Sec. 4-230. Definitions. As used in sections 4-230 to 4-236, inclusive: Sec. 4-231. When single audits required or program-specific audits. (a)(1)
Each nonstate entity which expends a total amount of state financial assistance equal
to or in excess of one hundred thousand dollars in any fiscal year of such nonstate entity
beginning on or after July 1, 1998, 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. If a provision of the general statutes or an administrative rule, regulation, guideline,
standard or policy, which is effective on July 1, 1992, requires a nonstate entity to
conduct a biennial audit, the audit required under this section shall be conducted on the
same biennial basis and shall cover both years of the biennial period. 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. 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: 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. Sec. 4-235. Designation of cognizant agencies. Pass-through entities and subrecipients. (a) The secretary shall designate cognizant agencies for audits conducted
pursuant to sections 4-230 to 4-236, inclusive. 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.
(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 fire district, fire and sewer district, sewer district
or other municipal utility, the Metropolitan District of Hartford County, a regional board
of education, a regional planning agency, 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 average annual receipts from all sources exceed two
hundred thousand dollars or any tourism district established under section 32-302;
(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, for
which total expenditures of state financial assistance by a nonstate entity during the
applicable year exceed the larger of (A) one hundred thousand dollars or (B) one per
cent of the total amount of state financial assistance expended, excluding expenditures
of an exempt program by the nonstate entity during the audited year;
(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 32-302;
(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 of the following programs: Education cost sharing, pursuant to sections 10-262f to 10-262j, inclusive; public and nonpublic school
pupil transportation, pursuant to sections 10-54, 10-97, 10-266m, 10-273a, 10-277 and
10-281; special education, excess costs equity and excess costs student-based, pursuant
to subsection (e) of section 10-76d, subsections (a), (b) and (c) of section 10-76g and
section 10-253; school building grants-principal and interest subsidy, pursuant to chapter 173 and section 10-264h; and school construction grants pursuant to public act 97-
265 and public act 97-11 of the June 18 Special Session*; and
(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.
(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.)
*Public act 97-265 is entitled "An Act Concerning Authorization of State Grant Commitments for School Building
Projects and Clarification and Separation of the Grant and Bond Program for School Building Projects and the Grant and
Bond Program for Interest Payment Subsidies" and public act 97-11 of the June 18 special session is entitled "An Act
Concerning Computerized Information Sharing, the Mashantucket Pequot and Mohegan Fund, Early Retirement, School
Construction, State Buildings, Nursing Homes, Executive and Legislative Councils, Commissions and Task Forces, Appropriations for the Fiscal Years Ending June 30, 1997, 1998 and 1999, Spring and Well Water Collection, Project Concern,
Notice Requirements for Psychiatric Admissions, the Tax on Net Direct Subscriber Charges of Health Care Centers,
Elimination of Certain Wage Inequities, Sheriffs' Fees and Expenses of the Connecticut Siting Council". (See Reference
Tables captioned "Public Acts of 1997" and "Public Acts of June 18, 1997", respectively, in Volume 16 which list the
sections amended, created or repealed by the acts.)
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).
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(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.
(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 one hundred thousand dollars in any fiscal year of such
nonstate entity beginning on or after July 1, 1998, 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.)
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 Subdiv. (1) of Subsec. (a) 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.
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(b) (1) Upon the completion of the audit, pursuant to sections 4-230 to 4-236, inclusive, the nonstate entity shall file copies of the audit report with state grantor agencies,
the cognizant agency and if applicable, 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 making the audit and the
chief executive officer of the nonstate entity jointly submit a request in writing to the
cognizant agency stating the reasons for such extension 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 cognizant agency may, after a hearing with the auditor and
officials of the nonstate entity, grant an additional extension if conditions warrant.
(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.)
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.
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(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. Each audit report shall identify which programs were tested
for compliance.
(c) (1) 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. The provisions of this
subsection shall be carried out in accordance with the regulations adopted pursuant to
section 4-236 and shall be subject to the provisions of subdivision (2) of this subsection.
(2) In achieving the audit coverage in accordance with subdivision (1) of this subsection, no more than two programs which each have total state financial assistance expenditures of twenty-five thousand dollars or more but not more than one hundred thousand
dollars shall be tested, if such programs are required to be tested to achieve the audit
coverage of subdivision (1) of this subsection.
(d) If an audit conducted pursuant to this section finds any material noncompliance
by a nonstate entity with applicable laws, regulations and grant or contract provisions,
or finds any reportable condition 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 noncompliance, reportable condition or material
weakness.
(P.A. 91-401, S. 4, 20; P.A. 98-143, S. 20, 24.)
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.
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(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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(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 findings of noncompliance
with individual compliance requirements or reportable conditions 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.)
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.
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(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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