§7501 — Title 31 Money and Finance | U.S. Code

Summary

Defines key words used for rules about federal money and audits. Comptroller General is the Comptroller General of the United States. Director is the Director of the Office of Management and Budget. Federal agency is defined the same way as “agency” in title 5, section 551(1). Federal awards are federal financial help and federal cost‑reimbursement contracts given to non‑federal entities, either directly or through others. Federal financial assistance covers grants, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance, food, direct appropriations, and similar aid (but not reimbursements for services to individuals under Director guidance). Federal program is a group of awards under one CFDA number or other category the Director sets. Generally accepted government auditing standards are the GAO’s auditing rules. Independent auditor is an outside state or local government auditor or a public accountant who meets those independence rules. Indian tribe means a tribe, band, nation, Alaskan Native village or corporation, or similar group the United States recognizes for special programs. Internal controls are the management processes that help ensure operations work well, financial reporting is reliable, and laws are followed. Local government covers units like counties, cities, school districts, and similar entities or groups of them as the Director allows. Major program is a program the Director identifies using risk‑based rules. Non‑Federal entity is a State, local government, or nonprofit. Nonprofit means an organization run for public purposes, not for profit, and that uses net proceeds to support its work. Pass‑through entity is a non‑Federal entity that passes federal awards on to subrecipients. Program‑specific audit is an audit of one federal program. Recipient is a non‑Federal entity that gets awards directly. Single audit is an audit that includes the entity’s financial statements and its federal awards as the law requires. State includes the 50 States, DC, territories, certain multi‑State or regional entities, and any Indian tribe. Subrecipient is a non‑Federal entity that gets federal awards through another non‑Federal entity (not an individual). The Director may not force a non‑Federal entity to label more programs as “major” than would result from these thresholds: if total federal spending exceeds $10,000,000,000, a program is major if it has more than the larger of $30,000,000 or 0.15% of total federal spending; if total spending is over $100,000,000 up to $10,000,000,000, use the larger of $3,000,000 or 0.30%; if total spending is $300,000 up to $100,000,000, use the larger of $300,000 or 3%. If the chosen major programs cover less than 50% of the entity’s federal spending (or a lower percent the Director allows), the auditor must add programs until at least 50% (or the lower percent) is covered. Loan or loan guarantee programs the Director lists are not subject to the first set of thresholds.

Title 31, §7501

Money and Finance — Source: USLM XML via OLRC

(a)As used in this chapter, the term—

(1)“Comptroller General” means the Comptroller General of the United States;

(2)“Director” means the Director of the Office of Management and Budget;

(3)“Federal agency” has the same meaning as the term “agency” in section 551(1) of title 5;

(4)“Federal awards” means Federal financial assistance and Federal cost-reimbursement contracts that non-Federal entities receive directly from Federal awarding agencies or indirectly from pass-through entities;

(5)“Federal financial assistance” means assistance that non-Federal entities receive or administer in the form of grants, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, or other assistance, but does not include amounts received as reimbursement for services rendered to individuals in accordance with guidance issued by the Director;

(6)“Federal program” means all Federal awards to a non-Federal entity assigned a single number in the Catalog of Federal Domestic Assistance or encompassed in a group of numbers or other category as defined by the Director;

(7)“generally accepted government auditing standards” means the government auditing standards issued by the Comptroller General;

(8)“independent auditor” means—

(A)an external State or local government auditor who meets the independence standards included in generally accepted government auditing standards; or

(B)a public accountant who meets such independence standards;

(9)“Indian tribe” means any Indian tribe, band, nation, or other organized group or community, including any Alaskan Native village or regional or village corporation (as defined in, or established under, the Alaskan Native Claims Settlement Act) that is recognized by the United States as eligible for the special programs and services provided by the United States to Indians because of their status as Indians;

(10)“internal controls” means a process, effected by an entity’s management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

(A)Effectiveness and efficiency of operations.11 So in original.

(B)Reliability of financial reporting.1

(C)Compliance with applicable laws and regulations;

(11)“local government” means any unit of local government within a State, including a county, borough, municipality, city, town, township, parish, local public authority, special district, school district, intrastate district, council of governments, any other instrumentality of local government and, in accordance with guidelines issued by the Director, a group of local governments;

(12)“major program” means a Federal program identified in accordance with risk-based criteria prescribed by the Director under this chapter, subject to the limitations described under subsection (b);

(13)“non-Federal entity” means a State, local government, or nonprofit organization;

(14)“nonprofit organization” means any corporation, trust, association, cooperative, or other organization that—

(A)is operated primarily for scientific, educational, service, charitable, or similar purposes in the public interest;

(B)is not organized primarily for profit; and

(C)uses net proceeds to maintain, improve, or expand the operations of the organization;

(15)“pass-through entity” means a non-Federal entity that provides Federal awards to a subrecipient to carry out a Federal program;

(16)“program-specific audit” means an audit of one Federal program;

(17)“recipient” means a non-Federal entity that receives awards directly from a Federal agency to carry out a Federal program;

(18)“single audit” means an audit, as described under section 7502(d), of a non-Federal entity that includes the entity’s financial statements and Federal awards;

(19)“State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the Trust Territory of the Pacific Islands, any instrumentality thereof, any multi-State, regional, or interstate entity which has governmental functions, and any Indian tribe; and

(20)“subrecipient” means a non-Federal entity that receives Federal awards through another non-Federal entity to carry out a Federal program, but does not include an individual who receives financial assistance through such awards.

(b)In prescribing risk-based program selection criteria for major programs, the Director shall not require more programs to be identified as major for a particular non-Federal entity, except as prescribed under subsection (c) or as provided under subsection (d), than would be identified if the major programs were defined as any program for which total expenditures of Federal awards by the non-Federal entity during the applicable year exceed—

(1)the larger of $30,000,000 or 0.15 percent of the non-Federal entity’s total Federal expenditures, in the case of a non-Federal entity for which such total expenditures for all programs exceed $10,000,000,000;

(2)the larger of $3,000,000, or 0.30 percent of the non-Federal entity’s total Federal expenditures, in the case of a non-Federal entity for which such total expenditures for all programs exceed $100,000,000 but are less than or equal to $10,000,000,000; or

(3)the larger of $300,000, or 3 percent of such total Federal expenditures for all programs, in the case of a non-Federal entity for which such total expenditures for all programs equal or exceed $300,000 but are less than or equal to $100,000,000.

(c)When the total expenditures of a non-Federal entity’s major programs are less than 50 percent of the non-Federal entity’s total expenditures of all Federal awards (or such lower percentage as specified by the Director), the auditor shall select and test additional programs as major programs as necessary to achieve audit coverage of at least 50 percent of Federal expenditures by the non-Federal entity (or such lower percentage as specified by the Director), in accordance with guidance issued by the Director.

(d)Loan or loan guarantee programs, as specified by the Director, shall not be subject to the application of subsection (b).

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Alaskan Native Claims Settlement Act, referred to in subsec. (a)(9), probably means the Alaska Native Claims Settlement Act, Pub. L. 92–203, Dec. 18, 1971, 85 Stat. 688, which is classified generally to chapter 33 (§ 1601 et seq.) of Title 43, Public Lands. For complete classification of this Act to the Code, see

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note set out under section 1601 of Title 43 and Tables.

Amendments

1996—Pub. L. 104–156 reenacted section catchline without change and amended text generally, substituting present provisions for similar provisions defining terms used in this chapter.

Statutory Notes and Related Subsidiaries

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of 2024 Amendment Pub. L. 118–207, § 1, Dec. 23, 2024, 138 Stat. 2701, provided that: “This Act [amending section 7504 of this title] may be cited as the ‘Financial Management Risk Reduction Act’.”

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of 2016 Amendment Pub. L. 114–301, § 1, Dec. 16, 2016, 130 Stat. 1514, provided that: “This Act [amending section 5226 of Title 12, Banks and Banking, section 280g–15 of Title 42, The Public Health and Welfare, and section 114 of Title 49, Transportation, renumbering section 7507 of this title as section 7506, repealing section 7506 of this title, amending provisions set out as notes under section 78m of Title 15, Commerce and Trade, and section 5189a of Title 42, and repealing provisions set out as a note under section 1395l of Title 42] may be cited as the ‘GAO Mandates Revision Act of 2016’.”

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of 1996 Amendment Pub. L. 104–156, § 1(a), July 5, 1996, 110 Stat. 1396, provided that: “This Act [amending this chapter and enacting provisions set out as notes below] may be cited as the ‘Single Audit Act

Amendments

of 1996’.”

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of 1984 Amendment Pub. L. 98–502, § 1(a), Oct. 19, 1984, 98 Stat. 2327, provided that: “This Act [enacting this chapter and provisions set out as notes under this section] may be cited as the ‘Single Audit Act of 1984’.” Transitional Application Pub. L. 104–156, § 3,

July 5, 1996, 110 Stat. 1404, provided that: “Subject to [former] section 7507 of title 31, United States Code (as amended by section 2 of this Act) [now 31 U.S.C. 7506] the provisions of chapter 75 of such title (before amendment by section 2 of this Act) shall continue to apply to any State or local government with respect to any of its fiscal years beginning before

July 1, 1996.” Congressional Statement of Purpose Pub. L. 104–156, § 1(b),

July 5, 1996, 110 Stat. 1396, provided that: “The purposes of this Act [see

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of 1996 Amendment note above] are to— “(1) promote sound financial management, including effective internal controls, with respect to Federal awards administered by non-Federal entities; “(2) establish uniform requirements for audits of Federal awards administered by non-Federal entities; “(3) promote the efficient and effective use of audit resources; “(4) reduce burdens on State and local governments, Indian tribes, and nonprofit organizations; and “(5) ensure that Federal departments and agencies, to the maximum extent practicable, rely upon and use audit work done pursuant to chapter 75 of title 31, United States Code (as amended by this Act).” Pub. L. 98–502, § 1(b), Oct. 19, 1984, 98 Stat. 2327, provided that: “It is the purpose of this Act [enacting this chapter and provisions set out as notes under this section]— “(1) to improve the financial management of State and local governments with respect to Federal financial assistance programs; “(2) to establish uniform requirements for audits of Federal financial assistance provided to State and local governments; “(3) to promote the efficient and effective use of audit resources; and “(4) to ensure that Federal departments and agencies, to the maximum extent practicable, rely upon and use audit work done pursuant to chapter 75 of title 31, United States Code (as added by this Act).” Tennessee Valley Authority Audits Unaffected by Single Audit Requirements Pub. L. 98–502, § 2(b), Oct. 19, 1984, 98 Stat. 2334, provided that: “The provisions of this Act [enacting this chapter and provisions set out as notes under this section] shall not diminish or otherwise affect the authority of the Tennessee Valley Authority to conduct its own audits of any matter involving funds disbursed by the Tennessee Valley Authority.”

Executive Documents

Termination of Trust Territory of the Pacific Islands For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title 48, Territories and Insular Possessions.

§7501 Definitions

Summary

Title 31, §7501

Notes & Related Subsidiaries

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References in Text

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Amendments

Statutory Notes and Related Subsidiaries

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Executive Documents

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