internal controls, policies, and written procedures€¦ · yif the procedure is overly complicated...

Wisconsin Department of Public Instruction

2016 Federal Funding Conference

Kathy Guralski, Assistant DirectorSchool Management Services


Internal Controls, Policies, and Written Procedures

1

Uniform Grant Guidance2

y Also known as:{ 2 C.F.R. Part 200

y Establishes rules that apply to allFederal grants

y Streamlines the Office of Management and Budget (OMB) Circulars into one, comprehensive policy guide

y Effective for the Federal grants awarded for fiscal school year 2015-16


Focus on Internal Controls3

§200.303 Internal Controls

As a subrecipient you must establish and maintain effective internal control over the Federal award that provides reasonable assurance that you are managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award



An effective internal control system increases the likelihood that the objective will be met

{ First line of defense in safeguarding assets

{ Not one event, but a series of actions that occur throughout your school district’s operations

{ People are what make internal controls work



Identify an objective

“I want to be sure that all costs coded to the IDEA grant are allowable per State and Federal rules and regulations”



Design a control

“Sally is most familiar with what is an allowable cost so we will have her approve all budget items for IDEA.”

“Sally should also be the one toreview and approve the claims.”

“Jim in accounting processes payroll and verifies supplies were received orservices were performed beforeapproving an invoice for payment.”



Implement the control

Sally puts together the federal grant budget, checking that only allowable costs are included

Jim codes payroll by identifying the individuals in the budget with the appropriate project code

All supplies and purchased services are processed through the school district’s purchasing process (PO, receipt, invoice, payment)



Jim codes the invoices with IDEA’s project code

Jim prepares the IDEA claim by pulling the project code from the general ledger for the time period being claimed

Sally approves the claim verifying the costs are in agreement with the approved budget and allowable

Jim submits the claim to DPI



Objective achieved

“Costs claimed on the IDEA grant are allowable per Federal rules and regulations”


Policy & Procedures

10

POLICY

Why you administer things a certain way

The goal or objective

PROCEDURE

How you perform the functions necessary to conform to your policy

Step by step process to implement the control

11

WRITTEN PROCEDURES

No longer “best practice” but a REQUIREMENT

should must


What written procedures must your LEA have in place?

Develop written procedures for:y Cash Management - §200.302(b)(6)y Allowability of Costs - §200.302(b)(7)y Conflict of Interest - §200.318(c)(1-2)

Ensure that existing written procedures are in compliance with:y General Procurement Standards -

§200.318-.326y Equipment Management

Requirements - §200.313

12


Procedures / Not Work Stoppages13

y Written procedures should ensure claiming of allowable costs without blocking or slowing down activities

y Make the procedures reliable but not onerous

y Accountability is important, but just as important is allowing the program area timely access to Federal funds to implement grant activities


Procedures / Not Mission Impossible14

y Written procedures should outline manageable steps

y Everyone involved must know the procedures and implement them, otherwise the procedures do not matter (and there will be a non-compliance finding)

y If the procedure is overly complicated or the people involved in authorizing are never available, the subrecipient is setting the stage for staff to ignore procedures in order to move work along


Technical Assistance15

y DPI Technical Assistance{ Wisegrant website

ÙAllowable Costs – Required Written Procedures| Includes Compensation

ÙCash Management of Federal FundsÙEquipmentÙProcurementÙConflict of Interest

{ http://dpi.wi.gov/wisegrants


§200.302Financial Management

(b)(7)

ALLOWABILITY OF COSTS

Written procedures for determining the allowability of costs prior to claiming grant fund

16


17

Required written procedures must address how the subrecipient is ensuring that costs on the federal grant, and ultimately claimed, are allowed under the individual Federal program and in accordance with the cost principles established in the Uniform Grant Guidance

y This includes how charges made to the grant for personnel are determined



18

CONFORM TO LIMITATIONS OR EXCLUSIONS2 CFR §200.403(b)

Factors affecting allowability of costs


{ Cost principles (Uniform Grant Guidance)

{ Cross cutting federal statutes/regulationsÙ EDGAR

{ Program statute and regulations Ù IDEA, ESEA, etc.

{ Terms and conditions of the federal award Ù Grant award

{ Other governing regulationsÙ State statutesÙ District policies


y Addresses 55 “items of cost” that receive clarification regarding allowability, in general, for using federal funds

Is not an exhaustive or minutely detailed list, so…

y Provides guidance on “Basic Considerations” to apply to all costs, listed or not listed

19


Subpart ECost Principles

§200.400 -§200.475

20

REASONABLE AND NECESSARY2 CFR §200.403(a)



Necessary{ A cost is “necessary” if it meets an

important program objective - it must address an existing need

Reasonable{ “Prudent Person” Standard

(2 CFR §200.404)

CONSISTENT WITH POLICIES & PROCEDURES2 CFR §200.403(c)

21



The cost must be consistent with policies, regulations, and procedures that apply uniformly to both federal awards and other activities of the subrecipient{ Subrecipients cannot apply different rules for

allowable costs based on funding source

CONSISTENT WITH POLICIES AND PROCEDURES2 CFR §200.403(c)

22

If the per-diem rate for employees whose salary and travel are paid from state/local funds is one amount, then there cannot be a separate, higher amount for employees paid from federal funds

EXAMPLE


CONSISTENT WITH POLICIES AND PROCEDURES2 CFR §200.403(c)

23

If the subrecipient’s policy does not reimburse employees for professional association memberships, an exception cannot be made to reimburse the same costs because federal funds are available

EXAMPLE


24

A cost is allocable to a particular Federal award if the goods/services involved are assignable to that Federal award in accordance with relative benefits received

{ To what extent are the expenditures charged to a particular grant program benefiting the program?ÙWhen an LEA charges 100 percent of an expenditure to a

federal program, the LEA must ensure that the program is receiving the entire benefit of these costs

ALLOCABLE TO FEDERAL AWARDS2 CFR §200.405(a)

ONCE THE COST HAS BEEN DETERMINED TO BEALLOWED…IT MUST BE ALLOCABLE


EXAMPLE 1 EXAMPLE 2

y A teacher spends 25% of their time on the federal award therefore 25% of the teacher’s salary is charged to the federal award

y Grant funded staff use the Internet, so the LEA charges 3% of the network costs to the federal award

25

ALLOCABLE TO FEDERAL AWARDS2 CFR §200.405(a)

Allocable with supportingTime and Effort documentation Not Allocable


§200.430Standards for Documentation of Personnel Expenses

(i)

COMPENSATION - PERSONNEL

Personnel salary and benefit charges made against the Federal awards must be based on records that accurately reflect the work performed

26


Personnel Time & Effort Records 27

These records must:

y Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated

y Be incorporated into the official records of the subrecipient

y Support the distribution of the employee’s salary among cost objectives if the employee works on multiple, unrelated activities (per grant guidelines)



Budget estimates do not qualify as supporting documentation, but may be used for interim accounting purposes, if the system for establishing the estimates has a proven track record that budgeted amounts are close to actual amounts

y Documentation records should be adjusted in a timely manner if there are significant changes in the employee’s work activity



y The subrecipient’s system of internal control must include processes to review after-the-fact interim charges made to a Federal award based on budget estimates

y All necessary adjustments must be made such that the final amount charged to the Federal award is ACCURATE, ALLOWABLE, and PROPERLY ALLOCATED



(b)(6)

CASH MANAGEMENT

The sub-recipient’s financial management system must have:

y Written procedures regarding cash management and claiming of federal funds

30


§200.305Payment

CASH MANAGEMENT

y Advance Payment{ Requesting Federal funds for

expenditures not yet incurred

y Cost Reimbursement{ Requesting Federal funds for

expenditures after they have been liquidated

31


§200.305 Payment32

Advance Payment

{ Subrecipient must :ÙMaintain written procedures that minimize the time

elapsing between the transfer of funds from DPI and the disbursement of those funds

ÙMaintain financial management systems that meet the standards for fund control and accountability per the Uniform Grant Guidance


§200.305 Payment33

Advance Payment

{ Subrecipient must :ÙAdvance funds limited to the minimum amounts

needed and be timed to be in accordance with the actual, immediate cash requirements of the LEA in carrying out the purpose of the approved program or project|As close as administratively feasible to the actual

disbursements


When might an LEA have an advance payment?

Accrued payroll at year end

{ Set up a payable on June 30th

{ File a final claim on July 10th

{ Payment of the payroll occurs in July and August

34


§200.305 Payment35

Cost Reimbursement

{ Preferred when requirements of cash advance not met

{ Almost always method used by school districts

{ Expenditures are obligated and liquidated prior to reimbursement


Cost Reimbursement – Obligating Funds36

When can you begin to obligate the funds?

Must be made within the grant period (July 1-June 30)

y Obligation – the amount of orders placed, contracts and subgrants awarded, goods and services received, and similar transactions during a given period that will require payment by the grantee during the same or a future period


Cost Reimbursement – Obligating Funds37

§76.708 When certain subgrantees may begin to obligate fundsy Formula grants – DPI may not authorize an

applicant to obligate funds until the date that the applicant submits its application to the State in substantially approvable form or July 1, whichever is later

y Discretionary grants – DPI may not authorize an applicant for a subgrant to obligate funds until the award is made


EDGAR §76.707 When Obligations are MadeIf the obligation is for - The obligation is made -(a) Acquisition of real or personal property On the date on which the school makes a

binding written commitment to acquire the property.

(b) Personal services by an employee of the school

When the services are performed.

(c) Personal services by a contractor who is not an employee of the school

On the date on which the school makes a binding written commitment to obtain the services

(d) Performance of work other than personal services

On the date on which the school makes a binding written commitment to obtain the work.

(e) Public utility services When the school receives the services

(f) Travel When the travel is taken.

(g) Rental of real or personal property When the school uses the property.

(h) A pre-agreement cost that was properly approved by the State under the cost principles identified in 34 CFR 74.171 and 80.22.

Cost Reimbursement – Obligating Funds

A fiscal transaction should be approved:{ By a person (program manager) who can attest the

planned/actual expenditure is allowable and approved under the Federal program and

{ By another person (business manager/accountant) who can attest to the availability of funds and to its consistency with the approved budget and who enters the transaction into the fiscal record

{ Each of these individuals should initial or sign the documentation for the transaction


39

Cost Reimbursement – Liquidating Funds40

§200.343(b) CloseoutUnless DPI authorizes an extension, a non-Federal entity must liquidate all obligations incurred under the Federal award not later than 90 calendar days after the end date of the period of performance as specified in the terms and conditions of the Federal award

y Liquidation – to liquidate an obligation, the service has occurred or the purchased item has been received and payment has been made to vendor or provider


Cost Reimbursement – Expenditure Report41

Requests for funds of Federal grants awarded by DPI must be completed using the form PI-1086{ Some grant programs still use an Excel version{ Larger formula grants have moved to a web-based format

The PI-1086 is a summary report, all detail to support the claim, such as purchase orders, is maintained by the recipient



(b)(5)(6)(7)

The sub-recipient must:

y Be able to match expenditures with approved grant budgeted amounts{ If it is not approved on the

budget, it is not an allowed cost – even if it would be if it was on the budget

{Claims, even though “rolled up,” must align with detailed budget

42


§200.313Equipment

(d)

Management of Equipment

The Uniform Grant Guidance identifies the procedures for managing equipment purchased in whole or in part with Federal funds

43


2 CRF §200 DEFINITIONS44

Equipment (§200.33):Tangible personal property (including IT systems) having a useful life of more than one year and a per-unit cost equal or greater to the capitalization level established by the sub-recipient; or $5,000

Acquisition cost (§200.2) –Freight, installation, accessories, auxiliary apparatus to make the equipment usable is included in the threshold cost of equipment


§200.318General Procurement Standards

The subrecipient must use its own documented procurement procedures which reflect applicable State and local regulations, provided that the procurements conform to applicable Federal laws and the Uniform Grant Guidance

45


46

The subrecipient must use its own documented procurement procedures which reflect applicable State and local regulations, provided that the procurements conform to applicable Federal laws and the Uniform Grant Guidance

All procurement transactions must be conducted in a manner providing full and open competition

y The subrecipient must have written procedures regarding solicitations to ensure this requirement is met


PROCUREMENT TRANSACTIONS

§200.318General Procurement Standards

(c)(1)

CONFLICT OF INTEREST

The LEA must maintain written standards of conduct covering conflict of interest and governing the actions of its employees engaged in the selection, award and administration of contracts

47


Conflict of Interest (§200.318(c)(1))48

These written standards must include that:

y No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest


49

A conflict of interest would exist if { The employee, officer, or agent (including school board

members) or

{ Any member of his or her immediate family or

{ His or her partner

engaged in the selection of a vendor but also had a potential financial or a tangible personal benefit created through the contract, including selecting an organization which employs or is about to employ any of the listed parties



These written standards must also include:

That officers, employees, and agents of the subrecipient must neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts

However, the subrecipient may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value



The written standards must provide for disciplinary actions to be applied for violations of conflict of interest or gratuities by officers, employees, or agents of the non-Federal entity



If your LEA has a parent, affiliate, or subsidiary organization, you must also maintain written standards of conduct covering organizational conflicts of interest

y Organizational conflicts of interest means that because of relationships with a parent company, affiliate, or subsidiary organization, the LEA is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization


53

The subrecipient must disclose, in writing, to the pass-through entity all violations of Federal criminal law involving fraud, bribery, or gratuity violationspotentially affecting the Federal award

Fraud Notification: http://goo.gl/forms/HPaogoXEdV

Failure to make required disclosures will result in noncompliance, and remedies may include suspension or debarment


DPI Monitoring54

When would DPI request a copy of a subrecipient’s written procedures?

{ When there is non-compliance or suspected non-compliance regarding Federal grant funds

{ Single audit findings

Corrective Actions

{ Update written procedures to be in compliance{ Train staff on procedures

Ù Funds will be withheld until corrective action has been implemented and reviewed by DPI


WI DEPT OF PUBLIC INSTRUCTION

1

FEBRUARY 2016

Allowable Costs – Required Written Procedures

Authority

2 C.F.R. Part 200, §200.302(b)(7) “Written procedures for determining the allowability of costs in accordance with Subpart E—Cost Principles of this part and the terms and conditions of the Federal award.”

2 C.F.R. Part 200, §200.403 To be allowable under Federal awards, except where otherwise authorized by statute, costs must be:

x Necessary and reasonable and allocable x Conform to cost principles or Federal award as to types or amount of cost items x Consistent with policies and procedures that apply uniformly to federal and non-federally funded

activities x Consistent treatment as direct or indirect cost x In accordance with GAAP x Not included as a cost to meet cost sharing or matching requirements of any other federally-

financed program x Adequately documented

Subpart E -- Cost Principles

The application of these cost principles is based on the fundamental premises that the LEA has in place sound management practices; will follow the terms and conditions of the specific Federal award and will determine, based on its own unique combination of staff, facilities, and experience how to assure proper and efficient administration of the federal funds.

§200.420 addresses 55 “items of cost” that receive clarification regarding allowability, in general, for using federal funds. It is not an exhaustive or minutely detailed list but provides guidance on “Basic Considerations” to apply to all costs, listed or not listed.

Written Procedures for Determining Allowable Costs

Written procedures such as required per 2 C.F.R. Part 200, §200.302(b)(7) are not a reiteration of the federal requirements or the policies or goals. Rather, procedures are the step by step process that is used to obtain the goal or the steps that are necessary to be in compliance with the federal requirement. Written procedures on Allowable Costs must address how the subrecipient is ensuring that costs on the federal grant, and ultimately claimed, are allowed under the individual Federal program and in accordance with the cost principles established in the Uniform Grant Guidance.

The following is a list of questions to consider when documenting procedures. This is not an all inclusive list but rather to be used in guidance when writing the step by step procedures. These questions represent the types of information DPI would look for if the subrecipient’s written procedures are selected for monitoring.


2

FEBRUARY 2016

Sample questions to ask when writing procedures determining the allowability of general expenditures made to a Federal grant:

Who, for each Federal program, creates the budget?

Who enters the budget for the Federal program?

Who verifies the budget aligns with the ledger? x How is this communicated between areas?

Who verifies allowability of each cost under the Federal program and the Uniform Grant Guidance?

For each Federal program, who is the informed contact for DPI questions?

When cost changes occur within the program, who is notified? (changes to business or program needs)

When cost changes are identified, what is the timeline for submitting budget amendments? x How is this communicated between areas?

Who verifies allowability of each amended cost under the Federal program and the Uniform Grant Guidance?

Who is responsible for generating supporting documentation demonstrating a cost is reasonable, necessary or allocable if it impacts a cost’s allowability?

x Where is this documentation kept?

Where is correspondence regarding budget reviews by DPI kept for each of the Federal grants? x How is this communicated between areas?

Sample questions to ask when writing procedures determining the allowability of personnel salary charges made to a Federal grant:

Who identifies each staff person with a status of single cost objective or multiple cost objective?

How is this status determined? x How often is this information reviewed and updated? x Where is this information stored? x How is this communicated between areas?

Regarding staff with multiple cost objectives:

How is the amount of staff person’s time budgeted on the grant determined?

What documentation or process is used to support the amount budgeted? x How often is this information reviewed and updated? x Where is this information stored?

Who verifies charged amounts against supporting documentation prior to a claim being made? x How is this communicated between areas?


3

FEBRUARY 2016

For short-term work such as substitute staffing, extended school year, stipends, etc.: Who verifies the short-term work is an allowable cost under the Federal program?

Who verifies the short-term work is completed by licensed individuals (if required)?

Who verifies the work was completed prior to submitting a claim? x Does the time sheet identify the Federal funding source or cost objective? x How is this communicated between areas?


1 FEBRUARY 2016

Cash Management of Federal Funds

Authority

2 C.F.R. Part 200, §200.305(b) “For non-Federal entities other than states, payments methods must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement by the non-Federal entity whether the payment is made by electronic funds transfer, or issuance of redemption of checks, warrants, or payment by other means.”

2 C.F.R. Part 200, §200.302(b)(6) “Written procedures to implement the requirements of §200.305 Payment.”

Reimbursement

Subrecipients of grants awarded by DPI are paid on allowable expenditures incurred by the LEA and submitted for reimbursement on a PI-1086 claim form. The reimbursement method ensures that expenditures have been both obligated and liquidated by the time the funds are transferred from DPI to the LEA. The reimbursement method is the most common method used and reduces the risk associated with advancing funds which relies solely on the LEA’s written procedures and financial management systems for fund control and accountability.

Advance Payments

Advance payment means a payment that DPI would make to the LEA “in advance” of expenditures being made. This situation is seldom used for Federal grants that are passed through DPI. A situation where an advance might be made is summer payroll. This would occur if an LEA obligates July and August payroll but submits a final claim in early July and receives Federal funds prior to the July and August salaries being paid by the LEA. This situation is in compliance with the Uniform Grant Guidance, which directs that advance payments must be limited to the minimum amounts needed by the subrecipient and be timed to cover the actual, immediate cash requirements in carrying out the grant program. Advance Payments of Federal Funds:

1. Must be deposited and maintained in insured accounts whenever possible 2. Must be maintained in interest-bearing accounts, unless the following apply:

a. The District receives less than $120,000 in Federal awards per year b. The best reasonably available interest-bearing account would not be expected to earn

interest in excess of $500 per year on Federal cash balances c. Interest earned amounts up to $500 per year may be retained by the LEA for

administrative expense. If the LEA earns any additional interest on Federal advance payments deposited in interest-bearing accounts, contact DPI or follow procedures stated in 2 C.F.R. Part 200, §200.305(9)

d. The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources


2 FEBRUARY 2016

Written Procedures

Written procedures such as required per 2 C.F.R. Part 200, §200.302(b)(6) should not be a reiteration of the federal requirements or the policies or goals. Rather, procedures are the step by step process that is used to obtain the goal or the steps that are necessary to be in compliance with the federal requirement. Written procedures should answer questions such as: who determines that the cash management procedures are being followed; how is it determined the procedures are followed; when the steps are performed; what is being verified.

A subrecipient’s Cash Management written procedures must address both advance payments and cost reimbursement. The written procedures should include steps involved in the obligating, liquidating, and claiming of federal funds.

The following is a list of questions to consider when documenting procedures. This is not an all inclusive list but rather to be used in guidance when writing the step by step procedures. These questions represent the types of information DPI would look for in the subrecipient’s written procedures if selected for monitoring.

Written procedures regarding the obligation of Federal funds:

Purchase orders for goods or services Who has authority to generate a purchase order (PO)?

How is a purchase order generated? What steps are involved?

Who approves purchase orders?

Who has authority to approve contracts?

Who determines the purchase is an allowed cost on a federal grant?

What information is used to make the determination it is an allowed cost?

Who verifies the goods or services have been budgeted on the Federal grant?

Payroll Who identifies each staff person with a status of single cost objective or multiple cost objective?

How is this status determined? x How often is this information reviewed and updated? x Where is this information stored? x How is this communicated between areas?

Who sets up the account coding of personnel claimed on the grant?

Who verifies that the salaries charged to the grant are for individuals approved on the grant?


3 FEBRUARY 2016

Regarding staff with multiple cost objectives: Who approves time worked on a federal program / project?

Who verifies charged amounts against supporting time and effort documentation prior to a claim being made?

x How is this communicated between areas?

For short-term work such as substitute staffing, extended school year, stipends, etc.: Who verifies the short-term work is completed by licensed individuals (if required)?

Who verifies the work was completed prior to submitting a claim? x Does the time sheet identify the Federal funding source or cost objective? x How is this communicated between areas?

Credit card purchases Who has access to the subrecipient’s credit card?

What purchases are allowed to be made by credit card?

Who reconciles credit card bill to actual expenditures?

What supporting documentation is required for payment of an expenditure?

Written procedures regarding the liquidation of Federal funds:

Receipt of goods or service performed Who verifies the goods have been received or service performed?

x How is the verification done?

Who determines the goods are being put into use in the federal program/project? How is it determined?

Who determines the service was timely performed and how is it verified?

If assets (such as computing devices) were purchased, how are these being tracked per Federal program?

If assets are lost, stolen or damaged, what is the process for reporting and documenting?

If assets are no longer needed, what is the process for reporting and documenting? x How is this communicated between areas?

Payment Process How is an invoice approved for payment? Who gives final approval?

What is the payment process?

What supporting documentation is required prior to payment?


4 FEBRUARY 2016

Written procedures regarding the claiming of Federal funds: How are expenditures tracked?

Who prepares the claim for expenditure reimbursement?

Who verifies that the expenditure report includes only expenditures that have been obligated and liquidated in the requested reimbursement amount?

Who verifies the expenditure report includes costs that are on an approved budget and have been determined allowable?

How is it determined if an expenditure claimed has been both obligated and liquidated?

Who approves the claim prior to submission?

When do expenditure claims get filed during the year? (monthly, quarterly)

Who ensures the final expenditure claim is filed no later than September 30th following the fiscal year ended June 30th?

x Who determines whether an amount claimed has been liquidated within 90 days of year end? x How are costs at year end determined to be obligated and not liquidated?

Who verifies that the final expenditure report ties to the general ledger accounts?

Who performs the cash reconciliation?

Is there separation of duties between who approves and disburses the funds from who performs the reconciliation?


1

FEBRUARY 2016

Conflict of Interest

Authority

2 C.F.R. Part 200, §200.318(c)(1) “The non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity.”

2 C.F.R. Part 200, §200.318(c)(2) “If the non-Federal entity has a parent, affiliate, or subsidiary organization that is not a state, local government, or Indian tribe, the non-Federal entity must also maintain written standards of conduct covering organizational conflicts of interest. Organizational conflicts of interest means that because of relationships with a parent company, affiliate, or subsidiary organization, the non-Federal entity is unable or appears to be unable to be impartial in conducting a procurement action involving a related organization.”

2 C.F.R. Part 200, §200.112 “The Federal awarding agency must establish conflict of interest policies for Federal awards. The non-Federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy.

Procurement Standards

When procuring property and services under a Federal award, the LEA must follow §200.318 General procurement standards through 200.326 Contract provisions. The LEA must use its own documented procurement procedures which reflect applicable state and local laws and regulations, provided that the procurements conform to applicable Federal law and the standards identified in the Uniform Grant Guidance. The documented procurement procedures of the LEA must include written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award, or administration of contracts. If an employee has a real or apparent conflict of interest that employee may not participate in the selection, award, or administration of a contract supported by a Federal award.

Written Procedures

Written procedures such as required per 2 C.F.R. Part 200, §200.318 should not be a reiteration of the federal requirements or the policies or goals. Rather, procedures are the step by step process that is used to obtain the goal or the steps that are necessary to be in compliance with the federal requirement. Written procedures should answer questions like: what is considered a conflict of interest; how is it determined that an employee has a conflict of interest, how it is determined the procedures are followed; when the steps are performed; what is being verified.


2

FEBRUARY 2016

The following is a list of questions to consider when documenting procedures. This is not an all inclusive list but rather to be used in guidance when writing the step by step procedures. These questions represent the types of information DPI would look for in the subrecipient’s written procedures if selected for monitoring.

Sample questions to ask when writing procedures regarding conflict of interest:

Defining Conflict of Interest Does the subrecipient’s policy and/or procedures include a definition of the relationships that are

viewed as a conflict of interest?

How are employees involved in the procurement process made aware of and provided with a copy of the subrecipient’s conflict of interest policy and procedures?

Do all employees involved in the procurement process fill out information regarding relationships that could be viewed as a conflict of interest?

What is the process for an individual to report a conflict of interest?

Determining a Conflict of Interest What is the continuing process to determine that an employee does not have a conflict of interest?

Are there regular updates of information provided by employees?

Who reviews the information provided by employees?

Disqualified from Participation Who verifies that an employee is removed from participation when a conflict is identified?

Gratuities Are gratuities never allowed or are there situations in which the financial interest is not substantial or

the gift is an unsolicited item of nominal value?

If nominal value allowed, what is the amount?

Is unsolicited defined?

Disciplinary Actions What is the disciplinary action when an employee does not remove themselves from the selection, award

and administration of contracts when a conflict of interest occurs?

Reporting Conflict of Interest Who is responsible to report a conflict of interest to DPI?

When should a conflict of interest be reported?

internal controls, policies, and written procedures€¦ · yif the procedure is overly complicated...

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