It is important to know the compliance requirements for every award your organization receives and accepts. The consequences of noncompliance can be significant and may include termination of the grant, reduction in future payments or funding amounts, repayment of federal funds already received and spent, imposed fines and penalties, reputational damage, special status for oversight and reviews, corrective action plan, and/or suspension or debarment.

To be in compliance with the requirements of your awards you will need people, training and education, policies and procedures, internal controls, resources, and documentation.

People 

Staff needs to understand their roles and responsibilities.  Day to day work activities performed by various staff needs to be documented within job descriptions and updated as responsibilities change.

Training and education

Staff needs to be trained on the award’s specific requirements, the funding sources’ requirements, and the Uniform Guidance.  Award requirements may have federal (Uniform Guidance), departmental (HHS, DOL, HUD), grant, state, and/or local requirements. Train staff on and use the Office of Management and Budget’s (OMB) Compliance Supplement. Make sure to include program managers in training. Regulations change frequently and you must stay current, annual updates for staff on changes to the organization’s awards is encouraged.

Policies and procedures 

Uniform Guidance requires specific policies and procedures to be in writing.  The organization’s policies may need to be modified to meet the requirements of the awards you receive.  They need to be complete and updated to reflect any material changes.

Internal controls

Required to prevent and detect noncompliance and ensure compliance with your policies and procedures.  Utilize checklists, technology, and systems.

Resources

Need time, programs, supplies, etc. to be able to meet the requirements and objectives of the award.

Documentation

Supporting documentation must be obtained and maintained for all compliance requirements applicable.

Make sure to address all of the above items for the following areas of common noncompliance

Schedule of Expenditures of Federal Awards (SEFA)

You are required to prepare the SEFA.  You need to make sure it is accurate and complete. Identifying the source of funding may be complicated.  For example, just because funding was received from a county does not mean it is not federal. You also need to evaluate and determine whether the organization is a subrecipient or a contractor under each award.  Please do not base the determination on the terminology used in the grant agreement.  There are specific determining factors to be used in this determination.

Allowable Costs

Know what costs are allowable and unallowable. Do not charge unallowable costs to the award. Obtain and maintain documentation for costs charged to the award including time and effort. Payroll costs need to be based on actual effort, not budgeted figures. Salaried employees actually need to track all hours worked on an award, not just record based on the hourly equivalent of a 40 hour week. Supporting documentation must be timely, accurate, and approved. You should be aware of the period of performance of the award and only charge allowable costs during this period. Allocate direct and indirect costs to awards by following Uniform Guidance requirements. Make sure not to duplicate costs in direct and indirect cost buckets and apply the proper allocation base to apply the indirect cost rate.

Procurement

You need to understand procurement requirements.  The current thresholds have changed in the past year may need to be revised to meet Uniform Guidance requirements.  Make sure to have sufficient documentation of the procurement method used (micro-purchase, small purchase, sealed bids, competitive bids, and noncompetitive proposals) along with how each of the methods’ requirements was met.  Make sure to check if a potential vendor is on a debarment list and document when required.

Reporting

Make sure you understand the reporting requirements and deadlines of your awards.  Make sure reports are accurate and proper documentation is maintained for financial and performance reporting.

Matching

Make sure the funds used to match the award are allowable.  Make sure you have the supporting documentation for the match.  

Subrecipient monitoring

You need to assess potential subrecipients before entering into an agreement with them.  The assessment should determine whether they have previously received federal funding and if so if they have had any prior findings.  This risk assessment needs to be documented and the subrecipient contract requirements should be modified based on the risk.  For example, if the subrecipient has been determined to be high risk, you may require more supporting documentation more frequently and/or perform or increase onsite monitoring.  Monitoring should be appropriate based on the risk assessment.  If there are known issues, these should be addressed through additional training of and oversight over the subrecipient.

Program income

Know the method of applying the program income.  There needs to be an adequate method to track and account for the income.

Eligibility

You need to know who is responsible for determining eligibility.  You need to obtain and maintain the supporting documentation of eligibility determinations. 

Equipment

Know the definition of equipment and your capitalization policy.  There are specific requirements for purchasing and disposing of equipment.  Prior approval is often required to purchase equipment.  Physical inventories of equipment must be performed. 

Special tests and provisions

These may include notifying the funding agency of key personnel changes, salary cap limitations, and unique and specific grant requirements.