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A Report on State of Texas Compliance with Federal Requirements for Selected Major Programs at the Water Development Board for the Fiscal Year Ended August 31, 2014

February 2015

Report Number 15-025

Overall Conclusion

The State of Texas complied in all material respects with the federal requirements for the Capitalization Grants for Clean Water State Revolving Funds Program (Clean Water Program) and the Capitalization Grants for Drinking Water State Revolving Funds Program (Drinking Water Program) in fiscal year 2014.

As a condition of receiving federal funding, U.S. Office of Management and Budget (OMB) Circular A-133 requires non-federal entities that expend at least $500,000 in federal awards in a fiscal year to obtain annual Single Audits. Those audits test compliance with federal requirements in up to 14 areas that may have a material effect on a federal program at those non-federal entities. Examples of types of compliance areas include allowable costs, cash management, and monitoring of non-state entities (subrecipients) to which the State passes federal funds. The requirements for 1 of those 14 areas vary by federal program and outline special tests that auditors are required to perform, such as requirements related to environmental reviews and financial commitments that the Water Development Board (Board) is required to make to its subrecipients. The Single Audit for the State of Texas included (1) all high-risk federal programs for which the State expended more than $73,923,376 in federal funds during fiscal year 2014 and (2) other selected federal programs.

From September 1, 2013, through August 31, 2014, the State of Texas expended $49.1 billion in federal funds. The State Auditor's Office audited compliance with requirements for the Clean Water Program and the Drinking Water Program at the Board, which spent $159.7 million in federal Clean Water Program funds and $78.7 million in federal Drinking Water Program funds during fiscal year 2014.

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