auditor and amended Subsec. (b)(1) to require that request to extend time for filing copies of audit with state agencies include estimate of the time needed to complete the audit, eliminate provision re hearing on the request, add provisions requiring auditor or chief executive officer to provide additional information and requiring auditor and officials of nonstate entity to meet with representatives of cognizant agency and make conforming and technical changes, effective October 5, 2009.
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Sec. 4-233. Conduct and scope of audits. When corrective action required. (a) Each audit required by sections 4-230 to 4-236, inclusive, shall:
(1) Be conducted in accordance with generally accepted government auditing standards, except that, for the purposes of said sections such standards shall not be construed to require economy and efficiency audits, program results audits, or program evaluations; and
(2) Except in the case of program-specific audits, cover the entire operations, including financial operations, of the nonstate entity, except that such audit may exclude public hospitals.
(b) Each such audit shall determine and report whether: (1) The financial statements of the nonstate entity are presented fairly in all material respects in conformity with generally accepted accounting principles; (2) the schedule of expenditures of state financial assistance of the nonstate entity is presented fairly in all material respects in relation to the financial statements taken as a whole; (3) in addition to the requirements of generally accepted government auditing standards, the auditor has performed procedures to obtain an understanding of internal control over state programs sufficient to (A) plan the audit to support a low assessed level of control risk for major state programs, (B) plan the testing of internal control over major state programs to support a low assessed level of control risk for the assertions relevant to the compliance requirement for each major state program, and (C) perform testing of internal controls; and (4) the nonstate entity has complied with laws, regulations and grant or contract provisions that may have a material effect upon individual compliance requirements for each major state program. In complying with the requirements of subdivision (4) of this subsection, the independent auditor shall select and test a representative number of transactions from each major state program to provide the auditor sufficient evidence to support an opinion of compliance. Each audit report shall identify which programs were tested for compliance.
(c) When the total expenditures of a nonstate entity's major state programs are less than fifty per cent of such nonstate entity's total expenditures of state financial assistance, excluding exempt program expenditures, the independent auditor shall select and test additional programs as major state programs as may be necessary to achieve audit coverage of at least fifty per cent of the nonstate entity's total expenditures of state financial assistance, excluding exempt program expenditures.
(d) If an audit conducted pursuant to this section finds any material or reportable noncompliance by a nonstate entity with applicable laws, regulations and grant or contract provisions, or finds any significant deficiency or material weakness with respect to the internal controls of the nonstate entity concerning the matters described in subsection (b) of this section, the nonstate entity shall submit to appropriate state officials a plan for corrective action to eliminate such material or reportable noncompliance, significant deficiency or material weakness.
(P.A. 91-401, S. 4, 20; P.A. 98-143, S. 20, 24; Sept. Sp. Sess. P.A. 09-7, S. 47.)
History: P.A. 98-143 substituted “nonstate entity” for “municipality, audited agency or nonprofit agency” throughout the section, amended Subsec. (a)(2) by inserting exception for program-specific audits, substantially amended the audit determination and report requirements of Subsec. (b) and deleted former Subsecs. (c) to (g), inclusive, substituting new Subsec. (c) re audit coverage of expenditures of state financial assistance and new Subsec. (d) re corrective action to eliminate material noncompliance, reportable condition or material weakness, effective June 4, 1998, and applicable to audits conducted for fiscal years commencing on and after July 1, 1998; Sept. Sp. Sess. P.A. 09-7 amended Subsec. (b) to require independent auditor to select and test transactions sufficient to support an opinion of compliance, amended Subsec. (c) to delete provision re implementation in accordance with regulations and provision requiring no more than 2 programs having total financial assistance expenditures between $25,000 and $100,000 to be tested to achieve audit coverage and to make a conforming change, and amended Subsec. (d) to replace “noncompliance” with “reportable noncompliance” and replace “reportable condition” with “significant deficiency”, effective October 5, 2009.
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Sec. 4-234. Audits in lieu of financial or financial and compliance audits. Additional audits. (a) An audit conducted in accordance with sections 4-230 to 4-236, inclusive, shall be in lieu of any financial or financial and compliance audit of state financial assistance programs which a nonstate entity is required to conduct under any other state law or regulation. To the extent that such audit provides a state agency with the information it requires to carry out its responsibilities under state law or regulations, a state agency shall rely upon and use such information and plan and conduct its own audits accordingly in order to avoid a duplication of effort.
(b) Notwithstanding the provisions of subsection (a) of this section, a state agency shall conduct any additional audits which it deems necessary to carry out its responsibilities, upon a written determination by the executive authority of the agency, based on evidence of fiscal irregularities or noncompliance with applicable laws and regulations, and after consulting with the cognizant agency. The provisions of sections 4-230 to 4-236, inclusive, do not authorize a cognizant agency or any nonstate entity, or any subrecipient thereof, to constrain, in any manner, such state agency from carrying out such additional audits. As used in this subsection and subsection (d) of this section, “executive authority” shall be construed as defined in section 4-37e.
(c) The provisions of sections 4-230 to 4-236, inclusive, do not (1) limit the authority of state agencies to conduct, or enter into contracts for the conduct of, audits and evaluations of state financial assistance programs or (2) limit the authority of any state agency auditor or other state audit official.
(d) A state agency that performs or contracts for audits in addition to the audits conducted for recipients of state financial assistance pursuant to sections 4-230 to 4-236, inclusive, shall, consistent with other applicable law, pay for the cost of such additional audits. Such additional audits may include, but shall not be limited to, economy and efficiency audits, program results audits and program evaluations. The state agency shall use the results of the single audit as a basis for any additional requirements, and shall not duplicate the single audit unless the executive authority of such agency determines in writing that such duplication is necessary.
(P.A. 91-401, S. 5, 20; P.A. 98-143, S. 21, 24.)
History: P.A. 98-143 substituted “nonstate entity” for “municipality, audited agency or nonprofit agency” in Subsecs. (a) and (b), amended Subsec. (a) by substituting “state financial assistance programs” for “an individual state assistance program” and deleted former Subsec. (e) re requirement that audits be conducted in conjunction with federal Single Audit Act, effective June 4, 1998, and applicable to audits conducted for fiscal years commencing on and after July 1, 1998.
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Sec. 4-235. Designation of cognizant agencies. Issuance of compliance supplement. Pass-through entities and subrecipients. (a) The secretary shall designate cognizant agencies for audits conducted pursuant to sections 4-230 to 4-236, inclusive, and shall periodically issue a state single audit compliance supplement containing information to assist independent auditors in conducting state single audits. Such information shall include, but is not limited to, identification of state financial assistance programs and their significant compliance requirements, suggested audit procedures for determining compliance, exempt programs and information relevant to the risk-based approach for use in determining major state programs.
(b) A cognizant agency shall: (1) Ensure through coordination with state agencies, that audits are made in a timely manner and in accordance with the requirements of sections 4-230 to 4-236, inclusive; (2) ensure that corrective action plans made pursuant to section 4-233 are transmitted to the appropriate state officials; and (3)(A) coordinate, to the extent practicable, audits done by or under contract with state agencies that are in addition to the audits conducted pursuant to sections 4-230 to 4-236, inclusive; and (B) ensure that such additional audits build upon the audits conducted pursuant to said sections.
(c) (1) Each pass-through entity which is subject to the audit requirements of sections 4-230 to 4-236, inclusive, shall:
(A) Advise subrecipients of requirements imposed on them by state laws, regulations, and the provisions of contracts or grant agreements, and any supplemental requirements imposed by the pass-through entity;
(B) If the subrecipient is subject to an audit in accordance with the requirements of said sections 4-230 to 4-236, inclusive, review such audit and ensure that prompt and appropriate corrective action is taken with respect to material or reportable findings of noncompliance with individual compliance requirements or significant deficiencies or material weaknesses in internal controls pertaining to state financial assistance provided to the subrecipient by the pass-through entity; or
(C) If the subrecipient is not subject to an audit in accordance with the requirements of said sections 4-230 to 4-236, inclusive, monitor the activities of subrecipients as necessary to ensure that state financial assistance is used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements.
(2) Each pass-through entity, as a condition of receiving state financial assistance, shall require each of its subrecipients to permit the independent auditor of the pass-through entity to have such access to the subrecipient's records and financial statements as may be necessary for the pass-through entity to comply with sections 4-230 to 4-236, inclusive.
(P.A. 91-401, S. 6, 20; P.A. 98-143, S. 22, 24; Sept. Sp. Sess. P.A. 09-7, S. 48.)
History: (Revisor's note: In 1997 the Revisors changed Subsec. (b)(3)(B) from “ensure that such additional audits build upon the audits conducted pursuant said sections” to “ensure that such additional audits build upon the audits conducted pursuant to said sections”, thereby correcting a clerical error made during the codification of P.A. 91-401); P.A. 98-143 amended Subsec. (b) by deleting provision requiring cognizant agency to act in conjunction with federal cognizant agency designated pursuant to federal Single Audit Act, inserting “through coordination with state agencies,” in Subdiv. (1) and deleting “the audit reports and” following “ensure that” in Subdiv. (2), and added new Subsec. (c) re requirements for pass-through entities, effective June 4, 1998, and applicable to audits conducted for fiscal years commencing on and after July 1, 1998; Sept. Sp. Sess. P.A. 09-7 amended Subsec. (a) to require secretary to periodically issue compliance supplement with information to assist auditors in conducting state single audits and amended Subsec. (c)(B) to insert “or reportable” and replace “reportable conditions” with “significant deficiencies”, effective October 5, 2009.
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Sec. 4-236. Regulations. (a) The secretary shall, in consultation with the Auditors of Public Accounts, appropriate state officials and representatives of nonstate entities, adopt regulations pursuant to the provisions of chapter 54 to implement the provisions of sections 4-230 to 4-235, inclusive.
(b) The secretary shall also adopt regulations, in accordance with the provisions of chapter 54, (1) concerning the recovery of grant funds based on audit findings, as the secretary deems appropriate for any grantee which is found as a result of an audit to not be in compliance with the standards established pursuant to section 4-233, and (2) establishing uniform standards which prescribe the cost accounting principles to be used in the administration of state financial assistance by the recipients of such assistance.
(P.A. 91-401, S. 7, 20; P.A. 98-143, S. 23, 24; P.A. 00-125, S. 1, 2.)
History: P.A. 98-143 amended Subsec. (a) by substituting “state officials and representatives of nonstate entities” for “state, municipal and audited agency officials and representatives of nonprofit agencies” and deleting criteria required to be included in regulations, effective June 4, 1998, and applicable to audits conducted for fiscal years commencing on and after July 1, 1998; P.A. 00-125 amended Subsec. (a) to make a technical change, and amended Subsec. (b) to make existing language re regulations Subdiv. (1) and to add Subdiv. (2) re cost accounting principles, effective May 26, 2000.
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Secs. 4-237 to 4-249. Reserved for future use.
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