Circular
| Department of the
Treasury FEDERAL FUNDS |
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ORIGINATING NO.: 05-02-OMB AGENCY: OFFICE OF MANAGEMENT AND BUDGET EFFECTIVE DATE: 7-16-04 EXPIRATION DATE: INDEFINITE SUPERSEDES: 95-19-OMB SUBJECT: FEDERAL FUNDS ATTENTION: DIRECTORS OF ADMINISTRATION AND CHIEF FISCAL OFFICERS FOR INFORMATION CONTACT: WILLIAM MAUGHAN PHONE: (609) 292-5004 The purpose of this circular letter is to clarify the Office of Management and Budget's policies and procedures regarding the establishment of federal grant accounts, reporting requirements and related transactions in the New Jersey Comprehensive Financial System (NJCFS). I. OVERVIEW The Grant Accounting Module of the NJCFS provides a budgetary control structure, independent from appropriations, which is tailored to grant requirements. In addition, it provides an automated mechanism for recording both direct and indirect grant costs and associated revenues. In order to facilitate statewide reporting and analysis of the federal programs, it is necessary that all departments utilize the Grant Accounting Module. See Section XII for a glossary of terms used in this circular letter. II. FEDERAL GRANTS WEBSITE The federal government has established a website (www.grants.gov), which allows organizations to electronically search and apply for competitive grant opportunities from federal agencies. Agencies must have a Dun and Bradstreet number (DUNS) to conduct business within the website. Agencies should contact the Accounting Bureau, Grants Analysis Unit if a DUNS number needs to be created or identified, or if there are questions relating to accessing the website. III. APPROPRIATIONS AND REVENUE BUDGETS Appropriations and revenue budgets are established in either of two ways.
IV. RELATIONSHIP OF APPROPRIATIONS AND REVENUE BUDGETS TO GRANTS There must be at least one appropriation unit for each government-wide number. (See Section V. for a description of government-wide number.) A government-wide number must contain one conduit appropriation. Appropriations cannot fund multiple government-wide numbers. The conduit appropriation unit must be linked to the revenue budget. Subgrantee appropriations units are not permitted to have revenue budgets linked to them. There must be one revenue budget per government-wide number. The only instance in which there may be more than one revenue budget for a government-wide number is if OMB's Bureau of Budget, Management and Planning appropriates within each State fiscal year for a multiple-year grant award. The revenue budget will have different fiscal years, the same revenue source each year, and will be linked to the conduit. V. FEDERAL AID MASTER TRANSACTION In order to activate a conduit or subgrantee appropriation unit, a federal aid master (FM) transaction must be processed in NJCFS. This FM transaction requires the establishment of a federal aid number, which identifies the conduit or specific subgrantee portion of the grant award; thus, the conduit and each subgrantee will have a unique federal aid number. This federal aid number is alphanumeric and 12 characters in length. There are no other requirements for its coding structure. The conduit and subgrantee appropriations units and the revenue budget are linked to the federal aid number through the Federal Aid Inference Table (FAIT), maintained by OMB. The combination of agency code and federal aid number is the key for the FM transaction. When increasing or decreasing federal budget authority, the conduit/subgrantee indicator and the Catalog of Federal Domestic Assistance Number (CFDA) must also be entered on the FM transaction. Modifications to an FM transaction require only the information that is to be modified. For reporting purposes, the Grant Accounting Module in NJCFS requires the establishment of a unique government-wide number for each federal grant award. This government-wide number is required on each FM transaction in order to establish and maintain the link among the federal aid numbers that pertain to the same grant. The government-wide number is 12 characters in length and is constructed as follows:
Although there can be only one conduit agency per government-wide number,
there can be more than one subgrantee agency that assists the conduit
agency in complying with the grant award. The conduit agency enters and approves an FM for itself and each subgrantee agency. The document(s) is forwarded to OMB, Grants Analysis Unit, for review and processing together with the following:
In accordance with Section 883D of the Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, grant end dates should be 90 days after the expiration of the funding date. For closeout purposes, the grant end date may be adjusted from 90 to 180 days. If extenuating circumstances dictate an end date beyond 180 days, the agency should provide OMB with justification supporting the end date proposed on the FM. If the award end date must be extended beyond the initial date, the State agency must supply a copy of a time extension request, or justification for the extension to the FM transaction. It is the conduit agency's responsibility to ensure billing and collection of revenue within the federal requirements of its respective federal agency, unless other arrangements have been made. Funds Passed Through a Non-State Entity If a State agency receives federal funds through a non-State entity, the agency must ensure that the NJCFS appropriation record, identified as a dedicated fund, indicates the source is a federal grant. Further, it is the agency's responsibility to establish the funds in the Grant Accounting Module using an FM transaction so that spending activity can be captured for the Schedule of Expenditures of Federal Awards (SEFA). Dedicated accounts can be established for State accounts pursuant to language in the Annual Appropriations Act. If a dedicated account was not identified in the Annual Appropriations Act, the agency should submit a NJCFS appropriation transaction (AP), revenue budget transaction (RB), and supporting documentation to establish the funding. VI. EXCESS APPROPRIATION AUTHORITY If an appropriation account has excess authority resulting from a federal authorization that is less than anticipated, OMB will place the excess appropriation authority in reserve. Within the same State fiscal year, the excess authority may be used to support an unanticipated grant increase within the same program above the initial anticipated appropriation authority, based on language in the General Provisions section of the Appropriations Handbook. At no time shall the excess authority be used to fund an unanticipated grant award/appropriation. Excess authority not required to support unanticipated grant increases should be reverted. This is accomplished by submitting a request to OMB. It is the conduit agency's responsibility to identify excess appropriation authority by program within the conduit and subgrantees' grant accounts, and transfer that appropriation authority when needed. Such movement of authority is to be processed as a transfer of appropriation (TA) in accordance with the Appropriations Handbook General Provision Language. VII. SUPPLEMENTAL GRANT AWARDS At times, the federal government provides increases to federal grant awards requiring corresponding increases to State appropriations and modifications to the Grant Accounting Module. Agencies should follow the guidelines in Section VI., Excess Appropriation Authority, for funding these increases. Should adequate excess authority not exist, the agency should request that OMB issue a Directory Letter based on the language in the Appropriations Handbook, Federal Funds section. In these cases, the agency will need to enter, approve and forward AP, RB and modifying FM transactions with the supporting grant award to OMB. VIII. USE OF UNOBLIGATED FEDERAL BALANCES There are occasions when the federal government will permit an agency to utilize an unobligated prior year balance. In such cases, it is the agencies' responsibility to enter FM adjustments (decrease/increase). The FMs should be forwarded to OMB with a copy of the federal authorization. The budget authority from the prior year will be placed in reserve and the budget authority in the current year will be increased by using excess authority within the current year (see Section VI.) or an OMB directory letter based on language in the Appropriation Act, Federal Funds section (see Section VII.) IX. FEDERAL GRANT TRANSACTIONS Transactions cannot be processed against a grant until the FAIT entry has been completed. Payroll transactions will process but will post against the agency's default account. Agencies will then have to process the correcting transactions to move the payroll expenses to the correct federal appropriation account once the FAIT entry has been entered. All transactions that are posted against a federal grant require a reporting category, which is created when a conduit agency creates the FM transaction. The NJCFS system identifies from the transaction when a reporting category is required based on the "G" or "B" indicator located in the field G/P indicator on the APPR screen. When an agency draws down funds from the federal government for expenditures relating to a federal grant, these funds must be posted as revenue. A refund to an appropriation account is not appropriate for a drawdown of federal funds. Agencies should post the revenue in the same fiscal year/grant award in which the expenditure was incurred. Since grant expenditures can be incurred in other than grant accounts (e.g., payroll), it is the agency's responsibility to process expenditure modifications (EMs) and/or Intra-governmental Payment Vouchers (UAs and AVs) such that expenditures will be accurately reflected within the Grant Accounting Module. Agencies should make every effort to adjust expenditures quarterly within the same State fiscal year in which the expenditure was incurred or by the end of the State fiscal year. X. REPORTS It is the conduit agency's responsibility to ensure that NJCFS is properly reflecting federal expenditures within the Grant Accounting Module based on Financial Status Reports (SF-269) or equivalent reports submitted to the federal government. OMB may request agencies to provide a copy of these status reports to confirm accountability within NJCFS. Subgrantee agencies should take necessary action to comply with the
reporting time frames contained in its System reports available to assist in monitoring grant activity are:
The above system reports are generated on CD and distributed to each State agency after each fiscal quarter and after the month of July. XI. PROCEDURES
XII. GLOSSARY Below is a listing of terms that are used in this Circular Letter, along with a brief explanation:
Charlene M. Holzbaur
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