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User's Guide V1.1 Page 17 of 24 <br /> AUDITS AND PROGRAM REVIEWS <br /> The Department of Education's Office of Inspector General, the Office of the Chief Financial Officer, <br /> and certain program offices will perform, issue, and review the audits and program reviews for <br /> organizations receiving Federal funds. <br /> PURPOSE OF AUDITS AND PROGRAM REVIEWS <br /> To determine how effectively payees control their funds. The audit will be done for the payee's entire <br /> organization to test the integrity of the payee's financial management system, and to test how the payee <br /> complies with the terms of the grant awards. These tests should include an appropriate sampling of the <br /> payee's grant awards. <br /> To ensure that the payee's organization is reviewed on a regular basis. The frequency at which the <br /> audits will be done depends upon the nature, size, and complexity of the payee's grants. The objective is <br /> to ensure that audits are held, regardless of whether they are done on a continuing basis or at scheduled <br /> intervals. <br /> To ensure that payees have a systematic method of resolving audit findings and recommendations. <br /> The payee's method should also allow for timely and appropriate resolution of the audit results. <br /> To inform the appropriate office within the Department of Education about the payee's Federal <br /> funds. A copy of the audit report and a description of its resolution shall be furnished to the appropriate <br /> office. <br /> HOW FINDINGS ARE REPORTED <br /> The findings of an audit or program review are contained in an audit report and sent to the payee. If the <br /> audit report informs the payee that funds are due to the Department of Education, the payee will also <br /> receive specific instructions for sending the payment. Frequently, the audit report may include a <br /> disallowance of expenditures for which the payee already drew funds. An audit finding may require the <br /> payee to return this disallowed funds. <br /> If payments are owed, the audit report is also sent to the Financial Improvement and Receivable Group <br /> in the Office of the Chief Financial Officer where an account receivable entry is established. A bill is <br /> issued for the disallowed amount in addition to any accrued interest and penalties. Instructions for <br /> payment are also included. <br /> RETURNING INTETEREST EARNED <br /> Payees receiving advance funding for programs not governed by the Cash Management Improvement <br /> Act should retain those funds in interest - bearing accounts. Payees are required to return interest earned <br /> (in excess of $200 per annum) to the Department of Education at least quarterly, unless Federal statute <br /> provides otherwise. <br /> http: / /e- grants .ed.gov /gapsweb/help /intro.html 6/18/2002 <br />