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(2) The grantee's responsibility to ee's accounting system or internal conaccount for program income in accord- trols. ance with the provisions of $ 1050.40 (B) The independent auditor should (CSA Instruction 6800-5);
explain in his audit report that the (3) The retention period for, or Fed- grantee will not continue to receive erai rights of access to, grant records CSA funding and will not be involved pursuant to $ 1050.20 (CSA Instruction in CSA programs as a grantee. 6800-4).
(C) The independent auditor should (f) In the event a final audit has not emphasize in his report any action rebeen performed prior to the closeout quired to clear the account such as reof the grant, CSA retains the right to covery of any unexpended funds or recover an appropriate amount, after disposition of grant property. fully considering the recommenda- (ii) Where questions arise in regard tions on disallowed costs resulting to the audit of CSA grantees being from any subsequent audit which may closed out, independent auditors be performed. (See reference (13) for should contact the cognizant CSA ReCSA audit requirements.)
gional Auditor for guidance. (42 FR 18034, Apr. 4, 1977, as amended at 47
(2) Audit disallowances. The normal FR 22535, May 25, 1982]
CSA audit disallowance procedures as
set forth in reference (13) shall be fol$ 1050.113 CSA implementing policies and
lowed for audit disallowances resulting procedures.
from a final audit. Final audit disal
lowances can only be satisfied by cash (a) General. Procedures for various activities to be undertaken in closeouts
payments to CSA when the grant in will be found in references (3) through
question has been or is in the process
of being closed out. (14). This subpart provides additional detail on required closeout procedures (42 FR 18034, Apr. 4, 1977, as amended at 47 relating to audits. (See reference (13) FR 22535, May 25, 1982] for basic procedures.)
(b) Closeout Audits-(1) Scope of Subpart M-Suspension and TerminaAudit. (i) Within 60 days after the
tion Procedures (CSA Instruction date of completion of a CSA grant, the
6800-13) grantee must submit a final audit of grant operations, except that the final
$ 1050.115-1 References. audit for public grantees shall be submitted within 90 days after the grant's
(1) 45 CFR 1010 (OEO Instruction 6004completion. Audit reports must be di
01a) Nondiscrimination in Federally-Assist
ed Programs of the Office of Economic Oprected to the Office of the Inspector
portunity-Effectuation of Title VI of the General, CSA/OCS, at the address
Civil Rights Act of 1964; specified in § 1050.112(c). Final audits
(2) 45 CFR 1067.2 (OEO Instruction 6730shall be conducted in accordance with 1) Denial of Application for Refunding; the Accounting Systein Survey and (3) 45 CFR 1050.110 (CSA Instruction Audit Guide, CSA Manual 2410-1, 6800-12) Grant Closeout Procedures; except that the scope of the audit (4) 45 CFR 1069.3 (CSA Instruction 6910shall be adjusted as follows:
la) Travel Regulations for CSA Grantees (A) The independent auditor will not
and Delegate Agencies. be required to render an appraisal of
8 1050.115-2 Definitions. the grantee's accounting system and internal controls. However, he will be (a) “Termination"-The termination required to review internal accounting of a grant is the cancellation of Federcontrols in accordance with generally al assistance, in whole or in part, accepted auditing standards to ascer- under a grant at any time prior to its tain the degree of reliance he can date of completion. The following do place on them in determining the not constitute termination: extent of his audit tests and proce- (1) Withdrawal of funds awarded on dures. Therefore, the audit report will the basis of grantee's under estimate normally contain no comments or rec- of the unobligated balance in a prior ommendations relative to the grant- grant period;
(2) Failure on the part of CSA to refund a grantee or to make a continuation, extension, supplemental other additional grant;
(3) Withdrawal of the unobligated balance as of the date of completion of a grant pursuant to the provision of CSA Instruction 6800-12 (45 CFR 1050.110);
(4) Annulment of a grant upon determination that the grant was obtained fraudulently or was otherwise illegal or invalid from inception;
(5) Withdrawal of unobligated funds from a CAA before the date of completion of its grant as a result of opt-out or de-designation proceedings under Section 210 of the Economic Opportunity Act of 1964 as amended, and OEO Instruction 6302-2.
(b) “Suspension”—The suspension of a grant is an action by CSA that temporarily suspends Federal assistance under the grant, pending a decision by CSA to terminate the grant.
8 1050.115-3 Failure to comply with grant
terms and conditions. When a grantee has materially failed to comply with the terms and conditions of a grant (including all applicable CSA Instructions), CSA may suspend the grant in accordance with $ 1050.115-4, terminate it for cause in accordance with $ 1050.115-5, or take such other remedies as may be legally available and appropriate under the circumstances.
8 1050.115-4 Suspension.
When grantee has materially failed to comply with grant terms and conditions, CSA may suspend the grant, after giving the grantee reasonable notice and opportunity to show cause why the grant should not be suspended. Pursuant to section 604(2) of the Economic Opportunity Act as amended, CSA may summarily suspend a grant without previous notice in an emergency situation. If a grant is suspended, CSA may withhold further payments and prohibit the grantee from incurring further obligations of funds, pending corrective action by the grantee or a decision by CSA to initiate termination proceedings in accordance with $ 1050.115-5. CSA will allow all necessary and proper costs
that the grantee could not reasonably avoid during the period of suspension, provided that they meet the provisions of the applicable Federal cost principles (for public grantees, the applicable provisions are those of Federal Management Circular 74-4).
8 1050.115-5 Termination for cause.
Whenever it is determined that a grantee has failed to comply with the terms and conditions of its grant, CSA may terminate the grant in whole or in part at any time prior to its date of completion. CSA shall promptly notify the grantee of the determination and the reasons for the termination, together with its effective date. Pursuant to section 604(3) of the Economic Opportunity Act of 1964, as amended, such determination shall not be made unless the grantee has been afforded the opportunity for a full and a fair hearing on the termination of its grant. Payment made to grantees or recoveries by CSA or other Federal grantor agencies under grants terminated for cause shall be in accordance with the legal rights and liabilities of the parties.
8 1050.115-6 Termination for convenience.
CSA or the grantee may terminate any grant in whole or in part if and only if both parties agree that the continuation of the project would not produce beneficial results commensurate with the further expenditure of funds. The two parties must agree on the termination conditions, including the effective date, and, in the case of partial terminations, the portion to be terminated. The grantee shall not incur new obligations for the terminated program or portion thereof after the effective date of termination and shall cancel as many outstanding obligations as possible. CSA shall allow full credit to the grantee for the Federal share of the noncancellable obligations properly incurred by the grantee prior to the effective date of termination.
§ 1050.115-7 CSA implementing policies
and procedures governing suspensions. (a) Purpose and scope. (1) This section establishes rules for the suspen
sion of assistance provided under the Economic Opportunity Act of 1964, as amended (hereinafter the Act), if the assistance is administered by the Community Services Administration; grantee may be suspended for failure to comply with the terms and conditions of its grant, including applicable laws, regulations, CSA Instructions, grant conditions, or approved work programs.
(2) However, this section shall not apply to any administrative action of the Community Services Administration based upon any violation or alleged violation of Title VI of the Civil Rights Act of 1964; in case of such violation or alleged violation the provisions of 45 CFR 1010 (CSA Instruction 6004-01a) shall apply.
(3) Pursuant to section 604(2) of the Act and this subpart, the responsible CSA official may suspend a grant under the circumstances outlined in paragraph (a)(1) of this section. There are two kinds of suspension: (i) Suspension on notice, as provided for in paragraph (c) of this section, and (ii) summary suspension as provided for in paragraph (d) of this section. Summary suspension may be invoked only when the responsible CSA official determines that an emergency situation exists (see paragraph (d)(1) of this section).
(b) Definitions. (1) The term “responsible CSA official” means the Director, Deputy Director, and any other official who is authorized to make the grant in question, the Regional Director of the Regional Office administering the grant in question, or the designee of any of these officials.
(2) The term “summary suspension" means suspension of a grant without prior notice to the grantee.
(c) Suspension on notice. (1) The responsible CSA official shall notify the grantee by letter or telegram that CSA intends to suspend a grant in whole or in part unless good cause is shown why the grant should not be suspended. In such letter or telegram the responsible CSA official shall specify the grounds for the proposed suspension and the proposed effective date of the suspension.
(2; The responsible CSA official shall also inform the grantee of its
right to submit written material in opposition to the intended suspension and of its right to request an informal meeting at which the grantee may respond an attempt to show why such suspension should not occur. The period of time within which the grantee may submit such written material or request the informal meeting shall be established by the responsible CSA official in the notice of intent to suspend. However, in no event shall the period of time within which the grantee must submit written material or request such a meeting be less than 5 days after the notice of intent to suspend has been sent. If the grantee requests a meeting, the responsible CSA official shall fix a time and place for the meeting, which shall not be less than 5 days after the grantee's request is received by CSA.
(3) In lieu of the provisions of paragraph (c)(2) of this section dealing with the right of the grantee to request an informal meeting, the responsible CSA official may on his own initiative establish a time and place for such a meeting. However, in no event shall such a meeting be scheduled less than 7 days after the notice of intent to suspend is sent to the grantee.
(4) The responsible CSA official may in his discretion extend the period of time or date referred to in the previous paragraphs of this section and shall notify the grantee of any such extension.
(5) At the time the responsible CSA official sends the notification referred to in paragraphs (c)(1), (2), and (3) of this section to the grantee, he shall also send a copy of it to any delegate agency whose activities or failures to act are a substantial cause of the proposed suspension, and shall inform such delegate agency that it shall be entitled to submit written material or to participate in the informal meeting referred to in paragraph (c)(2) and (3) of this section. In addition, the responsible CSA official may in his discretion give such notice to any other delegate agency.
(6) Within 3 days of receipt of the notice referred to in paragraphs (c) (1), (2), and (3) of this section the grantee shall send a copy of these reg. ulations to all delegate agencies which
would be financially affected by the proposed suspension action. Any delegate agency that wishes to submit written material may do so within the time stated in the notice. Any delegate agency that wishes to participate in the informal meeting with the responsible CSA official contemplated herein (if not afforded a right to participate under the previous paragraphs) may request permission to do so from the responsible CSA official, who may in his discretion grant or deny such permission. In acting upon any such request from a delegate agency, the responsible CSA official shall take into account the effect of the proposed suspension on the particular delegate agency, the extent to which the meeting would become unduly complicated as a result of granting such permission, and the extent to which the interests of the delegate agency requesting such permission appear to be adequately represented by other participants.
(7) In the notice of intent to suspend assistance the responsible CSA official shall invite voluntary action to adequately correct the deficiency which led to the initiation of the suspension proceeding.
(8) The responsible CSA official shall consider any timely material presented to him in writing, any material presented to him during the course of the informal meeting provided for in paragraphs (c) (2) and (3) of this section as well as any showing that the grantee has adequately corrected the deficiency which led to the initiation of suspension proceedings. If after considering the material presented to him the responsible CSA official concludes that the grantee has failed to show cause why the grant should not be suspended, he may suspend the grant in whole or in part and under such terms and conditions as he shall specify.
(9) Notice of such suspension shall be promptly transmitted to the grantee and shall become effective upon delivery. Suspension shall not exceed 30 days unless during such period of time termination proceedings are initiated in accordance with $ 1050.115-8, or unless the responsible CSA official and the grantee agree to a continu
ation of the suspension for an additional period of time. If termination proceedings are initiated, the suspension shall remain in full force and effect until such proceedings have been fully concluded.
(10) During a period of suspension no new expenditures shall be made and no new obligations shall be incurred in connection with the suspended program except as specifically authorized in writing by the responsible CSA official. Expenditures to fulfill legally enforceable commitments made prior to the notice of suspension, in good faith and in accordance with the grantee's approved work program, and not in anticipation of suspension or termination, shall not be considered new expenditures. However, funds shall not be recognized as committed solely because the grantee has obligated them by contract or otherwise to a delegate agency.
NOTE: Willful misapplication of funds may violate section 627 of the Economic Opportunity Act of 1964, as amended, 42 U.S.C. 2971(f) or other criminal statutes.
(11) The responsible CSA official may in his discretion modify the terms, condition and nature of the suspension or rescind the suspension action at any time on his own initiative or upon a showing satisfactory to him that the grantee has adequately corrected the deficiency which led to the suspension and that repetition is not threatened. Suspensions partly or fully rescinded may in the discretion of the responsible CSA official be reimposed with or without further proceedings: Provided, however, that the total time of suspension may not exceed 30 days unless termination proceedings are initiated in accordance with $ 1050.115-8, or unless the responsible CSA official and the grantee agree to a continuation of the suspension for an additional period of time. If termination proceedings are initiated, the suspension shall remain in full force and effect until such proceedings have been fully concluded.
(d) Summary suspension. (1) As stated in (a)(3) of this section the responsible CSA official may invoke summary suspension procedures only if he determines that an emergency
situation exists because there is a serious risk of: (i) Substantial injury to or loss of project funds or property, or (ii) violation of a Federal, State or local criminal statute, or (iii) violation of section 603(b) or 613 of the Economic Opportunity Act of 1964, as amended or of CSA Instructions implementing these sections of the Act. He must also determine that such risk is sufficiently serious to outweigh the general policy in favor of advance notice and opportunity to show cause.
(2) Notice of summary suspension shall be given to the grantee by letter or by telegram, shall become effective upon delivery to the grantee, and shall specifically advise the grantee of the effective date of the suspension and the extent, terms, and condition of any partial suspension. The notice shall also forbid the grantee to make any new expenditures or incur any new obligations in connection with the suspended portion of the program. Expenditures to fulfill legally enforceable commitments made prior to the notice of suspension, in good faith and in accordance with the grantee approved work program, and not in anticipation of suspension or termination, shall not be considered new expenditures. However, funds shall not be recognized as comrnitted by a grantee solely because the grantee obligated them by contract or otherwise to a delegate agency.
(3) In the notice of summary suspension the responsible CSA official shall advise the grant that it may request CSA to provide it with an opportunity to show cause why the summary suspension should be rescinded. If the grantee requests such an opportunity, the responsible CSA official shall immediately inform the grantee in writing of the specific grounds for the suspension and shall within 7 days after receiving such request from the grantee hold an informal meeting at which the grantee may show cause why the summary suspension should be rescinded. Notwithstanding the provisions of this paragraph, the responsible CSA official may proceed to initiate termination proceedings at any time even though the grant has been suspended in whole or in part. In the event that termination proceedings
are initiated, the responsible CSA ofiicial shall nevertheless afford the grantee, if it so requests, an opportunity to show cause why suspension shouid be rescinded pending the outcome of the termination proceedings.
(4) Notices of summary suspension shall also be furnished by the responsible CSA official and by the grantee to delegate agencies in the same manner as notices of intent to suspend as set forth in paragraphs (c) (5), (6), and (7) of this section. Delegate agencies shall have the same right to submit written material to the responsible CSA official or to participate in the informal meetings as in the case of intended suspension proceedings set forth in paragraphs (c) (5) and (6) of this section.
(5) The effective period of a summary suspension may not exceed 10 days unless termination proceedings are initiated in accordance with $ 1050.115-8 or unless the parties agree to a continuation of surnmary suspension for an additional period of time, or unless the grantee in accordance with paragraph (d)(3) of this section requests an opportunity to show cause why the summary suspension should be rescinded.
(6) If the grantee requests an opportunity to show cause why a summary suspension action should be rescinded the suspension shall continue in effect until the grantee has been afforded such opportunity and a decision has been made. Such a decision will be made within 5 days after the conclusion of the informal meeting referred to in paragraph (d)(3) of this section. If the responsible CSA official concludes after considering all material submitted to him, that the grantee has failed to show cause why the suspension should be rescinded, the responsible CSA official may continue the suspension in effect for an additional 10 days: Provided, however, That if termination proceedings are initiated, the summary suspension shall remain in full force and effect until all termination proceedings have been fully concluded.
(e) Right to counsel; travel expenses. In all proceedings under this section whether formal or informal, the grantee and CSA shall have the right to be