Sec. 403. Fiscal controls; sanctions
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Each State board shall establish such fiscal control and fund accounting procedures as may be necessary to assure the proper disbursal of, and accounting for, Federal funds allocated to local areas under this Act. Such procedures shall ensure that all financial transactions carried out under this Act are conducted and records maintained in accordance with generally accepted accounting principles applicable in each State. The Secretary shall establish, by regulation, fiscal control and fund accounting procedures meeting the requirements of subparagraph
(A)that will apply to other direct recipients. Each State board, Governor of a State, other direct recipient, and local board (including the chief elected official for the area) receiving funds under this Act shall comply with the applicable uniform cost principles included in the appropriate circulars of the Office of Management and Budget for the type of entity receiving the funds for all funds provided under this Act. The funds made available to a State for administration of statewide worker training services and activities in accordance with section 313(c), shall be allocable to the overall administration of worker training services and activities, but need not be specifically allocable to any individual program. Each State board, Governor, other direct recipient, and local board (including the chief elected official for the area) shall comply with the appropriate uniform administrative requirements for grants and agreements under this Act applicable for the type of entity receiving the funds, as promulgated in circulars or rules of the Office of Management and Budget. Procurement transactions under this Act between local boards and units of State or local governments shall be conducted only on a cost-reimbursable basis. Each Governor or State board shall conduct on an annual basis onsite monitoring of each local area within the State to ensure compliance with the uniform administrative requirements referred to in subsection (a)(3). If the Governor or State board determines that a local area is not in compliance with the uniform administrative requirements referred to in subsection (a)(3), the Governor or State board shall— require corrective action to secure prompt compliance with the requirements; and impose the sanctions provided under subparagraph
(E)in the event of failure to take the required corrective action. The Governor or State board shall, every 2 years, certify to the Secretary that— the State has implemented the uniform administrative requirements referred to in subsection (a)(3); the State has monitored local areas to ensure compliance with the uniform administrative requirements as required under subparagraph (A); and the State has taken appropriate action to secure compliance pursuant to subparagraph (B). If the Secretary determines that the Governor or State board has not fulfilled the requirements of this subsection, the Secretary shall— require corrective action to secure prompt compliance; and impose the sanctions provided under subsection
(d)or
(e)in the event of failure of the Governor or State board to take the required appropriate action to secure compliance. If, as a result of financial and compliance audits or otherwise, the Governor or State board determines that there is a substantial violation of a specific provision of this Act, and corrective action has not been taken, the Governor or State board shall— issue a notice of intent to revoke approval of all or part of the local plan affected; or impose a reorganization plan, which may include— decertifying the local board involved; prohibiting the use of eligible providers; selecting an alternative entity to administer the program for the local area involved; merging the local area into one or more other local areas; or making other such changes as the Secretary, Governor, or State board determines necessary to secure compliance. The actions taken by the Governor or State board pursuant to subclause
(I)or
(II)of clause
(i)may be appealed to the Secretary and shall not become effective until— the time for appeal has expired; or the Secretary has issued a decision. The Secretary shall make a final decision under subclause
(I)not later than 45 days after the receipt of the appeal. If the Governor or State board fails to promptly take the actions required under paragraph (1), the Secretary shall take such actions. By not later than 90 days after the effective date of this Act, the Secretary shall establish, by regulation, a system of monitoring, penalties for noncompliance, for other direct recipients that is comparable to the system required under paragraph
(1)for States. Every State or other direct recipient shall repay to the United States amounts found not to have been expended in accordance with this Act. If the Secretary determines that State or other direct recipient has expended funds made available under this Act in a manner contrary to the requirements of this Act, the Secretary may offset repayment of such expenditures against any other amount to which the State or recipient is or may be entitled, except as provided under subsection (d)(1). If the Secretary requires a State to repay funds as a result of a determination that a local area of the State has expended funds contrary to the requirements of this Act, the Governor or State board may use an amount deducted under subparagraph
(B)to repay the funds, except as provided under subsection (d). The Governor or State board may deduct an amount equal to the misexpenditure described in subparagraph
(A)from subsequent fiscal year allocations to the local area from funds reserved for the administrative costs of the local programs involved, as appropriate. A deduction made by a State as described in subparagraph
(C)shall not be made until such time as the Governor or State board has taken appropriate corrective action to ensure full compliance within such local area with regard to appropriate expenditures of funds under this Act. Each State or other direct recipient shall be liable to repay the amounts described in subsection (c)(1), from funds other than funds received under this Act, upon a determination by the Secretary that the misexpenditure of funds was due to willful disregard of the requirements of this Act, gross negligence, failure to observe accepted standards of administration, or a pattern of misexpenditure as described in subsection (c)(1). No such determination shall be made under this subsection or subsection
(c)until notice and opportunity for a fair hearing has been given to the recipient. In determining whether to impose any sanction authorized by this section against a State or other direct recipient for violations by a subgrantee or contractor of such State or recipient under this Act (including a violation of the regulations issued under this Act), the Secretary shall first determine whether such State or recipient has adequately demonstrated that the State or recipient has— established and adhered to an appropriate system for the award and monitoring of grants and contracts with subgrantees and contractors that contains acceptable standards for ensuring accountability; entered into a written grant agreement or contract with such subgrantee or contractor that established clear goals and obligations in unambiguous terms; acted with due diligence to monitor the implementation of the grant agreement or contract, including carrying out the appropriate monitoring activities (including audits) at reasonable intervals; and taken prompt and appropriate corrective action upon becoming aware of any evidence of a violation of this Act, including regulations issued under this Act, by such subgrantee or contractor. If the Secretary determines that the State or other direct recipient has demonstrated substantial compliance with the requirements of paragraph (2), the Secretary may waive the imposition of sanctions authorized by this section upon such State or recipient. The Secretary is authorized to impose any sanction consistent with the provisions of this Act and any applicable Federal or State law directly against any subgrantee or contractor for a violation of this Act, including regulations issued under this Act. In emergency situations, if the Secretary determines it is necessary to protect the integrity of funds provided under this Act or ensure the proper operation of the worker training service or activity involved, the Secretary may immediately terminate or suspend financial assistance, in whole or in part, to any recipient of such funds if the recipient is given prompt notice and the opportunity for a subsequent hearing within 30 days after such termination or suspension. The Secretary shall not delegate any of the functions or authority specified in this subsection, other than to an officer whose appointment is required to be made by and with the advice and consent of the Senate. If the Secretary determines that any recipient under this Act has discharged or in any other manner discriminated against a participant or against any individual in connection with the administration of the program involved, or against any individual because such individual has filed any complaint or instituted or caused to be instituted any proceeding under or related to this Act, or has testified or is about to testify in any such proceeding or investigation under or related to this Act, or otherwise unlawfully denied to any individual a benefit to which that individual is entitled under the provisions of this Act or the Secretary’s regulations, the Secretary shall, within 30 days, take such action or order such corrective measures, as necessary, with respect to the recipient or the aggrieved individual, or both. The remedies described in this section shall not be construed to be the exclusive remedies available for violations described in this section.