EPA Publication Number 202K09001
EPA Contract Number EP-W-08-042
Learner Manual - Module 7
Accounting Policies and Procedures
TRIBAL, U.S. TERRITORIES AND
INSULAR AREAS ADMINISTRATIVE
AND FINANCIAL GUIDANCE
MANUAL FOR ASSISTANCE
AGREEMENTS
"A Nation is a stable, historically developed community of people
who share territory, economic life, distinctive culture, and language.
Office of Environmental Justice, U.S. EPA
U.S. Environmental Protection Agency
Updated August 2013
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Module 7: Accounting Policies and Procedures
This manual was originally developed by the U.S.
Environmental Protection Agency for Tribal Nations,
but content also pertains to U.S. Territories and Insular
Areas. Exception: U.S. Territories and Insular Areas are
treated as states under Part 31 (and also under Part 35,
Subpart A for PPGs, unlike Tribes that are covered
under Subpart B).
Contents
MODULE 7: ACCOUNTING POLICIES AND PROCEDURES ,
ACCOUNTING PERSONNEL 3
ACCOUNTING REQUIREMENTS 3
INTERNAL CONTROLS 4
DOCUMENTATION 6
BUDGET CONTROLS 7
Real Property 9
Equipment 9
COST PRINCIPLES 11
Reasonable, Allocable, and Allowable Costs 11
Management Fees 14
Direct vs. Indirect Costs 14
Direct Costs 16
Indirect Costs 16
Financial Management Process 18
Enrollment Process for EPA-EFT 20
CASH MANAGEMENT 20
ATTACHMENT TO MODULE? 26
Answers to Self-Assessment Questions 26
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 7: Accounting Policies and Procedures
Module 7: Accounting Policies and Procedures
Tribal, U.S. Territories and
Insular Areas Administrative and
Financial Guidance for
Assistance Agreements
Mfxluley:
Accounting Policies and Procedures
The Grants Management Process
Module y Disadvantage!
Business EnffirpreE£(DEEs)
Module ID: Assista
ringanicl
Accounting Personnel
Accounting Personnel
Whom does the Tribal Nation need to employ?
For any Tribal Nation to be able to provide
accurate, current, and complete disclosure of
finances under federal awards, Tribal Nations have
personnel who:
Have experience in accounting and/or an
accounting education
Have education or experience with federal
assistance agreements and award
requirements
Are able to prepare and keep accurate and
timely assistance agreement records and
files
Are able to produce financial reports that
can be compared with the award work plan
and the budget
The Tribal Nation is ultimately held accountable
for any discrepancies, not the accountants.
What is Accounting?
Accounting is the recording of financial data for all
receipts, expenditures, assets, liabilities and net worth for
the entire Tribal Nation and includes analysis and
measurement of this information.
= Accounting information is reported to decision
makers.
Keep separate records for each federal assistance
agreement award.
= Records must be. separated by funding source.
Accounting Requirements
What is accounting?
Accounting is the recording of financial data for all
receipts, expenditures, assets, liabilities and net
worth for the entire Tribal Nation and includes
analysis and measurement of this information.
The Tribal Nation's accounting department must
keep separate records for each federal assistance
agreement award. Records must be separated by
funding source, such as the Environmental
Protection Agency, Bureau of Indian Affairs,
Indian Health Service, and United States
Department of Agriculture. The Tribal Nation's
accounting records must be accurate, current, and
complete.
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 7: Accounting Policies and Procedures
Accounting Procedures Manual
The organizations Accounting ProceduresManual must describein uniting
the accounting policies and proceduies for all its operations including
federalh-issued awanis.
Be sure to provide training to yourprogramstafc
Reviewthemanualanddetermine the strengths, limitations and
inconsistencies.
If vou have an establishedpdicyorproceduie, auditors and EPAexpectMju
tofollowie
Do we need an accounting manual?
The Tribal Nation must have an accounting
manual. This manual should describe in writing the
Tribal Nation's accounting policies and procedures
for all its operations including federally-issued
awards. For example, a general financial policy
might read:
The following policies and procedures
provide a framework and structure as to
how the Tribal Nation's financial
accounting system will be managed and
operated. The objective of this system is
to provide management with reasonable
but not absolute assurances that assets
are safeguarded against loss from
unauthorized use or disposition; that the
Tribal Nation is managing its state and
federal programs in compliance with laws
and regulations; transactions are
executed in accordance with
management's authorization and
recorded properly to permit the
preparation of financial statements in
accordance with generally accepted
accounting principles. The system will
also provide management and the Tribal
Council the data necessary to maximize
the beneficial use of financial resources
available.
Accounting Policies and Procedures
Internal Controls
Documentation
Budget Controls
Cost Principles
Cash. Management
What must be addressed in accounting policies
and procedures?
Authorizations, obligations, unobligated balances,
assets, liabilities, outlays or expenditures, and
income must be documented within a Tribal
Nation's accounting system.
Accounting policies and procedures must address:
Internal Controls
Documentation
Budget Controls
Cost Principles
Cash Management
Internal Controls
Internal Controls:
Establish policy for offcc'thv
communication and transition
consistency
Write a manual
Develop procedures tor i <
and monitoring
Internal Controls
What should an internal control policy include?
Internal control policies should be written for all
financial functions performed by and for the Tribal
Nation.
For example, a general policy statement controlling
internal communications might read:
Policy
To promote a professional working
environment for staff and the Tribal
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 7: Accounting Policies and Procedures
Council, it is the policy of the Tribal
Nation to maintain and respect proper
"chain-of-command" in terms of staff to
staff and staff to Tribal Council
communications.
A general procedure statement for controlling
internal communications might read:
Procedure
This means that all direct communications
with the Tribal Council should generally be
made by staff through the General Manager
(GM), Chief of Staff, or Administrator.
The exception to this may be those
communications between the Financial
Officer (FO) and the Tribal Council Chair,
Chief, Governor, or the Tribal Council as a
whole sitting in an official meeting, where
the FO has been delegated certain duties
and responsibilities that require such direct
communications, or where the Tribal
Council has asked to speak with, or receive
reports from other particular staff at official
meetings.
Individual Tribal Council members other
than the Chair, Chief, or Governor should
refrain from direct communications with
staff. Where the Tribal Council members
other than the Chair, Chief, or Governor has
a need to communicate to staff directly such
communications should be made through
the General Manager, Chief of Staff, or
Administrator where possible, or where not
possible or practical, the General Manager
or Chief of Staff should be informed of such
communications after the fact. This policy is
intended to apply to substantive, business
related communications and not merely
incidental conversations or communications
on a personal level.
Internal controls ensure consistency, continuity
during transitions, and training of new staff. These
benefits to the system are known as "desk
procedures".
Accounting Principles
Generally Accepted Accounting Principles
(GAAP)
The Government Accounting Standards Board
(GASB)
All recipients of federal funds must follow GAAP guidelines
Are we required to follow Generally Accepted
Accounting Principles (GAAP)?
All recipients of federal funds must follow GAAP
guidelines. Good internal controls assure that
reliable accounting data is generated and is
consistent with applicable federal laws and
regulations (GAAP) as well as Tribal Nation
policies and procedures. Good internal controls
also safeguard assets against theft and unauthorized
use, acquisition, or disposal.
Find out more about Generally Accepted
Accounting Principles (GAAP) at
http://www.fasab.gov/accepted.html.
The Government Accounting Standards Board
(GASB) is the independent organization that
establishes and improves standards of accounting
and financial reporting for U.S. state and local
governments. Find out more at http://www.gasb.org/.
Internal controls:
1 help Tribal Nations
make comparisons to
actual recorded
amounts of a project,
and
determine any
deviations and issuos
lluilnml Uibc
Oversight Measures
Ksliiblish policies and
procedures.
Conduct frequent and
continuous rc\icw
und monitoring.
Make an integral part
of the internal control
structure.
What oversight measures does EPA require?
Tribal Nations need policies and procedures for
reviewing and monitoring project budgets and
rectifying deviations that may occur. Frequent and
continuous review and monitoring of all project
budgets must be an integral part of the Tribal
Nation's internal control structure. Internal controls
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 7: Accounting Policies and Procedures
help Tribal Nations make comparisons to actual
recorded amounts of a project and determine any
deviations and issues that need to be addressed to
fix problems. For example:
The contracted Certified Public Accountant
(CPA) reviews the monthly financial
statements from a working disk sent from the
Tribal Nation by the Finance Officer.
Appropriate month end journal entries are
then prepared and faxed to the Finance
Officer for entry. Ideally this is completed prior
to the monthly Tribal Council meeting.
Internal
Control
Measure
Communication
Meeting
Meeting
Communication
Who
Accounting
Team
Financial and
Accounting
Team
All project team
members
EPA regional
office
When
Daily
Every other
week
Monthly
Monthly
Documen
examples:
* Cancelle"
f Invoices
* Purchase orders
Receiving reports
sand attendance
needs t< >
Joeumenl
Makf sure reports are
accurate.
Use disadvantages
business enterprises
(DREs).
Documentation
What needs to be documented?
Source documents are critical components of
"allowable" costs under federal assistance
agreements for both federal and required
nonfederal match, if applicable. Tribal Nations are
required to keep accurate source documents for
each grant (receipts). If a Tribal Nation cannot
provide these source documents, costs based on
those documents may be deemed "unallowable".
You need to provide records that adequately
identify where the funds come from and how they
are spent (balance sheets). Record the source and
application of all federally-funded activities, such
as authorizations, obligations, unliquidated
obligations, assets, outlays, income, and interest.
These records must be supported by documents,
such as:
Cancelled checks
Invoices
Purchase orders
Receiving reports
Time and attendance records
Contract and subcontract award documents
Not maintaining adequate records increases a
Tribal Nation's risk level. Mismanaged accounting
may open the Tribal Nation to accusations of fraud
and may prevent them from receiving future
awards. They may even have to pay back funds
that were transferred but not documented.
Report Accuracy
Reports need to
provide:
° accurate,
° current, and
° complete
disclosure of any
and all financial
transactions.
How accurate must the reports be?
Reports need to provide accurate, current, and
complete disclosure of any and all financial
transactions of each federally-funded project or
program. Providing accurate, current, and complete
disclosure of the financial transactions of federally-
funded projects or programs assures management
and the funding agency that assets are being
properly controlled and the Tribal Nation has the
necessary administrative capabilities to properly
manage the federal funds awarded.
' ' if
Disadvantaged Business Enterprises
When '1 'ribal Nations receive federal funds, they
agree to:
t Try to contract for supplies and sen-ices with
disadvantaged firms whenever possible
< Report useofDBEstO F.PA onan ;innual basis
...more in Moduli- 9..,
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Module 7: Accounting Policies and Procedures
Does this include Disadvantages! Business
Enterprises (DBEs)?
A Disadvantaged Business Enterprise (DBE)
includes Minority Business Enterprises and
Women Business Enterprises (MBE/WBE).
Table 1: Sample Balance Sheet
When Tribal Nations receive federal funds, they
agree to try to contract for supplies and services
with disadvantaged firms whenever possible.
Recipients follow basic steps outlined in the DBE
instructions.
Balance Sheet Summary
December 31, 2011
ASSETS
Current Assets
Bank Checking/Savings
Accounts Receivable
Total Current Assets
TOTAL ASSETS
LIABILITIES & EQUITY
Current Liabilities
Accounts Payable
Salaries Payable
Salary Benefits Payable
Deferred Revenue
Total Current Liabilities
Equity
TOTAL LIABILITIES & EQUITY
50,000.00
40.000.00
90.000.00
90.000.00
3,500.00
3,000.00
600.00
1.000.00
8.100.00
81,900.00
90.000.00
Tribal Nations should have written policies and
procedures about contracting with DBEs and
tracking this activity in order to report it to EPA on
an annual basis. If a disadvantaged business
enterprise is not available or acceptable, the Tribal
Nation may contract with or assign subawards to
other businesses.
Disadvantaged Business Enterprise (DBE)
(formerly addressed as MBE/WBE) instructions
are provided in the Appendix and available online
at http://www.epa.gov/osbp/dbe team.htm.
Budget Controls
Module 9 explains the DBE requirements
in greater detail.
Make surereports accurately
reflect project expenses.
Equipmentmustbe
maintained in good working
order through the entire award
period.
Actual expenditures or outlays
must be compared with
budgeted amounts for each
award or subaward monthly,
quarterly and yearly.
Budget Controls
Why do we need to have budget controls?
Budget controls are necessary to avoid excess
expenditures. Budget control is critical so that
Tribal Nations know the financial status of a
project when comparing budgeted line items with
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Module 7: Accounting Policies and Procedures
funds expended. Actual expenditures or outlays
must be compared with budgeted amounts for each
award or subaward*.
For example, the award usually includes
budgeted costs for personnel, travel,
equipment, supplies, and contracts. Tribal
Nations include these line items in their
fund accounts. The system shows the
budgeted and actual costs incurred for each
line item in each account.
*Some agreements may include a condition
requiring prior EPA approval for revised budgets.
In accordance with 40 CFR 31.30, it is usually
acceptable to move funds from one budgeted object
class category to another, when the amount is
under ten percent of the total budget (10%
cumulative over the life of the grant).
Table 2: Sample Budgeted and Actual Costs
Budgeted
Line Item
Personnel
Name 50% of 50,000
Name 25% of 40,000
Total Personnel
Fringe Benefits
20% of Personnel Costs
Total Fringe Benefits
Travel
Conference A
150 per diem x 3 days
Airline
Total Travel
Supplies
Office - 20 per month x 12
months
Project -(name or itemize
supplies)
Total Supplies
Other
Printing
Total Other
Total Direct Costs
Indirect Costs @ 8% of direct
Total Costs
Actual
Costs
25,000
20,000
45.000
9,000
9.000
450
500
950
240
300
540
250
250
Moving Funds
Movement of less than 10%
of the total EPA project budget
over the life of the grant
from one object class category to another
is usually acceptable.
Ask (h«Pro|«ct Officer
Document the Movement
For each award, a separate cost center or
"fund" must be maintained in the Tribal
Nation's accounting system. This "fund" cannot
include more than one award. A policy statement
might read:
It is the policy of the Tribal Nation to
expend program and service funding only
upon securing Council approved budgets,
and within approved budget limitation.
Deficit spending is strongly discouraged.
Grant and contract expenses may not be
incurred until an official award has been
made and the funds either received, or an
alternate source of reimbursable funding
has been approved by the Council.
Question
Your Tribal Nation has received two assistance
agreement awards this year. The first award only
has enough money to complete the first two of
seven project objectives. The second award came
with enough money to complete all of its
objectives and still have funds left over.
("'iin you use money from Ihe second award In
complete the objectives remaining in the
first award's project plan?
Select your answer.
A. Yes
B. No
C. II depends on how much money is involved
O. II depends on whether you are using award
funds or income generated by activities
conducted under the second award project
R. None of the above
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Module 7: Accounting Policies and Procedures
Internal Controls and Accountability
Real and personal property must be:
= Safeguarded
c Used solely for authorized purposes
(."heck tin.' award "terms and eruditions" for details.
Which accounting activities need internal
controls?
Effective internal controls and accountability must
be maintained for all assets including cash and real
and personal property. Tribal Nations and
subgrantees must adequately safeguard all such
assets and must also assure they are used solely for
authorized purposes.
Real Property
All real property purchased under the award must
be used for the project's originally authorized
purpose. The Tribal Nation cannot dispose of or
assign title to other interests until close-out of a
project.
For instance, real property purchased under
an award should not be used to secure a
loan from a bank. This is described under
40 CFR 31.31 in the Appendix.
Internal Controls and Accountability
(continued)
F.quipnifnL must he:
1 Numbered
- Inventoried
= Appraised at market value
Check the a\vard "terms and conditions" for details.
Equipment
Equipment purchased under the award is only to be
used by the recipient in the program or project for
which it was acquired, or as long as it is needed,
whether or not the project or program continues to
be supported by federal funds. Negotiate
dispersement with the original plan.
When equipment is no longer needed for the
original project, it may be used in other activities,
currently or previously supported by a federal
agency. Check the "terms and conditions" of the
award for your negotiated arrangement.
Typically, items of equipment with a current fair
market value of less than $5,000 may be retained,
sold, or disposed-of with no further obligation to
the awarding agency. If the fair market value is in
excess of the $5,000 the awarding agency shall
have a right to an amount of the agency's share of
the value of the equipment. This rule is described
under 40 CFR 31.32 in the Appendix.
For equipment purchased under the award,
property records must be maintained. These
records need to include:
A description of the property, including the
serial number or other identifying number:
o Tagged
o Bar coded
o Inventoried
The award for which the equipment was
purchased
A description of the entity who is holding
the title
The date the equipment was acquired
The cost of the equipment, including the:
Percentage of the federal funds used to
purchase the equipment
Location of the equipment
Use and condition of the equipment
The date the equipment was disposed of, or
sold, and the amount of the selling price
A reconciliation of inventory and property
records every two years
For example, an internal control policy for
equipment might read:
Responsibility for maintaining an inventory
control system shall rest with the Accounting
Department. The inventory control system will
enable the Tribal Nation to verify actual
physical inventories against book inventories.
As part of this system, all the Tribal Nation's
equipment, furniture, and hard supplies with
an expected life span of one (1) year or more
shall be labeled and recorded in the inventory
system. A complete organizational inventory
shall be conducted at least annually, the
results of which shall be reconciled to the
property records.
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Module 7: Accounting Policies and Procedures
Safeguards
Prevent:
r Loss
Theft of property
l'A|Liipmenl must he maintained in HIHHJ working
i rti'n I" hi- biisis for program decisions
Tin- somw of intr mnalion ti u- Standard [-< irm 4^,
Federal Financial Reports
Relutedto performance or productivity
Which expenditures do we report?
Tribal Nations must report and provide for
comparison of outlays or grant project
expenditures, with budget amounts for each
project/award. Timely and accurate "budget versus
expenditure" reports prepared by the Tribal
Nation's finance staff are often the basis for
program decisions. They are the source of
information for Standard Form 425, Federal
Financial Reports (FFRs) submitted to the Las
Vegas Finance Center (LVFC).
Only financial status information is
required by EPA. Recipients are no
longer required to submit Federal Cash
Transaction information, formerly
reported on the SF 272 (now lines lOa
through We on the FFR). Therefore, all
fields on the FFR need to be filled out
except for 1 Oa, 1 Ob, and 1 Oc.
EPA often asks that financial information be
related to performance or productivity information.
The financial department should ask the
department that is responsible for a specific project
to provide this information at the time that it is
requesting to expend funds. Some environmental
programs require each cost to match an objective in
the work plan. Financial information must be
monitored and included in the records.
Cost Principles
Written policies
and procedures
are necessary to
ensure that costs
are reasonable,
allocable, and
allowable.
Reimbursable
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Module 7: Accounting Policies and Procedures
Cost Principles
Reasonable, Allocable, and Allowable Costs
Clearly define in writing policies and procedures
that ensure alignment with federal cost principles.
Cost Principles (continued)
Document expenditures.
Differentiate direct costs from indirect costs.
Monitor allowable costs for use within the
specified time period.
Conduct internal annual audits.
Why do we need to have written policies and
procedures?
Written policies and procedures are necessary to
ensure that costs are reasonable, allocable, and
allowable. OMB Circular A-87 and EPA "terms
and conditions" require all costs (including cost
share or matching costs) claimed under an award to
be reasonable, allocable, and allowable.
Unallowable Costs
Other Grant
IndiretlCoBts
Office-Manager
>nnel
Compensation
Lkjuur
I nlri l.iillm. Hi
Lobbving
Costs must be given consistent treatment.
Unallowable
Unallowable costs are personnel compensations
rather than costs needed to fulfill the terms of the
award. Claims developed under approved cost
allocation plans will be based on allowable costs as
identified in OMB Circular A-87. Where
unallowable costs have been claimed and
reimbursed, they will be refunded to the program
that reimbursed the unallowable cost using one of
the following methods:
cash refund
offset to a subsequent claim
credits to the amounts charged to individual
awards
Unallowable costs include liquor, entertainment,
contributions and donations, costs related to
criminal or civil proceedings, lobbying, items for
personal use, and contingencies except for self-
insurance reserves, pension plan reserves, and post-
retirement health, and other benefit reserves. The
cost of governing, fundraising, pre-award costs,
investment management, idle facilities, advertising,
interest, and bad debts, fines, and penalties have
many restrictions.
Also, costs may not be assigned as direct costs if
any other cost incurred for the same purpose in like
circumstances has been allocated to an award as an
indirect cost. Supplanting and cost-shifting are
unallowable practices.
Reasonable Costs
A ix ist is reiiw mable if it does not exceed
what a prudent person would pay,
under the circumstances prevailing at the time
the decision was made to incur the cost.
Not
Ronsonnblc
Reasonable
Reasonable
A cost is reasonable if it does not exceed what a
prudent person would pay, under the
circumstances prevailing at the time the
decision was made to incur the cost. In other
words, the most expensive item should not be
purchased or used unless there are other
compelling reasons (such as it is more accurate,
reliable, or manufactured to be integrated as part of
a system) when an item of equivalent quality is
available at lower costs. If the same item can do the
job just as well as a more expensive item, the less
expensive item should be purchased.
Use good judgment. Document decisions!
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Module 7: Accounting Policies and Procedures
Table 3: Sample Budget versus Expenditures Report
BUDGET VS. ACTUAL
December 31, 2011
Budget Actual Remaining
Income
Income
Total Income
Expense
Personnel
Fringe Benefits
Travel
Equipment
Supplies
Contractual
Construction
Other
Indirect
Total Expense
Net Income
45.000.00
45,000.00
22,000.00
3,700.00
7,000.00
5,000.00
1,200.00
600.00
900.00
1,900.00
2,700.00
45.000.00
00.00
40.000.00
40,000.00
20,500.00
3,500.00
5,000.00
4,800.00
1,200.00
400.00
800.00
1.300.00
2.500.00
40.000.00
00.00
5.000.00
5,000.00
1,500.00
200.00
2,000.00
200.00
0.00
200.00
100.00
200.00
200.00
5.000.00
00.00
Allowable Costs
For costs to be allowable, theymust:
Bein accordanceuiththegrantagreement
Comply withcostprindplesinOMB Circular A-87including
Attachment A and B
Adhere to Generally Accepted Accounting Principles (GAAP)
Includeallapplicablecredits
Be completelydocumented
Allowable
Tests of allowability require that the cost:
Conform to any limitations or
exclusions set forth in the Cost
Principles found in OMB Circular A-87
or in the "terms and conditions" of the
federal award, or other Tribal
regulations.
Be consistent with policies, procedures,
and regulations that apply uniformly to
both federal awards and other Tribal
government units.
Be given consistent treatment. A cost
may not be assigned to a federal award
as a direct cost if any other cost, for the
same purpose within the Tribal Nation,
under like circumstances, has been
allocated as an indirect cost.
Be determined in accordance with
generally accepted accounting
principles (GAAP), except as otherwise
provided for in OMB Circular A-87.
Include all applicable credits, such as
discounts given by an equipment
manufacturer.
Be adequately documented.
Moving funds from one budget category
to another within a single grant is
usually acceptable if the total movement
over the life of the grant does not
exceed ten percent (10%) of the total
project budget.
Allocable Costs
A cost is allocable to a specific cost objective in an
awuixl it tile goods or sen ices puirliusetl are
required and budgeted for that project.
*
In the budget Required for the project
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Module 7: Accounting Policies and Procedures
Allocable
A cost is allocable to a specific cost objective in
an award if the goods or services purchased are
required and budgeted for that project.
Allocation methodologies are the ways in which a
Tribal Nation determines which costs to assign to
which objective. Allocation methodologies for
costs, such as space rental, must be in writing and
revised as they change. Allocation methodologies
must be adequately documented in a Tribal
Nation's policies and procedures.
Cost Shifting is not Allowed
Supplies Budget
$1,500 ea. x 4 computers =
2 personnel use computers
$1,500 x 2 computers =
Allocable
Not allocable
Need
$5,000 Supplies Budget
$6,000 $1,500 ea. x 2 computers =
4 personnel use computers
$3,000 $1,500x4 computers =
$3,000 Allocable
$3,000 Not allocable
$3,000 Balance Remaining
$15,000
$3,000
$6,000
$6,000
$0
$3,000
Under the principles of OMB Circular A-87,
Attachment A, any cost allocable to a specific EPA
award may not be charged to other federal awards.
Using the same charges on different awards is
prohibited practice and is unallowable. Such a
practice constitutes unallowable cost shifting*.
For instance, cost overruns under an award
that has no more funds available may not be
charged to another award or placed in
indirect cost pools. The cost overrun would
have to be funded by unrestricted Tribal
funds.
Just because an expense is allowable under the
OMB cost principles does not mean they are
allocable to the grant award.
For example, you purchase four computers.
They are charged to the budget under the
supply line, which is an allowable cost.
Only two employees are supporting the
grant. Costs for the two additional
computers are not allowable, because they
are not allocable to the grant.
*Cost shifting between budgets for different grants
is not allowed unless negotiated with EPA.
Allocability is about justification. The project
manager is responsible for oversight and keeping
cost allocations accurate. If the project needs it,
then document -justify those reasons in writing.
Document Expenditures
How should we document expenditures?
Expenses to programs must be properly
documented, which includes justification that the
expense is allowable. The following check list may
be attached to purchase orders or check requests to
explain why the purchase was made. Auditors and
regulators look for the justification.
Learner Notes
Activity 7.a (online at www.petetribal.org')
provides you with the opportunity to
practice identifying which costs are
allowable and which costs are not.
Novices: If you are new to EPA assistance
agreement awards, try the Allowable Costs
activity.
Possible categories for Allowable
Costs include:
Administrative systems
Policies and procedures
Experts: If you are already familiar with
accounting principles, try something a
little more challenging. Play "Stump the
System".
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Module 7: Accounting Policies and Procedures
Management Fees or Similar Charges
Are expenses added to direct costs
in order to accumulate and reserve funds
for ongoing business expenses,
unforeseen liabilities, or other similar costs
((>thenvise known as a slush fund or petty cash).
Management Fees
According to the regulations stated in Functional
Requirements Letter (FRL) 8569-3, the term
"management fees or similar charges" is not
allowable under EPA assistance agreements. The
term "management fees or similar charges" refers
to expenses added to direct costs in order to
accumulate and reserve funds for ongoing business
expenses, unforeseen liabilities, or other similar
costs (otherwise known as a slush fund or petty
cash).
EPA has decided that the public's interest is best
served by ensuring that EPA financial assistance is
used only to pay for costs that are allocable and
necessary for the performance of the specific
project. EPA will not allow recipients of EPA
awards to charge management fees to their
agreements unless the management services are
devoted entirely to a single EPA-funded project.
Management fees or similar charges may not be
used to improve or expand the capacity of
organizations carrying out EPA funded projects,
except to the extent authorized by the terms of the
agreement as a direct cost of carrying out the scope
of work.
Complete language for FRL-8569-3 is provided in
the Appendix.
Direct versus Indirect Costs
Develop a Cost Policy Statement tor classifying
costs as direct or indirect.
' Direct costs can he readily assigned to a particular
project
= Indirect costs are those that cunnot be readily
particular project
Direct vs. Indirect Costs
OMB Circular A-87 makes clear that for
classifying costs under every accounting system as
direct or indirect, there is no universal rule. For this
reason, it is very important for a Tribal Nation to
develop a Cost Policy Statement for classifying
costs as direct or indirect.
For example, an indirect cost policy statement
might read:
It shall be the responsibility of the Finance
Officer, working in consultation with the
General Manager, to monitor indirect
cost recoveries and to ensure that indirect
(i.e., central administrative) costs are fully
recovered in each fiscal year. All federal,
state, private, and tribal sources of
funding shall be required to contribute
the required prorated share of costs per
the federally negotiated indirect cost
rate. No agreement for any grant,
contract or other funding source that
becomes available to the Tribal Nation
but which does not allow for the full
recovery of indirect shall be entered into
or accepted by the Tribal Nation until a
source of any projected indirect shortfall
has clearly been identified and obligated.
Within the limits of any budgetary
authority established by the Tribal
Council, the Finance Officer shall
propose, and the General Manager
approve such reprogramming or budget
modifications as may be necessary to
accomplish this objective.
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Module 7: Accounting Policies and Procedures
Table 4: Sample Checklist
D Reasonable: Is the use of program dollars reasonable?
D Necessary: Is it necessary in performing the requirements of the program?
D Allowable: Is the use of program dollars allowable?
D Is it within the scope of the program project as proposed to EPA?
D Is the purchase allowable under OMB A-87, Attachment A?
D Clear business purpose: Is there a clear business purpose? It is evident to a third party that the
purchase is not for personal use.
D Budgeted: Is the purchase properly budgeted for?
D Funding available: Is there funding still available in the budget? If a budget revision needs to be
done in accordance with the program regulations, the Project Officer has been contacted.
D Coded: Is the purchase order or check request properly coded with the correct fund, program,
year, and account codes?
D Approved: Has the purchase order or check request been properly approved by supervisors?
D Conflict of interest: Do any of the supervisors have a conflict of interest in making this purchase?
Do any of the supervisors have a personal relationship or stand to gain personally by making this
purchase?
D Processed within deadlines: Have you followed policy and allowed enough time for the paperwork
to be processed within established deadlines?
D Policy followed: Each check request and purchase order must be documented to stand on its own
as to what, where, why, when, and how the funding was used.
D Documented: If you do not think it would be clear to an outside third party, such as an auditor,
then please take a moment and document the reasons for the purchase. Remember, at the end of
the year or two years from now, you might not be here to explain the purchase.
D Comfortable: Would you be comfortable with making this purchase if it was reported on the front
page of the daily newspaper with photos of you?
Developing a Cost Policy Statement will greatly
reduce, but not necessarily eliminate, any future
disagreements over the allowability of costs,
whether they are direct or indirect.
The basic difference between direct and indirect
cost is how easily a cost can be identified and
assigned with a high degree of accuracy to a
particular project.
Direct costs can be readily assigned to a
particular project.
Indirect costs are those that cannot be
readily assigned to a particular project.
Regulations permit minor direct cost items to be
treated as indirect costs for practicality, as long as
all such items receive consistent treatment.
Discussion
Does your organization have a
written cost policy statement?
If so, does it comply with 2 CFR
Part 225, OMB Circular A-87
regulations?
Which expenses are categorized as
direct costs?
Which expenses are categorized as
indirect costs?
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Module 7: Accounting Policies and Procedures
Direct Costs
Examples of direct costs include:
- Personnel
= Supplies
= Equipment
Travel
()nly when directly involved in or needed t( i meet
the award project objectives.
Direct Costs
Direct costs are costs that can be identified
specifically for accomplishing the work under the
award. Examples of direct costs include:
Compensation of employees for the time
devoted to the performance of the award
Cost of materials acquired, consumed, or
expended specifically for the purpose of
the award
Equipment used specifically to perform
the work under the award
Travel expenses incurred specifically to
carry out the award
Which project expenses are not
usually categorized as direct costs?
A. Environmental impact measuring devices
B. Water, power, and communication bills
(Unless used for a dedicated project funded
facility)
C. Employee compensation
D. Travel to work sites
E. All of the above
Indirect Costs
In direct costs are:
= Not readily identifiable \\-ithaparticularproject or program
= Nece-ssary to success of the award proj ect
Anindirectcostrateis:
= Negotiated in advanceof the assistance agreement
- You can only charge indirect costs if you havean approved
indirect costrate.
= Applied consistency to all grantprograms
Indirect Costs
Indirect costs are negotiated in advance. Indirect
costs are the costs incurred by a Tribal Nation that
are not readily identifiable with a particular project
or program but are nevertheless necessary to the
Tribal Nation's operation and the performance of
its programs.
Indirect costs are paid out of the
total grant amount;
it is not a separate financial responsibility.
Types of costs that are usually treated as indirect
costs include:
Operating and maintaining facilities
Electricity
Rent
Phone service
Depreciation
Administrative salaries
Secretary for travel
In theory, all such costs might be charged directly.
When it is not practical to charge them directly,
costs are grouped into a common pool and
distributed to the organization's programs through
a cost allocation process.
An indirect cost rate is applied to each assistance
agreement award. Assistance agreements are
charged for an item directly or indirectly, but not
through both methods. Charging with both methods
is called double charging and is not allowed.
Indirect Cost (IDC) Rate
Negotiate \vath your cognizant federal
The Department of Interior (DOI)/Interior
Business Center (IBC)/' Indirect Cost Services
CICS)
The Interior Business Center negotiates the
IndirectCost(IDC) rate
The Interior Business Center sends the IDC
Indirect costs rates for Tribal Nations may be
negotiated with their cognizant federal agency. The
cognizant federal agency for all recognized Indian
tribal governments is the U.S. Department of the
Interior. The Interior Business Center (IBC;
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 7: Accounting Policies and Procedures
formerly the National Business Center) approves
the indirect cost rate (IDC). An indirect cost rate
proposal should be submitted to IBC annually.
A Tribal Nation should work closely with the
Interior Business Center to achieve an equitable
rate and keep that rate current. This helps the
Tribal Nation maintain a current overhead rate and
avoid closeout delays.
For example, an indirect cost rate policy statement
might read:
It shall be the policy of the Tribal Nation
to submit its annual indirect cost proposal
in a timely manner, with submission no
later than sixty (60) days after the
publication of the annual single audit for
each calendar year, or July, whichever
shall occur first. Preparation of the
proposal shall be considered to be a
priority task for both the General
Manager and the Finance Officer. Outside
technical assistance may be retained by
the General Manager as necessary to
complete the proposal.
Which project expenses are not usually
categorized as indirect costs?
A. Payments on office and warehouse space
B. Maintenance staff
C. The Tribal Council receptionist's salary and
benefits
D. Travel to a conference for the grantproject
E. AH of the above
OMB Circular A-87 states:
A Tribal Nation that does not have a
previously established indirect cost rate
must submit their indirect cost rate
proposal to the Interior Business Center, if
they want to use an indirect cost or
overhead rate on any federal assistance
agreement award.
The Tribal Nation will receive an indirect cost rate (IDC
rate) agreement from the
Interior Business Center stating the negotiated rate
along with applicable "terms and conditions".
How do we contact the Interior Business Center?
Interior Business Center
Indirect Cost Services
2180 Harvard Street, Suite 430
Sacramento, CA 95815
Do it now, before you forget...
Add the Interior Business Center (IBC) contact
information to your Contact List.
The Contact Information with Tracking Document is
provided in the Appendix.
Learner Notes
Activity 7.b (online at www.petetribal.org)
will help you learn to differentiate between
direct and indirect costs. Practice
comparing budget line items to the work
plan in Activity 7.b.
Make Every Penny Count
EPA headquarters and regional offices pay awards
through the EPA Las Vegas Finance Center (LVFC).
Submit financial reports to the LVFC.
11'you have an EPA Regional Assistance Agreement,
follow the proc't'ss detailed by the
llranls Management OfliL-ia].
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Module 7: Accounting Policies and Procedures
Financial Management Process
How does the financial management process
work?
Financial system components used by a Tribal
Nation for EPA awards should consider the
following:
Reimbursement from EPA for projected
work or work performed under an award.
The majority of funds paid to a Tribal
Nation are received by Electronic Funds
Transfer (EFT).
Recipients can drawdown as many times
as they need in order to meet their
immediate cash needs.
Most grantees drawdown funds on a
monthly basis. It is easier to match one
month's expenses with the corresponding
revenues. It also helps to monitor actual
versus budget in a timely manner.
EPA headquarters and regional offices pay awards
through the EPA Las Vegas Finance Center
(LVFC). Submit your financial reports for
reimbursement to the LVFC. If a Tribal Nation has
an EPA Regional Assistance Agreement, the Tribal
Nation will follow the process detailed by the
Grants Management Official of that EPA regional
office.
Drawdown when expenses are incurred.
Don't wait!
The money flows both ways;
If you draw down more than you need,
send the excess back.
Las Vegas Finance Center
The Las Vegas Finance Center (LVFC)
manages the payment process function.
Please be advised. The Federal Financial Report
(FFR) Standard Form (SF) 425
replaced Standard Forms 269,269A and 272,
272A on October 1, 2009.
What does the Las Vegas Finance Center do?
The Las Vegas Finance Center (LVFC) manages
the payment process function:
Collects SF 3881 Forms from recipients
Inputs banking data into the finance
system allowing recipients to drawdown
funds
Enrolls recipients in the Treasury's
Automated Standard Application for
Payment (ASAP) system
Loads grant funds into ASAP as
awards/amendments are affirmed
Processes payment requests and informs
recipients of errors/rejections
Collects SF 425 Federal Financial Reports
Collects and processes final SF 425
Federal Financial Report for financial
closeout of grants
For more information about LVFC, visit their
website at
http://www.epa.gov/ocfo/fmservices/payinfo.htm.
Financial Management Process
There are two methods for managing the financial
process with EPA.
i. Automated Standard Application for Payments
(ASAP)
2. Electronic Funds Transfer (EFT)
There are two methods for managing the financial
process with EPA.
1. Automated Standard Application for
Payments (ASAP)
2. Electronic Funds Transfer (EFT)
m
Automated Standard Application for
Payments
Enroll one time hi use ASAP.
Establish and maintain accounts in ASAP to
control the flow of funds.
Enter spending authorizations into accounts in
accordance \\ith program needs and schedules.
Initiate payment requests through ASAP to meet
cash needs.
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Module 7: Accounting Policies and Procedures
How does the Automated Standard Application
for Payments process work?
ASAP is an all-electronic payment and information
system developed jointly by the Financial
Management Service (FMS) and the Federal
Reserve Bank of Richmond. ASAP, which
functions much like "on-line banking", is a system
through which grantee organizations receiving
federal funds can draw from accounts pre-
authorized by federal agencies. ASAP provides one
stop banking for handling all your federal funding
sources.
ASAP is also being used to make timely payments
to financial agents that are performing financial
services for FMS and other federal agencies.
The ASAP system is the preferred method of
payment for EPA grantees. ASAP operates as
follows:
Federal Agencies and organizations
receiving Federal funds enroll one time to
use ASAP.
Federal Agencies establish and maintain
accounts in ASAP to control the flow of
funds to organizations.
Federal Agencies enter spending
authorizations into their ASAP accounts
in accordance with their program needs
and schedules as awards are affirmed.
Payment Requestors at organizations
initiate payment requests through ASAP
to meet immediate cash needs.
Electronic Funds Transfer
ASAP is "as simple as pie"
-fast, easy, and secure.
How does the Electronic Funds Transfer process
work?
The EPA-EFT payment process is an electronic
funds transfer process initiated by and unique to
EPA in response to the Debt Collection
Improvement Act of 1996, Public Law 104-13.
This law requires that all federal payments be made
via Direct Deposit/Electronic Funds Transfer
(DD/EFT). The EFT process limits the amount of
cash available to a grant recipient. Recipients
should allow five to seven (5-7) days for a
transaction to clear the system.
The EPA-EFT is a manual payment process:
The recipient submits form SF-3 881,
banking data, to the Las Vegas Finance
Center and will be assigned an EFT
control number.
The recipient submits a U.S. EPA
Payment Request (EPA Form 190-F-04-
001, also referred to as EPA Form 190 or
simply a payment request) to the Las
Vegas Finance Center (LVFC).
Payment requests can be submitted for
reimbursable expenses no sooner than 3-5
days in advance of disbursing the funds.
The Las Vegas Finance Center reviews
each request. Additional reports and/or
documentation may be requested by your
EPA Project Officer (as required).
When the request is approved for
payment, EPA electronically transfers
funds through the U.S. Department of
Treasury and the Federal Reserve for
credit to the recipient's account at their
designated financial institution.
Credit to the account usually occurs
within 48 hours (3-5 business days)
following receipt and approval of the
request.
If the entire request or a portion of the request is
rejected, the recipient will be notified by the Las
Vegas Finance Center no later than one workday
following receipt of the request.
Can we request cash in advance instead of
reimbursement?
The recipient can use either EFT or ASAP for
advance payments or those requesting
reimbursement.
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Module 7: Accounting Policies and Procedures
Discussion
Who in your Tribal Nation is
authorized to request payment
from the federal government?
What procedure is used to request
payment?
Who monitors how often requests
are made?
What procedure is used to verify
that the requests are accurate?
Enrollment Process for EPA-EFT
Complete the Automated Clearing House (ACH)
Vendor/Miscellaneous Payment Enrollment
Form (SF 3881).
Send the completed SF 3881 to LVFC.
Enrollment Process for EPA-EFT
How do we enroll in the EPA electronic funds
transfer process ?
The recipient organization must complete the
Automated Clearing House (ACH)
Vendor/Miscellaneous Payment Enrollment Form
(SF 3881) which is generally provided in the award
package from EPA. Recipients will send the
completed SF 3881 to LVFC.
The Las Vegas Finance Center receives
and reviews the completed SF 3881 form
for accuracy.
If acceptable, the enrollment information
is entered into its vendor database for
assistance agreements.
The Las Vegas Finance Center provides
the recipient with a letter assigning them
an EFT Control Number and the
necessary forms.
Fax the U.S. EPA Payment Request (EPA
Form 190-F-04-001) to request an
advance or reimbursement from the grant
funds account.
Copies of the Vendor/Miscellaneous Payment
Enrollment Form (SF 3881) and U.S. EPA
Payment Request (EPA Form 190-F-04-001) are
provided on the next few pages, in the Appendix,
and at http://www.epa.gov/ogd/forms/forms.htm. The
EPA Electronic Funds Transfer (EFT) Payment
Process Recipients Manual, Exhibit A is provided
at http://www.epa.gov/ocfo/fmservices/recipient_manual.pdf
and in the Appendix.
Cash Management
AD VANG i.
1-5 work days /» Disbursement
REIMBURSEMENT^
Electronic Funds Transfer (EFT) Timeline
Cash Management
Do we need to have written procedures for
drawing grant funds and issuing payments?
There are two ways to request federal funds, by:
Advance payment
Reimbursement
Do not draw down the same amount each month.
Draw down only what is actually used.
If the Tribal Nation chooses advance payment,
there are specific procedures to be followed.
Advance payment procedures must comply with
the regulations in 40 CFR Part 31. They will
minimize the time period between transfer of funds
from the U.S. Treasury and disbursement of funds
by the Tribal Nation and any subgrantees.
The Tribal Nation should establish reasonable
policies and procedures to ensure the receipt of
reports on subgrantees' cash balances and cash
disbursements in sufficient time for them to
prepare complete and accurate cash transaction
reports and send them to EPA.
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Module 7: Accounting Policies and Procedures
ACH VENDOR/MISCELLANEOUS PAYMENT
ENROLLMENT FORM
OMB No- 1510-0056
This form is used for Automated Clearing House (ACH) payments with an addendum record that contains
payment-related information processed through the Vendor Express Program. Recipients of these
payments should bring this information to the attention of their financial institution when presenting this
form for completion. See reverse for additional instructions.
PRIVACY ACT STATEMENT
The following information is provided to comply with the Privacy Act of 1974 (PL. 93-579). All
information collected on this form is required under the provisions of 31 U.S.C. 3322 and 31 CFR
210. This information will be used by the Treasury Department to transmit payment data, by
electronic means to vendor's financial institution. Failure to provide the requested information may
delay or prevent the receipt of payments through the Automated Clearing House Payment System.
AGENCY INFORMATION
FEDERAL PROGRAM AGENCY
U.S. Environmental Protection Agency
AGENCY IDENTIFIER:
LVFC
AGENCY LOCATION CODE (ALCJ:
68128933
ACH FORMAT:
|K|CCD+ ! I CTX
ADDRESS:
PO BOX 98515
Lag. Vegas, MV 89193-8515
CONTACT PERSON NAME:
TELEPHONE NUMBER:
( 702 ) TV.-:-.
ADDITIONAL INFORMATION:
FAX Mumber: (702) 798-2423
PAYEE/COMPANY INFORMATION
NAME
5SN NO. OR TAXPAYER ID NO.
ADDRESS
CONTACT PERSON NAME:
TELEPHONE NUMBER:
( )
FINANCIAL INSTITUTION INFORMATION
ACH COORDINATOR NAME:
TELEPHONE NUMBER:
NINE-DIGIT ROUTING TRANSIT NUMBER
DEPOSITOR ACCOUNT TITLE:
DEPOSITOR ACCOUNT NUMBER:
LOCKBOX NUMBER:
TYPE OF ACCOUNT:
SIGNATURE AND TITLE OF AUTHORIZED OFFICIAL:
(Could be the same as ACH Coordinator)
TELEPHONE NUMBER:
AUTHORIZED FOR LOCAL REPRODUCTION
Sf 336 1 (Rev. 2,2003 )
Prescribed by Department of T
31 U 5 C 3322; 3 1 CFR 210
Figure 1: SF 3881 page 1
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Module 7: Accounting Policies and Procedures
Instructions for Completing SF 3881 Form
Make three copies of form after completing. Copy 1 is the Agency Copy; copy 2 is the
Payee/Company Copy; and copy 3 is the Financial Institution Copy.
1. Agency Information Section - Federal agency prints or types the name and address of
the Federal program agency originating the vendor/miscellaneous payment, agency
identifier, agency location code, contact person name and telephone number of the
agency. Also, the appropriate box for ACH format is checked.
2. Payee/Company Information Section - Payee prints or types the name of the
payee/company and address that will receive ACH vendor/miscellaneous payments,
social security or taxpayer ID number, and contact person name and telephone number
of the payee/company. Payee also verifies depositor account number, account title, and
type of account entered by your financial institution in the Financial Institution
Information Section.
3. Financial Institution Information Section - Financial institution prints or types the name
and address of the payee/company's financial institution who will receive the ACH
payment, ACH coordinator name and telephone number, nine-digit routing transit
number, depositor (payee/company) account title and account number. Also, the box
for type of account is checked, and the signature, title, and telephone number of the
appropriate financial institution official are included.
Burden Estimate Statement
The estimated average burden associated with this collection of information is 15 minutes
per respondent or recordkeeper, depending on individual circumstances. Comments
concerning the accuracy of this burden estimate and suggestions for reducing this burden
should be directed to the Financial Management Service, Facilities Management Division,
Property and Supply Branch, Room B-101, 3700 East West Highway, Hyattsville, MD
20782 and the Office of Management and Budget, Paperwork Reduction Project
(1510-0056), Washington, DC 20503.
Figure 2: SF 3881 page 2
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Module 7: Accounting Policies and Procedures
U.S. EPA PAYMENT REQUEST
Recipient Name: Contact Person:
Phone #:
Fax #:. Email address:
EFT#
Assistance Agreement
Request #
Account No/Activity Code
(Superfund Site Specific)
Cash on Hand: S
$ Amount
TOTAL AMOUNT REQUESTED S
Mark
(X)if
Credit
For EPA Internal Use Only
I certify that to the best of my knowledge and belief the data above are correct
and that all outlays were made in accordance with the grant conditions or other
agreement and that payment is due and has not been previously requested
APPROVALS:
Recipient Approving Official's Signature
Date Approved
EPA Certifying Officer Approval
Date Approved
EPA 190-F-04-001
EPA APPROVED AMOUNT
For EPA Use Only
Figure 3: U.S. EPA Payment Request Form 190-F-04-001
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Module 7: Accounting Policies and Procedures
For example, a cash receipts and deposit policy
might read:
Drawdowns for grants are deposited
directly into the Tribal Nation's bank
account. All records and other cash
receipts are received, deposited, and
recorded by the Finance Officer. Usually
for internal control purposes these duties
would be split among three people
(separation of duties). It is recommended
that a receipt book in triplicate be
obtained and a receipt written out for
each item that is to be deposited. The
payee gets the top copy, the second copy
would be attached to the deposit slip and
check copies, and the third copy would
stay in the receipt book until it is
completed, at which time it would be
filed. Only one cash receipt book should
be in use and in the office at any given
time. The Finance Officer would prepare
the deposit slip and with checks attached
have the General Manager count and
sign off on the cash receipts. The Finance
Officer then makes copies of the deposit
and checks (cash is changed into checks -
same as above), sends, and records the
deposit.
Advances
When advances are made by
electronic transfer of funds,
Tribal Nations must make drawdowns
as close as possible
to the time of making disbursements.
Request
How do we handle cash transactions for
advances?
When advances are made by electronic transfer of
funds, Tribal Nations must make drawdowns as
close as possible to the time of making
disbursements. Payment requests should be
restricted to immediate needs. Drawing down of
funds should occur no more than three to five days
in advance of disbursements.
Tribal Nations must monitor cash drawdowns to
assure that they conform to the standards of timing
of disbursements in accordance with the
regulations in 40 CFR Part 31.
Questions? Contact:
U. S. Environmental Protection Agency
Las Vegas Finance Center
P.O Box 98515
Las Vegas, N.V. 89193-8515
Phone: (702) 798-2485 Fax: (702) 798-2423
Contact the Las Vegas Finance Center regarding
cash transaction questions or issues at
http://www.epa.gov/ocfo/fmservices/pavinfo.htm or by
mail.
For UPS, Federal Express, or Overnight Mail:
Las Vegas Finance Center
4220 S. Maryland Parkway, Bldg C
Las Vegas, NV 89119
A request for a drawdown of funds
should be made to the
Las Vegas Finance Center day(5)
before the money is dispersed/spent.
A. 1-3
B- 3-5
c. r,-7
D. 7-14
E. None of the above
Monitor Allowable Costs
During Budget Period After Rudgot End Dale
Allowable NotAlkmable
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Module 7: Accounting Policies and Procedures
Table 5: Sample Drawdown Record
Document Summary:
Document Type:
Document Number:
Vendor Code:
Grant Number:
Budget Start Date:
Budget End Date:
Project Start Date:
Project End Date:
Order Date:
Effective Date:
Closed Date:
End Date:
Servicing Finance Office:
Order Amount:
Paid Amount:
Available Amount:
Vendor:
Document Details:
General Ledger Entries
General Office
000001
987654321AO
987654321
10/01/2011
09/20/2012
10/01/2011
09/30/2012
09/18/11
10/01/11
09/30/2012
AB01
$1,132,297.00
$1,060,000.00
$72,297.00
Quality Goods and Services
Line#
001
002
002
Line Ami
$320,000.00
$336,641.00
$475,656.00
Paid Amt
$320,000.00
$334,913.92
$405,086.08
Avail Amt
$0.00
$1,727.08
$70,569.92
FY
2007
2008
2008
Fund
El
El
El
Org
10YT
10YT
10UT
Program
407XXB15
503B15E
503B15E
Job
NA
NA
NA
BOC
4183
4183
4183
Document Activity:
Date
07/31/11
07/14/11
07/11/11
07/04/11
Ref Amount
$10,000.00
$20,000.00
$30,000.00
$15,000.00
Related Document
DA06AS0183361
DA 06 ASO 1803 51
DA 06 ASO 179423
DA 06 ASO 176777
Direction
Forward
Forward
Forward
Forward
Why do we need to monitor allowable costs?
All allowable costs for an award should be
monitored to ensure they are charged to the grant
by the budget end date. The period of time
specified in the agreement is the only time during
which the recipient may obligate funds for the
purposes specified in the budget; thus the specified
period is also known as the budget period.
The cost or expense must be incurreditems
receivedbefore the end of the budget end date
that is stated on the award contract or grant. A cost
can be paid and booked after the budget end date,
as long as it was incurred or received before the
budget end date.
Reflection
Pause a moment to consider your own
situation.
What is the reason for having internal
controls in your accounting system?
A. Ensuring award funds are used on award
project activities
B. Keeping accounting records separate for each
award
C. Managing draw-downs and payments
D. Simplifying the audit process
E. All of the above , ,
Does your organization have
a manual that spells out your
accounting policies and
procedures?
Does it comply with
accounting and financial
management requirements in
40CFR31and2CFRPart
225?
Does your organization use
an automated or
computerized accounting
system?
If not, have you considered
the possibility?
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
Last Updated April 2013
Page 25 of 27
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Attachment to Module 7
Answers to Self-Assessment Questions
15-16
Your Tribal Nation has received two assistance agreement awards this year.
The first award only has enough money to complete the first two of seven
project objectives. The second award came with enough money to complete
all of its objectives and still have funds left over.
Can you use money from the second award to complete the objectives
remaining in the first award's project plan?
A. Yes
B. No
C. It depends on how much money is involved
D. It depends on whether you are using award funds or income
generated by activities conducted under the second award project
E. None of the above
Award funds may only be used to accomplish objectives described in the project plan.
Unused funds and generated income must be used on that same project or returned to
the federal government. The U.S. Office of the Chief Financial Officer requires
deobligation of all unliquidated funds (per final Federal Financial Report (FFR) from
grantee). In other words, if you don't spend it as budgeted, you give the money back.
Cost shifting is not allowed.
22-23
Your Tribal Nation purchased a solar-powered, water-pumping system for
$5775 last year with award funds. The award period has expired and the
project has been closed out.
What happens to the system now, if the equipment is still needed for the
project for which it was acquired?
A. The Tribal Nation pays EPA the market value at the time of close-
out for the used system.
B. The system must be shut down; the project is over.
C. You keep the system only as long as you assign operating costs to
another federally funded project.
D. Assuming it's paid for, you keep the system and continue to use
the system for the project for which it was acquired.
E. All of the above are possible.
Equipment purchased under the award is used by the recipient in the program or
project for which it was acquired, for as long as it is needed, whether or not the project
or program continues to be supported by federal funds. Disposal "terms and
conditions" need to be agreed upon with EPA during project budget negotiations.
-------
Module 7: Accounting Policies and Procedures
estion (bold font indicates correct answer)
39
Which project expenses are not usually categorized as direct costs?
A. Environmental impact measuring devices
B. Water, power, and communication bills (Unless used for a
dedicated project funded facility)
C. Employee compensation
D. Travel to work sites
E. All of the above
Only those costs used solely for the purpose of one EPA-funded project can be
categorized as direct. Water, power, and communication services used by other
programs/ personnel and facilities would be considered indirect costs.
44
Which project expenses are not usually categorized as indirect costs?
A. Payments on office and warehouse space
B. Maintenance staff, training, and supplies
C. The Tribal Council receptionist's salary and benefits
D. Travel to a conference for the grant project
E. All of the above
Services generally provided for the Tribal Nation's work on all projects, not specific to a
single award, are considered indirect costs. Travel to a conference is charged to a
specific award and paid for as direct costs.
57
A request for a drawdown of funds should be made to the Las Vegas Finance
Center day(s) before the money is dispersed/spent.
A.
B.
C.
D.
E.
1-3
3-5
5-7
7-14
All of the above
When advances are made by electronic transfer of funds, grant recipients must make
drawdowns as close as possible to the time of making disbursements. Payment
requests should be restricted to immediate needs. Drawing down of funds should occur
no more than three to five days in advance of disbursements.
61
What is the reason for having internal controls in your accounting system?
A. Ensuring award funds are used on award project activities
B. Keeping accounting records separate for each award
C. Managing draw-downs and payments
D. Simplifying the audit process
E. All of the above
A. All of the above are helpful strategies. Internal controls help the Tribal Nation
to track award funds so that they are used the way they were intended to be
used.
Last Updated April 2013
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
Page 27 of 27
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