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New York State Accounting System User Procedures Manual

Volume Name
CONTROLS AND SPECIAL PROCEDURES
Volume
XI
Date
03/15/05
Section Name
Accounting for Federal Grants - Acronyms and Terminology
Section
5.0110


Purpose and Scope

This section of the Controls and Special Procedures Manual is not intended to be an all-inclusive listing of terminology used in grants management but will provide fiscal and program administrators with a single reference source of the most commonly used definitions for federal grants management. While some terminology included in this section may vary from definitions found in other grants-related documents (including statutes and regulations), every effort was made to keep these definitions broad enough so that they do not conflict with federal publications. If any of these definitions conflict with or appear to modify definitions in federal regulations and statutes, the statutory and regulatory definitions will be controlling.

Acronyms

ASAP
- Automated Standard Application for Payments 
CFDA
- Catalog of Federal Domestic Assistance
CMIA
- Cash Management Improvement Act
DFAFS
- Departmental Federal Assistance Financing System (discontinued, see FGA)
DHHS 
- Department of Health and Human Services
DOE
- Department of Education
DUNS
- Identification Number for Grantees and Payees
EDGAPS
- Education Grants Administration and Payment System
EFT
- Electronic Funds Transfer
FGA
- Federal Grant Award (replaces DFAFS)
FCS
- Food and Consumer Services (formerly FNS)
FNS
- Food and Nutrition Services 
GAO
- General Accounting Office (Federal)
GMS
- Grant Management System
HUD
- Housing and Urban Development
IDIS 
- Integrated Disbursement and Information System
IGPMS
- Integrated Grant and Payment Management System
JTPA
- Job Training Partnership Act
LOC 
- Letter of Credit
LOCCS
- Letter of Credit Cash System {Telephone Voice Response}
OMB
- Office of Management and Budget (Federal)
PCS 
- Program Support Center (DHHS)
PMS
- Payment Management System (DHHS) {name changed to PCS, Spring 2000}
SCAP
- Statewide Cost Allocation Plan
TSA
- Treasury-State {CMIA} Agreement
WIA
- Workforce Investment Act
WIC
- Women, Infants and Children


Terminology    

Automated Standard Application for Payments (ASAP) is an electronic payment and information system developed in 1995 to provide a single point of contact for the request and delivery of federal funds to coincide with State cash outlays to meet program needs. Federal awarding agencies establish individual grant award authorizations into ASAP accounts to control the flow of federal funds to the State. Once an ASAP account is established, the Federal Agency can increase or decrease award authorizations at its own discretion. This system fully integrates grants management with payment management so that State draws can never exceed the award authorization entered in the ASAP system.

Award see Grant Award

Award Periods relate to the length of time that a federal grant award is available for program purposes. Award periods vary by program but include: (see also Grant Award Status)

Performance Period - The period of time between the grant award begin date and the grant award end date when the grantee satisfies the program and/or reporting requirements of the grant award. During this time, a grantee may request funds, adjust drawdowns and report award expenditures. The program office may make changes to the grant award authorization, but once the performance period ends, the closeout process begins. The closeout process includes liquidation, suspension and closeout.

Liquidation Period - The period immediately following the end of the performance period. During the liquidation period, no new obligations may be incurred; all old liquidations must be removed or paid; payees can process drawdown requests and adjust drawdowns before reporting final grant expenditures.

Suspension Period - Immediately follows the liquidation period. During the suspension period, no drawdown requests may be processed; therefore, no additional expenditures may be recorded against an award. Recoveries (refunds, rebates, disallowances) of payments to payees may be processed, but the resulting increase in the federal funds cash balance must be immediately (same day) returned to the US Treasury in order to avoid a State CMIA interest liability.

Grantees are required to file final expenditure reports to the awarding agency and the reported expenditures MUST agree with the life-to-date expenditures recorded in the State’s Central Accounting System (CAS).

Generally, the Office of the State Comptroller (OSC) will unallocate unspent appropriation balances in the CAS during the suspension period but will not lapse and purge these records until notification is received from the Federal agency that the final expenditure report has been received and reviewed and the award is closed.

Close-Out Period - Follows the suspension period. During this period the federal government will close the award and deobligate all undrawn funds. Generally, OSC will unallocate unspent appropriation balances in the CAS. Once OSC and the cognizant State agency receive notice that the award is closed by the Federal agency, all appropriation records relating to the closed award can be lapsed and purged from the CAS.

Block Grants are primarily issued to government units in accordance with federal statutes and may be used for a variety of activities within a broad functional area.

Cash Management Improvement Act (CMIA) refers to federal legislation that was enacted in 1990 and amended in 2002 to improve the transfer of federal funds between the Federal Government and States. The objectives of CMIA are to minimize the time between the transfer of funds between the Federal Government and the States and the presentment of checks or settlement of electronic fund transfers (EFT); ensure that federal grants and funds are available when requested and needed; and to assess an interest liability to the Federal Government and/or the States to compensate for lost value (e.g. investment earnings) of funds. With few exceptions, a federal interest liability accrues when federal transfers to the State are delayed beyond the date the State cash outlay occurred or when State funds are advanced because of federal delays in establishing award authorizations. Conversely, a State liability is recorded when the State receives federal funds prior to the date needed to fund immediate cash disbursements, checks have cleared the State’s bank account or EFT settlement occurs. NOTE: Special CMIA-related procedures are provided in Section 5.0300 of this Manual.

Catalog of Federal Domestic Assistance (CFDA) is a comprehensive index of federal domestic assistance programs by federal administering agency, subject and program name. The Catalog of Federal Domestic Assistance Programs (CFDA) is a government-wide compendium of all 1,424 Federal programs, projects, services and activities. This compendium can be accessed at the following Internet website: http.www.cfda.gov

FDA Number is a five-digit number assigned to a federal program and included in the Catalog of Federal Domestic Assistance (CFDA). The first two positions of the CFDA number identify the federal agency administering the grant program and the third thru fifth positions identify the major program. The CFDA numbers are placed in all federal fund segregation accounting records, are used by New York State in the annual Treasury-State Agreement (TSA), to accumulate expenditure data needed to prepare the State’s annual Schedule of Expenditures of Federal and Non-Federal Awards and may be referenced in Single Audit reports.

Closeout (of an award) refers to the discontinuation of an award after State program services have been provided, all disbursements have been made and the Final Report of Expenditures has been submitted to the Federal award agency, accepted, recorded and is in agreement with the advances and payments reflected in the Federal Government’s payment management system (PMS).

Cognizant State Agency refers to the State department or agency that has direct operational responsibility for managing a federal domestic assistance program. Answers to questions relating to funding, status and reporting on the activity of a federal program will always be the responsibility of the cognizant state agency even if the program and/or State appropriations are fully or partially suballocated to other agencies.

Departmental Federal Assistance Financing System (DFAFS) (see also Grant Award Number) was the financing system originally used (in the early 1980's) by the former Department of Health, Education and Welfare to process drawdown requests initiated by the State. The DFAFS system has been discontinued and replaced with advanced payment systems; however, the DFAFS acronym continues to be used for identifying awards by grant award number.

Data Universal Numbering System (DUNS) is system that provides a unique nine digit identification code that is issued by Dun and Bradstreet to identify payees (e.g. New York State agencies or award recipients). DUNS is part of a federal government-wide project to use single identifiers for federal grant recipients.

Federal Domestic Assistance Program is any program, activity, service, or project that is funded in whole, or in part, by the Federal Government. These include but are not limited to general purpose aid to States, assistance to states to finance essential services and productivity efforts, public assistance or benefit programs, entitlement grants, block grants, student loan programs, etc.

Federal Grant refers to federal financial assistance (grants, cooperative agreements, loans, loan guarantees, property, interest subsidies, insurance, direct appropriations and other non‑cash assistance) and federal cost reimbursement contracts that entities receive directly from federal awarding agencies.

Fiscal Year for New York State is April 1 - March 31. State appropriations provided for federal grant purposes are generally appropriated based on the federal fiscal year. That is to say that the 1999 state appropriations would contain authorizations for April 1 - September 30 (second half of the 1999 federal fiscal year) and October 1 - March 31 (first half of the 2000 federal fiscal year). In the Central Accounting System, state appropriations are assigned a year code in the appropriation record that denotes the year in which the appropriation was enacted by the legislature. Conversely, in the federal grant management and payment management systems, federal grant awards are assigned a year code that represents the last year of the federal fiscal year. For example, a 1999 State appropriation for the federal grant period October 1, 1999 - September 30, 2000 would be assigned a State authorization year of 1999 (year of enactment) but the grant year contained in the DFAFS number would be 2000.

Formula Grant is an allocation of federal funds to a State or its subdivisions in accordance with distribution formulas usually prescribed by law or administrative regulation, for continuous activities not necessarily confined to a specific project.

Funding Technique - U.S. Dept. of the Treasury rules and CMIA statutes restrict the State’s drawdown of federal funds to actual, immediate, cash needs. For most federal grants, the State uses a post issuance funding technique whereby federal funds are requested within 1-2 days after the issuance of a check written against the federal fund appropriation but oftentimes this is several days prior to that check clearing the bank. Some grants (e.g. WIC) are cash managed based on a zero balance funding technique wherein same-day federal funds are requested and received in an amount equal to the amount of checks presented for payment against the State’s checking account(s) or EFT settlement occurs. A variety of other funding techniques are contained in the annual Treasury - State Agreement (TSA).

Functional (Check) Clearance Patterns are used annually in the calculation of State or federal interest liabilities pursuant to the Cash Management Improvement Act of 1990. Annually, the State develops a clearance pattern to determine the check clearance time, or days outstanding, for each check issued during the State’s fiscal year (April 1 - March 31) based on all checks issued and paid for each functional payment type. The State then uses this information to calculate dollar-weighted clearance days and clearance patterns for all payments made by check from federal funds. By agreement with the U.S. Department of the Treasury, annually OSC reviews and adjusts, as necessary, these clearance patterns for the purpose of calculating CMIA interest liabilities. The functional clearance patterns are modified for electronic payments (to vendors, municipalities, etc.) and payroll direct deposits.

Grant awards are authorizations granted by the Federal Government for purposes and activities set forth in federal appropriation acts, statutes, agreements or regulations. Unless otherwise provided for, grant awards become available at the start of the federal fiscal year (October 1st). Pursuant to State law, State appropriations are required before any payments financed by federal grant awards can be made.

Grant Award Notices are delivered to cognizant State agencies advising the recipient of the amount of federal financial assistance that is available for federally-supported programs for a specified period of time. Each award notice contains a unique federal grant award (FGA) number which is used by all federal and state grant management, payment management and reporting systems. Copies of grant award notices must accompany ALL federal funds budget certificates sent to OSC.

Grant Award Number (also referred to as FGA, DFAFS . Document number, Account code or Authorization code ) is a 12-digit number used by the federal award agency to identify grant awards to recipients. To facilitate electronic grant management, payment management and reporting systems, the grant award number is a required element that must be contained in State segregation records. CAS programs extract and accumulate all FGA activity for daily drawdown purposes and periodic transmission of grant award activity and status reports to the Federal Government. The award number is unchangeable and in the event that suballocations are authorized by the legislature from a State appropriation of the cognizant State agency to another State agency, the award number(s) typically transfers to the suballocation of the recipient agency. The accuracy and consistency of the award number cannot be overstated since this is the main link between the State’s CAS database of federal domestic assistance programs and the Federal Government’s Grant Management System (GMS) and the Payment Management System (PMS).

Grant Award Status describes the status of awards within grant and payment management systems:

Active Awards are those for which the award period has not expired and the award authorizations are current. A grantee may request funds, adjust drawdowns, and report award expenditures for all active awards

Expired Awards are those for which the award period has expired, but the Final Report of Expenditures has not been accepted by the award agency. After an award has expired no further drawdowns are permissible but final accounting adjustments or drawdown adjustments are allowed.

Open Awards may be either active or expired.

Closed Awards are those for which the award period has expired; all disbursements have been made; and the Final Report of Grant Award Expenditures has been submitted by the cognizant state agency to the federal award agency, reviewed and approved. This report must be in agreement with the advances and payments reflected in the Federal Government’s payment management system (PMS). Once closed, no transactions may be posted in the federal accounting system and these awards, and related appropriation/segregation records, may be purged from the State’s CAS. Typically, closed awards are moved to an inactive status several months after they have been closed.

Grant Management Systems (GMS) are used by federal agencies to manage the multitude of awards granted to State and local governments. These systems contain the federal grant award number, and for each award, the amount of award authorization, life-to-date expenditures made by the grantee and the unspent award balance. Prior to 1998, the federal GMS would be updated when NYS provided quarterly reports to the federal government agencies based on expenditures charged to State appropriation/segregation accounts that contained the DFAFS or grant award number. Expenditures that were incorrectly charged in the State’s accounting system or errors in the DFAFS code (contained in the segregation record) always results in GMS reporting errors. With present-day advances in technology, State and federal systems are electronically interfaced and federal funds requests are rejected if the amount requested exceeds the undrawn award authorizations contained in the federal payment management system.

Grantee is an entity (e.g. cognizant State agency) that applies for and receives a grant award from the federal government. The grantee is responsible for ensuring the grant is administered in accordance with all federal rules, regulations and laws. Suballocation of all, or part, of an award does not relieve the grantee of such responsibility.

Integrated Grant and Payment Management System (IGPMS) is a centralized financial management system designed to integrate financial management, grants administration and payment management systems into a single system. Moreover, the integrated system uses the latest in financial management technologies (relational database, Internet technology and a Windows environment) to link grants management with payment management systems in an efficient and effective manner so that federal award authorizations, undrawn award balances and State requests for federal funds to finance current disbursements are available using electronic means. Integrated systems are fast becoming the standard for Federal Government agencies and fundamentally changes the manner in which the State receives award authorizations, draws down funds from the U.S. Treasury and provides financial reports on grant award activity.

Letter of Credit (LOC) is a financial instrument that represents a commitment from the federal government to a recipient for financing federally-supported programs up to a pre-established amount. Under the LOC payment system, a hard-copy (paper) request for funds was delivered to the State’s banking institution and data was entered into the U.S. Treasury Financial Communication System (TFCS) where it was reviewed and approved for payment or rejected. If approved, funds were wire transferred to the State’s general checking account within 1-2 days. LOC’s were phased out during the mid-1990's in favor of electronic payment management systems.

M-Year Legislation was enacted in 1990 to limit the period of federal grant awards to September 30 of the fifth federal fiscal year after the period of availability. For example, a one-year federal grant award authorized to begin on October 1, 1993 expired on September 30, 1999 . Except for awards for which a specific federal law extends the availability for expenditure of obligated balances, any undisbursed balances of federal grant awards are withdrawn by the federal awarding agency and no longer available for program expenditures. In some instances the life of a federal award may be more or less than five (5) years and is set at the discretion of the awarding agency. Agencies should check with their federal program liaison to confirm the award period.

Payment Management Systems (PMS) enable the State to draw funds from the U.S. Treasury to finance State-administered federal programs. The systems developed by the Federal Government and used by NYS include voice response or telephone, ASAP, EDGAPS, SmartLink, IDIS, etc. Federal drawdowns are initiated by the State based on actual program disbursements and are cash managed to ensure that federal funds are not transferred to the State prior to the time such funds are needed to make program payments. If the request for federal funds is approved by the federal government, then funds are transferred to the State by:

FEDWIRE - payment will be electronically transferred to the State’s bank account through the Federal Reserve bank network. Payment is usually made the same day if funds are requested by 12:30pm EST.

ACH - payment is electronically transferred through the Automated Clearing House payment system to the State’s bank account the next business day.

Quarterly Federal Cash Status Reports (also referred to as PCS or PMS reports) are similar to bank statements and contain the grantee’s drawdown transactions and authorized changes (e.g. new, expired, inactivated, closed) in grant awards during the quarter. The reports are used to reconcile State drawdowns and verify that State appropriated amounts do not exceed the undrawn award authorizations. Discrepancies between the State’s records and the Federal Governments must be immediately investigated and resolved by the cognizant state agency.

Statewide Cost Allocation Plan (SCAP) is the State’s plan for allocating centralized service costs to appropriated funds outside the General Fund group of accounts. Annually, the Division of the Budget contracts with a consultant to determine the statewide costs for services provided by one State agency to other state agencies. These costs include, but are not limited to, the Division of the Budget, Office of General Services, Department of Civil Service, State Comptroller’s Office and represent expenses for centralized services which are used to calculate the State’s indirect cost rate. The indirect cost rate is included in the SCAP and sent to the Federal Government for review and approval. Once approved, this rate is applied to personal service expenses paid from non-General Funds and results in an indirect cost assessment included with the fringe benefit assessments in the Personal Service Analysis (CTL610) which is sent to State agencies at the end of each quarter.

Single Audit Act of 1984, as amended in 1996, requires every State and Local government that receives $300 thousand or more in federal financial assistance in any year to undergo a single audit for that fiscal year. For major federal programs, auditors are required to perform cash management, program compliance and performance tests to confirm that federal grants are administered in accordance with the terms under which the grants were awarded to the government unit. Auditors are required to report to the Federal government and prepare schedules of their findings and questioned costs. In order to perform such tests, federal grants must be accurately segregated and may not be commingled, within an appropriation or fund/subfund, with other major programs. As a result, every major program as defined by the SAA for that year is accounted for in a separate and distinct subfund by the State Comptroller’s Office. All requests for such subfunds should be directed to the General Ledger Section and should be accompanied by a copy of the grant award. The audit period for the Single Audit is the same as the State’s fiscal year.

Statistic Type is used on all vouchers charging federal fund appropriations. The CAS accumulates payment information, based on statistic type, and this is used to develop Functional (Check) Clearance patterns needed to calculate CMIA interest liabilities. Section 5.0300 of this Procedure Manual contains a complete list and description for Statistic Types.