We conclude our review of the twelve compliance requirements with federal awards by reviewing the final six compliance requirements listed in the annual Compliance Supplement (2 CFR Part 200, Appendix XI) which can be found here. The blog post covering the first six compliance requirements can be found here. Not every compliance requirement may be applicable to your award, but a sound understanding of the requirements and your award documentation will help you better determine which compliance requirements pertain to your award.
Please remember that all organizations receiving federal awards are required to have written policies and procedures that give guidance to the organization’s employees on how to comply with applicable compliance requirements.
The six compliance requirements covered in this article are:
Period Performance
Costs must be incurred within the period of availability specified by the award agreement. Recipients must be mindful of the award’s start and end dates and ensure all expenditures align with this period. All obligations incurred during the period of availability must be paid within 120 calendar days of the end date of the award period.
In some cases, unspent award amounts may be carried over to subsequent funding periods if explicitly permitted by the award document.
Procurement and Suspension and Debarment
All goods and services must be purchased in a manner providing full and open competition.
Organizations may use the micropurchase method if the aggregate dollar amount does not exceed $10,000 ($2,000 in the case of acquisition for construction subject to the Wage Rate Requirements (Davis-Bacon Act)). Micropurchases may be awarded without soliciting competitive quotations if the price appears to be reasonable.
For purchases over the micropurchase limit but less than $250,000, the small purchase method may be used. This requires the organization to obtain price or rate quotations from an adequate number of qualified sources. (Open competition requirements imply that at least two quotations will be obtained.)
For acquisitions exceeding $250,000, formal procurement methods must be used. Formal procurement methods include:
- Sealed bids – A method in which bids are publicly solicited through an invitation and a firm fixed-price contract is awarded to the responsible bidder whose bid conforms with all the material terms and conditions of the invitation and is the lowest in price. The sealed bids procurement method is preferred for procuring construction services
- Proposals – A method used when conditions are not appropriate for using sealed bids.
- Noncompetitive procurement – A method is usually restricted to single source items and services or if there is an exigency or emergency that precludes the use of a formal bid process.
Each of the above methods has detailed requirements that can be found at 2 CFR200.320.
Organizations must also have written policies and procedures dealing with conflict of interest between governing board members, management, and vendors.
Organizations must also ensure that awards are not spent on vendors that have been debarred by the federal government. The list of debarred individuals and organizations can be found at SAM.gov.
Program Income
Income that is generated by a federally funded project or program must be tracked and accounted for under the terms of the award.
Program income includes the following:
- Fees for services performed
- Rent from real or personal property acquired with federal awards
- Sale of items fabricated under federal awards
- Principal and interest on loans made with federal awards
Program income does not include the following:
- Interest earned on advances of federal funds
- Discounts, credits, rebates, and interest earned unless otherwise stipulated in the award documents
If authorized by federal regulations or the award, costs incidental to the generation of the program income may be deducted from gross income to determine program income if these costs have not been charged to the award.
Unless otherwise specified by the award document, program income is usually deducted from the allowable costs eligible for reimbursement under the program. However, some awards may allow for the program income to be added to the total award amount or for the program income to be used for cost sharing or matching with the award.
Reporting
Recipients of federal awards are responsible for complying with the numerous reporting requirements set forth by awarding agencies.
Federal award recipients must submit various reports, including:
Federal Financial Report (FFR or SF-425) – This report details the financial status of each federal award. Frequency and due dates vary depending on the award terms, but typically include interim (quarterly or semi-annual), annual, and final reports.
Performance/Progress Reports – These reports document progress towards project goals. They are generally required quarterly, semi-annually, and upon completion of the project, with specific deadlines outlined in the Notice of Award.
Federal Funding Accountability and Transparency Act (FFATA) reporting – FFATA reporting promotes transparency in federal spending. Prime recipients are required to report subaward information and executive compensation details. Sub-recipients receiving $25,000 or more must provide data to the prime recipient for reporting.
Subrecipient Monitoring
Organizations passing through federal awards to other organizations are responsible for ensuring that the receiving organization is aware that the award is federal in origin, uses the funds as required by the federal agency awarding the funds, and follows any additional requirements the pass-through organization places on the funds.
The organization passing the funds through must evaluate the risks of noncompliance with award requirements by the entity receiving the funds and develop a monitoring program to address these risks. Documentation of the plan and the results of the monitoring program are required.
Special Tests and Provisions
Special provisions are specific requirements and expectations established by the federal awarding agency or pass-through entity for an award. They can apply to an entire grant program or be specific to an individual award or recipient.
These requirements are found in the statutes, regulations, and the provisions of the contract or grant in the award documents.
Examples of special provisions include:
- Financial Management: Requiring payments to be reimbursements rather than advance payments.
- Performance Monitoring: Establishing additional or more detailed reporting requirements, including performance data like the number of jobs created by a project.
- Prior Approval: Requiring additional approvals from the awarding agency for certain actions or expenditures.
- Subrecipient Requirements: Stipulating specific requirements that must be flowed down to subawards.
- Program-Specific Conditions: Tailored requirements related to the planning, design, and objectives of the specific federal grant program.
If you have questions about how to comply with your federal award, please feel free to contact DZA.
