(a) Recipients and subrecipients that are governmental entities (including public agencies) shall comply with the requirements and standards of OMB Circular No. A-87, ``Cost Principles for State, Local, and Indian Tribal Governments''; OMB Circular A-128, ``Audits of State and Local Governments'' (implemented at 24 CFR part 44); and with the following sections of 24 CFR part 85 ``Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments'' or the related CDBG provision, as specified in this paragraph:
(1) Section 85.3, ``Definitions'';
(2) Section 85.6, ``Exceptions'';
(3) Section 85.12, ``Special grant or subgrant conditions for `high-risk' grantees'';
(4) Section 85.20, ``Standards for financial management systems,'' except paragraph (a);
(5) Section 85.21, ``Payment,'' except as modified by Sec. 570.513;
(6) Section 85.22, ``Allowable costs'';
(7) Section 85.26, ``Non-federal audits'';
(8) Section 85.32, ``Equipment,'' except in all cases in which the equipment is sold, the proceeds shall be program income;
(9) Section 85.33, ``Supplies'';
(10) Section 85.34, ``Copyrights'';
(11) Section 85.35, ``Subawards to debarred and suspended parties'';
(12) Section 85.36, ``Procurement,'' except paragraph (a);
(13) Section 85.37, ``Subgrants'';
(14) Section 85.40, ``Monitoring and reporting program performance,'' except paragraphs (b) through (d) and paragraph (f);
(15) Section 85.41, ``Financial reporting,'' except paragraphs (a), (b), and (e);
(16) Section 85.42, ``Retention and access requirements for records,'' except that the period shall be four years;
(17) Section 85.43, ``Enforcement'';
(18) Section 85.44, ``Termination for convenience'';
(19) Section 85.51 ``Later disallowances and adjustments'' and
(20) Section 85.52, ``Collection of amounts due.''
(b) Subrecipients, except subrecipients that are governmental entities, shall comply with the requirements and standards of OMB Circular No. A-122, ``Cost Principles for Non-profit Organizations,'' or OMB Circular No. A-21, ``Cost Principles for Educational Institutions,'' as applicable, and OMB Circular A-133, ``Audits of Institutions of Higher Education and Other Nonprofit Institutions'' (as set forth in 24 CFR part 45). Audits shall be conducted annually. Such subrecipients shall also comply with the following provisions of the Uniform Administrative requirements of OMB Circular A-110 (implemented at 24 CFR part 84, ``Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals and Other Non-Profit Organizations'') or the related CDBG provision, as specified in this paragraph:
(1) Subpart A--``General'';
(2) Subpart B--``Pre-Award Requirements,'' except for Sec. 84.12, ``Forms for Applying for Federal Assistance'';
(3) Subpart C--``Post-Award Requirements,'' except for:
(i) Section 84.22, ``Payment Requirements.'' Grantees shall follow the standards of Sec. Sec. 85.20(b)(7) and 85.21 in making payments to subrecipients;
(ii) Section 84.23, ``Cost Sharing and Matching'';
(iii) Section 84.24, ``Program Income.'' In lieu of Sec. 84.24, CDBG subrecipients shall follow Sec. 570.504;
(iv) Section 84.25, ``Revision of Budget and Program Plans'';
(v) Section 84.32, ``Real Property.'' In lieu of Sec. 84.32, CDBG subrecipients shall follow Sec. 570.505;
(vi) Section 84.34(g), ``Equipment.'' In lieu of the disposition provisions of Sec. 84.34(g), the following applies:
(A) In all cases in which equipment is sold, the proceeds shall be program income (prorated to reflect the extent to which CDBG funds were used to acquire the equipment); and
(B) Equipment not needed by the subrecipient for CDBG activities shall be transferred to the recipient for the CDBG program or shall be retained after compensating the recipient;
(vii) Section 84.51 (b), (c), (d), (e), (f), (g), and (h), ``Monitoring and Reporting Program Performance'';
(viii) Section 84.52, ``Financial Reporting'';
(ix) Section 84.53(b), ``Retention and access requirements for records.'' Section 84.53(b) applies with the following exceptions:
(A) The retention period referenced in Sec. 84.53(b) pertaining to individual CDBG activities shall be four years; and
(B) The retention period starts from the date of submission of the annual performance and evaluation report, as prescribed in 24 CFR 91.520, in which the specific activity is reported on for the final time rather than from the date of submission of the final expenditure report for the award;
(x) Section 84.61, ``Termination.'' In lieu of the provisions of Sec. 84.61, CDBG subrecipients shall comply with Sec. 570.503(b)(7); and
(4) Subpart D--``After-the-Award Requirements,'' except for Sec. 84.71, ``Closeout Procedures.'' [53 FR 8058, Mar. 11, 1988, as amended at 60 FR 1916, Jan. 5, 1995; 60 FR 56915, Nov. 9, 1995]