5minute oral presentation/interview questions ansered Need in 2-3 hours max

Introduction

This CAPP – Cardinal topic provides guidelines and references to assist State agencies with development of internal policies and procedures to properly account for, report, and manage federal grants in accordance with the following federal and state requirements.

Note: Unless specifically indicated in a subtopic, higher education institutions are excluded from these policies and procedures.

Policy

DOA provides grant-reporting capabilities to agencies through Cardinal.

State agencies are responsible for proper and accurate recording of federal grant activity through the use of Cardinal or an agency-based accounting system which interfaces to Cardinal and is fully reconciled to Cardinal with corrections made as needed.

Agencies must also prepare federal grants reports in accordance with federal regulations.

Key Resources for Federal Grants Management

The Office of Management and Budget (OMB) recently incorporated OMB Circulars A-21, A-87, A-89, A-102, A-110, A-122, and A-133 into a single document. The new document, now titled 2CFR, Uniform Administrative Requirements for Federal Awards, is located in Title 2 of the Code of Federal Regulations at http://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf . 

The new guidance streamlines the previous circulars into one document. The guidance is divided into subparts for acronyms and definitions, general provisions, pre-federal award requirements and contents of federal awards, post-federal award requirements, cost principles, and audit requirements.

The Cash Management Improvement Act of 1990 (CMIA) provides the general rules and procedures for the effective and equitable use of state and federal funds for major federal assistance programs as documented in the annual Treasury-State Agreement (TSA) between the State and the Federal government. See 31 CFR 205 Part A for the rules governing the largest federal programs and Part B for all other programs. The CMIA can be researched at www.fms.treas.gov/cmia/index.html. The CFR can be reviewed at http:// www.ecfr.gov/cgi-bin/ECFR as shown above. The TSA can be viewed at:

http://www.doa.virginia.gov/Financial_Reporting/CMIA/Treasury_State_Agreement.pdf

Allowable Costs

To be allowable under a grant program, costs must meet the following criteria:

· Be necessary and reasonable for proper and efficient performance and administration of Federal awards;

· Be allocable to Federal awards;

· Be authorized or not prohibited under state or local laws or regulations;

· Conform to any limitations or exclusions set forth in federal guidelines;

· Be consistent with policies, regulations, and procedures that apply uniformly to both federally assisted and other activities of the government unit of which the grantee is a part;

· Be accorded consistent treatment and determined to be in accordance with Generally Accepted Accounting Principles (GAAP);

· Not be included as a cost or used to meet cost sharing or matching requirements of any other Federal award in either the current or a prior period, except as specifically provided by Federal law or regulation and;

· Be net of all applicable credits and adequately documented.

Cognizant Agency

The Cognizant Agency for cost allocation plans and indirect cost proposals for all governmental units or agencies not specifically identified by OMB will be determined based on the Federal Agency providing the largest amount of federal grant funds to the entity. With some exceptions, this will usually be Department of Health and Human Services (HHS).

CMIA

The Cash Management Improvement Act of 1990 (CMIA) provides the general rules and procedures for the effective, efficient and equitable use of state and federal funds on behalf of major federal assistance programs in the annual Treasury-State Agreement (TSA). See 31 CFR 205 Part A of the Code of Federal Regulations for the rules governing the largest federal programs, and Part B for all other programs.

Drawdown

A process whereby a state requests and receives federal funds.

Expenditure Recording Date

The date vouchers are posted in Cardinal. This date may be several days after the creation of the voucher in Cardinal. It is also called the Cardinal Voucher Post Date.

Federal Financial Assistance

Assistance that non-Federal entities receive or administer in the form of grants, loans, loan guarantees, property (including donated surplus property), cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, and other assistance, but does not include amounts received as reimbursement for services rendered to individuals. Assistance includes awards received directly from federal agencies or indirectly from other state and local government units. A comprehensive listing, by federal program number, may be found in the Catalog of Federal Domestic Assistance (CFDA) at www.cfda.gov . Cardinal uses the Federal grantor’s number as listed in the CFDA as part of the account structure. The account number for revenue is 40 followed by the CFDA number. See CAPP – Cardinal Topic No. 60106, Account.

Federal

Award

An award of financial assistance, including cooperative agreements, in the form of money, or property in lieu of money, by the federal government to an eligible grantee.

The term does not include technical assistance, which provides services instead of money, or other assistance in the form of revenue sharing, loans, loan guarantees, interest subsidies, insurance, or direct appropriations. Also, the term does not include assistance for which the grantee is not required to account.

Funding Techniques

Federal CMIA regulations prescribe five primary federal program funding techniques for the drawdown of federal funds. Specific funding techniques for selected CMIA programs are in Virginia’s Treasury-State Agreement (TSA). Virginia’s TSA is maintained by the Financial Reporting Unit, Department of Accounts.

1) Zero balance accounting - a Federal Program Agency transfers the actual amount of Federal funds to a State that are paid out by the State each day.

2) Projected clearance - a Federal Program Agency transfers to a State the projected amount of funds that the State pays out each day. The projected amount paid out each day is determined by applying a clearance pattern to the total amount the State will disburse.

3) Average clearance - a Federal Program Agency, on the dollar-weighted average day of clearance of a disbursement, transfers to a State a lump sum equal to the actual amount of funds that the State is paying out. The dollar-weighted average day of clearance is the day when, on a cumulative basis, 50 percent of the funds have been paid out. The dollar-weighted average day of clearance is calculated from a clearance pattern.

4) Cash advance (pre-issuance or post-issuance) funding - a Federal Program Agency transfers to a State the actual amount of Federal funds that will be paid out by the State not more than three business days prior to the day the State issues checks or initiates electronic payments. The U.S. Treasury modified this rule, in Virginia’s TSA, to allow federal funds to be deposited not more than three business days prior to the expenditure recording date (voucher post date) in Cardinal.

5) Reimbursable funding - a Federal Program Agency transfers Federal funds to a State after that State has already paid out the funds for Federal assistance program purposes.

Grantee

The direct recipient of a grant that is accountable for the use of the funds received. The grantee is the entire legal entity even if only a particular component of the entity is designated in the grant award document.

Grantor

The Federal agency that awards a grant to an eligible grantee.

Pass-Through Funds

Funds received by a State agency or institution for subsequent transfer to other state agencies or institutions to carry out the program purpose.

Questioned Costs

Costs that, in the opinion of the auditor, may not comply with or may not be consistent with the requirements set forth in contracts, statutes, or regulations governing the allocation, allowability, or reasonableness of costs charged to awards and programs, and thus may not be reimbursable.

Statewide Indirect Costs

Indirect costs incurred by the State's central service agencies in support of other State agencies and institutions. Agencies are notified annually by DOA of their allocation of Statewide indirect costs.

Subgrant

An award of financial assistance in the form of money, or property in lieu of money, made under a grant by a grantee to an eligible subgrantee. The term includes financial assistance when provided by contractual legal agreement, but does not include procurement purchases, nor does it include any form of assistance, which is excluded from the definition of "grant."

The Common Rule for State Agency Financial Management Systems

2CFR, Part 200 prescribes the standards for financial management systems.

Subsection (a) says, “A State must expend and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to:

(1) Permit preparation of reports required by this part and the statutes authorizing the grant, and

(2) Permit the tracking of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes.”

Subsection (b), paraphrased below, is generally applicable to all grantees and sub-grantees:

· Financial Reporting—accurate, current and complete disclosure of financial results.

· Accounting Records—maintenance of records, which adequately identify the source, and application of funds.

· Internal Control—maintenance of effective control and accountability for all grants and subgrants.

· Budget Control—comparisons of actual expenditures or outlays to budgeted amounts for each grant or subgrant.

· Allowable Costs—grant expenditures determined by applying appropriate OMB cost principles, agency program regulations and the terms of grant and subgrant agreements.

· Source Documentation—documentation maintained to support accounting records.

· Cash Management—procedures to minimize the time elapsing between the transfer of funds from the federal government and the disbursement by the grantee or subgrantee.

Recording Federal Grant Financial Information in Cardinal

Cardinal provides most agencies with an adequate system for tracking grant expenditures and assisting in cash management. It may not, however, be sufficient for some agencies with a high volume and variety of grant tracking activities. Under those circumstances, the responsible agency must provide an agency-based system that meets the financial management standards of the Common Rule. The primary Cardinal federal grants accounting tool is the project code structure. See CAPP – Cardinal Topic No. 60101, Chart of Accounts, and CAPP – Cardinal Topic No. 60107, Project, for further details. State agencies responsible for CMIA interest calculations should use project codes to facilitate the tracking of deposits and related expenditures of major federal assistance programs.

If detail information is to be identified by project code, the agency must ensure the project code is entered on all applicable revenue and expenditure documents.

Agencies can use project, task, agency use 1, and agency use 2 chartfields to organize and record their grant activity.

Applicable fund, account, program, project and other chartfields used by the agency, such as agency use 1, agency use 2, and task, must be coded on all expenditure documents.

Policy

Solicitation of federal grants and contracts must be undertaken in accordance with Sections 4-1.05 b.3. and 4-2.01 a. of Part 4: General Provisions of the Appropriation Act and 2CFR, Part 200.

State agencies and institutions are responsible for filing timely applications and program plans for new or continuing federal grants or contracts. Grant applications and program plans must be filed by the required due dates set by the respective federal grantor agencies in order to qualify. This will also help avoid delays in the receipt of federal funds.

DUNS Number Requirement

All federal grant applications must include a Dun and Bradstreet (D&B) Data Universal Numbering System (DUNS) number. The DUNS number is required whether the applicant is submitting a paper application or using the new government-wide electronic portal www.grants.gov . The DUNS number supplements other identifiers, such as the tax identification number. It should be included on all applications for an award or renewal of an award. To obtain a DUNS number, state agencies and institutions should call the dedicated toll-free DUNS Number request line at 1-866-705-5711.

Government-wide Portal www.grants.gov

HHS developed the website www.grants.gov as part of the federal government’s response to the Federal Financial Assistance Management Improvement Act of 1999. It provides a “one-stop shopping electronic grants portal” for all federal grants customers and potential customers to obtain information and to apply for grants on-line.

General Procedures

Procedures to be followed in order to comply with State requirements include:

Each agency and institution must annually submit to the Department of Planning and Budget (DPB) reasonable estimates of anticipated receipts from federal grants.

These estimates are used in recommending appropriation levels for the agency. Agencies and institutions may then solicit and accept grants on the authority of the agency only up to the amount of nongeneral funds that have been so appropriated. Agencies and institutions should contact DPB for authorization to receive and expend nongeneral fund revenues in excess of the appropriated amount.

Do not solicit, accept, nor expend nongeneral fund revenues from grants:

· whose specific sources have not been included in the budget submission terminology and/or have not been appropriated to the agency;

· when the federal government provides the funds and the option exists for either the State or the federal government to administer the program supported by such funds;

· if in the event that federal funds are reduced or terminated, the State would be required to absorb the cost of services not provided for in the Appropriation Act;

· when the purpose of the grant is inconsistent with an agency's legislative or administrative mandate; or

· when such grant obligates an agency to (1) additional positions, employment levels, office space, or other additional costs beyond those provided for in the Appropriation Act, or (2) a capital outlay project, unless same is included in the Appropriation Act or unless prior approval has been obtained under Section 4-4.01 of the Act.

Cash Management

This Cash Management section provides policy and procedural guidance in accordance with the above-referenced OMB circulars, Section 2.2-803, Code of Virginia and in accordance with the federal Cash Management Improvement Act (CMIA) of 1990 for:

1) all state agencies and institutions that receive, deposit, expend, or transfer federal funds into (or from) the State Treasury,

2) all state agencies and institutions that “pass through” federal funds to subgrantees, and

3) all state subgrantee agencies and institutions that receive federal funds from other state agencies or institutions.

The guidance is designed to ensure that neither the federal government nor the Commonwealth benefits or suffers financially as a result of the transfer of cash in support of state administered federal programs.

DOA will maintain a technical understanding of intergovernmental cash management issues and requirements, including federal and state requirements related to the federal Cash Management Improvement Act of 1990. The State Comptroller, in cooperation with the State Treasurer, will serve as the Governor's designated liaison between the Commonwealth and the United States Treasury Department.

Deposits

Deposits should be made in accordance with CAPP - Cardinal Topic No. 20205, Deposits, and drawdowns in accordance with the Cash Management Improvement Act of 1990 as prescribed in the annual CMIA Treasury-State Agreement (TSA) and in the federal CMIA regulations (31 CFR Part 205).

Receiving Payment

State agencies and institutions should use the electronic funds transfer (EFT) method of receiving payment from federal grantor agencies or automated clearing house (ACH) payments through the federal Payment Management System (PMS) or the Automated Standard Application for Payment System (ASAP). Such an approach should include a mechanism to confirm the receipt of a specific transfer into a state bank account so that an agency or institution can properly and timely account for such funds. State agencies and institutions should work with their respective federal grantor agencies so that federal funds are received in state bank accounts within one banking day after the federal agency receives a request to draw down federal funds unless otherwise specified in the CMIA TSA.

Using Project Chartfield—CMIA Interest Calculations

State agencies responsible for CMIA interest calculations should use project codes to facilitate the tracking of deposits and related expenditures of major federal assistance programs.

Advance Funded Federal (Nonreimburse-ment) Programs

Under an advance funded (nonreimbursement) federal program, the state can draw down and deposit federal funds prior to the time that the related state expenditures clear the bank. State agencies and institutions should strive to time their requests for federal funds so that they are deposited just prior to the related expenditure recording date, or voucher posting date in Cardinal.

Generally, drawdowns of federal funds should not be requested so that they are deposited more than three business days before the related expenditure recording date (or voucher posting date) in Cardinal. When federal funding supports disbursements to vendors, drawdowns should be made frequently and timely enough to ensure (1) compliance with Prompt Payment Statutes and (2) sufficient cash is on hand in order to process the related expenditures in Cardinal.

Federal Delays

If operationally feasible, state agencies and institutions that experience a delay in the availability of federal funds at the beginning of a federal fiscal year should inquire if the federal grantor agency is authorized to operate under a continuing resolution until such time as the federal budget is signed into law. For those grants or contracts for which a continuing resolution is authorized, state agencies and institutions should request a drawdown of the required amount to process current federal expenditures.

If the federal grantor agency is not authorized to operate under a continuing resolution or if the federal grantor agency delays the transfer of funds, it may be necessary to request a Treasury loan in anticipation of federal revenue. See anticipation loan guidelines in CAPP – Cardinal Topic No. 20805, Loans.

Federal Reimbursement Programs

Under a federal reimbursement program, the state is required to advance state funds for program costs, and be reimbursed with federal funds at a later date. Reimbursement funding methods are usually associated with contracts that are subject to procurement regulations, which ordinarily require a deliverable (receipts, completed project) prior to payment of funds. Any grants that require an accounting submission to accompany the drawdown request are also considered reimbursement type federal programs.

Prior to accepting, or continuing, a reimbursement funding method, state grantee and state subgrantee agencies shall formally inquire of the respective federal grantor agencies or state grantee agencies if other funding methods are available that would fully, or partially, advance fund the program. Such inquiries should be made annually, several weeks before the grant or contract is renewed. Upon written request, the Department of Accounts will provide assistance to a state agency or institution in negotiating more favorable federal funding methods from the federal government or from the state grantee agency.

If the federal program is funded on a reimbursement basis, costs are to be billed to the federal grantor agency as often as feasible, at least monthly, unless otherwise prohibited by the grantor.

When negotiating cost reimbursement contracts, all State agencies and institutions are required to inquire of their federal counterparts as to the acceptability or availability of alternative drawdown procedures permitting billings more frequently than monthly.

Recording Expenditures on State & Federal Grants

If an agency has a federal grant or contract that requires both state and federal expenditures, then established procedures preclude, whenever possible, a state agency or institution from charging the General Fund, or special funds of the Commonwealth, for the federal expenditures.

Two methods of recording "split" funded expenditures are acceptable.

Preferable Method

The method preferred by the State Comptroller is to establish procedures to "split code" the expenditure documents. This allocates the disbursement between the General Fund (or other state fund) and the federal fund at the matching ratio prescribed by the grant or contract. Agencies can use speedcharts in Cardinal to assist with split coding of AP Vouchers if desired.

Temporary Funding Method

A second, and temporary, funding method is to be used only if the agency deems it to be the most efficient method for processing “split” funded expenditures. This method allows the agency to charge the original expenditure to the General Fund (or other state fund) and subsequently, within seven business days, prepare and submit a general ledger journal in Cardinal to charge the federal fund for the federal portion of the original expenditure. The general ledger journal should reference the original Voucher ID in the journal reference line. For compliance purposes, the general ledger journal processing time starts from the nonfederal fund expenditure (voucher) posting date in Cardinal and ends with the related federal fund expenditure posting date in Cardinal. Although seven business days are allowed, emphasis should be placed on entering the general ledger journal to charge the federal fund as soon as possible after the original state funded expenditure.

State agencies and institutions unable to comply with the above processing time requirements must request that the State Comptroller approve:

1) a Treasury loan when federal funding delays prevent compliance, and/or

2) an exception when systems or work load problems prevent compliance.

Treasury Loans in Anticipation of Federal Funds

An anticipation loan may be requested by a state grantee or subgrantee agency or institution to provide cash in anticipation of federal revenue. A Treasury loan request with all required cash flow and federal contact documentation should be submitted to the State Comptroller at least six weeks before the funds are needed.

Follow the specific Treasury loan requirements in CAPP – Cardinal Topic No. 20805, Loans.

Federal “Pass Through” Money to Sub-grantees

Grantee agencies and institutions that receive federal funds and subsequently transfer or “pass through” federal funds to other agencies or institutions, or other sub-grantees, shall minimize the time between the receipt of the federal monies and their transfer to the receiving agencies or institutions, or other sub-grantees.

Guidelines for grantees' payments to subrecipients should conform to standards for payments made by federal agencies to primary grantees. The timing of either advances or reimbursements to subrecipients should be as close as is administratively feasible to the actual disbursements by the recipient.

Subrecipient Versus Contractor Defined

In order to distinguish between subrecipient or vendor relationships, the following definitions and characteristics are to be considered.

These definitions and characteristics are taken from the newUniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, because the most occurrences of subrecipient arrangements will occur in the administration of federal grant funds. There are occasions where a subrecipient relationship will exist outside of federal funds, and the subrecipient coding should be used in those instances also.

Subrecipient Definition

A subrecipient is a non-federal entity that expends federal awards received from a pass-through entity to carry out a federal program, but does not include an individual that is a beneficiary of such a program.

A subrecipient may also be a recipient of other federal awards directly from a federal awarding agency.

A subrecipient--

· Determines who is eligible to receive federal financial assistance.

· Has its performance measured against whether the objectives of the federal program are met.

· Assumes responsibility for programmatic decision making.

· Assumes responsibility for adherence to applicable federal program compliance requirements.

· Uses the federal funds to carry out a program of the organization as compared to providing goods or services for a program of the pass through entity.

Contractor Definition

A contractor is a dealer, distributor, merchant, or other seller providing goods or services that are required for the conduct of a federal program. These goods or services may be for an organization’s own use or for the use of beneficiaries of the federal program.

A contractor--

· Provides the goods and services within normal business operations.

· Provides similar goods or services to other purchasers.

· Operates in a competitive environment. (This may not be the case when one state agency purchases goods or services from another.)

· Provides goods or services that are ancillary to the operation of the federal program.

· Is not subject to compliance requirements of the federal program.

Pass Through Procedures

The following procedures are to be used for recording PASS THROUGH (SUBRECIPIENT) TRANSACTIONS between State agencies and institutions, except transactions with Decentralized Higher Education Institutions.

Step

Action

Action by

Pass Through (Paying) Agency

Action by Subrecipient (Receiving) Agency

1

Determine whether the transaction is a contractor or subrecipient relationship.

Agree on relationship in conjunction with the receiving (sub-recipient) agency

Agree on relationship in conjunction with the paying (pass through) agency

2

Document the basis for the determination of subrecipient relationship.

File documentation with federal grant workpapers, to be available for single audit

File documentation with grant workpapers to be available for audit

Step

Action

Action by

Pass Through (Paying) Agency

Action by Subrecipient (Receiving) Agency

3

For federal subrecipient relationship transaction - receiving (subrecipient) agency, have the appropriation to spend federal funds

· Use appropriate Federal fund

· Account 609660 Cash Tran Out – Fed pass thru Cardinal

· Voucher MUST include CFDA number(s) in the Payment Message

· Record no expenditures

· Transfer appropriation, if it is not with the receiving (subrecipient) agency, by submitting request to DPB

· Use appropriate Federal fund

· Account 609650 Cash Tran In – Fed pass thru Cardinal

· Deposit Accounting Entry MUST include CFDA number(s) in the Journal Line Reference

· Record as expenditure using appropriate account codes

· If needed, submit request to DPB to establish appropriation.

4

For non-federal subrecipient relationship transaction—receiving (subrecipient) agency, have the appropriation to spend funds

Note: This is not applicable for General Funds – General Funds must be handled by an appropriation transfer through DPB.

· Determine appropriate fund

· Account 609660 Cash Tran Out – Fed pass thru Cardinal

· Voucher MUST include identification of source of funds in the Payment Message

· Record no expenditure

· Transfer appropria-tion, if it is not with the subrecipient agency, by submit-ting request to DPB.

· Determine appropriate fund

· Account 609650 Cash Tran In – Fed pass thru

· Deposit Accounting Entry MUST include identification of source of funds in the Journal Line Ref

· Record as expenditure using appropriate program and project chartfields

· If needed, submit request to DPB to establish appropriation.

Pass Through Procedures DHEI

The following procedures are to be used for recording PASS THROUGH (SUBRECIPIENT) TRANSACTIONS between decentralized higher education institutions (DHEI) and other State agencies and institutions. While Tier III higher education institutions may use different Cardinal accounts (from those shown in the table below and on the following page) to process the pass through subrecipient transactions, Tier III higher education institutions are required to implement adequate controls to ensure that pass through subrecipient transactions are properly identified and reported as necessary.

Step

Action

Action by

Pass Through (Paying) Agency

Action by Subrecipient (Receiving) Agency

1

Determine whether the transaction is a contractor or subrecipient relationship.

Agree on relationship in conjunction with the subrecipient agency

Agree on relationship in conjunction with the pass through agency

2

Document the basis for the determination of contractor / subrecipient relationship.

File documentation as appropriate (i.e., if subrecipient, file with grant workpapers) to be available for audit

File documentation as appropriate (i.e., if subrecipient, file with grant workpapers) to be available for audit

3

Federal subrecipient relationship transaction – Decentralized Higher Education Institution (DHEI) receives funds from another state agency by EDI. (Remittance data can be obtained by logging on to REDI Virginia. See EDI button on the DOA web-site at www.doa.virginia.gov )

Receiving agency should have the appropriation to spend federal funds

· Use appropriate Federal fund

· Account 609930 Cash Tran Out – Fed Pass thru HE

· Voucher must include CFDA number in the Payment Message.

· Transfer appropriation, if it is not with the Receiving DHEI

· Use appropriate Federal fund

· Deposit using Account 220550 Clearing Acct – Decentralized Agy

· Prepare month end general ledger journal to reverse credit to 220550, then record the transfer to Account 609920 Cash Trans In – Fed Pass thru HE

· General ledger journal MUST include CFDA number(s) in the Journal Line Ref

Step

Action

Action by

Pass Through (Paying) Agency

Action by Subrecipient (Receiving) Agency

4

Non-Federal subrecipient relationship transaction – Decentralized Higher Education Institution (DHEI) receives funds from another state agency by EDI. (Remittance data can be obtained by logging on to REDI Virginia. See EDI button on the DOA website at www.doa.virginia.gov )

Receiving agency should have the appropriation to spend funds.

Note: This is not applicable for General Funds – General Funds must be handled by an appropriation transfer through DPB.

· Determine appropriate fund

· Account 609930 Cash Tran Out – Fed Pass thru HE

· Voucher must include CFDA number in the Payment Message.

· Transfer appropriation, if it is not with the Receiving DHEI

· Determine appropriate fund

· Deposit using Account 220550 Clearing Acct – Decentralized Agy

· Prepare month end general ledger journal to reverse credit to 220550, then record the transfer to Account 609920 Cash Trans In – Fed Pass thru HE

· General ledger journal MUST include CFDA number(s) in the Journal Line Ref

General Obligation Bond Interest Expense

The Department of Accounts successfully negotiated with the U. S. Department of Health and Human Services (DHHS) to allow the inclusion of General Obligation Bond (GOB) interest expense in the College and Universities’ Facilities and Administrative indirect cost allocation plans. State agencies will also be allowed to allocate the GOB interest expense to Federal Grants and Contracts.

Although the General Fund pays this interest expense, current plans call for institutions and agencies to retain these recoveries in accordance with current law. The GOB interest expense will be submitted annually with the Statewide Indirect Cost Allocation Plan for approval by DHHS. Once approved, agencies and institutions will be notified of the amounts that may be included in their indirect cost rate plans. For further guidance see CAPP – Cardinal Topic No. 20705, Indirect Cost Recovery.

Cash Management Improvement Act of 1990 (CMIA)

The federal CMIA regulations (31CFR 205) prescribe the rules and procedures for the timely transfer and expenditure of funds between the federal government and the states for all federal programs listed in the Catalog of Federal Domestic Assistance.

Part A of the regulations applies to major federal assistance programs. The materiality threshold for major federal assistance programs subject to CMIA is prescribed in Table A to §205.5 of 31 CFR Part 205. Depending on funding technique and the terms of the Treasury-State Agreement (TSA), interest liabilities may be incurred, and interest calculations may be required, by Part A programs.

Federal programs that are not included in the TSA are subject to Part B of the CMIA regulations, which advises that the timing and amount of federal cash advances should be as close as administratively feasible to actual cash outlay by the State. Interest liabilities are not incurred, and interest calculations are not required, by Part B programs.

Comptroller’s Authority for CMIA Interest Calculations

Virginia's Appropriation Act contains the authority for the Comptroller to determine the amount of interest that may be owed to the federal government under the CMIA requirements and provides a sum sufficient appropriation for the payment of this interest. DOA publishes and distributes interest calculation requirements to affected agencies annually.

The following reports/queries have been developed to assist DOA and the agencies with interest calculations:

CMIA Report – Days held from Expenditure

Cash Management Improvement Act Query (V_AR_CMIA_QRY2)

Financial Reporting Guidance

This section provides reporting policy and procedural guidance in accordance with the Office of Management and Budget Circulars and Section 2.2 – 803, Code of Virginia, for all State agencies planning to accept or currently administering a grant or contract.

Cardinal provides agencies with an automated system to track grant revenues and expenditures. Agencies should use Cardinal reports to manage federal cash, reconcile records, calculate indirect cost recoveries, prepare federal financial reports, and monitor grant activity.

Federal Policy on Reporting and Auditing Financial Information

The new Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, define the audit requirements for State and local governments receiving federal assistance, including audit-reporting requirements.

OMB publishes an annual Compliance Supplement to the former Circular A-133, Audits of State and Local Governments and Non-Profit Organizations. The supplement will still be located at the OMB website at http://www.whitehouse.gov/omb/circulars/ even though the Circular has been incorporated into the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards . Each year, the Supplement updates program compliance requirements and related audit procedures. It focuses on requirements that could have a direct and material effect on a major program.

Schedule of Federal Assistance

The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards requires that a Schedule of Federal Assistance be prepared to show the total expenditures for each federal assistance program as identified in the Catalog of Federal Domestic Assistance. This schedule should include funds received directly from federal agencies and “pass through” funds from other state agencies and institutions.

State agencies are responsible for preparing a Schedule of Federal Assistance as part of the annual financial reporting requirements.

Property Acquired with Federal Grant Funds

Property acquired, in whole or in part, with federal grant funds should be acquired and managed in accordance with the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

State agencies should have a procurement system that complies fully with appropriate federal and state requirements to minimize financial risks such as cost disallowance and safeguard all property acquired with federal funds.

Capital Assets Acquired with Federal Grant Funds

Capital assets acquired in full or in part with federal grant funds are subject to the same capitalization and control criteria as any other assets.

Further Reference Detail

· CAPP Topic No. 30305, Capitalized or Controlled Assets.

· Additional specific requirements related to assets purchased with federal funds (e.g., depreciation, recovery of indirect cost, disposition, etc.) can be found in CAPP Topic No. 31105, Federal Requirements.

Making Purchases with Federal Funds

The Common Rule allows states to follow their own laws and regulations when making purchases with federal funds. These rules are explained in the Agency Procurement and Surplus Property Manual.

Federal policy relies on the adequacy of state procurement systems and practices without imposing additional requirements. The Common Rule, however, does require state governments to ensure that all purchase orders and contracts include any contract clauses required by federal laws, Executive Orders, and their companion implementing regulations.

Grant Closeout

State agencies and institutions are responsible for filing timely financial, performance, and other reports required by the federal grantor agency as a condition of the grant. Final reports must be filed by the required due dates set by the respective federal grantor agencies to avoid jeopardizing future grants or delaying the receipt of final reimbursement of federal funds.

Procedures

The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards provides guidance for complying with grantor agencies' requirements for closing out grants.

Internal Control

Each agency and institution should implement internal control procedures to ensure that:

· Federal grant acquisition and management policies and procedures are in accordance with federal and State requirements, clearly stated, and systematically communicated through manuals, handbooks or other media.

· Required federal reports are accurately prepared and submitted by the required due date.

· All grant transactions are properly and accurately recorded and accounted for in Cardinal, either through direct input or interface of an agency-based accounting system, with subsequent reconciliation or correction, as needed.

· Requests for advance or reimbursement funds are submitted on a timely basis with accurate and appropriate documentation, minimizing the amount and time federal funds are held.

Records Retention

Records related to fiscal activity and other supporting documentation should be retained for a period of at least three years. The retention period generally starts at the close of the fiscal year covered by the grant. Refer to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards for a detailed discussion of record-keeping and documentation requirements.

For pending, ongoing or unresolved litigation, audits, or claims, retain documentation until completion, resolution, or negotiation of settlements and retain according to standard schedules.

Destruction of records must be in accordance with policies and procedures of the Records Management Section, Library of Virginia. See CAPP – Cardinal Topic No. 21005, Records and Retention, for further guidance.

CMIA & Statewide Single Audit Report

Cash Management Improvement Act

CMIA Coordinator

Financial Reporting Unit

( (804) 371-7808

· [email protected]

Statewide Single Audit Report – Schedule of Prior Year Audit Findings

Finance and Administration Unit

· (804) 225-2542 or (804) 225-3051

· [email protected]

Statewide Single Audit Report – Schedule of Federal Assistance

Financial Reporting Unit

( (804) 225- 3804 or (804) 225-2257

· [email protected]

Subject Cross References

CAPP – Cardinal Topic No. 20205, Deposits

CAPP – Cardinal Topic No. 20315, Prompt Payment

CAPP – Cardinal Topic No. 20705, Indirect Cost Recovery

CAPP – Cardinal Topic No. 20805, Loans

CAPP – Cardinal Manual Function No. 60000 – Classification and Coding Structure

CAPP Manual Function No. 30000—Fixed Asset and Lease Accounting

Agency Procurement and Property Surplus Manual

Published by Department of General Services, Division of Purchases and Supply