Agenda - Council Work Session - 06/08/2021

Home

Acceptable reasons for justification must meet one of the following criteria: • A qualification as a low -risk auditee, in accordance with the criteria in §200.520 for the most recent audit, • An annual internal institutional risk assessment to identify, mitigate, and manage financial risks, or • A higher threshold consistent with state law. This flexibility would allow Minnesota local governments to increase and align their federal procurement procedures, specifically the micro -purchase threshold, with state law, which allows for procurements below $25,000 to be made without competitive price or rate quotations. We recommend that the City review its current federal procurement policy. If the micro -purchase threshold in your currently adopted policy is below the allowable FAR limit of $10,000, you would need to make a one-time amendment to the policy to adopt the $10,000 FAR limit before using it. If you prefer to increase your federal micro -purchase threshold to $25,000 to align it with state law, in addition to amending your federal procurement policy, you would need to annually certify the higher threshold and the justification for using the higher threshold. Uniform Guidance Written Controls and Subrecipient Monitoring Federal Uniform Guidance requires nonfederal entities to have and use documented subrecipient monitoring and management procedures consistent with 2CFR § 200.331-333 for disbursements of federal funds determined to be a federal subaward. A subaward is an agreement between the City and an outside party for the purpose of carrying out a portion of a federal award, which creates a federal assistance relationship with the subrecipient. The Uniform Guidance requirements for pass -through entities include, but are not limited to: • Providing the subrecipient with the best information available to describe the key identifiers and terms of the federal award and subaward; • A written risk assessment evaluating each subrecipient's risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring; • Written documentation of monitoring activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with federal statutes, regulations, and the terms and conditions of the subaward, and that the subaward performance goals are achieved; and • Written procedures verifying that every subrecipient is audited as required by the Uniform Guidance Subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in 2CFR § 200.501. During our audit, we noted that the City had developed and adopted written federal grant procedures (including subrecipient monitoring); however, these could be improved to ensure they fully address procedures specific to subrecipient monitoring as it relates to federal awards. We recommend that the City review its current federal grant procedures to ensure they include and are consistent with the subrecipient requirements specified in 2CFR § 200.332. SIGNIFICANT ACCOUNTING POLICIES Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 of the notes to basic financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended December 31, 2020. -3-