Since the Recovery Act was issued, the GAQC has received numerous questions about whether Build America Bonds should be a federal award that would be subject to the single audit.  In the last few days, the GAQC staff was informed by OMB that it has determined, after consideration with the various federal agencies involved, that the Build America Bonds Program is excluded from the provisions of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.  Therefore, Build America Bonds should not be presented by auditees on the Schedule of Expenditures of Federal Awards and should not be included in the scope of the single audit.

For those that may not be familiar with the Build America Bonds program, it was created by the Recovery Act to assist state and local governments in financing capital projects at lower borrowing costs and to stimulate the economy and create jobs.  Basically, it authorizes state and local governments to issue taxable bonds to finance any capital expenditures for which they could otherwise issued tax-exempt governmental bonds.   State and local governments then receive a direct federal subsidy payment for a portion of their borrowing costs on Build America Bonds equal to 35 percent of the total coupon interest paid to investors.  The question surrounding the bonds from a single audit perspective was whether this subsidy payment should be included on the Schedule of Expenditures of Federal Awards and included in the scope of the single audit.