TEA Announcement on Grant Monitoring and Compliance Issues PDF Print E-mail

11/19/11

The Texas Education Agency posted a TO THE ADMINISTRATOR ADDRESSED yesterday that explains various kinds of compliance issues disclosed by monitoring activities relating to expenditures of American Recovery and Reinvestment Act of 2009 (ARRA), and non–ARRA federal formula and discretionary grant funds.  In accordance with federal regulations, The TEA is obligated to actively monitor local education agencies for compliance with applicable laws, rules and regulations, in addition to specific provisions in grant applications and contracts.  TEA’s onsite and desk monitoring activities are disclosing various general and more specific compliance issues that can result in refunds, in some instances, of questioned dollar amounts. 

The TO THE ADMINISTRATOR letter states, “After a year of monitoring subrecipients’ accounting and grant records, TEA staff noted several prevailing issues. In many instances:

  1.  Subrecipients did not adequately maintain time and effort records to ensure compliance with the time and effort reporting requirements promulgated in OMB Circular A-87 (applicable to school districts and ESCs) or OMB Circular A-122 (applicable to nonprofit organizations), 2 CFR Appendix B to Part 225(8)(h), and 34 CFR 80.20(b)(5). Specifically, subrecipients:
    • Did not maintain adequate time and effort documentation to support the payroll costs charged to the grant (such as periodic certification or personnel activities reports).
    • Did not maintain adequate documentation to support payroll costs charged to the grant (such as extra-duty pay agreements, time sheets, and/or stipends).
    • Failed to develop and implement comprehensive administrative procedures that identified the processes and forms that should be used to ensure compliance with the time and effort requirements promulgated in the applicable OMB circular.
    • Used administrative procedures related to time and effort documentation that did not comply with the requirements promulgated in the applicable OMB circular.
  2. Subrecipients did not demonstrate compliance with the standards for financial management systems promulgated in 34 CFR 80.20(a), (b)(1), (2), or (4); or in 34 CFR 74.21(b)(1), (2), or (4) (for institutions of higher education or nonprofit organizations). Specifically, subrecipient’s accounting records (the general ledger) indicated that:
    • The subrecipient did not comply with the mandatory account code structure and accounting requirements, including the use of a fund code or other account code to identify the grant funding source.
    • The general ledger did not reflect expenditures by the class/object codes budgeted in the approved grant application.
    • The subrecipient did not maintain a financial accounting system that enabled it to compare budgeted amounts for each grant to the actual expenditures incurred and the outlays of grant funds to ensure that actual expenditures did not exceed the approved budget.
  3. Subrecipients failed to maintain adequate and sufficient source documentation to support the expenditures charged to grants and reported to TEA as the basis for reimbursement, as required by 34 CFR 80.20(b)(4), (5), or (6); or 34 CFR 74.21(b)(4), (6), or (7). Specifically, subrecipients:
    • Expended grant funds from budget categories that were not approved or amended in the grant application.
    • Obligated grant funds outside of the grant period.
    • Did not provide adequate source documentation (such as third-party invoices or receipts) to support the expenditure of grant funds.
  4. Subrecipients did not comply with the requirements promulgated in ARRA related to infrastructure projects by failing to demonstrate:
    • Compliance with the provisions of the Buy American Act as promulgated in Section 1605 of ARRA.
    • Compliance with the provisions of the Davis Bacon Act as promulgated in Section 1606 of ARRA.
    • Compliance with the certification requirements as promulgated in Section 1511 of ARRA.
  5. Subrecipients did not calculate excess costs for the education of elementary and secondary school students with disabilities, in accordance with 34 CFR 300 Appendix A. Subrecipients must calculate costs that are in excess of the average annual per-student expenditure from the preceding school year.”

To access the TO THE ADMINISTRATOR ADDRESSED letter dated November 18, 2011, on this topic, click on the link below.

http://ritter.tea.state.tx.us/taa/fedcomp111811.html