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<br />C. Upon termination or receipt of notice to terminate, whichever occurs first, Contractor shall cancel, <br />withdraw, or otherwise terminate any outstanding orders or subcontracts related to the performance of <br />this contract or the part of this contract to be terminated, and shall cease to incur costs thereunder. <br />Department shall not be liable to Contractor or to Contractor's creditors for costs incurred after <br />. termination of this contract. <br /> <br />D. Notwithstanding any exercise by Department of its right of suspension under Section 17 of this <br />contract, or of early termination pursuant to this Section 18, Contractor shall not be relieved of any <br />liability to Department for damages due to Department by virtue of any breach of this contract by <br />Contractor. Department may withhold payments to Contractor until such time as the exact amount of <br />damages due to Department from Contractor is agreed upon or is otherwise determined. <br /> <br />SECTION 19. <br /> <br />AUDIT <br /> <br />A. Contractor shall arrange for the performance of an annual financial and compliance audit of funds <br />received and performances rendered under this contract, subject to the following conditions and <br />limitations: <br /> <br />1. Contractors expending $300,000 or more in Federal financial assistance for any fiscal year <br />ending on or after June 30, 1997, shall have an audit made in accordance with Department's <br />supplemental audit guide, the Single Audit Act Amendments of 1996, 31 U.S.C. 7507, and OMS <br />Circular No. 133 - Revised June 30,1997, "Audits of States, Local Governments, and Non-Profit <br />Organizations." For purposes of this Section 19, "Federal financial assistance" means assistance <br />provided by a Federal agency in the form of grants, contracts, loans, loan guarantees, property, <br />cooperative agreements, interest subsidies, insurance or direct appropriations, but does not <br />include direct federal cash assistance to individuals. The term includes awards of Federal <br />financial assistance received directly from Federal agencies, or indirectly through other units of <br />State and local government; <br /> <br />2. Notwithstanding Section 4(a)(5) and Section 4(a)(6), Contractor shall utilize funds budgeted <br />under this contract to pay for that portion of the cost of such audit services properly allocable to <br />the activities funded by Department under this contract, provided however that Department shall <br />not make payment for the cost of such audit services until Department has received a satisfactory <br />audit report, as determined by Department, from Contractor; <br /> <br />3. Contractor shall submit two (2) copies of the report of such audit to Department within thirty <br />(30) days after the completion of the audit, but no later than nine (9) months after the end of the <br />audit period. However, for fiscal years beginning on or before June 30, 1998, the audit shall be <br />completed and submitted within the earlier of 30 days after receipt of the auditor's report or 13 <br />months after the end of the audit period. Contractor shall ensure that the audit report is made <br />available for public inspection within thirty (30) days after completion of the audit. Audits <br />performed under Subsection A of this Section 19 are subject to review and resolution by <br />Department or its authorized representative; <br /> <br />B. Notwithstanding Subsection A of this Section 19, Department reserves the right to conduct an <br />annual financial and compliance review of funds received and performances rendered under this <br />contract. Contractor agrees to permit Department or its authorized representative to audit <br />Contractor's records and to obtain any documents, materials, or information necessary to facilitate <br />such review. <br /> <br />C. Contractor understands and agrees that it shall be liable to Department for any costs disallowed <br />pursuant to financial and compliance audit(s) of funds received under this contract. Contractor further <br />understands and agrees that reimbursement to Department of such disallowed costs shall be paid by <br />Contractor from funds which were not provided or otherwise made available to Contractor under this <br />contract. <br /> <br />Page 8 of 12 <br />