Managing Public Grants
Meeting
Goals and Objectives | Revisions
in Budget and Program Plans
Financial Management
In addition to a well-planned project, your organization's financial management systems must meet certain requirements in order for you to receive and manage Federal grant funds. Financial systems must provide for the following:
- Accurate, current and complete disclosure of financial results
- Records that adequately identify the source and application of funds for federally sponsored activities
- Effective control over accountability for all funds, property and other assets
- Comparison of outlays with budget amounts for each award. Whenever appropriate, financial information should be related to performance data and unit cost information. (For example, your program served "X number of people at a cost of X dollars per person.")
- Written procedures to minimize time elapsed between transfer of funds and payments for program purposes by the recipient
- Written procedures for determining the reasonableness, allocability and allowability of costs (See OMB Circular A-122, Cost Principles for Nonprofit Organizations)
- Accounting records, including cost accounting records that are supported by source documentation
Banking Standards,
Accounting and Cost Principles
Federal awarding agencies do not require separate depository accounts for funds provided to a recipient, but you are accountable for the receipt, obligation and expenditure of funds. Advances of Federal funds must be deposited and maintained in insured, interest-bearing accounts. Cost principles for nonprofit organizations can be found in OMB Circular A-122. Questions about specific requirements for accounting methods and fiscal reporting should be directed to your assigned Federal grants management officer.
Indirect Costs7
Most Federal awarding agencies consider activities conducted by recipients that result in indirect charges a necessary and appropriate part of grants and will reimburse their share of those indirect costs. The appropriate share is either a fixed amount (as specified in statute or in regulations) or is determined based on a rate negotiated by a cognizant agency with an applicant/grantee and reflected in a formal rate agreement.
To simplify relations between Federal grantees and awarding agencies, OMB established the cognizant agency concept, whereby a single agency represents all others in dealing with grantees in common areas. In this case, the cognizant agency reviews and approves grantees' indirect cost rates. Approved rates must be accepted by other agencies, unless specific program regulations restrict the recovery of indirect costs.
The Department of Health and Human Services (HHS) is the cognizant agency for most nonprofit organizations. To establish an indirect cost rate for your organization, contact the HHS to initiate the application process. Indirect cost rate agreements are negotiated by the HHS, Division of Cost Allocation. You will find a sample indirect rate cost proposal for nonprofit organizations at http://rates.psc.gov.
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Cost Sharing Requirements8
OMB Circular A-122 details cost principles to be used in determining the value of your organization's and your collaborating partners' contributions to the project. The process for determining the valuation of any donated service, material, equipment, buildings and land must be documented. The Office of Grants Management (OGM) must approve all cost share documentation prior to finalizing cooperative agreement. Contributions that meet all of the following criteria will be accepted as part of your cost sharing requirements:- Are verifiable from your records
- Are not included as contributions for any other federally assisted project or program
- Are necessary and reasonable for proper and efficient accomplishment of project or program objectives
- Are allowable under applicable cost principles
- Are not paid by the Federal government under another award, except where authorized
- Are provided for in the approved budget
- Conform to other provisions on OMB Circular A-110 as applicable
Specific instructions for determining the value of donated land or property, donated equipment, land and buildings, volunteer services, employee services and donated supplies for the purposes of cost sharing can be found in OMB Circular A-110.
Program Income9
Program income is defined in 45 CFR 74 as income earned by the recipient that is directly generated by a supported activity or earned as a result of the award (see exclusions in specific agency regulations). Program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federally funded projects, the sale of commodities or items fabricated under an award, license fees and royalties on patents and copyrights and interest on loans made with award funds. Interest earned on advances of Federal funds is not program income. Except as otherwise provided in the terms and conditions of the award, program income also does not include the receipt of principal on loans, rebates, credits, discounts, etc. or interest earned on any of them. Furthermore, program income does not include taxes, special assessments, levies and fines raised by governmental recipients.
Program income earned during the project period is retained by your organization for use as specified by the Federal awarding agency in the award document. In the event that the Federal awarding agency does not specify in its regulations or the terms and conditions of the award how program income is to be used, the OMB Circular A-110 will provide you with specific instructions.
Meeting
Goals and Objectives | Revisions
in Budget and Program Plans