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PGL FIN 2006 01 Subrecipient Financial Procedures
PGL FIN 2006 01 Subrecipient Financial Procedures
I. REFERENCES:
Office of Management and Budget (OMB) Circular A-87, Cost Principles for State, Local
and Indian Tribal Governments; OMB Circular A-122, Cost Principles for Non-Profit
Organizations; OMB Circular A-21, Cost Principles for Educational Institutions; 29 Code of
Federal Regulation (CFR) Part 97, Common Rule for Uniform Administrative Requirements
for Grant and Cooperative Agreements to State and Local Governments, OMB Circular A-
110, Uniform Administrative Requirements for Grants and Agreements with Institutions of
Higher Education, Hospitals and Other Non-Profit Organizations; Colorado Job Training
Partnership Act Policy Guidance Letter #01-14-F1, Colorado Department of Labor and
Employment Subrecipient Financial Procedures.
II. PURPOSE:
To provide subrecipient financial record keeping and reporting guidelines to meet federal
statutory and regulatory requirements and ensure uniformity in definition.
III. BACKGROUND:
The Common Rule for Uniform Administrative Requirements for Grant and Cooperative
Agreements to State and Local Governments, at Subpart C, section .20, states the standards
for financial management and specifies, “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 tracing 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.” In addition, it states, “The financial
management systems of other grantees and subgrantees must meet the following standards:
(1) Financial Reporting. Accurate, current, and complete disclosure of the financial
results of financially assisted activities must be made in accordance with the financial
reporting requirements of the grant or subgrant.” The financial administration criteria,
and other reporting and record keeping requirements are addressed by the Colorado
Department of Labor and Employment (CDLE) in the attached “Subrecipient Financial
Procedures.”
IV. POLICY/ACTION:
With the issuance of this PGL, the CDLE is establishing our revised subrecipient financial
procedures. (Attachment 1)
V. IMPLEMENTATION DATE
This PGL is effective for all expenditures incurred on or after the issuance date of this PGL.
VI. INQUIRIES:
Inquiries concerning this PGL should be directed to Keith McNeal, (303) 318-8158.
Attachments: A - J
Attachment 1
TABLE OF CONTENTS
COLORADO DEPARTMENT OF LABOR AND EMPLOYMENT (CDLE)
SUBRECIPIENT FINANCIAL PROCEDURES
PAGE
3. Equipment ..................................................................................................10
C. REFUNDS .............................................................................................................13
D. OBLIGATIONS ...................................................................................................13
1. Disbursements ............................................................................................16
2. Accruals .....................................................................................................16
3. Obligations .................................................................................................16
ABLE OF CONTENTS
CDLE SUBRECIPIENT FINANCIAL PROCEDURES
PAGE
III. CASH
2. Collateral Agreements................................................................................25
4. Authorized Signatories...............................................................................26
C. PROGRAM INCOME.........................................................................................27
1. Interest Income...........................................................................................28
E REFUNDS .............................................................................................................30
G. PROPERTY..........................................................................................................31
TABLE OF CONTENTS
CDLE SUBRECIPIENT FINANCIAL PROCEDURES
PAGE
1. Contract Closeout...................................................................................... 36
V. ACRONYMS ................................................................................................................... 40
ATTACHMENTS
Attachment A ........................................................................ VAX Expense Report Form (VERF)
Attachment B........................................................ VAX Activity Expense Report Form (VAERF)
Attachment C ...............................................VAX Expense & Obligation Report Form (VEORF)
Attachment D ........................................................................... VAX Cash Request Form (VCRF)
Attachment E...................................................... Program Income Expense Report Form (PIERF)
Attachment F......................................................................... Stand-In Cost Report Form (SICRF)
Attachment G ..................................................................... Electronic Fund Transfer Set-up Form
Attachment H ............................................................... Grant Closeout Reconciliation Worksheet
Attachment I...................................................................................... Closeout Document Package
Attachment J ............................................................ VCRF FCS123 Coding and CFDA Numbers
Attachment K ......................................................................... Authorized Signature Format Letter
Attachment 1
Subrecipient Financial Procedures
Page 5 of 39
In order to meet the Federal reporting requirements and ensure compliance with State and
Federal laws and regulations pertaining to the Federal funds administered by the Colorado
Department of Labor and Employment (CDLE), the CDLE must maintain a financial system
within the State that provides fiscal control and accounting procedures sufficient to:
A. Provide Federally required records and reports that are uniform in definition,
accessible to authorized Federal and State staff and verifiable for monitoring,
reporting, audit, and evaluation;
B. Permit preparation of reports required by 29 CFR Part 97 and the statutes authorizing
the applicable grant(s) by Federal deadlines; and
C. Permit the tracing of funds to a level of expenditure adequate to establish that funds
have not been used in violation of the restrictions and prohibitions on the use of such
funds. Restrictions governing the use of funds are in the Federal statutes and
regulations under which the funds were awarded, applicable Policy Guidance Letters
(PGLs), the OMB Circulars, and the Generally Accepted Accounting Principles
(GAAP).
The Job Training Partnership Act (JTPA) system of Colorado used the computerized
financial reporting system developed by Computer Systems Design, Incorporated, (hereafter
referred to as the “VAX”) to meet its Federal reporting requirements since 1984.
Throughout this time, the VAX system has been modified to meet the new reporting
requirements of the various Federal programs, including employment and training programs,
and provided enhanced capabilities as well.
The previous JTPA tracking and record keeping requirements have driven how the State of
Colorado has utilized the VAX system. We continue to successfully track WIA and other
Federal programs on the system as well.
A. For expenditure reporting, which must be tracked under certain Federal programs by
funding year and subtitle of funds, and in specified cases, by cost category/budget
line item as well, changes in the following may be independently tracked and
recorded in the VAX:
2. Obligations
3. Disbursements
4. Accruals
Attachment 1
Subrecipient Financial Procedures
Page 6 of 39
5. Match
7. Stand-In-Costs
Changes in the above elements are both reported and recorded on a series of turn
around documents generated by the CDLE through the VAX system.
Changes in elements 1 through 4, above, are reflected on the VAX Expense Report
Form (VERF). When a Contract or Expenditure Authorization (EA) is awarded, the
CDLE creates a VERF that indicates, in its coding, the type of funds (year and
subtitle of funds) awarded. The VAX system assigns a unique “VAX number” to
each VAX report created. The Expense Budget Authority (element 1 above),
obtained from the Contract's/EA’s/Budget Information Summary (BIS), is recorded
by the CDLE in the VER, by cost category/line item, in the budget lines.
The VERF and VAERF (if applicable) are then sent to the subrecipient or are
available electronically, if the subrecipient has on-line access to the CDLE’s VAX
system. Subrecipients with on-line access to the CDLE's VAX system can either
print their own updated VERF and VAERF (see Attachment A for a sample of a
VERF and Attachment B for a sample of a VAERF) for completion and transmittal
to the CDLE or directly input their expenditures into the VAX system when the next
reports are due. The CDLE encourages and highly recommends that all subrecipients
with on-line access to the CDLE VAX system input their expenditures directly into
the VAX system. Since the subrecipient is actually entering its own expenditures
into the VAX system, it provides more accurate and timing reporting by the
subrecipient and allows the subrecipient to immediately review its reported
expenditures. Subrecipients with on-line access to the VAX system do not receive
the hard copy turn around documents, such as the VERF and VAERF, from the
CDLE. Subrecipient’s that post their reported cost elements directly into the VAX
system must print a financial record, usually a “/PFB”, reflecting the posted cost
elements. The subrecipient must then submit a copy of this financial record, the
“/PFB”, to the CDLE with an original signature and date of the authorized signatory.
The authorized signatory is listed on the entity’s authorized signature letter discussed
Attachment 1
Subrecipient Financial Procedures
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in Section III, CASH. The CDLE will provide training to those subrecipients that
wish to enter their own expenditures.
Subrecipients that don’t have on-line access to the VAX or do not wish to directly
input their expenditures shall use the VERF and VAERF to report, for each of the
line items, obligations (if applicable), disbursements (monthly) and accruals
(quarterly) (elements 2 through 4 above). The VERF and VAERF must be submitted
with an original signature and date of the authorized signatory. The authorized
signatory is listed on the entity’s authorized signature letter discussed in Section III,
CASH. After the CDLE has posted the subrecipient's reported cost elements, an
updated VERF and VAERF can be instantly generated that reflects the subrecipient's
costs reported to date and current budget availability. The updated VER and VAER
are then transmitted back to the subrecipient for use in reporting the next month's
costs.
Elements 6 and 7 above, program income and stand-in costs, are not governed by
contract budget requirements, but are reportable quarterly and annually, respectively,
when they occur. Program income and stand-in costs may be governed by certain
cost limitations and are usually subject to the allowability requirements of the
particular Federal grant. Program income expenses will be reported on a Program
Income Expense Report Form (PIERF) and stand-in costs will be reported on a
Stand-In Cost Report Form (SICRF). Generation of the VAX Stand –In costs reports
will occur when the subrecipient notifies the CDLE of the incidence of either type of
cost.
To ensure consistency among subrecipients with regard to the reporting and record
keeping for each of the aforementioned cost elements, policies and procedures
regarding expenditures reported to the CDLE can be found in Section II,
EXPENDITURE REPORTING.
Attachment 1
Subrecipient Financial Procedures
Page 8 of 39
B. Cash is tracked on the VAX Cash Request Forms (VCRF). Each CDLE subrecipient
will be issued a VCRF ( in CDLE VAX database for contracts starting on or after
July 1, 2005. The VCRF will reflect the entity’s cash balances under each
Contract/EA. As a new Contract/EA is awarded to a subrecipient, a new line item is
created on the entity's VCRF with cash budget authority equal to the amount of the
Contract's/EA’s total budget. The VCRFs will remain active until the subrecipient
has closed-out all of its grants under that VCRF with the CDLE. Program income
cash is also tracked on the VCRF, if applicable, as will be explained in greater detail
below with other cash policies and procedures in Section III, CASH.
With the charge of consistency in statewide Federal reports, other Federal programs'
record keeping requirements, following standard industry practices and generally
accepted accounting principles (GAAP), and further safeguard the Federal funds it
administers, the CDLE provides the following policy and procedural guidelines for
reporting costs under the CDLE contracts.
3. A system for allocating joint or indirect costs between contracts (or subtitles
if more than one subtitle is awarded through a contract) and cost
categories/cost objectives within a subtitle. There are restrictions on which
types of costs may be allocated to a program, cost category/cost objective in
accordance with an applicable Federal and/or State statutory and/or
regulatory guidelines. Allocation is not required, however, between years of
funds, if multiple years of funding for a given Federal program are available
simultaneously for the same purposes; the oldest funds should generally be
used first (first-in first-out basis). The allocation system as a whole must be
documented, consistent, and reasonable.
One-Stop centers must describe how the cost of services and operating
costs are funded within its One-Stop center’s Memorandum of
Understanding(s) (MOUs). In addition, One-Stop operators’ must have
a method of allocating costs, to ensure that each One-Stop partner bears
its fair share of the costs of maintaining the center. See the Workforce
Investment Act Memorandum of Understanding (MOU) and Cost
Allocation Guidelines PGL #00-17-F1, dated June 20, 2000.
e. A cost allocation plan that describes the basis and method for
charging direct and indirect costs;
f. Travel reports;
The CDLE's subrecipients are not required to maintain their accounting records
under the accrual basis, however, it is strongly recommended since Federal reports
are required to be reported on the accrual basis. The primary difference between the
cash and accrual basis involves the timing of when revenue and expenses are
recognized:
• In the cash basis of accounting, revenues are recognized when received and
expenditures are recognized when paid.
• In the accrual basis of accounting, revenues are recognized when earned and
expenditures are recognized when incurred.
In the accrual system, accrual adjustments are posted in the General Journal
and then the General and/or Subsidiary Ledgers. As such, it is then
necessary to record and post an entry that reverses the original entry, as of
the first day of the new accounting (reporting) period. Prepaid expenses are
amortized over the period in which they are incurred.
ii. Salaries and wages from the last pay period that are earned
but not yet paid (debit)
iii. Employee vacation or sick leave earned during the period but
not taken, if taken not yet paid (debit) (See Compensated
Absence discussion below.)
a. The net total amount accrued to date at quarter-end by the entity does
not exceed the balances of authorized untaken leave at quarter-end at
current authorized compensation rates; and
b. the leave was authorized under established written leave policies; and
If any portion of the current liability balance was not charged to the
benefitting program(s) previously, and for whatever reasons, the allocable
cost can not now be charged in whole to the benefitting program(s), and the
cost can not be shifted to a non-benefitting Federal program. The Office of
Management and Budget (OMB) Circular A-87 describes a "catch-up"
method that distributes the cost over future periods to the benefitting
programs.
The compensated absence accrual for each program should be accounted for
separately in the subrecipients accounting records so that when the absence is
taken and paid, the corresponding liability may be reduced. In addition,
when a Federal program ends, the subrecipient may then draw the
compensation absences cash balance for that program and place it in a
separate account, such as an escrow account, for future payments.
3. Equipment
Rules for each are based on the applicable OMB Circular depending
on the type of entity. The applicable Cost Principle’s OMB Circular
should be reviewed closely to determine the appropriate requirements
and treatment of property purchases for your type of entity.
Given that most asset lives are longer than the period of performance
of the contract that they were purchased under, not all of the asset
cost may be expensed by non-governmental subrecipients when the
purchasing contract ends. Under these circumstances, if the
subrecipient has a subsequent contract with the awarding agency that
will benefit from use of the asset, the undepreciated balance may
continue to be charged to the awarding agency through these
contracts.
If the entity does not continue to contract with the awarding agency,
cash advanced under the contract must be reconciled with allowable
expenses when the purchasing contract ends. Any surplus of cash
drawn will need to be refunded, or the asset must be relinquished to
the awarding agency. If the asset is relinquished, the awarding
agency must ensure that the subsequent user of the asset records the
undepreciated balance on their books, upon receipt, if a governmental
subrecipient, or through depreciation, if a nongovernmental
subrecipient. The cash ramifications of asset purchases and transfers
are discussed below in Section III, CASH, under part H, Property.
C. REFUNDS
Refunds shall be credited against the same cost category/budget line, title, subtitle
and year of funds, (i.e., the same VERF line, that the cost generating the refund was
posted to).
If the refund is received in a program year subsequent to the original cost's posting
and the contract with the CDLE that was originally charged is still active, the
subrecipient generally should post the credit in the period in which the credit was
received. An exception may be made if the subrecipient's year-end is involved and
the refund is material to the subrecipient's financial statements. Under these
circumstances, a revised report for a specified period may be submitted to the CDLE
to ensure that the CDLE's records agree with the final audited amounts. Or if the
refund is large enough to potentially be significant to the CDLE's financial
statements, an exception may be made whereby the CDLE may require a revised
report to ensure that the CDLE's statements are presented fairly. The CDLE should
be notified if any large refunds are received, to assess whether a revision is required.
credit amount equal to the total amount of the refund. The subrecipient must enclose
a check made payable to the CDLE for the amount of the refund.
D. OBLIGATIONS
Certain Federal laws and/or regulations and/or state policies and procedures may
make provisions for unobligated funds in excess of certain percentage of a
subrecipient's current year allocation to be recaptured from each subrecipient for
reallocation. These provisions make annual reporting of obligations at the
subrecipient level for those particular Federal programs necessary. For those Federal
programs, the CDLE requires quarterly obligation reporting to track subrecipient
progress toward meeting the stated obligation requirement and also to encourage
ongoing record keeping in the area of obligations or encumbrances.
As discussed in the financial system overview in Section I, the form that is used for
subrecipient reporting of disbursements, accruals, and obligations is the VAX
Expense Report Form (VERF). When a Contract or an EA under a Grant Agreement
is awarded, a VERF or line item on a VERF will be created by the CDLE for each
BIS associated with the award. Generally, CDLE contracts/EAs have only one BIS.
To allow the subrecipient to report disbursements, accruals, and obligations for each
budget line item on the BIS, there will be a corresponding description line item
created on the VERF. The VERFs will be transmitted with the Contract/EA
documents to the subrecipient upon award. The Catalog of Federal Domestic
Assistance (CFDA) number for the Federal funds awarded under the Contract/EA
can be found on each VERF. (See Attachment A for a sample VERF. See
Attachment J for a listing of CFDA numbers).
Subrecipients with access to the State's VAX financial system can determine from
the VERF hard copy, received with the contract, the "VAX number" to use in
conjunction with the VAX print command "/PCT" to obtain the VERFs when needed
for reporting. All other subrecipients will receive updated hard copies of their
VERFs by mail or FAX after CDLE has input the previous month's VERF. Based
upon the information reported by the subrecipient through the last period’s VERF,
the updated VERFs will reflect the current budget, disbursed, accrued, expended, and
balance amounts in the “Total” columns to the left of the boxed-in “Current”
reporting fields.
posting their reported cost elements directly into the VAX system and then printing a
financial record report such as a PFB, using the print command “/PFB,” that reflects
the posted cost elements. The subrecipient must then submit a copy of this financial
record, a PFB, in place of the VERF, to the CDLE with an original signature and
date of the subrecipient’s authorized signatory.
1. Disbursements
2. Accruals
made so that the total accruals reported on the form (to date plus current) will
match your total accruals at quarter-end. Include adjustments to
compensated absence balances in this column.
Please note that the CDLE only requires accrual reporting on a quarterly
basis, however, we do recommend, at a minimum, to reduce the accrued
amount by any disbursements of previous quarter-end accruals to avoid
interim double reporting on monthly reports.
3. Obligations
The CDLE is subject to cost limitations by the Federal grantor agencies from which
it receives funding. These limitations are disclosed in the applicable Federal
statute(s) and/or regulation(s), or state policy guidance letter(s). The CDLE enforces
the cost limitations, it is subject to, through the expenditure budgets it establishes in
subrecipient contracts which, except as discussed below, can not be exceeded. As
previously discussed, the line items contained in the contract BIS are reflected in the
VERF budget line items when the contract is awarded.
Under certain contracts, however, the cost limitations are expressed in terms of both
minimums and maximums. The purpose, therefore, of the line item budget is
primarily to ensure that none of the maximums are exceeded. Because one of the
maximums is the total amount of funds available, though, line item budgets may also
be established with minimums. As such, if the total amount of funds available under
a contract are not exceeded, and expenditures exceed a minimum budget while
underspending a maximum budget by the same amount, the terms of the CDLE's
grants with the USDOL are not violated. For example, the WIA Youth program will
have a minimum 30% Out-of-School Youth and a maximum 70% In-School Youth
budget line item. If the expenditures of the 30% Out-of School Youth exceed the
30% budget line item, and correspondingly, the 70% In-School Youth expenditures
are underspent by the same amount, the CDLE grant with the USDOL has not be
Attachment 1
Subrecipient Financial Procedures
Page 21 of 39
violated. For these reasons, there is room for some flexibility when a minimum
budget needs to be increased without impacting the total budget.
1. Informal Modifications
b. the budget line item amounts that will be reduced and increased,
The letter should be submitted to the CDLE with the applicable VERF. The
budget amounts on the impacted lines of the VERF should be lined through
in red and the proposed amounts should be written in ink above each original
budget amount. In addition, the submitted VERF, with the budget changes,
should have the original signature and date of the subrecipient’s authorized
signatory.
2. Formal Modification
modification process must be followed. The process is different for EAs and
Contracts. Under EAs, Workforce Regions must complete a modification
package and obtain the Workforce Region’s Director and the Local
Workforce Board Chair’s signature prior to the CDLE's approval. If the EA
is greater than $100,000, the Locally Elected Official’s (LEO’s) signature is
also required. Under Contracts, the contractor should contact their CDLE
Monitor for instructions as soon as they are aware of the need for a
modification, in that the Contract modification must be routed through the
same State agency channels as the original contract and the process can take
up to a month or more.
Once program income (PI) is earned, the expenditure of the income may be subject
to the same contract, regulatory, and statutory rules that the Federal funds that were
incurred to earn the PI were subject to, with one exception. Generally, the only
applicable cost limitation for PI is the administrative cost limitation. Further, if the
PI is earned under a discretionary grant that was provided less than the statutory
amount of administrative budget, with the awarding agency’s approval, the
subrecipient may be able to expend up to the maximum amount of administration
allowable by law. The statutory administrative cost limitations may be found in the
applicable program’s law and/or regulations and/or state policy guidance letters. The
program’s law and/or regulations and/or state PGLs may allow the balance of the PI
budget to be allocated among the remaining cost category(ies)/line items at the
subrecipient’s discretion.
If PI cash has been recorded on a line of the VCRF for the first time during a quarter
(see Sections III.C. and III.J.4.), a Program Income Expense Report Form (PIERF)
must be submitted to the CDLE for that line on a calendar quarterly basis thereafter.
A separate PIERF must be submitted for each line of the VCRF that PI cash has been
reported on. PIERFs are due to the CDLE by no later than the 25th calendar day of
the month following the calendar quarter end.
1. ensure that the amount of PI cash at quarter end is equal to the total PI
expenditure budget, and
Attachment 1
Subrecipient Financial Procedures
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2. that the amount of administrative budget does not exceed the maximum
allowed for the type of funding the PI was earned under.
The subrecipient should record its name in the space provided on the PIERF. The
last day of the calendar quarter being reported on should be noted in the top right
corner. The "CDLE Assigned VAX ER #" refers to the VERF number where
cumulative budget and expense information for the generated PI is recorded by the
CDLE. The CDLE will create a VAX report upon receipt of a new PIERF. The
VAX PIERF will be sent to subrecipients after the PI is posted by the CDLE.
Thereafter, the subrecipient should record the correlating four digits VAX number
from the VAX report in the space allotted in the top right corner of the PIERF.
In section 1 of the PIERF, the subrecipient must record in the “FCS123” column of
the “cash request line item” the six digit VAX line code from the “FCS123” column
of the VCRF that PI has been reported on the VCRF. The PI "Net (Undisbursed)
Amount" that is recorded by the subrecipient on the “cash request line item” of the
PIERF should be the same amount of cash reported on the corresponding VCRF
“FCS123” line as of the last day of the quarter. If subsequent VCRFs have recorded
additional PI on this line, all amounts recorded after quarter end should not be
included in the amount reported.
In section 2., the "Total Net (Undisbured) Amount" from Section 1 should be
recorded on the "Total" line under the "Total Net PI Amount" heading. This total
Net amount should be allocated by the subrecipient among cost categories/budget
line items applicable to the type of funds involved. The subrecipient should record
the appropriate “Cost Category”/“Budget Line Item” name in the left column, and
the amount of Total Program Income to be allocated to the indicated category in the
"Program IncomeAmount" column. The subrecipient can change the program
income distribution in subsequent reports, provided the administrative budget is
never exceeded.
The CDLE will post budget changes and any expenses reported for the quarter and
then provide a copy of a PI VERF to the subrecipient.
If PI has not been fully expended as of the end date of the BIS/VER that it is
associated with, the period of time that the Program Income may be retained and
spent by the subrecipient may be extended under the following conditions:
Attachment 1
Subrecipient Financial Procedures
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1. The related BIS/VERF period was shorter than the State's period of
availability for the Federal funds awarded therein, and the Federal funds are
still active after the end date of the BIS/VER;
2. The subrecipient can and will continue to spend the funds under the same
contractual, regulatory and statutory conditions that it was subject to while
the BIS/VERF was active; and
3. The subrecipient can and will continue to report quarterly on expenditures of the
PI until the PI is exhausted or the Federal funding period of the funds that were
awarded under the related BIS/VER expire, whichever occurs first.
If each of the above conditions can be met, the CDLE will, as part of closeout
proceedings on the Federal funds, deobligate on the VCRF any portion of the VERF
budget not expended through the end of the contract period. The funds available on
the VCRF line item will then equal the unexpended balance of PI. The PI VERF
report "TO" date will be extended through the last date that the related Federal funds
are available to the State. When the PI has been fully expended or the funds expire,
PI closeout documents must be submitted in accordance with section IV. below. (If
the PI is fully expended by the end of the related contract, the PI is closed out with
the contract.)
Program income expenses must be included in the scope of independent audits of the
CDLE provided funds.
The subrecipient must then use the VMERFs to report quarterly match provided
under the contract. VMERFs are due no later than the 25th calendar day of the
month following the calendar quarter-end. If the 25th calendar day of the month
falls on a weekend or holiday, the VMERFs are due to the CDLE by no later than the
close of business of the next business day. Certain programs, circumstances, or
subrecipients may require the CDLE to require certain VMERFs to be submitted
earlier. Failure to submit the VMERFs on time may result in the implementation
of corrective action(s) and/or sanction(s) upon the subrecipient by the CDLE.
Attachment 1
Subrecipient Financial Procedures
Page 25 of 39
The subrecipient can make VMERF budget changes if the total amount of match to
be provided is not negatively impacted. The subrecipient should note such changes
in red ink on the VMERF by lining through the budget amounts to be changed and
recording the revised amounts in red ink above the old budget amounts. In addition,
the submitted VMERF, with the budget changes, should have the original signature
and date of the authorized signatory. If the total amount of match originally
contracted for cannot be provided, the subrecipient must contact the CDLE for
instructions.
Stand-in costs are costs paid from non-Federal sources that a subrecipient proposes
to substitute for the CDLE funded costs that have been questioned as a result of an
audit or other review. In order to be considered as valid substitutions, the costs:
Must have been incurred by the entity with the questioned costs.
Must have been reported as incurred by the entity that has the questioned
costs, i.e., subrecipient must have reporting systems in place for their lower-
tier subrecipients.
Stand-in costs are a potential solution to future audit or monitoring issues and should
be viewed by subrecipients as a form of insurance coverage for themselves, as well
as their lower-tier subrecipients.
Under the Federal laws and/or regulations, stand-in costs are to be used prior to the
establishment of a debt during the resolution phase.
Attachment 1
Subrecipient Financial Procedures
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The information reported each year will be input by the CDLE into a cumulative
VAX Stand-In Cost Report for each subrecipient. The report will include a line for
each cost objective under which stand-in costs were reported by the subrecipient.
After each year-end, the CDLE will provide an updated printout of each
subrecipient's cumulative stand-in cost VAX report for the subrecipient's files.
III. CASH
A. METHODS OF PAYMENTS
The CDLE maintains that the cost reimbursement contracting method does
not impede our ability to advance funds under the CMIA if proper controls
are in place during the period of the award and if net cash advances are equal
to allowable program costs when the award is closed out.
CDLE retains the right, however, to change the payment method from
advance to reimbursement if the:
• Subrecipient does not demonstrate to the CDLE the willingness or
ability to maintain procedures that will minimize the time elapsing
between the transfer of funds by the CDLE and the subrecipient's
disbursement of the funds in accord with the CMIA, or;
This action will take effect upon written notification by the CDLE. The
CDLE may revert back to the advance method after deficiencies have been
corrected. See the CDLE's Corrective Action Policy Guidance Letter.
1. Bonding of Employees
2. Collateral Agreements
Attachment 1
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Subrecipients must maintain all funds in cash depositories that have FDIC
insurance coverage. If the subrecipient is a unit of state or local government,
and their account balances exceed the FDIC maximum coverage on deposits
at any one financial institution, then all funds in excess of that insurance
coverage must be collaterally secured in accordance with the Public Deposit
Protection Act (PDPA) in C.R.S. 11-10.5-107(5). If the subrecipient is not a
unit of state or local government, then all funds in excess of the FDIC
maximum insurance coverage must be moved to other FDIC financial
institutions until funds in excess of the FDIC maximum insurance coverage
no longer exist. A written copy of the collateral agreement and copy of the
collateral deposit receipt shall be obtained from the subrecipient's banking
institution and maintained on file for monitoring and audit reviews.
Projections of cash needs should not include accrued amounts, but only
immediate cash disbursements. The CDLE recommends, at a minimum, cash
forecasting based on the cash balance per books. The USDOL, however, has
issued Financial Management Technical Assistance Guides (TAGs) that
recommend that a valid pattern of checks being cleared by the bank is an
acceptable method of cash forecasting.
4. Authorized Signatories
C. PROGRAM INCOME
29 CFR 97.21 requires that program income generated under Federal programs be
disbursed before additional Federal cash is requested. This requirement suggests a
dissociation between the source and use of cash that will assist subrecipients in
complying with the CMIA.
The procedure for reporting the receipt of program income to the CDLE will
automatically reduce your draw of Federal funds by the amount of program income,
while increasing your total available cash for future draws. The program income
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cash is thereby used to fund the total cash needs for the period of the cash request.
When cash is needed to fund program income expenditures (see the Program Income
section of part II. above), the cash may be drawn in the same manner in which
Federal cash is drawn.
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1. Interest Income
Except for States, as defined in the CMIA, interest earned on Federal funds
may be considered program income. As indicated in the Program Income 29
CFR 97.21, requests for cash advances from CDLE must be reduced by
program income earned. In order to do so for interest earned, subrecipients
that are not State agencies must have the ability to identify interest earned on
the CDLE furnished Federal funds if those Federal funds include interest
income as program income.
In such cases, the CDLE recommends that subrecipients keep a separate bank
account to facilitate identifying interest earned associated with Federal funds.
If a separate bank account is impractical, the subrecipient's accounting
system must be able to provide information on interest earned on the Federal
portion of funds.
D. EXCESS CASH
should accompany any cash returned, with the account codes to be credited in the
amount of the check indicated.
E. REFUNDS
F. UNCLAIMED CHECKS
Reasonable bank charges associated with canceling the check(s) or warrant(s) may
be charged to the grant, budget permitting, in a revised VERF. No changes should
be made to expenses for the unclaimed amounts. A check, made payable to the
CDLE, for the total amount of the canceled items, less any bank charges that were
expensed to the grant in the revised VERF, should accompany the closeout
documents. Closeout documents should reflect total expenses including unclaimed
checks. Subrecipient clients or vendors named in the itemized listing may claim
payments due from the CDLE for up to three years from the original check date at
which point funds will be refunded to the USDOL.
Subrecipients may obtain waivers from this requirement from the CDLE upon
submission of evidence of an oversight entity's escheat policy to which they are
subject. Such evidence should be submitted to the CDLE's Controller. Waivers from
the CDLE will be written. Any refunds from oversight escheat funds should be
handled in accordance with the refund policy above.
G. PROPERTY
For governmental subrecipients, there are no complicating issues regarding the use of
the CDLE provided cash for allowable property purchases. Cash is drawn to make
the purchase and the expense is recorded when the asset is received. For non-
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If the balance of an asset's cost can not be transferred to another contract with the
same awarding agency when the purchasing contract ends (either because another
contract does not exist or other contract(s) can not benefit from the asset's use), an
excess of cash drawn over reportable expenses will exist at the contract's closeout.
Under these circumstances there are two available options:
1. If the subrecipient wants to retain the asset and the awarding agency agrees,
the subrecipient can reimburse the awarding agency for the undepreciated
balance of the asset's cost. The VCRF would be credited in the amount of the
refund. Cash drawn under the contract would then equal reported expenses.
2. If, however, the subrecipient does not wish to buy out the remaining portion
of the asset's life and thereby retain the asset, the asset must be relinquished
to the awarding agency. The awarding agency then must record an adjusting
entry to the subrecipient's VCRF that credits the subrecipient for the
undepreciated balance transferred. The CDLE funded entity that next uses
the asset would then be charged through a debit to their VCRF for the
undepreciated balance of the asset's cost. Again, no cash would actually be
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transferred. This user would expense the balance of the asset's cost either
immediately, if a governmental entity, or through depreciation, as described
above.
The State shall establish such fiscal control as may be necessary to assure the proper
disbursal of Federal funds. As a fiscal control, the CDLE retains the right to suspend
funding, in whole or in part, to protect the integrity of funds or to ensure proper
operation of programs.
Certain compliance issues may result in the CDLE withholding payment on a cash
request. When a compliance issue is identified by CDLE and rejection of a cash
request appears necessary, CDLE will contact the subrecipient in accord with
CDLE's Corrective Action PGL. The subrecipient will be given the opportunity to
correct the compliance issue under the terms of the Corrective Action PGL, in order
to receive payment. Specific reasons for payment rejections shall include, but are not
limited to:
The CDLE, however, will not withhold payment if the amount requested exceeds the
balance available under a Contract or EA with the subrecipient, but rather, will
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reduce VCRF line item amounts requested to equal the amounts available. In no
event shall cash drawn exceed the entire contract amount, even if the cash requested
is to cover legitimate contract expenses.
Funds required under subrecipient contracts or EAs with CDLE may be drawn from
CDLE on a VCRF. The VCRF will reflect available undrawn spending authority for
each budget information summary (BIS) associated with each active contract or EA
awarded to a subrecipient entity.
The VCRFs will continue to be used by subrecipients as long as active contracts exist
between the individual subrecipient and CDLE. As contracts are closed-out, the
budget lines will be coded by CDLE to not appear on VCRF printouts. This coding
can, of course, be seen on VAX print command, “/PCT or reversed for historical
reconciliations or the like.
Funds may not be requested more often than weekly to meet immediate
cash needs.
Workforce Regions may call in their cash requests on Monday before noon.
Workforce Regions must follow-up called in requests for cash with
submission of a signed VCRF (VAX print command, "/PCN") that reflects
the same distribution and amount information conveyed by phone. Cash
requests called in on Monday will be paid on Friday of the same week.
Holiday exceptions to this schedule will be made known in advance.
our account to the subrecipients' accounts on the same day that it is received
from the Federal government Payment Management System, and thereby
minimize CDLE's cash-on-hand due to uncleared checks. EFTs are a
recommended approach to cash management and should be used to the extent
practical at the subrecipient level as well.
State agency subrecipients of CDLE must, in accord with State Fiscal Rules,
create an Inter-Governmental Transaction (IT) in the State accounting
system to receive funds from CDLE. Only the amount field on the header
screen needs to be completed by the subrecipient. CDLE will enter the
appropriate account coding. A screen print of the IT, however, must be
submitted with the VCRF. The IT does not replace the VCRF.
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Please note that the amount of cash requested in H, per line, net of any
program income reported for each line, cannot exceed 20% of the spending
authority, or the award amount, if larger, for each line; so plan your draws
accordingly.
The period of time for which cash needs are being projected should be
recorded in the "from" and "to" spaces in the top left corner of the VCRF.
The current period's report should always indicate a "from" date of the day
following the last report's "to" date. "From" and "to" dates should never
overlap with or leave a gap between the period of the VCRFs submitted
immediately before or after the current VCRF.
IV. CLOSEOUT
A. GENERAL PROVISIONS
CDLE utilizes two major types of contracting documents, Contracts and Grant
Agreements. CDLE’s generally utilizes Contracts for Non-Workforce Regions
subrecipients (contractors), while the Workforce Regions generally receive Grant
Agreements and Contracts. Contracts generally stand on their own and appropriate
only one program and program year of funds, while Grant Agreements, like
Contracts, authorize only one program year of funds, but the EAs/VERs allow for the
appropriation of multiple programs under a Grant Agreement. As such, the Closeout
of a Contracts and Grant Agreements vary in certain ways.
1. Contract Closeout
For each Contract, all CDLE subrecipients must submit, no later than sixty
(60) days after the end of a Contract, a completed and signed Grant Closeout
Reconciliation Worksheet along with a Final VAX Expense Report Form
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(VERF) and a Contract Closeout Package (see Attachment H for the Closeout
Reconciliation Worksheet and Attachment I for a Contract Closeout
Package).
For each EA/VERF under a Grant Agreement, all CDLE subrecipients must
submit, no later than sixty (60 ) days after the end of a Contract or an
EA/VERF, a completed and signed Grant Closeout Reconciliation Worksheet
and a Final VAX Expense Report Form (VERF) (see Attachment H for the
Closeout Reconciliation Worksheet). In addition, for each Grant Agreement
that had an EA(s)/VERF(s) that closed during that program year period of
time, the subrecipient must submit, no later than 60 days after a program year
(i.e., August 31), an annual Contract Closeout Package that includes all the
EAs/VERFs that were closed during that program year period of time. For
example, if a subrecipient had an EA/VERF that ended under a Grant
Agreement during PY05 (from July 1, 2005 through June 30, 2006), then the
subrecipient must submit, by August 31, 2006, a separate Contract Closeout
Package for that Grant Agreement that includes the EAs/VERFs that were
closed during PY05 under that Grant Agreement (see Attachment I for a
Contract Closeout Package).
Near the end of each PY, CDLE will distribute to every subrecipient that program
year’s closeout instructions, forms, and Contract Closeout Package that need to be
completed and submitted to CDLE by the stated deadlines. Each Contract Closeout
Package must include the following completed and signed documents (see
Attachment I for a closeout package with completion instructions):
the entity's VCRF. If the subrecipient cannot net the credit against a positive draw
on another contract, the subrecipient must refund the net credit amount on the VCRF
by enclosing a check made payable to CDLE.
a. the PY of funding under the contract expires on the last day of the
contract, or
a. the PY of funding under the contract did not expire with the contract,
and
the subrecipient must submit separate closeout documents for all PI earned
and expended, 45 days after all the PI has been expended, or the PY of
funding has expired, whichever occurs first. Only Sections III, V, and VI
must be completed on the Closeout Grant Reconciliation Worksheet when PI
is being closed out. As indicated in 1 above, any remaining PI cash when the
PY has expired, must be returned by CDLE to the USDOL
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V. ACRONYMS