HomeResourcesAudit Database Project Compliance RecommendationsGrants With Special Conditions Were Not Monitored and Were Susceptible to Fraud - (22 CFR 226.14, “Special Award Conditions”) - ADS 303.3.9.2, “High Risk Recipients"

Grants With Special Conditions Were Not Monitored and Were Susceptible to Fraud - (22 CFR 226.14, “Special Award Conditions”) - ADS 303.3.9.2, “High Risk Recipients"

The Code of Federal Regulations (22 CFR 226.14, “Special Award Conditions”) states that if an applicant or recipient has:

a history of poor performance, is not financially stable, has a management system that does not meet the standards prescribed in this part, has not conformed to the terms and conditions of a previous award, or is not otherwise responsible, the USAID Agreement Officer may impose additional requirements as needed, provided that such applicant or recipient is notified in writing as to: The nature of the additional requirements, the reason why the additional requirements are being imposed, the nature of the corrective action needed, the time allowed for completing the corrective actions, and the method for requesting reconsideration of the additional requirements imposed.

Any special conditions will be promptly removed once the conditions that prompted them have been corrected.

ADS 303.3.9.2, “High Risk Recipients,” notes that although 22 CFR 226 is not directly applicable to awards to non-U.S. organizations, the standards in 22 CFR 226 may be used for non-U.S. recipients.

ADS also notes that an agreement officer may consider making a high-risk award with “special award conditions” only if it appears likely that the potential recipient can correct its deficiencies in a reasonable period of time. To minimize the risk of such awards, the following temporary conditions may be added: (1) special award conditions and (2) technical assistance to the recipient.

The contract {being reviewed] laid out specific requirements for the contractor in awarding and managing grants, regardless of recipient. The requirements are as follows.

  • The contractor shall comply in all material respects with ADS Chapter 303, “Grants and Cooperative Agreements to Non-Governmental Organizations,” in awarding and administering grants, as well as with 22 CFR 226 (Agency for International Development Part 226—“Administration of Assistance Awards to U.S. Non-Governmental Organizations”) to the extent that it may be relevant to such grants.
  • Prior USAID approval must be obtained for grants in accordance with ADS 302.5.6.
  • The COTR must approve the criteria for and selection of all grantees.
  • These grants will be awarded competitively. Limited competition may be considered. However, a program description and a list of prospective applicants must be approved by the cognizant technical officer.
  • Contracting officer approval is required for all grants over $100,000.
  • Minimum evaluation criteria will be proposed by the contractor and approved by USAID.
  • The contractor will carry out any necessary preaward actions with respect to the proposed grantees, such as financial reviews and an assessment of management capability, in accordance with criteria to be provided by USAID.
  • The contractor will ensure postaward management—reporting, audits, etc.—in accordance with USAID directives and policies.

General Recommendations

  • Require the contractor to comply with its internal procedures and grant requirements within the contract by developing an adequate records system to support claimed grant costs and (2) verify the contractor’s completed actions.
  • Make a complete inventory of grants awarded by the contractor from program inception, review grant files to ensure that documentation is adequate to support required procurement and monitoring requirements, and question and collect amounts for those grants not adequately supported.

SOURCE: AUDIT REPORT NO. E-267-11-002-P MAY 16, 2011

The recommendations are derived from audit reports of the Office of the Inspector General. The source refers to the audit report, which is available on this site as part of the Audit Database Project: an educational tool for compliance with USAID regulations.  Please see the disclaimer of this site before using recommendations.

Tags: Grants Management
 
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