1 | WEATHERIZATION ASSISTANCE PROGRAM / FINANCIAL MANAGEMENT CURRICULUM – September 2011eere.energy.gov Financial Management 10 CFR 600: Know Your Requirements

1 | WEATHERIZATION ASSISTANCE PROGRAM / FINANCIAL MANAGEMENT CURRICULUM – September 2011 eere.energy.gov

Financial ManagementFinancial Management

10 CFR 600: Know Your Requirements

Financial Management

WEATHERIZATION ASSISTANCE PROGRAM / PROGRAM MANAGEMENT CURRICULUM – September 2011

Presented by:Michelle Picklesimer



Major Subparts• Subpart A - General

• Subpart B - Grants to Other Than State and Local Governments

• Subpart C - Grants to State and Local Governments

• Subpart D - Cooperative Agreement

10 Code of Federal Regulation 600



SECTION 10 CFR 600(Non-Profits)

10 CFR 600

(State/Local)

General Requirements 101-104 200-205

Pre-Award Requirements

110-117 210-212

Financial Admin./Management

120-128 220-230

Property Standards 130-137 231-235

Procurement Standards 140-149 236-237

Reports and Records 150-153 240-242

Termination & Enforcement

160-162 243-244

After-the-Award 170-173 250-252

10 CFR 600 Sections



This section prescribes the forms and instructions to be used in applying for federal assistance.

Applicants are not required to submit more than the original and two copies of preapplications and applications.

For amendments to a previously submitted application only the affected pages need be submitted.

Grant Application Requirements



• Recipients shall comply with the debarment and suspension common rule.

• www.epls.gov

Debarment and Suspension



Defines under what circumstances a grantee will be considered high-risk:

• history of unsatisfactory performance,• financially unstable,• management system that does not meet standards,• nonconformance in prior awards,• or not otherwise responsible.

Awarding agency will provide written explanation of conditions and corrective action.

Special Restrictive Conditions Requirements



Financial management systems must meet the following minimum standards:

• Provide for accurate, current, and complete disclosure for all financial activities.

• Maintain records that identify the source and use of funds.

Financial Management Standards Requirement



Accounting System

LIHEAP Grant

Weatherization Grant

Utilities Funds

Grant 1Grant 2

Grant 3

Accounting system that does not segregate funds



Accounting System

LIHEAP Grant

Weatherization Grant

Utilities Funds

Accounting system that does segregate funds




• Internal Control. Maintain effective control and accountability for all grant cash, property, and other assets.

• Budget Control. Compare actual expenditures with budgeted amounts on a periodic basis.

Financial Management Standards Requirements



Budget Control

• Serves to link programmatic and financial activities.

• Prevents cost overruns.

• Helps staff responsible for specific activities to maintain control over expenditures.

Financial ManagementStandards Requirements




• Source Documentation. Have records supported by source documentation.

• Cash Management. Have procedures to minimizing time elapsing between the transfer of funds and disbursement of funds.

Financial Management Standards Requirement



All methods and procedures for payment shall minimize the time elapsing between the transfer of funds and disbursement by the subgrantee.

The payment methods that can be used are:

• Advances (for grantees if they meet standards)

• Reimbursements (when requirements are not met or for construction contracts.)

• Working capital advances (if a subgrantee cannot meet the criteria for advance payments.)

Payment Requirements



• Recipients must also expend program income, rebates, refunds, and audit recoveries before requesting additional federal cash payments.

• Payments cannot be withheld unless:

Recipient has failed to comply with grant award conditions.

Recipient is indebted to the United States.

• Recipients are encouraged to use minority owned banks.

Payment Requirements




• Allowable Cost. Determine allowable costs by OMB cost principles, program regulations, and grant agreement.

Financial Management Standards Requirements



The allowable costs referenced in 10 CFR 600 are detailed in separate OMB Circulars:

OMB Circular A-87 -Cost Principles for State and Local Governments. (2 CFR Part 225)

OMB Circular A-122 -Cost Principles for Non-Profit Organizations. (2 CFR Part 230)

OMB Circular A-21 – Cost Principles for Institutions of Higher Education (2 CFR Part 220)

Allowable Cost Requirements



• Where a funding period is specified, a grantee may charge to the award only costs resulting from obligations during the funding period.

Period Allowability of Funds Requirements



All Contributions, including cash and in-kind, shall be accepted as part of recipient’s cost sharing or matching if they:• are verifiable through records,• are not counted for other federal programs• are necessary for completion of the project,• are allowable under the cost principles,• are not paid by other federal funds (unless approved by

statute),• are provided for in the approved budget, and • conform to other provisions of the financial management

circulars.

Cost Sharing Requirements



Program income is gross income generated by a grant supported activity, or earned only as a result of the grant agreement during the grant period.

The methods for treatment of program income include:• Addition• Deduction• Cost Sharing

Program Income Requirements



Unless authorized by Federal regulations or the grant agreement, program income will be treated as gross program income. Unless authorized, program income shall be deducted from the total allowable costs.

There are no Federal requirements governing the disposition of program income earned after the end of the award period unless the regulations or agreement states differently.

Program Income Requirements



State and local governments and non-profit organizations will be subject to the audit requirements in OMB A-133.

Non-Federal Audit Requirements



Recipients are permitted to rebudget within the approved direct cost budget to meet unanticipated requirements and make very limited program changes.

The applicable cost principles which require prior approval shall apply.

Prior approval is required based on specific clauses within the grant agreement and in the following instances where

• a revision would result in the need for additional funds;• Cumulative transfers would exceed 10% of the total budget if

the grant is over $100,000;

Budget and Project Revisions Requirements



• Funds allotted for training were transferred;• There is a revision in the scope of objectives;• Contracting out of any work;• There is a need to extend the period of availability of funds;• There is a change in key persons who are central to the

purpose of the project or• Absence of Project Director or Principal Investigator for more

than 3 months or 25% of time

Requests for prior approval will be in the same format as used in the application. The approval must be in writing.

Budget and Project Revisions Requirements



Real property means land and structures.

Title to real property will vest with the grantee or subgrantee.

The awarding agency will provide instructions for disposition of real property when it is no longer needed.

Real Property and Equipment Requirements



Equipment is defined as tangible, nonexpendable personal property having a useful life of more than one year and an acquisition cost of $5,000 or more per unit.

Title to equipment acquired under a grant or subgrant will vest with the grantee or recipient unless specified.

Equipment shall be used for the program or project it was acquired. The equipment may be used for other Federally supported projects if it does not interfere with the project for which it was originally acquired.

Equipment shall not be used to provide services to non-federal outside organizations for a fee less than private companies charge.




• If replacement equipment is needed the equipment to be replaced may be used as a trade-in.

• The property management requirements include the following:

• Property records must include a description, serial number, source, title, cost, acquisition date, percent of Federal participation, location, use, condition, and ultimate disposition.

• Physical inventory must be done at least every two years.

• A control system to ensure safeguards against loss, damage, or theft.




• Adequate maintenance procedures.

• Proper sales procedures. Items with a fair market value (F.M.V.) of $5,000 or less that are no longer needed can be disposed of with no further obligations. Items over $5,000 F.M.V. require the awarding agency to receive its fair share.




Federally owned equipment requires a recipient to submit an annual inventory listing. When the equipment is no longer needed a grantee will request disposition instructions from the Federal agency.




Title to supplies acquired under an award will vest with the recipient.

If there is a residual inventory of unused supplies exceeding $5,000 in total fair market value upon termination or completion of the award and if the supplies are not needed for any other federally sponsored programs the recipient shall compensate the awarding agency for its share.

Supplies Requirements



Standards: Recipient is responsible for all procurement contractual and

administrative issues Maintain Code of Conduct All procurement transactions must provide for open and free

competition

Federal Procurement Regulations



Grantees and Subgrantees must have written procurement procedures that include:

• Procedures that avoid the purchase of unnecessary or duplicative items.

• Analysis of lease and purchase alternatives.

• Preference for products and services that conserve natural resources and protect the environment.

Federal Procurement Regulations



• Grantees are encouraged to enter into State and local inter-governmental agreements for purchasing common goods and services.

• Grantees are encouraged to use Federal excess and surplus property.

• Procedures to ensure awards are only to responsible contractors.

• Records that detail the significant history of a procurement.

• Grantees will have protest procedures.

Procurement Regulations



• All procurement transactions will be conducted in a manner providing full and open competition. There must be written selection procedures. Also, the solicitation must include a clear and accurate description of the service or material being procured.

Procurement Regulations



• Small purchase. Procedures for services and goods that will not cost more than $25,000 in the aggregate (non profits) and $100,000 (governmental).

• Sealed bids (formal advertising).

• Competitive proposals.

• Non-competitive proposals may only be used when the item is available from one source, emergency situations, the awarding agency authorizes, or competition is determined inadequate. Pre-award review may be required.

Methods of Procurement



Sealed Bid Proposals:

• Made early in the procurement cycle:

Allows vendors time to prepare their bids to meet the specification of the solicitation

• Solicitation information includes:

What is being purchased

Terms & conditions the vendors must meet

Where & when sealed bids will be opened





• Awards are made to the lowest priced responsible vendor:

Capable of compliance will all bid specification

Capability of performing the work

Has administrative capacity

• Award becomes – a firm, fixed price contract





• Vendor’s payments:

Lump sum - paid for successful performance

Unit price - paid for each deliverable unit is completed in the contract

• Must have at least 2 responsive suppliers competing for contract




Competitive Proposal Procurements:

– Proposal types:

Request for Proposal

Request for Quotations

Request for Information




Competitive Proposal Procurements:• Publicized method same as sealed competitive process

(invitation for bids)• All evaluation factor publicized & their importance• All vendor submittals received and evaluated• Proposals must be solicited from a number of qualified

sources• Organization must have a method for conducting technical

evaluation of all proposals & for selecting awardees




Competitive Proposal Procurements:• Award made to the most responsive firm whose proposal is

most advantageous to the program

Price and other factors considered to determine most advantageous offer

• Must have at least 2 responsive suppliers competing for contract




Non Competitive Procurements:• Non competitive procurements must be approved by funding

agency before awarding

• Organization must devise & document its own analysis process to ensure fair prices are being charged

• Non competitive contracts become negotiated contracts

• Organization determines what level of organizational leadership is required to approve this method




Non Competitive Procurements:

• May be used only when it is not feasible for:

Small purchase procedures

Sealed bid or competitive proposals

and one of the following conditions applies:

Item only available from a single source

Emergency exist that will not permit a delay resulting from completive bidding




Non Competitive Procurements: Organization authorized noncompetitive proposals After solicitation of a number of sources, competitive is

determined as inadequate

Cost analysis is required which verifies: Proposed cost data Projection of the data Evaluation of costs and profits




• Grantees are to encourage minority firms, women’s business enterprises, and labor surplus area firms.

Procurement



• There must be a cost price analysis in connection with every procurement.

Procurement



• Grantees must make available proposed procurement technical specifications upon request by the awarding agency.

Procurement



• The bonding requirements of a recipient will be accepted if the awarding agency’s interest is adequately protected. If not, there are specific requirements described in 10 CFR 600.

Procurement



1. Determine what you will be purchasing

2. Establish the timeframe for the purchase.

3. Identify the lead individual to handle the purchase.

4. Prepare the general instructions.

5. Prepare the specifications and price quote sheets.

6. Advertise the solicitation

12 Steps of Procurement



7. Conduct bidder’s conference.

8. Receive bids/proposals/quotations.

9. Evaluate the bids/proposals/quotations.

10. Select the contractor(s)/vendor(s)

11. Establish the solicitation file.

12. Enter into agreements with contractor(s)/vendor(s).

12 Steps of Procurement



Performance reports shall not be required more frequently than quarterly or, less frequently than annually.

Periodically report progress in meeting program objectives. This must include comparison of accomplishments with planned objectives.

Quarterly and semi-annual reports will be due 30 days after the reporting period. Annual and final reports will be due 90 days after expiration date.

Performance Report Requirements



Grantee and subgrantees must retain records for three years after submitting the final expenditure report.

Records must be maintained until completion of action on all litigation, claims, negotiation, or audit.

For property and equipment the retention period starts upon disposition.

Record Retention Requirements



The Federal agency will require the following final reports:• Standard Form 425 – Federal Financial Report• Standard Form 270 - Request for Advance or Reimbursement,

if applicable• Final performance or progress report

The recipient will submit an invention disclosure, if applicable.

The recipient will submit a Federally-owned property report.

Cost and cash adjustments will be made as appropriate.

Close-out Requirements



The Cost Principles Address Four Major Areas:

• Basic Guidelines for Costs

• Cost Allocation Plan

• Indirect Cost

• Allowability for selected costs

Cost Principles



• Costs are allowable if they are necessary and reasonable, not prohibited under state or local laws, conform to laws and regulations, given consistent treatment, comply with generally accepted accounting principles, and are not included as a cost under other federal programs.

• Allocable costs assigned must be in proportion to the benefits received, cannot be shifted to overcome deficiencies in other programs, must be supported by a cost allocation plan.

• Applicable credits are to be used to reduce expenditures applicable to a given grant.

• The total cost of a grant program is comprised of the allowable direct and allowable indirect costs less applicable credits.

Basic Guidelines for Costs



• Identify each of the shared costs that should be allocated.

• Identify each of the shared costs that will be included as part of the indirect cost pool, if applicable.

• Determine the method in which costs will be allocated so that each program is paying proportionately for the benefits from the cost.

• Prepare the cost allocation plan and submit for internal approval.

Allocation of Costs



• Identify the service and costs of each service to be allocated.

• Determine the method (unit) for allocating the costs of each service to user programs.

• Allocate costs mathematically to user programs.

Steps in Preparing a Cost Allocation Plan



The following supporting information would be a part of a cost allocation plan.• List of grants, contracts and agreements.

• Agency organization chart.

• Job description - for each general and administrative staff person.

• Work sheet for each individual showing personnel and non personnel costs, chargeable hours and calculation of that employee's billing rate.

• Summary of non-personnel general administrative costs and allocation to each general and administrative position.

Direct Cost Allocation Plan Documentation



The following supporting information would be a part of a cost allocation plan.• Copy of the previous audit report supporting the total general and

administrative costs use in these calculations.

• Copy of the time sheet form which will be used by general and administrative staff.

• Copy of the monthly billings summary form that will be used to invoice each program.

• Space cost allocation for each property

Direct Cost Allocation Plan Documentation



INDIRECT COSTS

Direct CostsPersonnelSpaceConsumablesTelephone

Indirect CostsPersonnelSpaceConsumablesTelephone

Total Costs

Direct CostsIndirect Costs



• Indirect costs are shared costs, to be distributed by an indirect cost rate, that must be grouped into one or more equitable cost pools to determine appropriate rate(s).

• A formal indirect cost proposal must be submitted and approved. Once approval is granted, charges can then be distributed by means of an indirect cost rate.

• Application of indirect cost rates must be supported by formal accounting records available for auditing.

• Indirect costs (or administrative costs) are no different than direct costs in that they have to be allowable under the federal government cost principles.

Indirect Costs



• Predetermined rate - negotiated, usually for one year and not subject to adjustment.

• Fixed rate with carry forward - adjusted in future period.

• Final rate - not subject to adjustment.

• Provisional rate - temporarily subject to adjustment.

Types of Indirect Cost Rates



• Receive the grantee's indirect cost proposal.

• Review it in the detail it deems necessary to reach a conclusion.

• Try to reach an agreement with the proposing agency on a rate both will find acceptable.

Cognizant Agency



• Costs included as indirect costs should not also be charged directly to programs.

• All costs could be charged to programs on a direct basis, if one wanted to incur the time and expenses to do so.

• Costs must be allowable under the cost principles.

• Funds spent on administrative costs are unavailable for programmatic use.

• Funds spent on administrative costs, which are not charged to the program receiving the benefit, must be paid for by other funds of the agency.

• Many funding sources limit the amount of total administrative costs (direct and indirect).

Key Points to Remember



Cost CategoryA-87

State & LocalGovernments

A-122Nonprofit

Organization

A-21EducationalInstitutions

Allowable Allowable with Approval Not Allowable

Accounting X XAdvertising – Read Allowability X X X

Advisory Council X XAlcoholic Beverages X X X XAlumni Activities X XAudit Services X XAutomatic Data Processing X X

Bad Debts X X X XBid and Proposal Costs (reserved) X

Bonding Costs X X XBudgeting X XBuilding Lease and Management X X

Civil Defense Costs – Read Allowability X

Commencement and Convocation Costs – Read Allowability X

Communication Costs X X X XCompensation for Personal Services X X X X

Contingency Provisions X X X X

Contributions X X XDeans of Faculty/Graduate Schools

X X



Cost CategoryA-87


A-122Nonprofit

Organization



Defense and Prosecution

Read Allowability X X XDepreciation of Use Allowance X X X X

Disbursing Services X XDonations X X XEmployee Morale, Health and Welfare Costs and Credits X X X X

Entertainment Costs X X X XEquipment and other Capital Expenditures X X X X

Executive Lobbying Costs X X

Fines and Penalties X X XFringe Benefits X X X XGeneral Government Expenses X X

Goods/Services for Personal use X X X

Housing and Personal Living Expenses X X X

Lobbying X X X XIdle Facilities and Idle Capacity X X X

Independent Research and Development (reserved) X

Insurance and Indemnification X X X X



Cost CategoryA-87


A-122Nonprofit

Organization



Interest, Fund-Raising, and Investment Management Costs – Read the Regulations X X X X

Labor Relations Costs X X XLegal Expenses X X XLosses on Other Awards X X X X

Maintenance and Repair Costs X X X X

Materials and Supplies X X X X

Meetings, Conferences X X X

Memberships, Subscriptions and Professional Activity Costs X X X X

Motor Pools X XOrganization Costs X XOvertime, Extra Pay, Shift and Multi-Shift Premiums X X A-87 A-122

Page Charges in Professional Journals X X

Participant Support Costs X X

Patent Costs X X XPayroll Preparation X XPension Plans X X XPersonnel Administration X X



Cost CategoryA-87


A-122Nonprofit

Organization



Plant Security Costs X XPreagreement Costs X XPre-award Costs X X XProfessional Costs X X X XProfit and Losses on Disposition of Depreciable Property or Other Capital Assets X X X X

Proposal Costs X X XPublication and Printing Costs X X A-87 A-122

Rearrangement and Alteration Costs X X X X

Reconversion Costs X X XRecruiting Costs – Read Allowability X X

Relocation Costs – Subject to Limitations X X

Rental Costs X X X XRoyalties and other costs for use of patents and copyrights X X

Scholarships and Student Aid Costs X X X

Selling and Marketing X X

Severance Pay X X X XSpecialized Service Facilities X X X

Student Activity Costs X X



Cost CategoryA-87


A-122Nonprofit

Organization



Taxes X X X X

Termination Costs X X X

Training and Education Costs

X X X

Transportation Costs X X X

Travel Costs X X X X

Trustee Travel and Subsistence

X X

Under Recovery X X



[email protected]

mailto:[email protected]

Documents

1 | WEATHERIZATION ASSISTANCE PROGRAM / FINANCIAL MANAGEMENT CURRICULUM – September 2011eere.energy.gov Financial Management 10 CFR 600: Know Your Requirements