Pre-Award/Internal Controls

Eligible Activities and Allowable Costs

A list of eligible activities, including direct and indirect costs, can be found in the policies and procedures for each program detailed in this manual, and within the executed grant agreements for each specific grantee.

Allowable costs are based on the premise that a recipient is responsible for the effective administration of Federal awards, application of sound management practices, and administration of Federal funds in a manner consistent with the program objectives and terms and conditions of the award.

• Program staff will ensure eligible activities are identified in the program policies and procedures manual, in the Notice of Funding Availability (NOFA) for each program’s application cycle, and in the grant agreement template for each program.
• Program staff will ensure that proposed project activities meet the SLFRF and program requirements prior to the project award.

SLFRF Restrictions

Treasury’s final rule also provides more information on important restrictions on use of SLFRF award funds, including that recipients other than Tribal governments may not deposit SLFRF funds into a pension fund; and recipients that are States or territories may not use SLFRF funds to offset a reduction in net tax revenue resulting from the recipient’s change in law, regulation, or administrative interpretation. In addition, recipients may not use SLFRF funds directly to service debt, satisfy a judgment or settlement, or contribute to a “rainy day” fund. Recipients should refer to the Treasury's final rule for more information on these restrictions.

Grant Agreements

In addition to period of performance, scope of work, eligible activities, Single Audit, and reporting requirements, Federal requirements are documented in the grant agreement templates (Appendix A), as provided by the OSC to all state agencies responsible for granting SLFRF funds and on their website. These federal requirements are passed to the grantee of SLFRF funds and they agree to abide by those requirements when they sign the grant agreement. Compliance with all federal requirements would be confirmed with each financial/progress report and at the time of monitoring. Any deviation from existing program policies and/or grant agreements would result in the return of grant funds to the state. Below is an example of the CFR citations spelled out in this template:

• Cost Principles and Allowable Uses (2 CFR Part 200 Subpart E)
• Cost sharing or matching (2 CFR 200.306)
• Program Income (2 CFR Part 200.307)
• Procurements by States (2 CFR Part 200.317)
• Reasonable Costs (2 CFR 200.404) 
• Conflicts of Interest (2 CFR Part 200.318)
• Contract Provisions (2 CFR Part 200.327)
• Reporting (2 CFR Part 200.329)
• Duplication of Benefits (DOB)
• Fraud, Waste, and Abuse
• FFATA, SAM’s and UEI numbers

Program staff will coordinate with the DLG contracts manager to ensure proper SLFRF grant agreement templates are approved by the State Controller's Office during the development and launch of the program.

Grant Application Procedures

All DLG grant applications are submitted electronically through the DLG grants portal. Program staff will create program NOFAs and applications through the portal, as detailed below.

• Grant program applications and guidelines are available electronically through each program’s website. 
• The DLG Online Grants Portal is an electronic system that allows entities to electronically file grant applications, and manage active grant awards, contracting and reporting requirements. The DLG Grants Portal has an external side for applicants and grantees and an in-house side for DLG staff. Both sides of the portal are similar in design so staff and grantees can easily review information in the same manner.
• Once an application form has been created by DLG staff and made available in the portal, a Notice of Funding Availability (NOFA) is also created, which identifies organizations eligible to apply for funds and the date range the application is available. Only those organizations listed as eligible applicants can apply for grant funds and the application is only available during the date ranges identified in the NOFA.
• Applications are submitted electronically through the grants portal. Applications are reviewed by program staff and are accepted or suspended through the grants portal. All accepted applications are automatically assigned a project number and captured on the permanent side of the portal. Applications that require additional information are suspended, unlocking the application to the applicant so they can correct and/or edit necessary information and resubmit the application. The application can be suspended and resubmitted as many times as necessary. Once an application has been submitted and accepted through the portal, that application cannot be altered.
• As applications are accepted in the portal, a screen is provided to staff to establish the project name. Applications are automatically numbered as they are accepted through the grants portal, as determined by the numbering convention established when creating the NOFA.
• Project documents, from application to close out, are maintained electronically and are accessible at any time by both grantees and DLG program staff through the portal.

Internal Controls

DLG, under direction of the Office of the State Controller, follows OMB 2 CFR 200 guidance, as evidenced by information posted on the OSC website. The State Controller has also implemented the State Controller Policy on Internal Control System, which details uniform guidance, risk assessment, and OMB compliance. These are also detailed in the grant agreement template required for all SLFRF projects, as provided by the OSC. Recipients should ensure they maintain proper documentation supporting their internal controls.

• Program staff will ensure that recipients of SLFRF program funds have an implemented system of internal controls as part of its routine monitoring activities and as part of its risk assessment activities.
• Program staff will ensure that recipients have a plan of organization that specifies segregation of duties as they may be necessary to assure proper safeguarding of assets. 
• Program staff will ensure that recipients have adequate record keeping procedures to provide effective accounting control over assets, liabilities, revenue and expenditures.
• Program staff will ensure that recipients have an effective process of internal review and adjustment for changes in conditions within the organization.

Unique Entity Identifier and Debarment/Exclusion Verification

All eligible recipients are required to have a Unique Entity Identifier (UEI) in addition to maintaining an active registration in the System for Award Management (SAM). In addition, recipients are prohibited from using SLFRF funds to enter into subawards and contracts with parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs.

• Program staff will ensure UEI numbers are a requirement of each SLFRF funded program application.
• Program staff will ensure a copy of the applicant’s SAM.gov registration is a requirement of each SLFRF funded program application. This SAM.gov registration document includes the UEI number, registration status, and active exclusion records and will serve as a debar check.
  • Alternatively, if the above is not captured at the time of application, it will be obtained as soon as possible after acceptance of an SLFRF program application.

After funding recommendations have been approved by the DOLA executive director, and PRIOR to completing award letters and grant agreements.

Risk Assessment

The Uniform Guidance requires pass-through entities to monitor and manage their subrecipients to ensure compliance (2 CFR 200.330-332). Risk assessments are not used to make award decisions. The purpose of a risk assessment is to evaluate a subrecipient’s risk of non-compliance with Federal statutes, regulations, and terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring. A risk assessment tool can be used to evaluate, document, and classify subrecipients’ fiscal and programmatic capability by determining various criteria to develop a relative risk assessment score. The level of risk should guide the pass-through entity in determining the level of technical assistance and monitoring required. Risk assessments must be completed for all grantees at a minimum for every grant cycle and maintained in the official grant file of record.

Risk assessments should be conducted after a decision to award. A risk assessment should be completed for each subrecipient by the pass-through entity, and the subrecipient can be required to include information used to develop the risk assessment as part of the application process scoring criteria, or after selection but prior to award. After completing the risk assessment and determining the score, a pass-through entity should determine any action steps needed to manage and/or mitigate risk.

The risk assessment is used to understand:

• The subrecipient's prior experience with the same or similar subawards;
• The subrecipient’s system of internal controls; 
• The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with 2 CFR 200 Subpart F and the extent to which the same or similar subaward has been audited as a major project; 
• Whether the subrecipient has new personnel or new or substantially changed systems; and 
• The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency). 2 CFR 200.332(b).

Initially, each criterion in the Risk Assessment Tool (Appendix B) is scored as high, medium, or low risk based on defined thresholds. The combined scores determine the overall risk score. If a subrecipient totals more than 11 points in the Risk Assessment Tool, they are considered a Low Risk, 4-11 are Medium Risk, and less than 4 are High Risk. If they are considered a “High Risk”, technical assistance should begin shortly after the grant agreement is executed. Risk assessments should be conducted for every grant cycle and maintained in the official grant file of record.

• Program staff will complete Appendix B for each grantee and upload to the Documents tab of the project file in the portal. This activity will take place at the onset of the SLFRF funded project.