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ARTICLE V <br />AUDITS, THIRD PARTY CONTRACTING, RECORDS RETENTION AND REPORTS <br />1. STATE reserves the right to conduct technical and financial audits of PROJECT work and <br />records and ADMINISTERING. AGENCY agrees, and shall require its contractors and <br />subcontractors to agree, to cooperate with STATE by making all appropriate and relevant <br />PROJECT records available for audit and copying as required by paragraph three (3) of ARTICLE <br />V. <br />2. ADMINISTERING AGENCY, its contractors and subcontractors shall establish and maintain a <br />financial management system and records that properly accumulate and segregate reasonable, <br />allowable, and allocable incurred PROJECT costs and matching funds by line item for the <br />PROJECT. The financial management system of ADMINISTERING AGENCY, its contractors and <br />all subcontractors shall conform to Generally Accepted Accounting Principles, enable the <br />determination of incurred costs at interim points of completion, and provide support for <br />reimbursement payment vouchers or invoices sent to or paid by STATE. <br />3. ADMINISTERING AGENCY, ADMINISTERING AGENCY's contractors and subcontractors, and <br />STATE shall each maintain and make available for inspection and audit by STATE, the California <br />State Auditor, or any duly authorized representative of STATE or the United States all books, <br />documents, papers, accounting records, and other evidence pertaining to the performance of such <br />contracts, including, but not limited to, the costs of administering those various contracts and <br />ADMINISTERING AGENCY shall furnish copies thereof if requested. All of the above referenced <br />parties shall make such AGREEMENT, PROGRAM SUPPLEMENT and contract materials <br />available at their respective offices at all reasonable times during the entire PROJECT period and <br />for three (3) years from the date of submission of the final expenditure report by the STATE to the <br />FHWA. <br />4. ADMINISTERING AGENCY is required to have an audit in accordance with the Single Audit Act <br />of 2 CFR 200 if it expends $750,000 or more in Federal Funds in a single fiscal year. The Federal <br />Funds received under a PROGRAM SUPPLEMENT are a part of the Catalogue of Federal <br />Domestic Assistance (CFDA) 20.205. <br />5. ADMINISTERING AGENCY agrees to include all PROGRAM SUPPLEMENTS adopting the <br />terms of this AGREEMENT in the schedule of projects to be examined in ADMINISTERING <br />AGENCY's annual audit and in the schedule of projects to be examined under its single audit <br />prepared in accordance with 2 CFR, Part 200. <br />6. ADMINISTERING AGENCY shall not award a non -A&E contract over $5,000, construction <br />contract over $10,000, or other contracts over $25,000 (excluding professional service contracts of <br />the type which are required to be procured in accordance with Government Code sections 4525 <br />(d), (e) and (f)) on the basis of a noncompetitive negotiation for work to be performed under this <br />AGREEMENT without the prior written approval of STATE. Contracts awarded by <br />ADMINISTERING AGENCY, if intended as local match credit, must meet the requirements set <br />forth in this AGREEMENT regarding local match funds. <br />Page 11 of 26 <br />