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considering the recommendation on disallowed costs resulting from the <br /> final audit. <br /> 7. Audits & Inspections: All Subrecipient records with respect to any matters <br /> covered by this Agreement shall be made available to the City, its designees <br /> or the Federal Government, at any time during normal business hours, as <br /> often as the City deems necessary, to audit, examine, and make excerpts or <br /> transcripts of all relevant data. Any deficiencies noted in audit reports must be <br /> fully cleared by the Subrecipient within 30 days after receipt by the <br /> Subrecipient. Failure of the Subrecipient to comply with the above audit <br /> requirements will constitute a violation of this Agreement and may result in the <br /> withholding of future payments. The Subrecipient hereby agrees to have an <br /> annual agency audit conducted in accordance with current City policy <br /> concerning Subrecipient audits and, as applicable, 2 CFR Part 200 (Uniform <br /> Administrative Requirements, Cost Principles, and Audit Requirements for <br /> Federal Awards). <br /> C. Reporting and Payment Procedures <br /> 1. Program Income: The Subrecipient shall report quarterly all program income <br /> as defined at 24 CFR 570.500(a) generated by activities carried out with <br /> CDBG funds made available under this Agreement. The use of program <br /> income by the Subrecipient shall comply with the requirements set forth at 24 <br /> CFR 570.504. By way of further limitations, the Subrecipient may use such <br /> income during the contract period for activities permitted under this Agreement <br /> and shall reduce requests for additional funds by the amount of any such <br /> program income balances on hand. All unused program income shall be <br /> returned to the City at the end of the contract period. Any interest earned on <br /> cash advances from the U.S. Treasury is not program income and shall be <br /> remitted promptly to the City. <br /> 2. Indirect Costs: If indirect costs are charged, the Subrecipient will develop an <br /> indirect cost allocation plan for determining the appropriate Subrecipient's <br /> share of administrative costs and shall submit such plan to the City for <br /> approval, in a form specified by the City. <br /> 3. Payment Procedures and Timing: The City will pay to the Subrecipient funds <br /> available under this Agreement based upon information submitted by the <br /> Subrecipient and consistent with any approved budget and City policy <br /> concerning payments. With the exception of certain advances, payments will <br /> be made for eligible expenses actually incurred by the Subrecipient, and not to <br /> exceed actual cash requirements. Payments will be adjusted by the City in <br /> accordance with advance fund and program income balances available in <br /> Subrecipient accounts. The Subrecipient agrees to submit payment request at <br /> least quarterly. In addition, the City reserves the right to liquidate funds <br />