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New York State Accounting System User Procedures Manual

Volume Name  
CONTROLS AND SPECIAL PROCEDURES
Volume XI Date
3/15/05
Section Name
Federal Grants - State Accounting & Reporting Procedures
Section  
5.0400

Budget Certificate Requirements

     To ensure timely and complete processing of Division of the Budget-approved certificates to segregate appropriations, it is necessary that agencies provide essential information to facilitate compliance with federal CMIA and Single Audit reporting requirements. For budget certificates to be approved for processing in the Central Accounting System, the following information MUST be provided.

      All first-time budget certificates establishing federal funds appropriations must be accompanied by the Federal Grant Award Notice received from the federal awarding agency. Certificates that segregate beyond these initial levels must be supported by attached grant award amendments. Reductions in awards must also be reflected on certificates if necessary. Segregation levels/disbursements cannot exceed available grant award authority.

All federal funds budget certificates must contain the following:

Federal Grant Number (DFAFS number), or authorization code, usually 12 digits;
                 AND
Five-digit CFDA number (refer to Section 5.0300 of this Manual).

     Commingling of grant awards cannot be permitted since there must be a one-to-one relationship between State appropriation records and federal grant awards. This is necessary since:

  • not all awards expire at the same time,

  • commingling awards (within appropriation records) prevents the Office of the State Comptroller (OSC) from lapsing and purging individual segregations for closed awards within an appropriation, and

  • OSC is better able to assist State agencies in the maintenance of federal grant appropriation/segregation records.

     The first 4 digits and the last 2 digits (program identifier) of the program code will be used to account for federal grant funds that are appropriated as a single program ("A parent" appropriation) in State appropriation acts. OSC recognizes the need to account for State appropriations for each grant award but agencies must also be cognizant of the need to consistently assign program codes that sum to program amounts contained in appropriation acts. Therefore, ALL "subordinate" appropriations of the appropriated agency and any appropriation record created as a result of statutory transfers or suballocations of appropriations to another State agency will be assigned a program code identifier that is the same as the "A parent" appropriation.

Budget Certificate Processing Delays and Rejections

     Failure to provide a valid Federal Grant Award number and CFDA number on budget certificates will result in a delay or rejection of the certificate(s) since OSC cannot create a segregation record without this information. Since federal financing systems and reports are based on grant award numbers, it is MANDATORY that this information be provided on Budget Certificates in order for OSC to completely and accurately report grant activity or request federal funds needed to finance State payments from appropriated federal funds.

Suballocations or Transfers to Other State Agencies

     The cognizant State agency is defined as the agency which applied for and received federal aid. It is this agency that is responsible for ensuring full compliance with federal rules and regulations governing federal grant funds. Suballocations or transfers of appropriations to other State agencies will never relieve the cognizant agency of their responsibility for ensuring compliance especially as it relates to over-disbursement of award authorization balances.

     To properly account for suballocations of appropriations from one State agency to another:

  • Suballocations or transfers of appropriations must be authorized by  statute;

  • The appropriation program codes for suballocations must be the same code used by the cognizant agency; and

  • Agencies receiving suballocations must obtain the fund, subfund, CFDA number and grant award number from the cognizant agency and include this information on all budget certificates related to such suballocation.

Federal Award Changes

     Within 30 days of receipt, State agencies are required to notify the Division of the Budget- Examination Unit and OSC-Bureau of Accounting Operations, Appropriation Section of any changes to the funding of federal programs. Such changes include, but are not limited to, increase or decrease in federal funding, disallowances or any change in a program's scope or objective. Each notification is to be accompanied by reference to the grant award number and notice from the federal awarding agency. Any change that will cause disbursements to exceed award authorizations must be IMMEDIATELY addressed by the cognizant state agency.

     Provided appropriations remain in force, expired awards will remain in the State's accounting records until federal notice is received that the award is closed. After an award has expired no further drawdowns are permissible but final accounting adjustments or drawdown adjustments are allowed.

     State agencies are required to reconcile State accounting records to federal award records (e.g., PMS-272 report) before the Final Report of Grant Expenditures is prepared and filed with the federal award agency.

     When the Final Report of Grant Expenditures is filed with the federal awarding agency and has been accepted, the award is closed (see Section 5.0110). Upon receipt of notice that the grant award is closed by the Federal government, OSC will take steps to lapse and purge all appropriation records containing the closed award number, if possible.

Fringe Benefits and Indirect Costs

     Employee fringe benefit and indirect costs are permissible charges to federal grants.

     Annually, the Division of the Budget (DOB) provides the OSC with fringe benefit and indirect cost rates to be applied to personal service expenses paid from federal fund appropriations. OSC will issue an Accounting Bulletin providing the fringe benefit and indirect cost rates provided by DOB.

     The rates must be used by State agencies for budgeting and charging grant programs.

     Quarterly, OSC will issue a Fringe Benefit/Indirect Cost Assessment (CTL610), to State agencies with programs appropriated outside the General Fund. Quarterly personal service expenses are multiplied by the applicable fringe benefit and indirect cost rates to arrive at an assessed amount. Such assessments are to be reviewed by State agencies and paid within 30 days of receipt.

Financing Federal Grants

     In many instances, the State requests federal funds, through integrated grant and payment management systems (IGPMS), based on grant award number. To facilitate the timely request of federal funds, special accounting reports have been designed and are provided to OSC personnel to report prior day's disbursements sorted by fund, subfund and award numbers. Inaccurate or incomplete award numbers contained in State segregation records prevent OSC from requesting federal funds needed to finance State-administered program disbursements.

     Where prior arrangements have been made, OSC will act as agent for the cognizant state agency to obtain reimbursement of state disbursements eligible to be financed with federal grant funds.

Under some circumstances the cognizant State agency maintains the responsibility for requesting Federal reimbursement for program spending. In those instances, the State agency must ensure that the temporary loan authority has been granted which allows the use of State funds for Federal program spending with the exception that the Federal reimbursement will be requested in a timely manner.

     State requests for reimbursement will be processed daily using federal financial management systems developed and provided by the Federal government.

     Since most federal programs are funded, or will soon be funded, by drawdown requests processed through integrated grant management and financing systems, it is essential that State agencies understand the impact that agency-generated expenditures (including payroll charges)have on reported grant disbursements. State programs that are financed partially by State and Federal funds must be ‘split charged' at the time voucher or payroll payments are made. It is never an acceptable practice for such payments to be charged 100% to federal funds since these transactions will automatically generate a request for federal funds from the U.S. Treasury.

     Once these federal funds are received and credited to the State's accounting records, any subsequent journal voucher adjustment that reduces grant award disbursements will increase the federal funds cash balance resulting in a State CMIA interest liability retroactive from the date of original payment to the date the funds are spent or returned to the U.S. Treasury.

NOTE:  
     OSC procedures require that segregation balances NEVER exceed the grant award authorization. Payroll charges that exceed grant award segregation balances cannot be financed by drawdown through federal payment systems. Therefore, due diligence must be exercised by State agencies when assigning employee pools to federal fund cost centers to ensure that overdrawn personal service segregations do not occur. Failure to abide by this directive may result in OSC action to align Central Accounting System federal segregations and/or disbursements with award authorizations.

Fund Controls

     Except for the Unemployment Insurance Benefit Fund (481), all appropriated federal grants will be accounted for within the Special Revenue Fund-Federal or Federal Capital Projects group of accounts. Within each fund, separate subfunds will be assigned by the OSC's Bureau of Accounting Operations, General Ledger Section to facilitate drawdowns from the U.S. Treasury to finance disbursements from appropriated federal programs and perform compliance audits related to the cash management of federal programs.

Fund #  Fund Title
221 Combined Student Loan Fund
261 Federal USDA Food and Nutrition Services Fund
265 Federal Health and Human Services Fund
267 Federal Education Grants Fund
269 Federal HHS Block Grant Fund
290 Federal Operating Grants Fund
291 Federal Capital Projects Fund
382 SUNY Federal Direct Lending Program
480 Unemployment Insurance Administration Fund
481 Unemployment Insurance Benefit Fund
484 Unemployment Insurance Occupational Training Fund
486 Federal Job Training Partnership Fund

M-Year Legislation

     The life of most federal grant awards is limited and terminates on September 30th of the fifth federal fiscal year after the period of availability. For example, a federal grant award with a one-year grant period of October 1, 1993 - September 30, 1994; expired on September 30, 1999 (five years from September 30, 1994).

     By March 31st each year, OSC strongly recommends that State agencies make every effort to disburse and/or adjust all unspent award authorization and segregation balances for all awards scheduled to be terminated. This will allow sufficient time for final reports and closing documents to be reviewed and approved by the Federal government before the awards are closed on September 30th.

     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 the award is considered expired.

     In some instances the life of a federal award may be more or less than M-Year limits,and is set at the discretion of the awarding agency.

     Agencies should check with their federal program liaison to confirm the award period to ensure that federal funding authorizations are not withdrawn prematurely.

OSC Confirmation and Reporting

     Annually, during the first calendar quarter, the OSC's Bureau of Accounting Operations will confirm with State agencies the accuracy of the CFDA numbers assigned to segregation records within the Central Accounting System. Agencies are required to report any discrepancies or changes to OSC's Bureau of Accounting Operations within 30 days of the confirmation request.

     Monthly appropriation/segregation-based CAS reports contain information relating to the status of State appropriations. These reports also include the grant award number and CFDA number assigned to each federal fund segregation record. On receipt, agencies must review these reports for completeness and accuracy and report errors or omissions to OSC's Bureau of Accounting Operations immediately upon discovery.

     OSC will provide State agencies with monthly or quarterly reports of state spending from federal award authorizations.

     The Federal government will provide OSC with grant award authorization balances which will be matched to the State's appropriated balances for each grant award, as identified by federal grant award (DFAFS) number. State agencies will be notified of any instance(s) where State appropriated balances exceed the federal grant award authorization balance. State agencies are responsible for providing information to OSC to support the level of appropriation otherwise reducing segregations of such appropriations to the award authorization level will be necessary.

     As more and more federal grant authorization records are provided to OSC electronically, it will be OSC's policy to immediately unallocate any segregation balance, as appropriate, that exceeds the award level to ensure that State spending cannot exceed that which the Federal government has agreed to finance. When such action becomes necessary, the cognizant State agency will be notified and requested to follow-up with the federal award agency on reason(s) why the award authorization was reduced. If the award authorization is restored in the Federal Integrated Grant and Payment Management System, then the appropriation will be re-allocated accordingly.

Retention of Records

     State agency retention and access to records must be in full compliance with all applicable federal laws, rules and regulations (e.g., for Department of Health and Human Services, see 45CFR 92.42). Agencies should refer to the General Retention and Disposition Schedule for New York State Government Records as published by the New York State Archives and Records for guidance on minimum retention periods for other fiscal records, purchasing/claims and payments, revenue and collections, accounting reports and bank transactions. Records retention and disposition schedules for State government agencies are published in the State Education Department's website at :
http://www.archives.nysed.gov/a/nysaservices/ns_gov_start_records.shtml

In addition to any federal requirements, OSC suggests the records retained include:
1. A copy of the grant application.
2. The grant award document.
3. All grantee requests for funds.
4. Copies of grant expenditure and disbursement records.
5. All notice of grant adjustments.
6. Copies of all correspondence related to fiscal matters.
7. Documentation of final acceptance by grantor and closure.
8. Any other information that may be deemed relevant in an audit.

Central Accounting System Reports

     Frequent reports will be provided to State agencies to assist in the monitoring of the status of federal grant awards. In addition, reports will be made available to agencies as a result of the matching of federal award authorizations to State appropriated balances by federal grant award numbers. Following is a list of reports provided to State agencies or used by OSC to manage State appropriations and federal grants:

BUD049 Appropriation/Segregation Accounts - Expenditure based
BUD060 Cost Center Status by Segregation
ASC210 Federal Report of Disbursements by Agency and DHHS Grant Award
ASC211 Federal Block Grants - Disbursements by Agency
ASC220  Federal Report of Disbursements by DHHS Grant Award (OSC use)
ASC221 Federal Report of Disbursements by Education Grant Award
ASC230 Federal DHHS and Education Quarterly Report of Disbursements by Fund/Subfund and Grant Award Number
ASC370 Federal Disbursements by Federal Index (CFDA) Number