Federal grant compliance: A discussion checklist for avoiding clawbacks
Federal grants can provide critical support to communities, whether related to infrastructure investments or preparing for emergency situations. However, these funds come with rules and regulations that help ensure the best use of the taxpayer’s money. The federal government cannot monitor all grants, recipients, and sub-recipients in real time. Instead, it includes in all contracts a provision for clawing back any funds deemed to have been improperly spent.
The distinction of “improperly spent” can mean anything from truly fraudulent expenditures to an expense that lacks the supporting documentation required but is otherwise allowable. When a federal agency does claw back funds, it can create significant financial hardship for the grant recipient.
The fear of putting one’s own county/city/state in this financial hardship can be a constant, dull hum for public servants. The duties of carrying out a grant program and the fiscal administration of the grant are often split between multiple individuals. It is critical that all understand the full scope of the work in order to best maintain compliance and avoid clawbacks. Read on for a list of conversation starters to discuss within your organization to support that alignment.
- Financial controls
- Do we meet the $750,000 federal expenditure threshold to require a single audit?
- Who conducts the single audit, and when?
- Who submits our results to the federal repository?
- Who renews our entity listing on SAM.gov?
- What is our micro-purchase threshold?
- Programmatic requirements
- Where is the information sourced to include in the quarterly progress reports?
- Who are our subcontractors, and what can we do if they’re not performing as expected?
- Have we ever had supplies or equipment exceeding $5,000 at the end of a grant? What did we do with them?
- What is the approved period of performance for our grant or project?
- Financial and programmatic
- How do we begin the procurement process?
- How do we store the bids from a procurement that were not selected?
- How do we demonstrate our selection methodology for selecting contractors and subgrantees?
- How do we store documentation?
- How do we know if the file documenting procurement and vendor selection process is complete?
- When do we destroy documentation, if ever?
- Do our contracts provide an incentive to vendors to control costs?
Comprehensive, cross-disciplinary understanding of the requirements and the practices of your organization is the best way to mitigate risk. Just as is true with emergency management, preparedness is an effort that will pay dividends. Taking the time up front to have these conversations regularly will help ensure that requirements do not slip through the cracks.
For more information, please reach out to our team.