The Department is required to assure that fiscal control and
accounting procedures for federally funded entities will be established
to assure the proper disbursal and accounting for the federal funds
paid to the state. In compliance with that assurance the Department
requires program Subrecipients to maintain adequate fidelity bond
coverage. A fidelity bond is a bond indemnifying the Subrecipient
against losses resulting from the fraud or lack of integrity, honesty
or fidelity of one or more of its employees, officers, or other persons
holding a position of trust.
(1) In administering Contracts, Subrecipients shall
observe their regular requirements and practices with respect to bonding
and insurance. In addition, the Department may impose bonding and
insurance requirements by Contract.
(2) If a Subrecipient is a non-governmental organization,
the Department requires an adequate fidelity bond. If the amount of
the fidelity bond is not prescribed in the contract, the fidelity
bond must be for a minimum of $10,000 or an amount equal to the contract
if less than $10,000. The bond must be obtained from a company holding
a certificate of authority to issue such bonds in the State of Texas.
(3) The fidelity bond coverage must include all persons
authorized to sign or counter-sign checks or to disburse sizable amounts
of cash. Persons who handle only petty cash (amounts of less than
$250) need not be bonded, nor is it necessary to bond officials who
are authorized to sign payment vouchers, but are not authorized to
sign or counter-sign checks or to disburse cash.
(4) The Subrecipient must receive an assurance letter
from the bonding company or agency stating the type of bond, the amount
and period of coverage, the positions covered, and the annual cost
of the bond. Compliance must be continuously maintained thereafter.
A copy of the actual policy shall remain on file with the Subrecipient
and shall be subject to monitoring by the Department.
(5) Subrecipients are responsible for filing claims
against the fidelity bond when a covered loss is discovered.
(6) The Department may take any one or more of the
actions described in Chapter 2, of this Part, titled "Enforcement"
in association with issues identified as part of filing claims against
the fidelity bond.
|
