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A Report on State of Texas Compliance with Federal Requirements for the Research and Development Cluster for the Fiscal Year Ended August 31, 2015

February 2016

Report Number 16-017

Overall Conclusion

The State of Texas complied in all material respects with the federal requirements for the Research and Development Cluster in fiscal year 2015.

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 12 areas that may have a material effect on a federal program at those non-federal entities. Examples of the types of compliance areas include allowable costs, procurement, reporting, and monitoring of non-state entities (subrecipients) to which the State passes federal funds. The requirements for 1 of those 12 areas vary by federal program and outline special tests that auditors are required to perform, such as requirements related to the identification of key personnel who work on each federal award. The compliance areas determined to be direct and material may vary significantly among audited entities. Therefore, a comparison of the number of reported findings among entities included in this report may not be an accurate indicator of performance. The Single Audit for the State of Texas included (1) all high-risk federal programs for which the State expended more than $76,877,448 in federal funds during fiscal year 2015 and (2) other selected federal programs.

From September 1, 2014, through August 31, 2015, the State of Texas expended $51 billion in federal funds. The State Auditor's Office audited compliance with requirements for the Research and Development Cluster at seven higher education institutions. Those seven higher education institutions spent $803 million in federal Research and Development Cluster funds during fiscal year 2015. Auditors identified 22 findings classified as significant deficiency and non-compliance for the Research and Development Cluster.

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