Focus on internal controls: Five tips to avoid noncompliance with federal awards

As you work to stay in compliance with federal programs, it’s easy to overlook internal controls that prove you’re properly managing the terms and conditions of federal awards.

Implementing and monitoring internal controls can help your tribal management and council feel confident the tribe is properly complying with requirements.

Below are tips your tribe can take to help decide which internal controls to put in place and how to manage them.

Internal controls overview

Although the concept of internal controls may seem vague, internal controls are embedded in the ways management and tribal council members perform tasks to operate their programs.

These tasks can include planning, execution, and final reporting, all of which help ensure program objectives are being met and the tribe is staying in compliance with grant requirements.

Often processes can be performed to achieve a particular result, however, that result may have been achieved without internal controls in place. For example, it’s possible that a required report is successfully submitted to an agency — the achieved desired result — without performing a review of the report for accuracy.

Processes are procedures that originate, transfer, or change data, and can result in errors. Internal controls are procedures designed to prevent, detect, and correct errors resulting from processes and can’t generate errors.

When designing internal controls, Part Six of the Office of Management and Budget (OMB) Compliance Supplement suggests considering the people involved in completing a process as the doers and those involved in internal controls as the reviewers. In the example above, a doer would be the person who prepared the report, while the reviewer would be the person who reviewed the report for accuracy.

Tips to choose and support your internal controls

1. Plan to properly document your procedures.

No matter what controls you eventually decide to use, be prepared to develop proper documentation.

Entities that receive and operate federal awards, such as tribes, must establish and maintain their internal controls as required by the OMB’s uniform guidance — Title two U.S. Code of Federal Regulations Part 200