Chapter 02. Audits of Contracts and Grants
Regulation .01 Scope.LinkCopy Citation
A.
In General. This chapter applies to audits required or authorized under State Finance and Procurement Article, §7-404, Annotated Code of Maryland, for private-care contracts, including grants, made by the Department of Juvenile Services.
B.
Additional Examinations. In addition to conducting audits under this chapter, the Secretary may also provide for periodic examinations of the accounts and records of all contractors, including grantees, receiving funds from the Department.
Regulation .02 Periodic Audits Required.LinkCopy Citation
The Secretary shall provide for periodic audits of the accounts and records of all contractors providing care for juveniles.
Regulation .03 Purpose and Scope of Audit.LinkCopy Citation
A.
In General. The audit shall determine whether funds were spent in accordance with the contract.
B.
Expenditures and Revenues. The auditor shall review expenditures and revenues to determine if they are consistent with the approved budget and supported by documentation, in accordance with the contract and generally accepted accounting principles.
C.
Amounts Due. The audit shall establish amounts due to or from the State by comparing budgeted, reported, and audited expenditures to revenues.
D.
Basis of Final Settlement. The audit findings shall be the basis for making a final settlement of the contract.
Regulation .04 By Whom Conducted.LinkCopy Citation
A.
In General. Except as provided in §B of this regulation, the Department's Audit Division shall conduct the audits required by this chapter.
B.
Local Governments.
(1)
Subject to §B(2) of this regulation, the Audit Division need not conduct an audit of contracts with local governments for which audits are conducted in accordance with the federal Single Audit Act, 31 U.S.C. §7501 et seq.
(2)
If audits conducted under the Single Audit Act do not satisfy the requirements of the Department, the Audit Division shall conduct such further auditing as it considers necessary under the circumstances.
Regulation .05 How and When Conducted.LinkCopy Citation
A.
How. The audits shall be conducted in accordance with:
(1)
The terms of the contract; and
(2)
Allowable cost guidelines of the Department.
B.
When. The audits shall be performed at the intervals and in the manner approved and determined by the Secretary.
Regulation .06 Audit of Subcontractor, Subgrantee.LinkCopy Citation
A.
Authority to Audit. The Audit Division may audit a subcontractor, including a subgrantee, when it is in the interest of the State to do so.
B.
Notice to Primary Contractor. If the Department elects to audit a subcontractor, the Department shall inform the primary contractor, in writing, that the primary contractor need not audit that subcontractor as otherwise required by Regulation .10C of this chapter.
Regulation .07 Draft Audit Report.LinkCopy Citation
A.
Issuance. The Audit Division shall conduct an exit conference and issue a draft audit report after the exit conference.
B.
Additional Information. The draft report shall reflect any additional information that:
(1)
The contractor provides at the exit conference or, in accordance with §C of this regulation, after the exit conference; and
(2)
The Audit Division considers relevant.
C.
Postconference Information.
(1)
After the exit conference, the contractor may submit additional information for consideration in the draft report only if the contractor notifies the Audit Division, at or before the exit conference, of its intent to submit this information.
(2)
The additional information shall be submitted by a date mutually agreeable to the Audit Division and the contractor, but not later than 90 days after the exit conference.
D.
Report Final Unless Reconsideration Requested. The draft report becomes final and the amounts found to be payable to or from the State become payable unless the contractor requests reconsideration in accordance with Regulation .08 of this chapter.
Regulation .08 Request for Reconsideration.LinkCopy Citation
A.
When Authorized. The contractor may request a reconsideration of the draft audit report at any time within 30 days of the mailing of the draft report.
B.
How Made. The request for reconsideration shall:
(1)
Be in writing; and
(2)
Specify:
(a)
The amount at issue; and
(b)
The reasons the contractor believes the draft report should not become final.
Regulation .09 Reconsideration by Audit Committee.LinkCopy Citation
A.
In General.
(1)
If a contractor files a timely request under this regulation, the request shall be considered by an audit committee.
(2)
The audit committee shall consist of:
(a)
The Chief of the Audit Division or the Chief's designee;
(b)
The Deputy Secretary for Administration or the Deputy's designee;
(c)
The Assistant Secretary for Departmental Support or the Assistant Secretary's designee; and
(d)
One or more of the other assistant secretaries or their designees.
B.
Modification by Committee. The Audit Review Committee may:
(1)
Modify the draft report as it considers appropriate; and
(2)
Reissue the report in accordance with Regulation .07 of this chapter.
C.
Notice of Final Report.
(1)
If, after reviewing the contractor's original or any subsequent request for reconsideration, the Audit Review Committee finds no basis for considering further appeals, the Committee shall mail a notice of its findings to the contractor.
(2)
The notice shall inform the contractor that:
(a)
Unless appealed within 30 days of the notice's mailing, the audit is final; and
(b)
The contractor may appeal the Committee's decision to the Secretary or to the procurement officer in accordance with the Administrative Procedure Act or the State Procurement Law, as applicable.
Regulation .10 Responsibilities of Contractor.LinkCopy Citation
A.
Disclosure of Records. Each contractor shall provide the Audit Division, during the contractor's regular business hours, full disclosure of all accounting, financial, and other records, as requested from time to time by the Audit Division.
B.
Retention of Records. Each contractor shall retain all accounts and records relating to the contract for a period of 5 years following the close of each fiscal year.
C.
Audit of Subcontractors. Each contractor is responsible for auditing its subcontractors in accordance with this chapter.
D.
Receipts and Expenditures. Each contractor shall maintain detailed accounting records that include all receipts and expenditures of contract funds.
E.
Revenues.
(1)
All revenues received in connection with the contract shall be credited to the contract program and applied to the gross allowable expenditures of the program.
(2)
These revenues include:
(a)
All proceeds from the provision of services, including fee collections and third-party payments;
(b)
All proceeds from the sale of goods, including all goods obtained or manufactured with labor and materials paid for with contract funds; and
(c)
All interest earned on deposited contract funds or proceeds.
(3)
This section does not apply to:
(a)
Undesignated contributions to the contractor; or
(b)
Contributions designated to a specific purpose not contemplated in the contract.
Chapter annotations
Authority: Human Services Article, §9-204; State Finance and Procurement Article, §7-404; Annotated Code of Maryland
History: Effective date: June 18, 2007 (34:12 Md. R. 1067)