As portions of the new Uniform Grant Guidance (UGG) rules have been phased in, now is a good time to revisit your policies and procedures to ensure all requirements of your federal awards are being met.  Well written (and effectively communicated) policies and procedures are a key part of internal controls and ensuring funds are used consistently with their purpose.

The UGG requires organizations to have policies and procedures in place regarding the following compliance areas: cash management, procurement, reporting, eligibility, and subrecipient monitoring.  Depending on the requirements of the federal programs you administer, not all compliance requirements may apply to you.  For example, eligibility or subrecipient monitoring may not be required for certain grants.  The guidance can be found in the Code of Federal Regulations at 2 CFR 200.

Cash Management – Organizations either receive funds in advance or as reimbursements after funds are spent.  For those receiving funds in advance, procedures should be in place to ensure requests for advances are done as close as is administratively possible to actual outlays, or for those receiving funds after the expense, that reimbursements are only after costs have been paid.  Procedures should also cover monitoring of cash management activities, repayment of excess interest earnings, and the determination of the allowability of costs in accordance with Subpart E Cost Principles, with emphasis on 2 CFR 200.403.

Additionally, State programs subject to a Treasury-State agreement, must also include in the policy a listing of programs covered by the agreement, the methods of funding to be used, and the method used to calculate interest

Procurement – This area saw the most changes during the implementation of the UGG, and the deferral periods have ended.    Policies and procedures should address avoiding obvious acquisition of unnecessary and duplicative items; maintaining records sufficient to detail the history of procurement; prohibiting the award of a subaward with any suspended or debarred party; and require that staff determine that entities receiving subawards (subrecipients) equal to or over $25,000 are not suspended or debarred (and the method to determine that).  Organizations should also have written standards of conduct covering conflicts of interest and governing of its employees engaged in the selection, award, and administration of contracts.  Organizations standards should also establish the methods of procurement used for different types and amounts of procurement transactions.  What makes procurement seem so daunting is that without a policy, compliance is very difficult, as the federal government makes each organization determine the specifics of its own policy. For details, refer to 2 CFR 200.317 – 200.326 and our previous article.

Reporting – Organizations are usually required to submit several types of reports throughout the period of their federal awards.  To ensure reporting is done both timely and accurately, organizations should document policies that establish responsibility and provide the procedures for periodic monitoring, verification, and reporting of program progress and accomplishments.  The required reports are usually listed in each grant, and may vary between federal programs.

Eligibility – Organizations may have federal awards with eligibility requirements and policies must be in place to describe how eligibility determinations are made, and document the performance of the determinations.

Subrecipient Monitoring – Organizations may at times pass federal funds through to subrecipients in administering programs to meet program requirements.  In these situations, organizations need policies and procedures in place to establish responsibility for monitoring subrecipients, processes and procedures to perform the actual monitoring (monitoring may vary based on the assessment of risk of each subrecipient), the methodology for resolving findings in subrecipient noncompliance or weakness in internal controls, and requirements for processing of subrecipient audits.  Procedures should also be in place for communicating federal award requirements to subrecipients.  As previously discussed, subrecipients receiving $25,000 or more cannot be suspended or debarred.

This article does not discuss every requirement, as grants and individual programs have their own specific requirements.  It is recommended that all individuals who administer federal awards read and understand the requirements contained in the Uniform Grant Guidance and their specific federal awards.  In addition to reviewing policies as it relates to federal awards, this is a fantastic opportunity to review all other policies and procedures in place for your organization.

For more information, or if you have any questions, please contact our Audit Senior Manager, Veronica Cook.

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