Audit resolution and recovery of state program funds based on audit findings

(a) As provided in section 4-236-21 of the Regulations of Connecticut State Agencies, the cognizant agency shall be responsible for ensuring the resolution of audit findings that affect the programs of more than one state agency. Resolution of findings that relate to the programs of a single state agency shall be the responsibility of the recipient and the agency. Alternate arrangements may be made on a case-by-case basis by agreement among the agencies concerned. (b) After the audit report is accepted by the cognizant agency, the grantor state agencies shall review the audit report including the audit findings relating to the agencies' programs and the auditee's corrective action plans. Pass-through entities are also responsible for reviewing the audit reports of their subrecipients. (c) State grantor agencies shall follow up on audit findings to ensure proper resolution. Follow up procedures regarding a current year or prior year audit finding may include, but are not limited to, communication with the nonstate entity and review of the nonstate entity's records. Pass-through entities shall work with state grantor agencies and develop a course of action to resolve audit findings relating to state financial assistance provided to subrecipients. (d) Agencies shall determine whether to "allow" or "disallow" the reported expenditures in findings involving questioned costs. (1) If the state grantor agency decides the expenditures were proper (i.e., the independent auditor's questioned costs are not sustained), they are "allowed costs" and no further action is required. (2) If the state grantor agency decides the expenditures were improper (i.e., the independent auditor's findings are sustained), the nonstate entity shall consider the questioned costs to be ineligible; they are "disallowed costs". (3) The state grantor agency shall notify the nonstate entity of any disallowed costs, and, unless successfully appealed to the executive authority of the agency, the state financial assistance received with respect to such disallowed costs shall be returned to the applicable state government agency. The state agencies shall also establish an accounting record of the debt, require other necessary corrective actions, and follow-up on corrective actions to ensure compliance.