0701  Overview

This chapter establishes Department of Veterans Affairs’ (VA) financial policies regarding the use of single and program-specific audit reports in the award and administration of grants.

Key points covered in this chapter include:

• In compliance with 2 C.F.R. § 200.501, VA will require that non-Federal entities expending $1,000,000 or more in Federal awards during the non-Federal entity’s fiscal year must have a single or program-specific audit conducted for that year;
• VA will adhere to 2 C.F.R. Part 200 Subpart F – Audit Requirements for VA programs to ensure program consistency;
• VA will use the Federal Audit Clearinghouse (FAC) and consult with Office of Inspector General (OIG) to assess single audit findings and determine if a recipient’s pending or continuing award will be affected in accordance with 2 C.F.R. § 200.339; and
• VA is responsible for the resolution or follow-up of an audit finding to include corrective actions, collections, exceptions, appeals, compromises, or programmatic issues.

0702  Revisions

Section	Revision	Office	Reason for Change	Effective Date
Various	Updated 2 C.F.R. Part 200 references and definitions.	OBO- GMS	The Office of Management and Budget (OMB) released updates to 2 C.F.R. Part 200 in April 2024, including increasing the Single Audit threshold.	January 2026
0706	Updated Authorities and Reference section	OFP (047G)		January 2026

For a complete listing of previous policy revisions, see Appendix A: Previous Policy Revisions.

0703  Definitions

Federal Audit Clearinghouse (FAC) – Clearinghouse designated by OMB as the repository of record where a non-Federal entity is required to transmit the information required by 2 C.F.R. Part 200 Subpart F.

Recipient –An entity that receives a Federal award directly from VA to carry out an activity under a VA grant program.

Single audit –An organization-wide audit of a non-Federal entity’s financial statements and of its expenditures of Federal awards. Single audits are performed by a public accountant or a Federal, state, local government, or Indian tribe audit organization, which meets the general standards specified for external auditors in generally accepted government auditing standards (GAGAS).

0704  Roles and Responsibilities

Office of Business Oversight (OBO) is responsible for conducting reviews and performing special projects designed to evaluate and improve Department Grant Management Operations.

Grant Program Office (GPO) is responsible for reporting to the approving official on the programmatic administration of a grant, if awarded.

Head of a Grant Program Office (HGPO) is responsible for tracking resolution of a single or program-specific audit finding unless the GPO designates another individual in writing.

GPO staff are responsible for reviewing all relevant Single Audit Data Collection Forms and/or audit reports and for using the information appropriately in making funding and other decisions or recommendations related to a current or potential grant. They are also responsible for determining if there are any debts related to unallowable costs and following GPO processes in conformance with this chapter and Volume XII, Chapter 5 – Vendor Debts to recover funds.

0705  Policies

070501  Audit Requirements

1. In compliance with 2 C.F.R. § 200.501, Department of Veterans Affairs (VA) will require that non-Federal entities expending $1,000,000 or more in Federal awards during the non-Federal entity’s fiscal year must have a single or program-specific audit conducted for that year.
2. Audits must be conducted in accordance with 2 C.F.R. § 200.514, except when the recipient elects to have a program-specific audit conducted.
3. The recipient may elect to have a program-specific audit under only one Federal program if the program’s statutes, regulations, or terms and conditions do not require a financial statement audit. The audit will be conducted in accordance with 2 C.F.R. § 200.507.
4. When requested by Government Accountability Office, VA’s Office of Inspector General (OIG) will conduct audits of an entity not meeting Subpart F of 2 C.F.R. Part 200 during the project period or within a reasonable time after the end of the project period.
5. Grant Program Offices (GPOs) must ensure that the terms and conditions of the award specify that the awardee must adhere to audit requirements listed in 2 C.F.R. § 200.508.
6. GPOs may use Office of Business Oversight (OBO) to conduct additional reviews that evaluate recipient compliance with specific grant requirements, per 2 C.F.R. § 200.503.
7. GPOs must ensure that required audits are completed, and reports are received in a timely manner. GPOs must inform recipients of responsibilities and potential consequences of not submitting the required audit reports.
8. GPOs shall contact OIG to determine whether they or another GPO/office has audit resolution responsibility when an audit report or Single Audit Data Collection Form at the Federal Audit Clearinghouse (FAC) identifies findings on a VA grant relevant to a GPO’s grant programs.
9. Upon transmission (issuance) of a single audit report by OIG or notification from OIG, GPOs will monitor individual recipients to ensure any audit findings are resolved. Additionally, GPOs will work with individual recipients to resolve findings from any other grant review initiated by the GPO.
10. GPOs will adequately document the basis for the determination of a cost disallowance in the event a recipient appeals.
    1. Determinations of cost allowability and deficiencies in management systems resulting from audit findings must be based on the applicable statute(s), regulations, cost principles, and other terms and conditions of the award.
    2. Process deficiencies, e.g., the recipient did not obtain required prior approval for an otherwise allowable expenditure, should not be the sole basis for disallowing a cost (see Volume X, Chapter 5 – Grants Post-Award).
11. GPO personnel with appropriate authority will take any actions to modify a grant award(s) if necessitated by audit resolution.

070502  Use of Audit Reports in the Grants Management Process

1. GPOs, in coordination with OIG, will consult the FAC website to determine if a single audit report has been submitted and whether it contains findings. The FAC is the designated receipt point in the Federal government for single audit reports in accordance with 2 C.F.R. § 200.512(b).
2. GPOs will consult with OIG to determine who is responsible for actions to obtain a required audit report if based on its own knowledge, or following consultation with OIG, a GPO determines that the report is delinquent.
3. GPOs will use the most current Single Audit Data Collection Form or audit report (if there are relevant findings) when making pre-award decisions and as part of post-award monitoring.
4. GPOs may use the results of audits in the determination to not make an award, make the award using special conditions after designating the organization as “high risk,” and/or take other appropriate action, e.g., an enforcement action (see Volume X, Chapter 5 – Grants Post-Award).
5. GPOs may use the range of enforcement actions available under Volume X, Chapter 5 – Grants Post-Award and may take action at any time to designate a recipient as high risk, if the GPO is deemed responsible for obtaining a delinquent audit report. GPOs may request that OBO perform a special review of a high-risk recipient.

070503  Audit Resolution and Follow Up

1. GPOs must ensure that recipients take appropriate corrective action on each audit finding.
2. In accordance with 2 C.F.R. § 200.339, GPOs will take actions for continued non-compliance with audit findings. These actions may include withholding payments, placing the recipient on the high-risk list, suspending the award, etc. This requirement continues even if the audit report covers an award(s) that expired or was terminated prior to receipt of the audit.
3. The Head of a Grant Program Office (HGPO) must track resolution of a single audit finding unless the GPO designates another individual in writing.
4. If an audit finding gives rise to the creation of a debt to VA, the debt must be collected in accordance with the Standards for the Administrative Collection of Claims (31 CFR part 901). The potential to compromise or waive a debt is addressed in Volume XII, Chapter 12.
5. HGPO’s must sign a letter (Notice of Indebtedness) advising the recipient of an audit finding requiring creation of a debt.
   1. The letter constitutes the final decision of the GPO and may be appealed by the recipient under Volume XII, Debt Management and 2 C.F.R. § 200.342 or other applicable appeals procedures.
   2. The letter should be coordinated with the appropriate program office and with Office of the General Counsel.
6. GPOs have continuing responsibility for follow-up activities to collect monies as outlined in 38 C.F.R. Parts 1.910 – 1.929.

0706  Authorities and References

• Code of Federal Regulations
  • 2 C.F.R. Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
  • 2 C.F.R. § 200.332 Requirements for pass-through entities.
  • 2 C.F.R. § 339, Remedies for Non-Compliance
  • 2 C.F.R. § 200.342 Opportunities to Object, Hearings, and Appeals.
  • 2 C.F.R. § 200.346 Collection of amounts due
  • 2 C.F.R  § 200.501 Audit requirements
  • 2 C.F.R. §200.507 Program Specific Audits
  • 2 C.F.R §200.508 Auditee Responsibilities
  • 2 C.F.R §200.512(b) Report Submission
  • 2 C.F.R. §200.514 Standards and Scopes of Audit
  • 38 C.F.R. 1.910-1.929 Standards for the Collection of Claims
• VA Financial Policy Publications
  • Volume X, Chapter 5 – Grants Post-Award
  • Volume XII, Chapter 5 – Vendor Debts
  • Volume XII, Chapter 12 – Compromise of Debt – COWC
• Federal Audit Clearinghouse

0707  Rescissions

Volume X, Chapter 7 – Grant Audit Use and Resolution, June 2021.

Appendix A: Previous Policy Revisions

Section	Revision	Office	Reason for Change	Effective Date
Various	Updated references throughout.	OFP (047G)	OMB released revisions to Title 2 of the C.F.R. on Federal grants.	May 2021
Various	Reformatted to new policy format	OFP (047G)	Reorganized chapter layout	June 2019
0704 Roles and    Responsibilities	Updated and streamlined roles and responsibilities	OFP (047G)	Reorganized chapter layout	June 2019
0705 Policies	Reformatted policies	OFP (047G)	Improve flow and order of information stated	June 2019
0705 Policies	Updated policy statements	OFP (047G)	Properly reflect VA’s Grant Audit Use and Resolution requirements	June 2019