Administrative and fiscal accountability

(a) Audits (1) Contract with approved auditing entity Not later than October 1, 2025, and annually thereafter, a State shall contract with an approved auditing entity (as defined under paragraph (3)(B)) for purposes of conducting an audit under paragraph (2) (with respect to the fiscal year ending September 30 of such year). (2) Audit requirement Under a contract under paragraph (1), an approved auditing entity shall conduct an audit of the expenditures or transfers made by a State from amounts received under a grant under section 4, with respect to the fiscal year which such audit covers, to determine the extent to which such expenditures and transfers were expended in accordance with section 4. (3) Entity conducting audit (A) In general With respect to a State, the audit under paragraph (2) shall be conducted by an approved auditing entity in accordance with generally accepted auditing principles. (B) Approved auditing entity For purposes of this section, the term approved auditing entity means, with respect to a State, an entity that is— (i) approved by the Secretary of the Treasury; (ii) approved by the chief executive officer of the State; and (iii) independent of any Federal, State, or local agency. (4) Submission of audit Not later than April 30, 2026, and annually thereafter, a State shall submit the results of the audit under paragraph (2) (with respect to the fiscal year ending on September 30 of such year) to the State legislature and to the Secretary of the Treasury. (b) Reimbursement and penalty If, through an audit conducted under subsection (a), an approved auditing entity finds that a State violated the requirements of subsection (d) or (e) of section 4, the State shall pay to the Treasury of the United States 100 percent of the amount of State funds that were used in violation of section 4 as a penalty. Insofar as a State fails to pay any such penalty, the Secretary of the Treasury shall offset the amount not so paid against the amount of any grant otherwise payable to the State under this Act. (c) Annual reporting requirements (1) In general Not later than January 31, 2026, and annually thereafter, each State shall submit to the Secretary of the Treasury and the State legislature a report on the activities carried out by the State during the most recently completed fiscal year with funds received by the State under a grant under section 4 for such fiscal year. (2) Content A report under paragraph (1) shall, with respect to a fiscal year— (A) contain the results of the audit conducted by an approved auditing entity for a State for such fiscal year, in accordance with the requirements of subsection (a) of this section; (B) specify the amount of the grant made to the State under section 4; and (C) be in such form and contain such other information as the State determines is necessary to provide— (i) an accurate description of the activities conducted by the State for the purpose described under section 4; and (ii) a complete record of the purposes for which amounts were expended in accordance with this section. (3) Public availability A State shall make copies of the reports required under this section available on a public website and shall make copies available in other formats upon request. (d) Failure To comply with requirements The Secretary of the Treasury shall not make any payment to a State under a grant authorized by section 4— (1) if an audit for a State is not submitted as required under subsection (a) during the period between the date such audit is due and the date on which such audit is submitted; (2) if a State fails to submit a report as required under subsection (c) during the period between the date such report is due and the date on which such report is submitted; or (3) if a State violates a requirement of section 4 during the period beginning on the date the Secretary becomes aware of such violation and the date on which such violation is corrected by the State. (e) Administrative supervision and oversight (1) Limited role for Secretary of the Treasury The authority of the Secretary of the Treasury under this Act is limited to— (A) promulgating regulations, issuing rules, or publishing guidance documents to the extent necessary for purposes of implementing subsection (a)(3)(B), subsection (b), and subsection (d); (B) making payments to the States under grants under section 4; (C) approving entities under subsection (a)(3)(B) for purposes of the audits required under subsection (a); (D) withholding payment to a State of a grant under subsection (d) or offsetting a payment of such a grant to a State under subsection (b); and (E) exercising the authority relating to nondiscrimination that is specified in section 6(b). (2) Limited role for Attorney general The authority of the Attorney General to supervise the amounts received by a State under section 4 is limited to the authority under section 6(b). (f) Reservation of state powers Nothing in this section shall be construed to limit the power of a State, including the power of a State to pursue civil and criminal penalties under State law against any individual or entity that misuses, or engages in fraud or abuse related to, the funds provided to a State under section 4.