Sneak Preview: Better Monitoring Needed for Section 2501 Awards

May 22, 2015 | By Jerry Ashworth | Post a Comment

xsass_bookshot(The following was excerpted from an article in the Single Audit Information Service.) The U.S. Department of Agriculture (USDA), Office of Advocacy and Outreach (OAO) plans, by October, to implement enhanced monitoring measures  that comply with its standard operating procedures to ensure that Section 2501 grant recipients adhere to grant regulations and their award terms and conditions, in response to a recent audit by the department’s Office of Inspector General (OIG).

The 2008 Farm Bill authorized $20 million for each of fiscal years 2010 through 2012 for the Section 2501 program, which OAO administers. The program provides grant funds for outreach, training, education and technical assistance to encourage and assist socially disadvantaged farmers, ranchers and forest landowners to purchase and operate farms, ranches and nonindustrial forest lands. The OIG audit evaluated 118 Section 2501 grants that OAO awarded in FYs 2010 and 2011, totaling about $38.2 million.

OIG determined that OAO officials did not adequately oversee these Section 2501 recipients. An OIG sample of selected recipients found that they had violated at least one of the terms or conditions in the grant agreement, or a program regulation. The violations included inadequately documenting expenses, receiving reimbursed funds used after the grant expiration date, failing to maintain a financial management system and violating conflicts of interest prohibitions.

“The grantees were able to violate the terms of their grants without detection because OAO had not developed or implemented policies, procedures or controls to administer the Section 2501 program in FYs 2010 and 2011,” OIG explained. “Specifically, OAO had not performed monitoring activities, such as site visits or desk reviews, to evaluate the use or implementation of FY 2010 and 2011 grant funds. By allowing grantees to violate regulations or the terms and conditions of the grant agreement, OAO did not ensure grant funds were used to meet the objectives of the Section 2501 program.”

According to the Office of Management and Budget’s (OMB’s) uniform grant guidance under the provision on internal controls (§200.303), nonfederal entities must maintain effective internal controls over a federal award and are required to comply with federal statutes, regulations and the terms and conditions of the federal awards. In addition, the federal awarding agency must manage and administer the award so that federal funds are expended and associated programs are implemented in full accordance with U.S. statutory and public policy requirements (§200.300(a)).

(The full version of this story has now been made available to all for a limited time on Thompson’s Grants Compliance Expert site).


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