[Code of Federal Regulations]

[Title 7, Volume 4]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR277.16]



[Page 899-900]

 

                          TITLE 7--AGRICULTURE

 

    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE

 

PART 277_PAYMENTS OF CERTAIN ADMINISTRATIVE COSTS OF STATE AGENCIES

--Table of Contents

 

Sec. 277.16  Suspension, disallowance and program closeout.



    (a) Suspension. When a State agency has materially failed to comply 

with any of the provisions contained in the Act, regulations, or FNS-

approved State Plan of Operation, FNS may, after written notification to 

the State agency, temporarily withhold some or all Federal 

reimbursements for costs of administration of the Food Stamp Program in 

accordance with Sec. 276.4. Adjustments will be made either by 

adjusting the Letter of Credit authorization or by not allowing the 

State agency to withdraw funds.

    (b) Disallowance. (1) FNS may disallow costs in accordance with part 

276 and effect nonpayment for some or all costs incurred by a State 

agency which are normally allowable but are determined by FNS to be 

nonreimbursable because the State agency has failed to comply with any 

of the provisions contained in the Act, regulations, or FNS-approved 

State Plan of Operation.

    (2) FNS may also disallow costs and institute recovery of Federal 

funds when a State agency fails to adhere to the cost principles of this 

part and appendix A.

    (c) Offsets to the Letter of Credit. (1) FNS may recover funds when 

owed by the State agency to FNS through offsets to the Letter of Credit. 

Offsets shall include:

    (i) Costs determined by FNS to be disallowed under the provisions of 

this part;

    (ii) Unallowable costs resulting from audit or investigation 

findings;

    (iii) Amounts owed which have been billed to the State agency and 

which the State agency has failed to pay without cause acceptable to 

FNS; or



[[Page 900]]



    (iv) Amounts owed to FNS for title IV reimbursements and recipient 

claims collections which were reported on the FNS-209 and which the 

State agency has failed to pay.

    (2) The amounts recovered through the offset procedure should be in 

one lump sum. If recovery of funds through the offset procedure is not 

possible in one lump sum, FNS shall make appropriate adjustments to 

recover the funds in not more than three fiscal years.

    (d) Program transfer or termination. (1) When termination or 

transfer of a State program has been agreed upon by FNS, the following 

closeout procedure shall be observed:

    (i) Upon request, FNS shall make or arrange for prompt payment to 

the State agency for allowable costs not covered by previous payments.

    (ii) The State agency shall immediately refund to FNS any 

unobligated balance of cash withdrawn by the State agency for the 

administration of the program in the affected State or Indian 

reservation.

    (iii) The State agency shall submit to FNS within 90 days after the 

date of termination of the program, all required financial, performance, 

and other reports. FNS may grant extensions when requested by the State 

agency.

    (iv) FNS shall adjust the amount authorized by the Letter of Credit 

in order to effect payment of any amounts due the State agency, and if 

appropriate, shall bill the State agency for any amounts due to FNS. The 

amounts of such billings shall be promptly remitted to FNS.

    (v) In the event a final audit has not been performed prior to the 

closeout of the program, FNS shall retain the right to disallow costs or 

recover funds resulting from the final audit findings.

    (2) Provisions of Sec. 277.13 apply for any property acquired with 

program funds or received from the Federal Government in connection with 

the program and which was in use in the affected project area or areas.



[Amdt. 188, 45 FR 85702, Dec. 30, 1980, as amended by Amdt. 342, 59 FR 

2733, Jan. 19, 1994]