All DHS subrecipients are required to submit either a Single Audit report or a letter stating why a Single Audit was not performed. In both of these situations, an Audit Letter must be submitted to DHS. This reporting requirement is in effect for each fiscal year (subrecipient's fiscal year) in which the subrecipient has a contract with DHS.

The audit requirements are divided into the three following categories:

Vendor Relationship

Contract Audit Requirements: This contract constitutes a vendor relationship with DHS. No audit requirements are imposed by DHS as a result of this contract. No audit costs are allowed to be billed to this contract. In the event the contractor elects to have a financial audit performed, the submission of the audit report to DHS is not required nor desired.

Vendor Relationship-Foster Care and Adoption Agencies

Contract Audit Requirements: This contract constitutes a vendor relationship. DHS requires that a financial audit be performed in accordance with Generally Accepted Auditing Standards. This audit must be submitted to the Office of Contracts and Rate Setting (address below) no later than five months after the close of the contractor's fiscal year. However, if the contractor is required to have an audit in accordance with OMB Circular A-133 (Single Audit) because of federal awards from other contracts, then a copy of the Single Audit report must be submitted to the Office of Contracts and Rate Setting (address below). The Single Audit report must be submitted no later than five months after the close of the contractor's fiscal year. DHS agrees to participate in audit costs related to either the financial audit or the Single Audit as described in other sections of this contract. Office of Contracts and Rate Setting Michigan Department of Human Services Office of Contracts & Rate Setting 235 S. Grand Ave., Suite 1201 Lansing, MI 48909

Subrecipient Relationship

Contract Audit Requirements: This contract constitutes a subrecipient relationship with DHS. The contractor is required to comply with all federal regulations that relate to the accounting and auditing of the federal award used to fund this contract. This includes, but is not limited to, compliance with OMB Circular A-133. The Catalog of Federal Domestic Assistance number (CFDA) for the federal award(s), along with the Federal Financial Participation (FFP), and the related federal regulations, laws, and other requirements may be obtained by accessing our CFDA Numbers and Federal Financial Participation application. DHS agrees to participate in audit costs related to the audit as described in other sections of this contract. Reporting Requirements If the contractor is required per OMB Circular A-133 to have a Single Audit performed, the contractor must submit the Reporting Package and an Audit Transmittal Letter to the address below in accordance with the time frame established in the Circular. Reporting Package includes: (1) Financial statements and Schedule of Expenditures of Federal Awards (2) Summary schedule of prior audit findings (3) Auditor's report(s) (4) Corrective action plan If a Single Audit is not required per OMB Circular A-133, the contractor must still submit an Audit Transmittal Letter stating why a Single Audit was not required and the contractor's fiscal year the letter pertains to. The Audit Transmittal Letter should include items stated in the section, Audit Transmittal Letter, described below. The letter may be mailed to the address below or FAX to (517) 373-8771. Audit Transmittal Letter The contractor is responsible to identify in the Audit Transmittal Letter all organizations it operates that administer DHS subrecipient programs and the different names the contractor may use to contract with DHS. The contractor is responsible for proper completion and submission of the Audit Transmittal Letter. This letter, to be accurately processed by DHS, must include the following information: Agency's name as reported in the DHS contract(s). Agency's Federal Identification Number(s). If the agency contracts with DHS under different name(s) or Federal Identification number(s), these must also be identified. If the contractor operates other organizations under different names, these organizations must also be identified. List all DHS contracts by contract number administered by the agency for the year under audit (this includes contracts not included in the Schedule of Federal Awards). Mailing address for all information: Michigan Department of Human Services Office of Internal Audit 235 S. Grand Ave., Suite 1112 Lansing, MI 48909 Attention: William Addison, CPA Audit Cost No audit costs may be charged to DHS when audits required by this contract have not been performed, or have not been performed in accordance with OMB Circular A-133 requirements. Late submission of the Single Audit report is considered non compliance with this section and may be grounds to impose sanctions. Sanctions DHS may impose sanctions if the contractor fails to adhere to any of the audit requirements in the contract. In cases of continued inability or unwillingness to comply with audit requirements, DHS may impose sanctions such as: (a) Withholding a percentage of federal awards until the audit is completed satisfactorily; (b) Withholding or disallowing overhead costs; (c) Suspending federal awards until the audit is coducted; (d) Terminating the federal award;