(a)  Every state department and agency which receives federal assistance funds subject to the provisions of the uniform administrative requirements for grants in aid to state and local governments shall set aside an amount equal to one-tenth of one percent (.1%) of the funds received to pay for financial and compliance audits as required by the grantor or by state statute.

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(b)  Applications for grants, except where precluded by federal law, shall include requests for funds adequate to accomplish the objectives of the grant proposal, including monies to pay for financial and compliance audits as required by the grantor or by state statute. Monies included in a grant award budgeted and designated for auditing the grant or program shall not be used for any other purpose.

(c)  All funds set aside and designated to be used for financial and compliance audits of federal assistance grants shall be deposited into a separate account maintained by the general treasurer for that purpose.