New Internal Control Requirements under Uniform Guidance

Stacey Nelson

By: Stacey Nelson

Under Uniform Guidance, non-federal entities are required to implement the new administrative requirements and Cost Principles for all new federal awards. The updated federal regulations can be found here. A primary emphasis under Uniform Guidance is the increased focus on internal controls, and one of the biggest challenges facing many organizations is the change in the requirement to document the organization’s internal controls.

2 CFR 200.303 states the entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the entity is managing the Federal award in compliance with Federal statutes, regulations and terms and conditions of the Federal award. While not seemingly a significant departure from the previous requirement, the regulations specifically require written procedures to ensure compliance with cash management requirements and allowable costs and also written standards of conduct addressing conflicts of interest and individuals engaged in procurement decisions.

Though the guidance specifies only these areas to be documented in writing, best practices are to maintain written documentation of the internal controls over all compliance requirements applicable to the organizations Federal awards. Section 200.303 of the Uniform Guidance suggests using the Standards for Internal Control in the Federal Government (Green Book) or the Internal Control Integrated Framework (COSO) as guidance to be followed when designing and implementing your internal control procedures.

Documenting your controls may seem like a tedious task, however, due to the increased emphasis under the new Uniform Guidance rules, it is one that you can’t afford to ignore. Please contact your Eide Bailly service provider with any questions you may have.

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