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The Rural Utilities Service (RUS or the Agency) loan, loan guarantee, and grant programs act as a catalyst for economic and community development. By financing improvements to rural electric, water and waste, and telecommunications and broadband infrastructure, RUS also plays a significant role in improving other measures of quality of life in rural America, including public health and safety, environmental protection and culture and historic preservation.

RUS has implemented the standards for audits required by the loan and grant agreements of RUS electric and telecommunications borrowers and grantees (awardees).This policy provides guidance to awardees to specifically address the timing and documentation requirements of annual audited financial statements, requirements of audit firms performing the audit of financial statements, applicable regulations and guidelines for both awardee and audit firms, and requirements and guidelines in selection of audit firms. In addition, possible consequences for failure to adhere to this policy are identified.

The Agency, via a final rule with request for comments, is considering eliminating the requirement for the Report of Compliance of Contractual Agreements and Regulatory Requirements (i.e., RUS Management Letter) from Certified Public Accountant (CPA) audit submittals and updating all references in the regulation related to the report. It has been determined this report no longer provides a meaningful benefit to RUS or the awardees. The elimination of this report could reduce burdensome requirements on borrowers and applicants and possibly provide a cost benefit to the awardees.

To implement these changes, RUS will publish this as a final rule without prior notice. The Administrative Procedure Act exempts from prior notice rules with any actions "relating to agency management or personnel or to public property, loans, grants, benefits, or contracts" (5 U.S.C. 553(a)(2)).