Federal Fund Recipients Can Expect Scrutiny
‘Single Audit’ Rules Require Written Documentation of Policies
Organizations that receive federal government funding for their program operations are subject to governance under the Uniform Guidance if expenditures of such funds equal or exceed $750,000 in any given year. The purpose of Uniform Guidance (Single Audit) requirements is to provide assurance to the federal government that the funds are being used appropriately by the recipients, which can include states, cities, universities, nonprofit organizations, and Indian tribes.
Guidance on reporting requirements pertaining to this type of government funding spells out how certain activities should be tracked and reported. Failure to abide by the guidance – including having written policies and procedures – can place funding in jeopardy, so it’s a good idea to revisit your organization’s documentation and make sure it’s up to date.
Expect More Scrutiny
After two years of pushing out pandemic-related relief funding – often to organizations that never received federal funds before and have never been through a Single Audit – the federal government is likely to scrutinize the use of these funds carefully. Funding received under the American Rescue Plan Act of 2021 (ARPA) will be under the magnifying glass starting this year. One of the easiest ways to help prepare yourself for potential State or Federal oversight is by making sure your policies and procedures are up to Federal standards and properly documented.
Statutory and National Policy Requirements
Among other things, this section of guidance requires organizations to have written policies and procedures governing public policy items, such as executive compensation limits, conflicts of interest, whistleblower protection, and Federal Funding Accountability and Transparency Act (FFATA) reporting. It also contains language requiring recipient organizations to ensure that no federal funds are used in ways that are discriminatory or that harm public welfare or the environment.
Awarding agencies should make clear to any subrecipients what the relevant public policy requirements are. If you are unsure of what policies you must follow, review your award documentation or program agreement, as it should incorporate them either directly or by reference in the terms and conditions. Organizations should review their written policies to ensure that such requirements are included.
In recent years, federal procurement standards have been updated to increase the dollar thresholds of small purchases and the simple acquisitions threshold. Due to these changes, it would be prudent to review your organization’s policies and consider updating them, as necessary.
Procurement regulations are rules that local, state, and federal governments must follow when they award contracts for services to private companies utilizing federal funds. One aspect of these requirements includes ensuring that your organization’s written policies discuss the oversight of a contractor’s performance, standards of conduct for employees involved in awarding contracts, and maintaining records to document the history of procurements. Finally, your policies should make it clear that all procurement transactions should be conducted in a manner providing full and open competition.
Arguably the most important aspect of the procurement requirements is the dollar thresholds associated with the different types of purchases. At a minimum, your organization must follow these guidelines for relevant purchases. However, if those dollar amounts don’t make sense for the size and scope of your organization, you can make your policies stricter than the minimums required.
If your organization spends less than $10,000 or more of federal funds on a specific item or service, it is considered a micro-purchase. Micro-purchases may be awarded without soliciting competitive bids if the organization considers the price to be reasonable.
Anything above $10,000, but below $250,000, is considered a small purchase. Small purchase procedures require an organization to obtain price or rate quotes from a reasonable number of qualified sources. A simple method to document that this is occurring is by keeping a record of the vendors and prices considered before the purchase was made.
Finally, $250,000 is the simplified acquisition threshold, and purchases above that must require one of the following procurement methods, as applicable: sealed bid, competitive proposals, or noncompetitive proposals method (this method will only be allowable under certain circumstances). In addition, the organization must perform a cost or price analysis of the procurement.
Documentation is Key
The above describe just a few of the policies and procedures that organizations need to have in place to comply with Uniform Guidance standards. When questions arise as to whether a written policy or procedure is needed, error on the side of caution and document!