federal grant compliance
“As a condition of receiving federal awards, non-federal entities agree to comply with laws regulation, and the provisions of grant agreements and contracts, and to maintain internal control to provide reasonable assurance of compliance with these requirements.”[1]
Beyond Balance Sheets can design your organization’s systems to ensure internal controls are in compliance with each of the following areas:
· Allowable Costs & Activities – Activities charged to a federal grant must be reasonable for the performance of the award and conform to any limitations or exclusions noted in the award. Both direct and indirect costs must be reasonable for the performance of the award, conform to any limitations in the award, conform to GAAP, and be adequately documented. Beyond Balance Sheets can assist with development of a federal cost allocation plan.
· Cash Management – Organizations that are recipients of federal funding must minimize the time federal funds are held in advances. If advances are allowed, the organization should have controls in place to ensure that the funds are expended in 30 days.
· Period of Performance of Federal Funds – Expenditures of federal funds must occur during the specified award period. Any pre-award costs or carryover balances must be authorized by the awarding federal agency.
· Procurement, Suspension, and Debarment –Procurement policies must be formalized in writing and appropriate price analysis or bidding must be conducted and documented. Procedures must ensure that federal funding is not being passed to debarred or suspended people or entities.
· Program Income – Any program income earned during the project period must be retained by the recipient and used in accordance with the terms and conditions of the award.
· Reporting – Every award has specific reporting requirements that may vary. Some will require quarterly financial and progress reports and others may only require close-out reports. It is the organization’s responsibility to ensure that reporting requirements are understood and met in accordance with deadlines.
· Subrecipient Monitoring – Procedures must ensure that the sub-recipient is aware that it is federal funding and understand the applicable requirements. The pass-through organization must evaluate the risk of the sub-recipient’s noncompliance and monitor financial and programmatic progress.