EPA Publication Number 202K09001
EPA Contract Number EP-W-08-042
Learner Manual - Module 8
Source Documentation for Procurement and
Purchasing
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, US. EPA
U.S. Environmental Protection Agency
Updated August 2013
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Module 8: Source Documentation for Procurement and Purchasing
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 8: SOURCE DOCUMENTATION FOR PROCUREMENT AND PURCHASING.
CRITICAL COMPONENTS OF ALLOWABLE COSTS 3
EXPENSING 4
Payroll 4
Travel authorization 6
Travel voucher 6
THE PROCUREMENT SYSTEM 7
THE PROCUREMENT/PURCHASING PROCESS 11
Examples of policies 11
Purchase orders and request forms 12
TRACKING DBEs 13
COST SHARING AND VALUATION 14
Cost sharing 14
Valuation of donated services 15
Valuation of donated supplies 15
CONFERENCES 17
ATTACHMENT TO MODULES 19
Answers to Self-Assessment Questions 19
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
Module 8: Source Documentation for Procurement and Purchasing
Tribal, U.S. Territories and
Insular Areas Administrative and
Financial Guidance for
Assistance Agreements
Source Documentation for
Procurement and Purchasing
The Grants Management Process
Modulei:7he Grant
Module 2: Assistance
Agreement
Module; Federal Funding
rency AC (FFATA)
Source Documentation
Examples include:
' - -" - --
Paid bills
-- Payroll
* Time aod attendance records
= Contracts
= Suba^vanidocumaits
= Purchase Orders
= Pay able Vouchers
Describe the basic facts of a
transaction such as:
= Date
Justification of thePurpose
= Amount
= Budgetcode
= Justification of the cost
allocation
Critical Components of Allowable
Costs
Which documents do we need?
Source documents provide the basic evidence
needed to support accounting transactions.
Examples of source documents include cancelled
checks, paid bills, payroll, time and attendance
records, contracts, and subaward documents.
Accounting records, journal entries and financial
records must all be supported by source
documentation. They describe the basic facts of a
transaction such as its date, purpose, and amount.
The reason why source documentation is so
important for a Tribal Nation is that if a Nation
cannot provide source documentation (e.g., journal,
ledger, receipts, purchase orders, etc.) for all
expenditures under their assistance agreements,
costs may be deemed unallowable.
Source Documentation Required for:
Travel:
Authorizations
Vouchers
Trip Reports
Procurement of services
Purchase of materials
Cost sharing
Evidencethatpraperprocurement
steps were taten
Valuatkraofdonated:
Services
';'-'::..-:
Equipment (or equipment use)
Conferences
Remember In the eyes of the federal government,
if you don't have the documentation, it never happened.
A Tribal Nation should keep source documentation
to support claims costs on the following:
Payroll
Travel authorizations
Travel vouchers
Purchases for material and services
Cost sharing
Valuation of donated services
Valuation of donated supplies and
equipment (or equipment use)
Conferences
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
Payroll Documentation
Hours Worked and Documented onTimesheet
^
>
100%
4Ohrs
EPA
Semi-Annual Reporting
20% 50% 3O% 10%
Shrs 20hrs 12 hrs 4hrs
EPA PPG NSF EPA
Use timesheets NOT estimates.
Record actual hours worked.
I,
Expensing
Payroll
How do we record payroll expenses?
For payroll expenses charged to awards, Tribal
Nations follow the documentation rules included in
OMB Circular A-87. If an employee worked only
on one assistance agreement and did not work on
any other projects, charges for the employee's
salary or wages, or a percentage thereof, can be
claimed.
The employee must submit periodic certification
that work was done solely for the award and during
the award period. These certifications are prepared
at least semi-annually and are signed by the
employee or supervisory official having first-hand
knowledge of the work performed by the
employee.
If the employee worked on more than one federal
award, semiannual certifications cannot be used.
Instead, the employee must prepare time sheets
identifying the actual hours worked on each
project. The time sheets must identify the project
and the hours worked on each project. Or if a
portion of the employee's time is to be counted
toward required nonfederal match, then timesheets
may be required depending on the grantee's
accounting system for tracking match.
The total hours recorded on the time sheet must
represent the total hours for which the employee
worked and was paid. To be allowable, labor costs
must be based on accurate time sheets reflecting
the actual activities of all employees.
If an employee worked more hours than paid or
compensated, then the employee's gross pay must
be allocated based on the hours worked.
Payroll for Salaried Personnel
Costs
EPA grant 001
PPG grant 002
Total hours
45 hours
15 hours
60 hours
S300 (45/60 x $400)
$100 (15/60 x $400)
Gross Pay ($10 per hour x 40 hours = $400)
Tills employee is considered exempt or paid a sel
salary no matter ho\v many hours are worked.
Salaried or overtime exempt personnel are paid the
same no matter how many hours they work.
Overtime exempt personnel are usually managers
or administrators.
For example, assume an employee worked
60 hours in a given week (45 hours on EPA
grant 001 and 15 hours on PPG grant 002)
but was only paid for 40 hours. The labor
costs would be allocated as $300 from the
EPA grant and $100 from the PPG grant.
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Module 8: Source Documentation for Procurement and Purchasing
Payroll for Hourly Personnel
Costs
EPA grant 001 32 hours $384 (32/59 x $708)
PPG grant 002 27 hours $324 (27/59 x $708)
Total hours 59 hours
Gross Pay ($12 per hour x 59 hours = $708)
This employee is paid an hourly wage,
which may fluctuate from week to week.
Wage or hourly personnel may earn different
amounts each week depending on how many hours
they work. Wage earners can be part-time or full-
time personnel. Hourly positions are determined by
the amount of work that needs to be done on any
given week.
For example, assume an employee worked 59
hours in a given week (32 hours on EPA grant 001
and 27 hours on PPG grant 002). The labor costs
would be allocated as $384 from the EPA grant and
$324 from the PPG grant. The worker is paid $12
for each hour worked.
If the employee was paid overtime at time-and-
a-half, then he would make $12 + $12/2 or $18 for
each hour of time over 40 hours that week.
59 hours worked - 40 hours =19 hours overtime
40 hours x $12 = $480 at the usual pay rate
19 hours x $18 = $342 at the overtime pay rate
$480 + $342 = $822 total
32 hours / 59 hours x 100% = 54.24% of the
overtime hours from the EPA grant
$342 x 54.24% = $185.50 overtime
27 hours / 59 hours x 100% = 45.76% of the
overtime hours from the PPG grant
$342 x 45.76% = $156.50 from PPG
$480 + $185.50 + $156.50 = $822 total pay for
this pay period
What if we use budget estimates?
Budget estimates or other distribution percentages
determined before or after the services are
performed do not qualify as source documentation
for charges to federal awards, but they may be used
for interim accounting purposes, provided that:
The Tribal Nation's system for establishing
the estimates produces reasonable
approximations of the activity actually
performed.
When using time and effort certifications
rather than time sheets:
Comparisons of actual costs to budgeted
distributions are made quarterly and
based on the monthly activity reports.
Costs charged to federal awards (i.e., to
reflect adjustments made as a result
of the activity actually performed)
may be recorded annually, if the
quarterly comparisons show the
differences between budgeted and
actual costs are less than ten percent
of the overall budget.
Budget estimates or other distribution
percentages are revised as necessary,
at least quarterly, to reflect changed
circumstances (e.g., employee's time
begins to be allocated to more than
one funding source, or employee had
to take leave without pay
unexpectedly).
EPA recommends a revised budget be filed with
the EPA Project Officer when budget changes
are necessary. If unsure, contact your Project
Officer for clarification.
Which of the following are used as source
documentation of personnel costs for an
award project?
A. Periodic certifications
B. Salaries
C. Timesheets
D. Wages
E. All of the above
Question
Ail electrician works 32 hours on an EFA-funded
project. She also works 15 hours on general
repairs across the Tribal Nation. I ler hourly wage
is $12. Her contract states that she is paid her
regular wage for overtime hours worked.
How much of her wage can be paid
out of the EPA grant funds?
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
Select an answer
A. $180
B. $147
C. $347
D. $384
E. None of the above
Which of the following may be used for
interim but not final accounting
purposes?
A. Estimates
B. Expenses
C. Costs
D. Shifting
E. All of the above
Travel
Authorization
i ',,( apprmid in im-ur
expenses.
Travel authorization
What about travel costs?
For all travel, a Tribal Nation should prepare a
travel authorization document that identifies:
The traveler
The travel location
The estimated travel costs for the trip
The purpose of the trip
How the travel relates to the assistance
agreement objectives
Signature of an official authorizing the
travel
direct charge to assistance agreements. Proper
identification is important for charging the right
accounts as well as reviewing the expenditures
against the project budget.
Information is entered into the recipient's official
accounting data. Information needs to be accurate
to prevent errors in the records. Errors could cause
the grant recipient to over- or under-recover costs.
Travel voucher
This document is prepared after the trip is taken.
Travel vouchers are only allocable if the trip is
previously authorized through the travel
authorization document.
The voucher includes all costs claimed for the trip:
Transportation
Food
Lodging
Other authorized expenditures:
o Ground transportation
o Purchase of supplies
A copy of the approved travel authorization is
attached to the voucher along with all receipts as
required by the Tribal Nation to justify claimed
expenditures.
Which of the following items can be found
on a travel authorization but not on a
travel voucher?
A. Estimated travel costs
B. Food, lodging, and other expenses
C. Transportation to the travel location
D. Traveler and project identification
E. All of the above
An authorization request is created before the trip
begins. This is important because travel is usually a
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
Table 1: Sample Travel Authorization
Travel Authorization
Department: Grants Office
Name: Jane Doe
Title: Project Manager
Authorization No. 9876543
Date: 09/15/11
You are authorized to travel as indicated below and to incur necessary expenses in accordance with Tribal Rules
and Regulations.
Places of Travel
From: | Somewhere
Purpose:
Hotel Rate:
Per Diem Allowance:
Period of Travel:
, ST
Initial meeting EPA
| To: | Washington, DC
grant
Maximum $300.00 per day
$60.00 per day ($15
Beginning 10/0 1/11
breakfast, $15 lunch, $30 dinner)
| Ending 10/02/11
Mode of Travel
Common carrier D
Privately owned Vehicle 0
Extra fare D | Tribal-owned Vehicle D
At mileage rate: $0.56 per mile*
Estimated Costs
/ hereby certify that travel is advantageous to the Nation.
Transportation:
Per Diem:
Miscellaneous:
Hotel Rate:
TOTAL
Charged to account #:
$128.80
$75.00
$15.00
$300.00
$518.80
^0000123^
Private car
(approximately 230 miles)
Meals
Internet Services
1 night's stay
Signatures:
Jane Doe
Requester 's Signature
Project Manager
Title
James Stone
Authorizing Officer 's
Signature
John Fern
Fiscal Officer 's Signature
*The Nation can set its own trav<
sement rate. The current federal mileage rate is $0.56
The Procurement System
Formal policies, procedures, and instructions
Necessary to ensure proper checks and balances
For internal purchasing of goods and senices
To promote competition
To ensure equal consideration
The Procurement System
What is a procurement system?
A procurement system consists of formal policies,
procedures, and instructions necessary to ensure
proper checks and balances for internal purchasing of
goods and services. Procurement systems ensure that
mechanisms are in place to promote competition to
the maximum extent practicable, to protect against
allegations of bias or favoritism when purchasing
services and ensure that equal consideration will be
given to small and disadvantage businesses. The
internal control structure preserves the essential
values of the Tribal leaders and managers who are
acting with integrity and honesty, while encouraging
continuous improvement and innovation.
The Procurement System continued
Have policies and procedures in place. Use practical
instructional documents to show how to execute the
procedures (i.e., guidelines). Provide your Tribal
Nation with the necessary foundation for an effective
procurement process. Guidelines should specify each
project's authority and responsibility during the
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Module 8: Source Documentation for Procurement and Purchasing
lifetime of the award. Authority and responsibility
can be divided among personnel in many different
ways. It is important to control the following aspects
of the procurement process:
Administration
Solicitation
Proposal
Receipt
Evaluation
An effective process guarantees effective internal
control. Remember that non-procurement personnel
are also involved in the procurement process.
Ultimately those individuals on the authorities and
responsibilities list are held accountable for actions
taken.
Table 2: Sample Travel Voucher
The Procurement System continued
An effective process guarantees effective
internal control.
Remember that non-procurement
personnel are also involved in the
procurement process.
Keep an authorities and responsibilities
list.
Staple
Receipts
Here
DATE
10/017
11
10/027
11
DESTINATION
From: To:
Somewh
ere, ST
Washing
ton, DC
Washingto
n,DC
Somewher
e, ST
TRAVEL EXPENSE CLAIM
TRIP
PURPOS
E
Initial
Meeting
EPA grant
MILEA
GE
Miles
CHAR
GE
Amount
*
S per
mile $0.56
117
117
$65.52
$65.52
NAME
ADDRE
SS
CITY
SS#/or
VN#
M
Breakf
ast
0.00
15.00
EALS
Lunc
h
15.0
0
15.0
0
Dinn
er
30.0
0
HOTEL
200.00
I hereby certify that the above expenses
were incurred and the amounts are
correct and should be paid from BUDGET CODE IN-STATE
BUDGET CODE OUT-OF-
the appropriate fund. STATE
SIGNATURE Jane Doe
Claims must be submitted within 90 days of trip and all
claims for the
current fiscal year should be submitted in time to be
paid in that fiscal year. APPROVED BY James Fern
Jane Doe
1234 Rural Route 2
Somewhere, ST 12345
SS2938475
MISC.
Explain
Internet
EXPEN
SE
Amount
15.00
TOTAL
TOTAL
$325.52
$90.84
$421.04
01-00-0000123**
DATE 10/05/11
DATE 10/06/11
*The Nation sets its own travel reimbursement rate. The current federal mileage rate is $0.56.
**Budget codes are typically set by the Nation's finance/accounting department.
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
Table 3: Sample Authorities and Responsibilities List
Authorities and Responsibilities List
Authorized Representative
Name:
Title:
Telephone:
Email Address:
Program/Project Manager
Name:
Title:
Telephone:
Email Address:
Financial Representative
Name:
Title:
Telephone:
Email Address:
Mailing Address
Name:
Address:
City, State, Zip:
This is the individual who has the authority to sign the application for Federal
Assistance (SF 424) and execute the Agreement on behalf of the applicant.
James Stone
President, Tribal Leader's Council
555-666-9000 FAX:
jstone@tribe.org
555-666-9001
This is the individual who is responsible for the management of the Project for the
applicant.
Jane Doe
Project Manager
555-666-9898 FAX:
jdoe@tribe.org
555-666-9899
This is the individual who is responsible for the accounting and financial
management system for the applicant.
John Fern
Accountant
555-666-9878 FAX:
jfern@tribe.org
555-666-9879
This is the address to which all grant correspondence should be mailed.
Tribe
1234 Rural Route 2
Somewhere, ST 98765
A second page should be added for additional
personnel regularly involved in the procurement
process.
Procurement Policies and Procedures
Obtain the best value for the work
Establish documentation
Ğ Provide an equal opportunity to all businesses
Why do we need a procurement system?
Get the best value. A Tribal Nation's government
obtains goods and services from various sources.
As a Tribal Nation grows and/or its needs change
and expand, there is often a need to procure goods
and services from outside sources.
Since a significant portion of a grant recipient's
funds are used for procurement or purchases, it
is critically important to establish a
procurement system with well-defined checks
and balances.
As expenditures for goods and services increase,
there is a greater need to ensure that projects are
properly announced in the market place to ensure
that the grant recipient is acquiring competitive
bids for the work it is seeking. Procurement
policies and procedures enable the recipient to get
the best value for the work the Tribal Nation is
seeking to purchase. In addition, procurement
systems establish documentation that the project
has given an equal opportunity to all businesses to
bid on the work.
Procurement system checks and balances are meant
to:
Prevent losses, financial as well as
physical.
Obtain only needed goods at reasonable
prices. This entails shopping the market
for the best product quality at the most
reasonable price and only purchasing what
is needed close to or at the time it is
needed.
Assure that EPA dollars are not spent on
items unrelated to the successful
implementation of the project.
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
For example:
Do not buy supplies or equipment at the end of
the grant just to use up supply dollars when
these items cannot be used for achieving the
goals of the project, which is coming to an
end. These items will be deemed unallowable
by EPA based on the Bona Fide Needs Rule.
Allow similar types of projects to go out
to bid in a uniformed and consistent
manner.
Promotes equal opportunity for small and
disadvantaged businesses to bid on
proposed projects the Tribal Nation is
seeking to fund.
Protects against unfair purchasing
practices.
What is a procurement system?
A. Formal policies and procedures
B. Instructions for implementation
C. Checks and balances
D. Part of the internal control structure
E. All of the above
Why does a Tribal Nation need a
procurement system?
A. More funds are being used for external
procurement fir purchases.
B. EPA reimbursements do not cover
procurement of supplies.
C. Supply sources depend on internal
procurement systems.
D. Procurement costs increase steadily
over time.
E. All of the above are \iable reasons.
ial Nations must, to the
extent feasible, give
procurement preference to
American Indians and Indian-
owned businesses.
How do we set up a procurement system?
Procurement under an EPA grant by an Indian
Tribe or Intertribal Consortium is subject to
regulations specified under 40 CFR 31.38. Tribal
Nations must, to the extent feasible, give
procurement preference to American Indians and
Indian-owned businesses.
(b) Preference requirements for wages and
grants
Any contract, subcontract, grant, orsubgrant
or any other Act authorizing Federal
contracts with or grants to Indian
organizations or for the benefit of Indians,
shall require that to the extent feasible:
(1) preferences and opportunities for
training and employment in connection with
the administration of such contracts or
grants shall be given to Indians; and
(2) preference in the award of subcontracts
and sub grants in connection with the
administration of such contracts or grants
shall be given to Indian organizations and to
Indian-owned economic enterprises as
defined in section 3 of the Indian Financing
Act of 1974 (25 U.S.C. 1452).
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
miW,>ğl1RM /Z\
(*.'
Procurement/Purchasing Regulations
Purchasing Supplies, Equipment, and Services Under EPA
Grants Local Governments
The Procurement/Purchasing Process
How do we know if our purchasing process
complies with regulations?
Recipients of EPA grants and cooperative
agreements will likely need to buy supplies,
equipment, and services to complete the project.
Guidance to help meet EPA requirements when
making necessary purchases is provided in a
document entitled Purchasing Supplies, Equipment
and Services Under EPA Grants Local Governments.
(Though the document says it is for "Local
Governments" requirements and guidelines are also
recommended for Tribal Nations.) It assists Tribal
Nations in determining if their procurement
policies and procedures fully comply with federal
regulations. This tool can help Tribal Nations
develop new or improve existing procurement
systems.
A copy of "Purchasing Supplies, Equipment, and
Services Under EPA Grants Local Governments"
is provided in the Appendix and at
http://www.epa.gov/ogd/grants/nonprofit/supplv.htm.
Procurement Policies
Write policies tor procurements and purchases
that cost:
Otli.-i nu-tli.
Moretliau S.-
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Module 8: Source Documentation for Procurement and Purchasing
Sample Price Quote
Y/alnut Center
45* Main 51.
Somewhere, ST 98765
January 27, 2009
Dear Ms. Doe:
You recently requested pricing information from our company. Here is our quote:
Pipeline c onstruction
Equipmentrental
S5,750.00
52,900.00
Total 58,650
Grand total 58,650
Delivery date OZ/15/2012
Justification for using a particular supplier might
read:
Though there are four construction
companies in our state, only Walnut Center
is local and is a certified Disadvantaged
Business Enterprise. Therefore, we agree to
contract all construction work for this
project through Walnut Center. Even
though other companies appear less
expensive, estimated travel costs to the
construction site will exceed budgetary
constraints. (See attached table.)
Sample Bid Comparison
Re-procurement of bids is recommended every two
to three (2-3) and no further apart than every five
(5) years. Frequent re-procurement keeps the
process competitive. It helps the grantee to get the
best deal and avoid using the same services over
multiple years. The best practice is to rebid
whenever a new contract or subgrant is awarded.
Exceptions can be made for services requiring
special training or expertise. Ask your EPA Project
Officer if there are any concerns.
Purchasing policies and procedures must be
determined for purchases.
A. Small
B. Medium
C. Uirge
D. EPA-funded
E. All <>1 the above
Purchase Orders (POs) and
Request Forms
A copy of the purchase order form is provided to
the various departments that need to kno\v the
items have been ordered, such as:
Requesting
" Shipping
° Receiving
^ Accounting
Purchase orders and request forms
What paperwork do we need when ordering
supplies?
Purchase orders (POs) or request forms are issued
by authorized individuals to purchase items that are
used in accomplishing the delivery of assigned
tasks (tasks required to achieve award objectives).
Purchase order and request forms should identify:
For whom and/or what project the items
are being purchased
Quantity and price expected to be paid for
the product
Funding, financial, and budgeting
information, so the proper accounts can be
charged once the product is received
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Module 8: Source Documentation for Procurement and Purchasing
Sample Purchase Order
PURCHASE ORDER
A copy of the purchase order form is provided to
the various departments that need to know the
items have been ordered. Some of these
departments might be:
Requesting, if they are not the ones that
are directly ordering the items (they may
be using a central purchasing department)
Shipping and receiving, if the items are to
be shipped to a central distribution point
for further distribution to the end user
Accounting, so they can match up the
invoice and receiving report with the
purchase requisition order when the items
are received and have been accepted by a
responsible individual
Learner Notes
Activity 8.a (online at www.petetribal.org')
can help you review your financial and
accounting procedures. By mapping out
how transactions are processed and
comparing them with the recommended
procedures in this manual, you may
discover gaps in existing systems and/or
ways to improve the process.
Purchase orders or request forms are:
A. A good idea, hut not really necessary
B. A total waste of time and paper
C. Department documentation for tracking and
reporting purchases
D. Legal documents that EPA uses to prove costs
are non-allowable
E. All of the above
e
Disadvantaged Business Enterprises
(DBEs)
American
Share the Wealth
Tracking DBEs
How are disadvantaged business enterprises
(DBEs) tracked?
DBEs consist of Minority Business Enterprises and
Women Business Enterprises (MBEs/WBEs).
There is a DBE requirement when procuring or
purchasing supplies, equipment, construction, or
services to accomplish federal assistance programs.
The Tribal Nation needs to follow the DBE
procedures and comply with the six good faith
efforts listed in 40 CFR Part 33. This will ensure
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
that minority-owned and women-owned firms are
used whenever possible.
40 CFR Part 33 is provided in the Appendix.
Contact your regional office for DBE instructional
materials and training.
There are specific reporting requirements under the
DBE "administrative terms and conditions". EPA
Form 5700-52A is used to report annually all DBE
procurements. A recipient is required to report all
procurements at the end of the reporting period
regardless of whether or not they conduct business
with a DBE.
The Appendix contains instructions for completing
EPA Form 5700-52AMBE/WBE Utilization under
Federal Grants and Cooperative Agreements. If a
Tribal Nation has any questions, EPA has a DBE
Coordinator at headquarters in Washington, D.C.
and in each one of the Regional Offices.
Module 9 provides more detailed information
about working with disadvantaged businesses.
Tracking DBEs
Purposely looking for
disadvantaged enterprises
increases the pool of available and
qualified vendors and contractors.
...morein Module9...
How does working with disadvantaged
businesses benefit our Tribal Nation?
Most disadvantaged business enterprises are small
businesses, and small businesses drive the U.S.
economy. Purposely looking for disadvantaged
enterprises increases the pool of available and
qualified vendors and contractors. This also
ensures that opportunities are spread more
equitably, as mandated by law. In many cases,
qualifying enterprises may be found within the
Tribal Nation and the benefit goes directly to
members of that Nation.
Cost Sharing
Provide Source Documentation
for Contributions
EPA Assistance Agreement Award Ğ?*
Cost Sharing and Valuation
Cost sharing
What is cost sharing?
Costs and third party in-kind contributions count
toward satisfying a cost sharing or matching
requirement and must be documented in the Tribal
Nation's records and, if applicable, in the records
of subgrantee or cost-type contractors.
The Tribal Nation's matching cost requirements
should be recorded in a separate budget from the
assistance agreement award budget. Accounting
records must be supported by source
documentation such as cancelled checks, paid bills,
payrolls, time and attendance records, contract and
subgrant award documents, etc. These costs should
be tracked and accounted for in the same manner as
federal funds.
The third party in-kind contributions should be
accounted for and tracked as a separate account.
These records should be signed by the individual or
organization that donated the service or supplies
and must show how the value placed on third-party
in-kind contributions was derived. To the extent
feasible, volunteer services will be supported by
the same methods that the organization uses to
support the allocation of regular personnel costs.
For special standards for third party in-kind
contributions, see 40 CFR 31.24.
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
Last Updated April 2013
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Module 8: Source Documentation for Procurement and Purchasing
Valuation of Donated Services
Donated
gardening
services
valued at
$12.00 per
hour
Valuation of Donated Supplies
Camera donated
January 12, 2012
Donated
camera
valued at
$359
Camera appraised at $359
Valuation of donated services
How do we place a value on volunteer services?
Unpaid services provided to a Tribal Nation or
subgrantee by individuals will be valued at rates
consistent with those ordinarily paid for similar
work in a Tribal Nation's or subgrantee's
organization.
If a Tribal Nation or subgrantee does not have
employees performing similar work, the rates will
be consistent with those ordinarily paid other
employees for similar work in the same labor
market. In either case, a reasonable amount for
fringe benefits may be included in the valuation.
When an employer other than a Tribal Nation,
subgrantee, or cost-type contractor furnishes free-
of-charge the services of an employee in the
employee's normal line of work, the services will
be valued at the employee's regular rate of pay not
including the cost of fringe benefits. Fringe
benefits are not included, because these individuals
are equated to "temporary" employees. If the
services are in a different line of work, use the
individual rate for similar work in the same labor
market.
For example, your Tribal Nation can hire a
gardener for $12.00 per hour. However, you
already have a gardener who has volunteered to do
the work for no pay. The value of that gardener's
donated time is the price that would have been paid
to a hired gardener ($12.00 per hour). Use the
value of the work volunteered and not the person's
usual pay rate. For example, if a lawyer has
volunteered to do the gardening, the work is valued
at $12.00 per hour and not the $250.00 per hour the
lawyer is paid for legal consultations.
Valuation of donated supplies
How do we assign a value to materials that are
donated?
The value of donated supplies is recorded as the
market value at the time of the donation. Market
value is the highest estimated price that a buyer
would pay and a seller would accept for an item in
an open and competitive market.
Valuation of loaned equipment, supplies,
or space is at the fair rental rate.
Appraisal of real property, such as land,
buildings, or space in a building, is
established at the market or rental value.
The Tribal Nation should have all property
professionally appraised and environmentally
assessed.
Depreciation of assets is:
Based on "fair market
value" at the time of sale
Calculated separately for
each asset
Based on four factors:
I. Asset o >sl
l:. Assel estimated life
;,. Asset residual value
4. Method of depreciation
How do we depreciate equipment and property
over time?
Most physical plants, facilities, and equipment
wear out or become obsolete over the years.
Therefore, asset value decreases. According to
Generally Accepted Accounting Principles
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
(GAAP), equipment are depreciated over the years
rather than expensed in one year.
Similarly, although land is not depreciated
(because it does not wear out), improvements to
land, such as paving or fences, are depreciated
because these improvements wear out or become
obsolete over time. The portion of the asset "used
up" (worn out) each year is referred to as
depreciation.
Depreciation is based on the "fair market value" at
the time of sale (or closeout).
Depreciation for each asset is usually calculated
separately and is based on four factors:
1. Asset cost - The cost incurred to
acquire, transport, and prepare the
asset for its intended use such as sales
tax, title fees, transportation, and
installation.
2. Asset estimated life - This is the
estimated life the Tribal Nation
expects the asset to last.
3. Asset residual value (book value after
being fully depreciated) - The
residual value is an estimate made of
the dollar amount that can be
recovered for the asset at the end of
its useful life when it is disposed of
(sold or traded in). This amount
cannot be depreciated.
4. Method of depreciation - Under
GAAP a plant and equipment item
can be depreciated using one of the
four methods of depreciation.
a. Straight-line
b. Units of Production
c. Declining balance (see example
below)
d. Sum of years digits
Regardless of the depreciation method selected or
annual depreciation taken, total depreciation over
the life of the asset is the same. For example:
Discussion
Methods, tips, and techniques:
How do you validate project
costs?
Does your project involve any
third-party in-kind
contributions?
How do you determine the value
of third-party in-kind
contributions?
How do you determine the
market value of an item?
Your Tribal Nation builds a water
treatment plant that costs $3,000,000
with funds from an EPA grant
awarded over a period of five years.
Accounting determines the water
treatment plant loses five percent of its
value each year. Each year of the grant,
the plant is depreciated by five percent
of its original cost. After five years,
when the grant is closed out, the water
treatment plant is valued at
$2,321,342.81.
3,000,000 * 5% = 150,000
-150.000
2,850,000 * 5% = 142,500
-142.500
2,707,500 * 5% = 135,375
-135.375
2,572,125 * 5% = 128,606.25
-128.606.25
2,443,518.75 *5% = 122,175.9375
-122.175.9375
2,321,342.8125
Value When New
$3,000,000.00
Value When Used
$2,321,342.81
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
Conferences
What if the project involves hosting a
conference?
Travel and other charges related to conferences
receive special consideration. If your project
specifically calls for a conference as part of the
overall plan, special "terms and conditions" may be
written into the award document to explain which
costs will be allowed if the best practices
guidelines are followed.
Conferences hosted by the Tribal Nation may be
funded with an assistance agreement if the
principal purpose is not for the direct benefit of the
federal government. The "Best Practices Guide for
Conferences" will help award recipients make
correct planning and funding decisions. The guide
is structured to help users identify costs that are
allowable based on who is sponsoring the
conference and what issues need to be resolved to
properly plan and conduct a conference.
The Best Practices Guide for Conferences used by
EPA is provided in the Appendix and at
http://www.epa.gov/ogd/recipient/bestpractice.htm.
EPA Logo
Can we use the EPA logo on conference
materials?
The guide provides answers to frequently asked
questions concerning conference activities and
allowable conference expenditures.
For example, whether it is appropriate to use EPA's
logo is a frequently asked question from award
recipients. Chapter 3, Section D of the conference
guidance states,
"Use of the Agency's logo in connection
with promotion or sale of non-government
produced goods or services is forbidden.
Promotional material for conferences
conducted under grants and cooperative
agreements may acknowledge that the
conference receives financial support from
the Agency under an assistance
agreement, but cannot use the logo on a
conference brochure in a manner that
implies that the conference is being
conducted by EPA. These conferences
should be described as the recipient's
event, not EPA's." (Appendix, page 71)
The use of EPA's logo on websites developed
under assistance agreements is also unallowable.
Caution: EPA Order 1015.2A explains when and
how the EPA logo can be used. Recipients should
consult with their Project Officer or Grant
specialist, if they want to use the EPA logo.
The logo can only be used on projects funded by
EPA and only with written EPA approval.
The "Best Practices Guide for Conferences"
contains some of the cost issues Tribal Nations
need to consider. Tribal Nations that have
conference-specific assistance agreements should
contact their Grants Specialist for additional
guidance.
EPA Order 1015.2A can be downloaded at
http://www.epa.gov/ogd/manual6/Library/1015 2a.pdf.
53K,1
*> Ğp
When in doubt;
do not use the logo.
EPA Tribal, U.S. Territories and Insular Areas Administrative and Financial Guidance for Assistance Agreements
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Module 8: Source Documentation for Procurement and Purchasing
Learner Notes
Please take a few minutes to become
familiar with the Best Practices Guide for
Conferences located in the Appendix.
Directions for Activity 8.b are provided
online at www.petetribal.org in the Activity
Booklet.
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Attachment to Module 8
Answers to Self-Assessment Questions
Which of the following are used as source documentation of personnel costs for an award
project?
A. Periodic certifications
B. Salaries
C. Timesheets
D. Wages
E. All of the above
Salaries and wages, periodic certifications and timesheets are all
types of documentation used to validate allowable costs.
12-13
An electrician works 32 hours on an EPA-funded project. She also works 15 hours on general
repairs across the Tribal Nation. Her hourly wage is $12. Her contract states that she is paid her
regular wage for overtime hours worked.
How much of her wage can be paid out of the EPA grant funds?
A. $180
B. $147
C. $347
D. $384
E. None of the above
Costs
EPA grant 001 32 hours $384 (32/47 x $564)
General Repairs 15 hours $180 (15/47 x $564)
Total hours 47 hours
Gross Pay ($12 per hour x 47 hours = $564)
16
Which of the following may be used for interim -but not final- accounting purposes?
A. Estimates
B. Expenses
C. Costs
D. Shifting
E. All of the above
Budget estimates or other distribution percentages determined
before or after the services are performed along with comparisons
and adjustments do not qualify as source documentation for
charges to federal awards, but may be used for interim accounting
purposes.
20
Which of the following items can be found on a travel authorization but not on a travel voucher?
A. Estimated travel costs
B. Food, lodging, and other expenses
C. Transportation to the travel location
D. Traveler and project identification
E. All of the above
Estimated costs appear on the travel authorization, while actual
costs are recorded on the travel voucher.
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Module 8: Source Documentation for Procurement and Purchasing
F"
F
Question (bold font indicates correct answer
What is a procurement system?
A. Formal policies and procedures
B. Instructions for implementation
C. Checks and balances
D. Part of the internal control structure
E. All of the above
A procurement system consists of formal policies, procedures, and
instructions for implementation necessary to ensure proper checks
and balances within an internal control structure.
30
Why does a Tribal Nation need a procurement system?
A. More funds are being used for external procurement or purchases.
B. EPA reimbursements do not cover procurement of supplies.
C. Supply sources depend on internal procurement systems.
D. Procurement costs increase steadily over time.
E. All of the above are viable reasons.
Since a significant portion of a Tribal Nation's funds are used for
procurement or purchases, it is critically important for a Tribal
Nation to establish a well-defined procurement system with checks
and balances.
38
Purchasing policies and procedures must be determined for_
A. Small
B. Medium
C. Large
D. EPA-funded
E. All of the above
purchases.
All purchases should follow written policies and procedures.
44
Purchase orders or request forms are:
A. A good idea, but not really necessary
B. A total waste of time and paper
C. Department documentation for tracking and reporting purchases
D. Legal documents that EPA uses to prove costs are non-allowable
E. All of the above
Purchase orders and request forms are used by many different
departments. They provide proof that items were ordered,
received, and paid for. They help employees keep track of supplies
and equipment.
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