CROSSWALK OF FINANCIAL MANAGEMENT STANDARDS 24 CFR Part 84 Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations and 24 CFR Part 85 Administrative Requirements for Grants and Cooperative Agreements to State, Local, and Federally-recognized Indian Tribal Governments Standards for financial management systems 84.21: Standards for financial management systems: Where practical recipients must relate financial data to performance data and development unit cost information. Records must be accurate, current and complete, as per 84.52, and must identify the source and application of funds (including awards, authorizations, obligations, unobligated balances, etc.). Recipients must have effective systems to control and account for funds and to compare budget to actual outlays. Written procedures must be in place 1) to minimize time between receipt of funds and payments by the recipient, 2) for determining reasonableness, allowability of costs in accordance with contract terms and conditions. 85.20: Standards for financial management systems: States (85.20(a)) and local governments (85.20(b)) must expend and account for grant funds in accordance with State laws and procedures. These fiscal control and accounting procedures of the state and its subgrantees must permit preparation of reports, must permit the tracing of funds to ensure that they have not been used in violation of applicable restrictions and prohibitions. Reporting must be accurate, current and complete, in accordance with the reporting requirements of the grant. Records must identify the source and application of funds (including awards, authorizations, obligations, unobligated balances, etc.). Recipients must have effective systems of internal control to safeguard property and ensure that it is used solely for authorized purpose. They must account for funds and compare budget to actual outlays. Financial information should be related to productivity data and unit cost information. Procedures must be in place 1) to minimize time between receipt of funds and payments by the recipient, 2) for determine reasonableness, allowability of costs in accordance with contract terms and conditions. Records must be supported by source documentation. Awarding agency may review adequacy of the financial management system of any applicant or at any time subsequent to award. Generally similar language relative to reporting, controls, budget/actual, allowability, cash management, etc. Governments must be able to trace use of funds. 85.20 makes no mention of requirement for written procedures. 1
Payment 84.22: Payment: Generally reimbursement is preferred method subject to administrative conditions. HUD may advance working capital if deemed necessary. Certain standards apply to the use of banks and other institutions as depositories of funds and to the types of accounts used. Generally, these should be interest bearing as described in subpart (k). Recipients are encouraged to use minority, women-owned businesses, where possible. Generally, and except as otherwise required, only forms SF-270 and SF-271 will be allowed when requesting payments. 85.21: Payment: Funds will generally be advanced provided the recipient maintains ability to minimize elapsed time between receipt and disbursement of funds. Otherwise, reimbursement is preferred method subject to administrative conditions. HUD may advance working capital if deemed necessary. Program income must be applied to expenditures prior to requesting additional funds for the same activity. HUD may not withhold funds unless grantee has failed to comply with terms and conditions. Cash must be released promptly on compliance. Recipients are encouraged to use minority, women-owned businesses, where possible. Interest on advances must generally be repaid to the federal agency. Similar language, however, 85.21 made no reference to HUD forms required. There was also no mention of the use of financial institutions or the type of accounts allowed. Cost sharing or match 84.23: Cost sharing or matching: In order to be accepted as part of cost sharing and matching, all contributions must be verifiable, not included as contributions elsewhere, necessary and reasonable to further the project, allowable, not from federal sources unless authorized, included in the HUD approved budget, and in conformance with provisions of this part. With HUD approval, certain unrecovered indirect costs, property, equipment, volunteer costs, employee costs (other than recipient), supplies, etc. may be used toward match. Values for recipient contributions are subject to cost principles and must be calculated and documented based on certain constraints specifically enumerated in this section. 85.24: Matching or cost sharing: In order to be accepted as part of cost sharing and matching, all contributions must be allowable costs incurred by the grantee, including costs borne by other nonfederal grants (costs borne by other federal sources are not allowed), or third party costs applicable to the period of the grant. Qualifications or exceptions include: general revenue sharing funds, costs counted toward other federal cost sharing requirements, costs financed by program income, and services or property financed by income earned by contractors. Costs must be verifiable from grantee and subgrantee records and how value was determined. Thirdparty in-kind contributions must be allowable if paid for, and represent an increase in services over and above base level or cost savings for same level. Certain indirect costs, property, equipment, volunteer costs, employee costs (other than recipient), supplies, etc. may be used toward match. Values for recipient contributions are subject to cost principles and must be calculated and documented based on certain constraints specifically enumerated in this section. Similar language although 85.24 details qualifications and exceptions (i.e. costs not allowed) more fully. Discussion on method for determining value of contributions is very similar. 2
Program income 84.24 Program income: Except as provided in paragraph (h) of this section, program income generated from projects financed in part or in whole with federal funds is to be retained and accounted for by the recipient and in accordance with HUD regulations or contract terms and conditions. They can be added to the funding for the project, used to finance the non-federal component of the project, or deducted from the allowable costs on which the federal share is based. Except where HUD approves deviation, it should generally be used to reduce the HUD share of the project funding. Except as otherwise noted, the recipient shall not have obligations regarding program income beyond the program period. Proceeds from sale of property are subject to property standards requirements (84.30 through 84.37). 85.25 Program income: Grantees are encouraged to earn program income to defray program costs. Program income can come from various sources (fees, for services, rental of real property, proceeds from sale, etc.). Certain income, such as taxes, levies, special assessments, fines, etc. are not considered program income unless specifically identified in the grant agreement. Proceeds from sale of property are subject to 85.31 through 85.37. Program income generally is to be deducted from either federal or non-federal outlays unless otherwise specified. Generally program income will be deducted from the total allowable costs to determine the net allowable costs. When authorized, program income may be added to funds committed to a project. When authorized it may be counted toward cost sharing. Except as otherwise noted, the recipient shall not have obligations regarding program income beyond the program period. Similar language although 85.25 further clarifies what may be considered program income and what is not. Generally the application of program income is subject to prior agreement or authorization by the funding agency. Budget revisions and changes 84.25: Revision of budget and program plans: Recipients must report any deviations and request prior approval for revisions including change in project scope or objective, change in key personnel, reduction in project director s time devoted to project, need for additional funding, certain line item transfers, inclusion of certain costs, and sub-award or contracting out not discussed it the application. HUD may waive certain cost-related and administrative prior approvals and requirements. HUD may also restrict the transfer of certain funds. Written approval is required for changes to construction related awards. The recipient is required to provide written notification to HUD. HUD must review within 30 days. 85.30: Changes: Grantees and subgrantees are permitted to rebudget within the approved direct cost budget to meet unanticipated requirements and may make limited program changes to the approved project. However, certain post-award changes require prior written approval. 85.22 contains requirements for prior approval of certain types of costs. Recipients must report any deviations and request prior approval for revisions including change in project scope or objective, change in key personnel, reduction in project director s time devoted to project, need for additional funding, certain line item transfers, inclusion of certain costs, and subaward or contracting out not discussed it the application. Written approval is required for changes to construction related awards. The recipient is required to provide written notification to HUD. HUD must review within 30 days. Public agencies have greater discretion in minor budget changes. 3
Non-federal audits 84.26: Non-Federal audits: Institutions of higher education, or other non-profit organizations (including hospitals), state and local governments are subject to audit requirements in the Single Audit Act Amendments of 1996 (revised OMB Circular A-133). Commercial organizations are subject to HUD or recipient regulations. 85.26: Non-Federal audits: State and local governments are responsible for obtaining audits in accordance with the Single Audit Act Amendments of 1996 (revised OMB Circular A-133). Audits must be performed by an independent auditor. States/local governments providing fund to a subgrantee that expends more than $300,000 in a fiscal year must 1) determine whether the grantee has met the audit requirements of the Act and A-110 if applicable; 2) determine whether subgrantee spent federal funds in accordance with applicable laws and regulations; 3) ensure that appropriate corrective action is taken within six months of receipt of audit report; 4) consider whether audit report necessitates an adjustment to grantee s own records; 5) Require all subgrantees to allow independent auditors to have access to records and financial statements. 85.36 should be followed by local governments to select an auditor. 85.26 clearly enumerates oversight responsibility of the states and local governments in ensuring the subgrantees procure required audits, and follow through as required in a timely manner. Generally OMB Circular A- 133 is applicable. Allowable costs 84.27: Allowable costs: Each kind of recipient has a set of Federal principals for determining allowable costs. Allowability of costs incurred by state, local or federally-recognized Indian Tribal governments are determined in accordance with OMB Circular A- 87. Allowability of costs incurred by non-profits is determined according to OMB Circular A-122. Allowability of costs incurred by institutions of higher education is determined according to OMB Circular A-21. Allowability of costs for hospitals is determined by Appendix E of 45 CFR part 74. Allowability of costs for commercial organizations is determined by the Federal Acquisition Regulation (FAR) at 48 CFR part 31. 85.22: Allowable costs: Grant funds may only be used for allowable costs and for reasonable fees or profit by cost-type contractors. Each kind of recipient has a set of Federal principals for determining allowable costs. Allowability of costs incurred by state, local or federally-recognized Indian Tribal governments are determined in accordance with OMB Circular A-87. Allowability of costs incurred by non-profits is determined according to OMB Circular A-122. Allowability of costs incurred by institutions of higher education is determined according to OMB Circular A-21. Allowability of costs for hospitals is determined by Appendix E of 45 CFR part 74. Allowability of costs for commercial organizations is determined by the Federal Acquisition Regulation (FAR) at 48 CFR part 31. Similar language, however, 85.22 includes discussion on limitation on use of funds. 4
Period of availability of funds 84.28: Period of availability of funds: When a funding period is specified, only allowable costs resulting from funding period obligations and HUD authorized pre-award may be charged. 85.23. Period of availability of funds: Recipients may incur costs only within the time period unless carryover of funds is allowed in which case funds may be used to cover expenses resulting from the subsequent funding period. All obligations must be liquidated within 90 days of the end of the funding period. Similar language. 85.23 adds language regarding liquidation of obligations within 90 days of end of grant period. Financial reporting 84.52: Financial reporting: Describes certain specific forms authorized for obtaining financial information from recipients. HUD determines frequency and timing of reporting and whether reports are to be based on cash or accrual basis. A final report is required upon completion of the project or program. Reporting on cash advances may vary from reimbursement method, although HUD may waive these requirements in certain instances. HUD may also require additional reporting under certain conditions. 85.41 Financial reporting: Describes certain specific forms authorized for obtaining financial information from recipients. HUD determines frequency and timing of reporting and whether reports are to be based on cash or accrual basis. A final report is required upon completion of the project or program. Reporting on cash advances may vary from reimbursement method, although HUD may waive these requirements in certain instances. HUD may also require additional reporting under certain conditions. Similar language. 5