Federal Grant Compliance Requirements, Part VI – Equipment and Real Property Management and Real Property Acquisition and Relocation Assistance
As described in Part I through V of our previous articles, 14 different compliance requirements could have a direct and material effect on federal grants received by governmental or nonprofit organizations. Organizations that utilize Federal programs to purchase capital assets must comply with two requirements, Equipment and Real Property Management and Real Property Acquisition and Relocation Assistance. Click here to learn more.
Equipment and Real Property Management: The Equipment and Real Property Management requirement focuses on the purchase and sale/disposal of capital assets purchased with federal funds. The requirement also establishes the documentation and procedures necessary to manage these assets. Detailed information of these requirements can be found in Office of Management and Budget Circular A-102 Common Rule, program legislation and/or regulations, and the grant award agreement terms and conditions.
For equipment with an acquisition cost over $5,000 and a useful life of more than one year and for all real property, adequate records must be maintained to track the assets. Adequate records for each asset should include the funding source used to purchase the equipment, purchase cost, and the date of purchase. These records should be updated as purchases and disposals occur. Assets should be used only for the Federal program they are purchased for. All equipment and real property must be safeguarded and maintained to ensure usability. At least biannually, a physical inventory should be performed and reconciled to the equipment records.
Organizations that dispose of real property and equipment having a fair market value of more than $5,000 must forward any proceeds to the Federal program (allocable based on the percent of Federal participation in the original purchase). When selling federal assets, organizations should attempt to obtain the highest possible return. For real property, any disposal must have the prior consent of the awarding agency. If equipment or real property is no longer necessary for federal purposes, but will be retained by the organization, the fair market value of the property should be paid to the Federal program.
Proper internal control procedures within the organization should ensure these compliance requirements have been met. Controls should include identifying those within the organization who will maintain equipment and real property records. Management should review records to determine completeness and accuracy. Organizations should further ensure the safeguarding of assets through the use of inventory tracking tags that are permanently affixed to assets, as practical, and securing assets using locked gates and doors.
Real Property Acquisition and Relocation Assistance: The Real Property Acquisition and Relocation Assistance requirement focuses on the uniform and equitable treatment of persons displaced by federally assisted programs from their homes, businesses, or farms. Further documentation of requirements can be found in the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended.
This requirement outlines what is required of the organization to ensure compensation offered to those displaced by a Federal program is equitable. The use of qualified independent appraisers, followed by a third-party review of appraisals, are used to calculate the compensation offer. Further allowances are also available to the displaced parties.
This requirement is uncommon for organizations, so read the detailed requirements carefully to ensure the proper procedures are followed when acquiring property in which individuals or organizations are displaced.
The 14 federal grant compliance requirements are not independent of one another. The purchase of equipment and real property is affected by the above two requirements, as well as the following related requirements: Activities Allowable or Unallowable, Allowable Costs, Procurement and Suspension and Debarment, Davis-Bacon Act, and Reporting. Each of these compliance requirements is described in more detail within other parts of our series on Grant Compliance.
Look for upcoming newsletter articles providing specific details on each of the 14 compliance requirements. Please contact Traci Hanson, Shelley Goodrich, or Sandra Weaver with specific questions.