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Blog > Posts > Part II: A Lack of Effective Internal Controls Over Grant Funds Can be Costly
Part II:  A Lack of Effective Internal Controls Over Grant Funds Can be Costly

Non-profit organizations that expend more than $500,000 in federal funds are required to have an audit performed in accordance with OMB Circular A-133, and are required to report any internal control or compliance deficiencies indentified during the audit, including questioned costs.  In addition, the organization may be subject to additional monitoring activities by the awarding agency in the form of site visits or grant-specific audits.  Grant recipients are required to prepare a Corrective Action Plan to address any findings or questioned costs identified.  Organizations that fail to address these findings on a timely basis or have a significant amount of questioned costs run the risk of being designated as high-risk and may be subject to additional administrative actions by the granting agency, including: increased grant monitoring and reporting; additional special conditions; withholding of federal grant funds; non-certification of future grant applications; collection of questioned costs through the U.S. Department of Treasury, Treasury Offset Program; or referral to the U.S. Government-Wide Suspension and Debarment List.


With the current state of our economy and the passage of the American Recovery and Reinvestment Act, federal agencies are now required to provide increased oversight over their grants, and the effort needed to address any issues that may be identified can be very costly.  With this in mind, if you currently have federal or state funding, it is essential that you evaluate your organization’s current control environment, and develop and implement policies and procedures to ensure that these funds are adequately accounted for and controlled.

August 10. 2010 | Phil Aldridge

 

 

Part II: A Lack of Effective Internal Controls Over Grant Funds Can be Costly

 

Non-profit organizations that expend more than $500,000 in federal funds are required to have an audit performed in accordance with OMB Circular A-133, and are required to report any internal control or compliance deficiencies indentified during the audit, including questioned costs.  In addition, the organization may be subject to additional monitoring activities by the awarding agency in the form of site visits or grant-specific audits.  Grant recipients are required to prepare a Corrective Action Plan to address any findings or questioned costs identified.  Organizations that fail to address these findings on a timely basis or have a significant amount of questioned costs run the risk of being designated as high-risk and may be subject to additional administrative actions by the granting agency, including: increased grant monitoring and reporting; additional special conditions; withholding of federal grant funds; non-certification of future grant applications; collection of questioned costs through the U.S. Department of Treasury, Treasury Offset Program; or referral to the U.S. Government-Wide Suspension and Debarment List.


With the current state of our economy and the passage of the American Recovery and Reinvestment Act, federal agencies are now required to provide increased oversight over their grants, and the effort needed to address any issues that may be identified can be very costly.  With this in mind, if you currently have federal or state funding, it is essential that you evaluate your organization’s current control environment, and develop and implement policies and procedures to ensure that these funds are adequately accounted for and controlled.

 

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