(a) Upon request and with reasonable notice, an entity receiving Grant Award funds directly under the Grant Contract or indirectly through a subcontract under the Grant Contract shall allow, or shall cause the entity that is maintaining such items to allow the Institute, or auditors or investigators working on behalf of the Institute, including the State Auditor and/or the Comptroller of Public Accounts for the State of Texas, to review, inspect, audit, copy or abstract its records pertaining to the specific Grant Contract during the term of the Grant Contract and for the three year period following the date the last disbursement of funds is made by the Institute or all reports required pursuant to the Grant Contract are submitted and approved, whichever date is later.
  (1) A Grant Recipient shall maintain its records pertaining to the specific Grant Contract for a period of three years following the date the last disbursement of funds is made by the Institute or all reports required pursuant to the Grant Contract are submitted and approved, whichever date is later.
  (2) The Grant Recipient may maintain its records in either electronic or paper format.
(b) Notwithstanding the foregoing, the Grant Recipient shall submit a single audit determination form no later than 60 days following the close of the Grant Recipient's fiscal year. The Grant Recipient shall report whether the Grant Recipient has expended $750,000 or more in state awards during the Grant Recipient's fiscal year. If the Grant Recipient has expended $750,000 or more in state awards in its fiscal year, the Grant Recipient shall obtain either an annual single independent audit, a program specific independent audit, or an agreed upon procedures engagement as defined by the American Institute of Certified Public Accountants and pursuant to guidance provided in subsection (e) of this section.
  (1) The audited time period is the Grant Recipient's fiscal year.
  (2) The audit must be submitted to the Institute within thirty (30) days of receipt by the Grant Recipient but no later than nine (9) months following the close of the Grant Recipient's fiscal year and shall include a corrective action plan that addresses any weaknesses, deficiencies, wrongdoings, or other concerns raised by the audit report and a summary of the action taken by the Grant Recipient to address the concerns, if any, raised by the audit report.
    (A) The Grant Recipient may seek additional time to submit the required audit and corrective action plan by providing a written explanation for its failure to timely comply and providing an expected time for the submission.
    (B) The Grant Recipient's request for additional time must be submitted on or before the due date of the required audit and corrective action plan. For purposes of this rule, the "due date of the required audit" is no later than nine (9) months following the close of the Grant Recipient's fiscal year.
    (C) Approval of the Grant Recipient's request for additional time is at the discretion of the Institute. Such approval must be granted by the Chief Executive Officer.
(c) No reimbursements or advances of Grant Award funds shall be made to the Grant Recipient if the Grant Recipient is delinquent in filing the required audit and corrective action plan. A Grant Recipient that has received approval from the Institute for additional time to file the required audit and corrective action plan may receive reimbursements or advances of Grant Award funds during the pendency of the delinquency unless the Institute's approval declines to permit reimbursements or advances of Grant Award funds until the delinquency is addressed.
(d) A Grant Recipient that is delinquent in submitting to the Institute the audit and corrective action plan required by this section is not eligible to be awarded a new Grant Award or a continuation Grant Award until the required audit and corrective action plan are submitted. A Grant Recipient that has received approval from the Institute for additional time to file the required audit and corrective action plan may remain eligible to be awarded a new Grant Award or a continuation Grant Award unless the Institute's approval declines to continue eligibility during the pendency of the delinquency.
(e) For purposes of this rule, an agreed upon procedures engagement is one in which an independent certified public accountant is hired by the Grant Recipient to issue a report of findings based on specific procedures to be performed on a subject matter.
  (1) The option to perform an agreed upon procedures engagement is intended for a non-profit or for-profit Grant Recipient that is not subject to Generally Accepted Government Audit Standards (also known as the Yellow Book) published by the U.S. Government Accountability Office.
  (2) The agreed upon procedures engagement will be conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants.
  (3) The certified public accountant is to perform procedures prescribed by the Institute and to report his or her findings attesting to whether the Grant Recipient records are in agreement with stated criteria.
  (4) The agreed upon procedures apply to all current year expenditures for Grant Awards received by the Grant Recipient. Nothing herein prohibits the use of a statistical sample consistent with the American Institute of Certified Public Accountants' guidance regarding government auditing standards and 2 CFR Part 200, Subpart F, "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards."
  (5) At a minimum, the agreed upon procedures report should address:
    (A) Processes and controls;
    (B) The Grant Contract;
    (C) Indirect Costs;
    (D) Matching Funds, if appropriate;
    (E) Grant Award expenditures (payroll and non-payroll related transactions);
    (F) Equipment;
    (G) Revenue Sharing and Program Income;
    (H) Reporting; and
    (I) Grant Award closeout.
  (6) The certified public accountant should consider the specific Grant Mechanism and update or modify the procedures accordingly to meet the requirements of each Grant Award and the Grant Contract reviewed.
(f) For purposes of this rule, a program specific audit should address:
  (1) Sample of awards;
  (2) Reporting;
  (3) Indirect costs;
  (4) Matching funds, if appropriate;
  (5) Expenditures;
  (6) Expenditure Reporting;
  (7) Personnel Level of Effort Reporting;
  (8) Grant Closeout;
  (9) Performance Measures;
  (10) Publications and Acknowledgements;
  (11) Title to equipment;
  (12) Contract certifications;
  (13) Changes in Principal Investigator or Program Director;
  (14) Intellectual Property and revenue sharing;
  (15) Early termination and event of default; and
  (16) Any other issue identified by the Institute, the Grant Recipient, or the person performing the program specific audit.
(g) If a deadline set by this rule falls on a Saturday, Sunday, or federal holiday as designated by the U.S. Office of Personnel Management, the required filing may be submitted on the next business day. The Institute will not consider a required filing delinquent if the Grant Recipient complies with this subsection.

Source Note: The provisions of this §703.13 adopted to be effective December 21, 2009, 34 TexReg 9213; amended to be effective March 2, 2014, 39 TexReg 1386; amended to be effective September 17, 2014, 39 TexReg 7342; amended to be effective December 10, 2014, 39 TexReg 9565; amended to be effective December 7, 2016, 41 TexReg 9527; amended to be effective March 8, 2017, 42 TexReg 1029; amended to be effective December 21, 2017, 42 TexReg 7167; amended to be effective June 7, 2018, 43 TexReg 3595; amended to be effective December 18, 2018, 43 TexReg 8123; amended to be effective March 14, 2019, 44 TexReg 1346; amended to be effective June 5, 2019, 44TexReg 2723