Division of Health Care Financing and Policy
Grants Management and Quality Assurance Unit
Grant Instructions, Requirements, Policies and Procedures
December 20, 2013
General and Administrative
Whenever a Federal grant is being applied for, a copy of the application must be submitted to the Department of Administration, Budget Division, and the Legislative Counsel Bureau, Fiscal Analysis Division, at the time the application is submitted to the grantor agency. Additionally, Federal Standard Form 424 (or 424A) will be filed if required by the Federal granting agency. If not required by the Federal granting agency, an alternative form will be filed as designated by the Nevada State Clearinghouse of the Department of Administration.
If the Federal grant application is approved and the award document is received, a copy of the award document must be sent to the Budget Division and Legislative Fiscal Analysis Division. The Accounting Unit staff will do this.
Grant awards greater than $100,000 are submitted to the Legislature/IFC for approval. Accounting Unit staff will do this.
Work programs are prepared by the Accounting Unit and submitted for approval in order to establish appropriate budgetary authority for fulfilling grant obligations.
Once an award is received the grant coordinator must work with the Grants Management Unit Chief in creating the necessary implementation plan to assure the appropriate approvals, documentation and tracking requirements are received, developed or in progress.
The Grant Coordinator is the staff member who is in charge of the day to day operations of the grant. This person is responsible for all aspects of the grant. Therefore, it is imperative this individual works with the necessary administrative and accounting staff to ensure appropriate grant requirements are met.
It is the responsibility of the Grant Coordinator to develop the necessary contracts or grant documents. These documents must include, at a minimum, the following:
Grantee/Contractor name, address, and tax ID number
Grant/Contract period
Grant/Contract dollar amount
Scope of Work
Specific service data to be collected and submitted
Financial requirements that must be met
Federal financial requirements
Format for submission of information/invoice
Time frame for submission of reports/information
Contact person(s) and address(es)
The Grant Coordinator is responsible for verifying that purchases and disbursements are made in accordance with the grant agreement. Grant funds are drawn on a reimbursement basis. Grant closeout documentation will depend on the requirements on the Grant.
The Grant Unit will apply the following 3 principles as described by OMB Circular A-87:
(1.) Governmental units are responsible for the efficient and effective administration of Federal awards through the application of sound management practices.
(2.) Governmental units assume responsibility for administering Federal funds in a manner consistent with underlying agreements, program objectives, and the terms and conditions of the Federal award.
(3.) Each governmental unit, in recognition of its own unique combination of staff, facilities, and experience, will have the primary responsibility for employing whatever form of organization and management techniques may be necessary to assure proper and efficient administration of Federal awards.
Grant Unit staff will conduct themselves as required by the State of Nevada, Employee Handbook, as administered by the Department of Personnel and by any other rules established by the Division of Health Care Financing and Policy.
State guidance related to all state processes and procedures is found in the Nevada State Administrative Manual (SAM).
Allowable Costs (From the HHS Grants Policy Statement)
Cost principles establish general standards for the allow ability of costs, provide detailed guidance on the cost accounting treatment of costs as direct or indirect costs, and set forth allow ability principles for selected items of cost. Applicability of a particular set of cost principles depends on the type of organization making the expenditure. For example, a non-profit organization receiving a sub award from a State recipient would be subject to the cost principles for non-profit organizations, while the State would be subject to the cost principles for States, local governments, and Indian tribal governments.
The cost principles are set forth in the following documents and are incorporated by reference in 45 CFR 74.27 and 92.22:
OMB Circular A-21—Cost Principles for Educational Institutions (2 CFR part 220)
OMB Circular A-87—Cost Principles for State, Local, and Indian Tribal Governments15 (2 CFR part 225)
OMB Circular A-122—Cost Principles for Non-Profit Institutions16 (2 CFR part 230)
45 CFR part 74, Appendix E—Principles for Determining Costs Applicable to Research and Development under Grants and Contracts with Hospitals
48 CFR subpart 31.2 (Federal Acquisition Regulation)—Contract Cost Principles and Procedures—Contracts with Commercial Organizations
Recipients can use their own accounting systems, policies, and procedures to implement the cost principle requirements as long as the standards prescribed in 45 CFR 74.21 or 92.20 for financial management systems are met (see “Financial Management”).
Cost Principles
The cost principles address four tests in determining the allow ability of costs. The tests are as follows:
Reasonableness (including necessity). A cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The cost principles elaborate on this concept and address considerations such as whether the cost is of a type generally necessary for the organization’s operations or the grant’s performance, whether the recipient complied with its established organizational policies in incurring the cost or charge, and whether the individuals responsible for the expenditure acted with due prudence in carrying out their responsibilities to the Federal government and the public at large as well as to the organization.
Allocability. A cost is allocable to a specific grant, function, department, or other component, known as a cost objective, if the goods or services involved are chargeable or assignable to that cost objective in accordance with the relative benefits received or other equitable relationship. A cost is allocable to a grant if it is incurred solely in order to advance work under the grant; it benefits both the grant and other work of the organization, including other grant-supported projects or programs; or it is necessary to the overall operation of the organization and is deemed to be assignable, at least in part, to the grant.
Consistency. Recipients must be consistent in assigning costs to cost objectives. They must be treated consistently for all work of the organization under similar circumstances, regardless of the source of funding, so as to avoid duplicate charges.
Conformance. This test of allow ability—conformance with limitations and exclusions contained in the terms and conditions of award, including those in the cost principles—may vary by the type of activity, the type of recipient, and other characteristics of individual awards. “Allowable Costs and Activities” below provides information common to most HHS grants and, where appropriate, specifies some of the distinctions if there is a different treatment based on the type of grant or recipient.
These four tests apply regardless of whether the particular category of costs is one specified in the cost principles or one governed by other terms and conditions of an award. These tests also apply regardless of treatment as a direct cost or an indirect cost. The fact that a proposed cost is awarded as requested by an applicant does not indicate a determination of allow ability.
The Basic Guidelines from OMB A-87 Include:
Basic Guidelines
1. Factors affecting allowability of costs. To be allowable under Federal awards, costs must meet the following general criteria:
a. Be necessary and reasonable for proper and efficient performance and administration of Federal awards.
b. Be allocable to Federal awards under the provisions of this Circular.
c. Be authorized or not prohibited under State or local laws or regulations.
d. Conform to any limitations or exclusions set forth in these principles, Federal laws, terms and conditions of the Federal award, or other governing regulations as to types or amounts of cost items.
e. Be consistent with policies, regulations, and procedures that apply uniformly to both Federal awards and other activities of the governmental unit.
f. Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.
g. Except as otherwise provided for in this Circular, be determined in accordance with generally accepted accounting principles.
h. Not be included as a cost or used to meet cost sharing or matching requirements of any other Federal award in either the current or a prior period, except as specifically provided by Federal law or regulation.
i. Be the net of all applicable credits.
j. Be adequately documented.
2. Reasonable costs. A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when governmental units or components are predominately federally- funded. In determining reasonableness of a given cost, consideration shall be given to:
a. Whether the cost is of a type generally recognized as ordinary and necessary for the operation
of the governmental unit or the performance of the Federal award.
b. The restraints or requirements imposed by such factors as: sound business practices; arms length bargaining; Federal, State and other laws and regulations; and, terms and conditions of the Federal award.
c. Market prices for comparable goods or services.
d. Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the governmental unit, its employees, the public at large, and the Federal Government.
e. Significant deviations from the established practices of the governmental unit which may unjustifiably increase the Federal award's cost.
3. Allocable costs.
a. A cost is allocable to a particular cost objective if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received.
b. All activities which benefit from the governmental unit's indirect cost, including unallowable activities and services donated to the governmental unit by third parties, will receive an appropriate allocation of indirect costs.
c. Any cost allocable to a particular Federal award or cost objective under the principles provided for in this Circular may not be charged to other Federal awards to overcome fund deficiencies, to avoid restrictions imposed by law or terms of the Federal awards, or for other reasons.
d. Where an accumulation of indirect costs will ultimately result in charges to a Federal award, a cost allocation plan will be required.
4. Applicable credits.
a. Applicable credits refer to those receipts or reduction of expenditure-type transactions that offset or reduce expense items allocable to Federal awards as direct or indirect costs. Examples of such transactions are: purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds or rebates, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing to or received by the governmental unit relate to allowable costs, they shall be credited to the Federal award either as a cost reduction or cash refund, as appropriate.
b. In some instances, the amounts received from the Federal Government to finance activities or service operations of the governmental unit should be treated as applicable credits. Specifically, the concept of netting such credit items (including any amounts used to meet cost sharing or matching requirements) should be recognized in determining the rates or amounts to be charged to Federal awards. (See Attachment B, item 11, "Depreciation and use allowances," for areas of potential application in the matter of Federal financing of activities.)
Please refer to OMB A-87 for a comprehensive list of items of cost.
Composition of Cost
1. Total cost. The total cost of Federal awards is comprised of the allowable direct cost of the program, plus its allocable portion of allowable indirect costs, less applicable credits.
2. Classification of costs. There is no universal rule for classifying certain costs as either direct or indirect under every accounting system. A cost may be direct with respect to some specific service or function, but indirect with respect to the Federal award or other final cost objective. Therefore, it is essential that each item of cost be treated consistently in like circumstances either as a direct or an indirect cost.
Direct and Indirect Costs
Direct costs are costs that can be identified specifically with a particular award, project or program, service, or other organizational activity or that can be directly assigned to such an activity with a high degree of accuracy. Direct costs include, but are not limited to, salaries, travel, equipment, and supplies directly benefiting the grant-supported project or program. Indirect costs (also known as “facilities and administrative costs”) are costs incurred for common or joint objectives that cannot be identified specifically with a particular project, program, or organizational activity. Facilities operation and maintenance costs, depreciation, and administrative expenses are examples of costs that usually are treated as indirect costs. The organization is responsible for presenting costs consistently and must not include costs associated with its indirect rate as direct costs.
Public Assistance Cost Allocation Plans
General
Federally-financed programs administered by State public assistance agencies are funded predominately by the Department of Health and Human Services (HHS). In support of its stewardship requirements, HHS has published requirements for the development, documentation, submission, negotiation, and approval of public assistance cost allocation plans in Subpart E of 45 CFR Part 95. All administrative costs (direct and indirect) are normally charged to Federal awards by implementing the public assistance cost allocation plan. This Attachment extends these requirements to all Federal agencies whose programs are administered by a State public assistance agency. Major federally-financed programs typically administered by State public assistance agencies include: Temporary Assistance to Needy Families (TANF), Medicaid, Food Stamps, Child Support Enforcement, Adoption Assistance and Foster Care, and Social Services Block Grant.