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being notified by the CITY, contract suspension or termination procedures will be <br />initiated. <br />X. AUDITS <br />If SUBRECIPIENT expends Federal funds in a fiscal year which equal or exceed Five <br />Hundred Thousand Dollars ($500,000) as specified in OMB Circular A-133- Revised, <br />SUBRECIPIENT shall cause an audit to be prepared at SUBRECIPIENT's expense by a Certified <br />Public Accountant (CPA) who is a member in good standing with the American Institute of <br />Certified Public Accountants (AICPA) of the California Society of CPA's. The audit must be <br />performed in accordance with Generally Accepted Auditing Standards (GAAS) authorized by the <br />AICPA and Federal laws and regulations governing the programs in which it participates. <br />Furthermore, CITY retains the authority to require SUBRECIPIENT to submit a similarly prepared <br />audit at SUBRECIPIENT's expense even in instances when SUBRECIPIENT's expenditure is less <br />than $500,000. SUBRECIPIENT will be required to identify corrective action taken in response to <br />any findings identified by CPA related to their funded activity or program. <br />SUBRECIPIENT shall submit two (2) copies of such audit report, including a copy of the <br />management letter, to CITY within six (6) months of the end of each AGREEMENT year in which <br />SUBRECIPIENT has received federal funding (i.e. July 1 -June 30). Failure to meet this <br />requirement may result in CITY denying reimbursement of funds to SUBRECIPIENT, as well as <br />future funding qualification. SUBRECIPIENTS which are exempt from statutory audit <br />requirements shall maintain records which are available for review by CITY or Federal officials. <br />SUBRECIPIENT acknowledges that any and all "Financial Statements" submitted to CITY <br />pursuant to this AGREEMENT become Public Records and are subject to public inspection <br />pursuant to Sec.6250 et seq. of the California Government Code. <br />XI. FEDERAL ADMINISTRATIVE REQUIREMENTS <br />A. Financial Mana eg ment <br />1. Accounting Standards <br />SUBRECIPIENT agrees to comply with Office of Management and Budget <br />(hereinafter referred to as "OMB") Circular A-110 and agrees to adhere to the accounting <br />principles and procedures required therein, utilize adequate internal controls, and maintain <br />necessary source documentation for all costs incurred. <br />2. Cost Principles <br />SUBRECIPIENT shall administer its program in conformance with OMB <br />Page 18 of 26 <br />20C-23 <br />