ACLS Policy Memo 2025-01: Financial Audit Requirements

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All grantees that are community-based organizations (CBOs) are required to annually submit to ACLS an electronic copy of their organization's latest reviewed financial statement, audited financial statement, program-specific, or single audit. The financial statement or audit must be in final form (i.e., drafts are not acceptable) and with an opinion or management letter signed by the CPA. These should be sent to ACLSFinancialAudit@mass.gov and submitted no later than nine months after the program's fiscal year ends¹ with a Cc to the program's assigned Program Specialist. The following guidance explains how grant recipients can comply with state and federal fiscal reporting requirements.

• Organizations with more than $200,000 in gross support and revenue (e.g., grants, contracts, donations, fundraising) during their fiscal year:
  • Requirement: The Non-Profit Organizations/Public Charities Division of the Massachusetts Attorney General's Office (MA AGO) requires that these organizations submit financial statements audited or reviewed by an independent certified public accountant (CPA).
  • Cost: The cost of financial statements is not an allowable expense and cannot be charged to the adult education grant.
  
  
• Organizations with more than $500,000 in gross support and revenue (e.g., grants, contracts, donations, fundraising) during their fiscal year:
  • Requirement: The MA AGO requires that these organizations prepare financial statements in accordance with generally accepted accounting principles (GAAP) that are audited in accordance with generally accepted auditing standards for non-profit or governmental organizations. Adult education grants are restricted rate grants and have a statutory requirement to supplement and not supplant.
  • Cost: The cost of financial statements is not an allowable expense and cannot be charged to the adult education grant because the MA AGO requires financial statements and audits.
  
  
• Federal regulations 2 CFR 200.501(a) and 2 CFR 200.501(b) require organizations that expend $1,000,000 or more in federal funds during their fiscal year submit a single audit.
  • Requirement: 2 CFR 200.501(a) and 2 CFR 200.501(b) require organizations that expend $1,000,000 or more in federal funds during their fiscal year submit a single audit.
  • Cost: The cost of a single audit is an allowable cost. However, it must be allocated proportionately to all funding sources.
  
  
• The Massachusetts Department of Elementary and Secondary Education requires organizations that expend $1,000,000 or more in state adult education grant funds (e.g., FC345, FC668, etc.) and/or a combination of state and federal adult education grant funds during their fiscal year submit a program-specific audit in addition to a financial statement audit.
  • Requirement: In determining the combination of state and federal funding, organizations with federal funding alone that exceeds $1,000,000 are required to follow the 2 CFR 200.501(a) single audit requirement. Additional information regarding program-specific audit requirements can be found at the Office of Management and Budget Compliance Supplement , specifically, Part 4 84-002 .
  • Cost: The financial statement audit cannot be charged to the grant. The additional cost of the program-specific audit is an allowable expense and may be charged to the adult education grant.

While ACLS program specialists are aware of this policy, it is not their role to advise grantees about the requirements of MA AGO or 2 CFR 200.501(a) and 2 CFR 200.501(b).

This policy will be included in the addendum to the FY24-FY28 Massachusetts Policies for Effective Adult Education in Community Adult Learning Centers (CALCs) and Correctional Institutions (AECIs) .

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¹ For example, if an agency's fiscal year ends on June 30, 2024, it must submit its audit by March 31, 2025 (i.e., nine months later). An agency with a fiscal year that ends on December 31, 2024, must submit its audit by September 30, 2025.

Last Updated: October 18, 2024