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4/13/76 8. AUDITS. AC 150/5100-10A a. Standard. Each sponsor shall provide audits ft be made by the sponsor or at his direction to determine, at a minimum, the fiscal integrity of financial transactions and reports, and the compliance with laws, regulations, and administrative requirements. The sponsor will schedule such audits with reasonable frequency, usually annually, but not less frequently than once every two years, considering the nature, size, and complexity of the activity. In addition, the sponsor shall establish a systematic method to assure timely and appropriate resolution of audit findings and recommendations. b. Requirements. Each sponsor is required to provide periodic audits to determine the financial integrity of its transactions and reports. In addition, each sponsor is responsible for audit of all cost reim- bursable type contracts. c. Interpretation. Audits may be performed by state auditors, sponsor's internal audits, or the sponsor's independent public accountants. It is desirable that such audits be performed in accordance with the audit standards promulgated by the Comptroller General of the United States in the publication entitled, "Standards for Audit of Government Organizations, Programs, Activities, and Functions." 29. REVIEWS OF SPONSOR'S FINANCIAL MANAGEMENT SYSTEM. a. Responsibility for Reviews. FAA auditors' are responsible for establishing procedures to determine if sponsors comply with the standards mentioned in paragraphs 21 through 28. b. Types of Reviews. FAA review of sponsors may be accomplished by using one or more of the following techniques, but they are not limited to those listed: (1) audits made by Federal auditors (DOT or other Federal) at completion of a prior grant; (2) annual evaluation made by DOT elements of sponsor technical, financial, and administrative procedures; (3) special system surveys made by Federal auditors or independent public accountants prior to grant awards; and (4) audits made by the sponsor or required by the sponsor which are made in accordance with guidelines listed in the General Accounting Office booklet entitled "Standards for Audit of'Governmental Organizations, Programs, Activities and Functions." c. FAA Review Requirements. Chap 2 Par 28 (1) Grants Awarded After June 30, 1974. FAA will review the financial management systems of sponsors who are receiving their first FAA grant award after June 30, 1974, prior to making the award when- ever possible but in no event will this review take place later than six months following the date on which the grant agreement was signed. Subsequent to this initial review, financial manage- ment systems will be reviewed as directed in paragraph 29c(2)below. Page 13