Finding Text
Criteria: Under Uniform Guidance (2 CFR §200.302, §200.303, §200.305, §200.318–§200.326, and §200.430), a non-federal entity must establish, document, and maintain written policies and procedures for the management of federal awards. Effective internal control over federal awards provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the awards. Condition: The Town did not have written policies and procedures required by Uniform Guidance (2 CFR 200) for the administration of its federal programs. Specifically, the Town has not formally documented policies and procedures addressing key areas required under the Uniform Guidance, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. While informal processes exist, they are not sufficiently documented to ensure consistent application or compliance with federal requirements. Cause: The Town has not developed or formally adopted written federal grant management policies and procedures. Effect: Without formal written policies and procedures, there is an increased risk of noncompliance with federal program requirements. This condition exposes the Town to potential noncompliance with federal regulations, increases the risk of unallowable costs being charged to federal awards, and may affect the Town’s ability to properly administer, monitor, and report federal program activity. Additionally, the lack of documentation may impair continuity of compliance in the event of change in key personnel. Recommendation: The Town should develop, formally adopt, and implement written policies and procedures to comply with Uniform Guidance (2 CFR 200). The policies should address all major compliance areas, including but not limited to allowable and unallowable costs and cost principles, procurement standards, suspension and debarment, conflicts of interest, cash management, and reporting and record retention requirements. The Town should ensure that staff responsible for federal grant administration are properly trained to ensure adherence to these policies and that the policies are reviewed periodically and updated as needed. Views of responsible officials: See management’s responses to findings on Page 78.