45 CFR Part 1235, Appendix to Part 1235 - Procedures To Resolve Questioned Costs

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View PDF at GPO Pt. 1235, App.
Appendix to Part 1235—Procedures To Resolve Questioned Costs
I. Because implementation of section 224 may impact on how questioned costs are treated when raised in the context of an audit or program monitoring exercise, this appendix explains how questioned costs will be resolved. This part does not create any new auditing requirements.
II. All expenditures in support of a federal grant may be reviewed by an authorized audit or program monitoring review. Adequate financial records and supporting documentation must be maintained for both cash and in-kind contributions. (See ACTION's Grants Management Handbook for Grantees, ACTION Order 2650.2)
III. Three definitions are important to understand in relation to resolution of questioned costs:
(a) The term “questioned cost”, pursuant to the Inspector General Act of 1978, as amended, 5 U.S.C. Appendix 3, means an expenditure of grant funds that is questioned because of:
(1) An alleged violation of a provision of the Domestic Volunteer Service Act of 1973, as amended, or other law, regulation, or grant governing the expenditure of funds by the grantee;
(2) A finding that at the time of an audit or program review the cost is not supported by adequate documentation; or
(3) A finding that the expenditure of funds for the intended purpose is unnecessary or unreasonable.
(b) The term “disallowed cost” means a questioned cost related to federal or local match expenditures that ACTION management, in a management decision, has sustained or agreed should not be charged to the Government.
(c) The term “program finding” means a questioned cost identified as from the grantee's excess locally generated contributions which is referred to ACTION program management for consideration.
IV. When costs are questioned from locally generated contributions, a distinction will be made between costs as part of the local match and costs as part of the excess contribution.
V. Normally, when expenditures of Federal or non-Federal local match funds are questioned, a management decision is made to either allow or disallow the costs. When an expenditure of excess locally generated funds is questioned, however, it will not be treated as a potential disallowed cost but identified as a program finding and referred to ACTION program management for resolution.
VI. Program findings may include, but are not limited to:
(a) Inadequate records to document the expenditures and provide assurance of the grantee's internal controls over the use of its cash and in-kind contributions; and
(b) Evidence that expenditures were made that are inconsistent with the Domestic Volunteer Service Act of 1973, as amended.
VII. Once program findings are determined by ACTION program management, decisions may be made to take corrective steps, including but not limited to:
(a) Requiring the grantee to adhere to stated program goals and objectives as a condition for future funding;
(b) Requiring the grantee to adopt a stronger financial management and control system.
Based on past experience, it is expected that corrective steps will be needed only in rare instances.
VIII. If the grantee has raised locally generated contributions in excess of the matching requirement and those expenditures are not questioned, and are consistent with the DVSA of 1973, as amended, for local match expenditures, they may be substituted for any disallowed portion of local match costs in order for the grantee to meet its matching requirement.

Title 45 published on 2012-10-01

The following are only the Rules published in the Federal Register after the published date of Title 45.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2014-12-19; vol. 79 # 244 - Friday, December 19, 2014
    1. 79 FR 75872 - Federal Awarding Agency Regulatory Implementation of Office of Management and Budget's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
      GPO FDSys XML | Text
      DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, AGENCY FOR INTERNATIONAL DEVELOPMENT, NATIONAL SCIENCE FOUNDATION, CORPORATION FOR NATIONAL AND COMMUNITY SERVICE, NATIONAL ARCHIVES AND RECORDS ADMINISTRATION, DEPARTMENT OF TREASURY, NATIONAL ENDOWMENT FOR THE ARTS, DEPARTMENT OF TRANSPORTATION, GULF COAST ECOSYSTEM RESTORATION COUNCIL, DEPARTMENT OF HEALTH AND HUMAN SERVICES, EXECUTIVE OFFICE OF THE PRESIDENT, DEPARTMENT OF LABOR, ENVIRONMENTAL PROTECTION AGENCY, INSTITUTE OF MUSEUM AND LIBRARY SERVICES, DEPARTMENT OF DEFENSE, NATIONAL ENDOWMENT FOR THE HUMANITIES, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, DEPARTMENT OF THE INTERIOR, DEPARTMENT OF COMMERCE, DEPARTMENT OF AGRICULTURE, DEPARTMENT OF ENERGY, DEPARTMENT OF HOMELAND SECURITY, SOCIAL SECURITY ADMINISTRATION, DEPARTMENT OF STATE, DEPARTMENT OF VETERANS AFFAIRS, DEPARTMENT OF EDUCATION, DEPARTMENT OF JUSTICE, SMALL BUSINESS ADMINISTRATION, National Institute of Food and Agriculture, Rural Utilities Service, Rural Housing Service, Office of the Chief Financial Officer, Farm Service Agency, Office of National Drug Control Policy, Office of Management and Budget, Commodity Credit Corporation, Rural Business-Cooperative Service, Federal Emergency Management Agency
      Interim final rule.
      Effective date: This interim final rule is effective on December 26, 2014. The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of December 26, 2014. Implementation dates: For grants authorized under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, this rule is applicable for emergency or major disaster declarations issued on or after December 26, 2014. For non-Federal entities that are nonprofit organizations or institutions of higher education (IHEs), there is a one-year grace period for implementation of the procurement standards in 2 CFR 200.317 through 200.326. As will be detailed in the 2015 OMB Compliance Supplement, non-Federal entities choosing to delay implementation for the procurement standards will need to specify in their documented policies and procedures that they continue to comply with OMB circular A-110 for one additional fiscal year which begins after December 26, 2014. Comment date: To be assured of consideration, comments must be received by OMB electronically through www.regulations.gov no later than midnight Eastern Standard Time (E.S.T.) on February 17, 2015.
      2 CFR Parts 1, 25, 170, 180, and 200

Title 45 published on 2012-10-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 45 CFR 1235 after this date.

  • 2014-12-19; vol. 79 # 244 - Friday, December 19, 2014
    1. 79 FR 75872 - Federal Awarding Agency Regulatory Implementation of Office of Management and Budget's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
      GPO FDSys XML | Text
      DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, AGENCY FOR INTERNATIONAL DEVELOPMENT, NATIONAL SCIENCE FOUNDATION, CORPORATION FOR NATIONAL AND COMMUNITY SERVICE, NATIONAL ARCHIVES AND RECORDS ADMINISTRATION, DEPARTMENT OF TREASURY, NATIONAL ENDOWMENT FOR THE ARTS, DEPARTMENT OF TRANSPORTATION, GULF COAST ECOSYSTEM RESTORATION COUNCIL, DEPARTMENT OF HEALTH AND HUMAN SERVICES, EXECUTIVE OFFICE OF THE PRESIDENT, DEPARTMENT OF LABOR, ENVIRONMENTAL PROTECTION AGENCY, INSTITUTE OF MUSEUM AND LIBRARY SERVICES, DEPARTMENT OF DEFENSE, NATIONAL ENDOWMENT FOR THE HUMANITIES, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, DEPARTMENT OF THE INTERIOR, DEPARTMENT OF COMMERCE, DEPARTMENT OF AGRICULTURE, DEPARTMENT OF ENERGY, DEPARTMENT OF HOMELAND SECURITY, SOCIAL SECURITY ADMINISTRATION, DEPARTMENT OF STATE, DEPARTMENT OF VETERANS AFFAIRS, DEPARTMENT OF EDUCATION, DEPARTMENT OF JUSTICE, SMALL BUSINESS ADMINISTRATION, National Institute of Food and Agriculture, Rural Utilities Service, Rural Housing Service, Office of the Chief Financial Officer, Farm Service Agency, Office of National Drug Control Policy, Office of Management and Budget, Commodity Credit Corporation, Rural Business-Cooperative Service, Federal Emergency Management Agency
      Interim final rule.
      Effective date: This interim final rule is effective on December 26, 2014. The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of December 26, 2014. Implementation dates: For grants authorized under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, this rule is applicable for emergency or major disaster declarations issued on or after December 26, 2014. For non-Federal entities that are nonprofit organizations or institutions of higher education (IHEs), there is a one-year grace period for implementation of the procurement standards in 2 CFR 200.317 through 200.326. As will be detailed in the 2015 OMB Compliance Supplement, non-Federal entities choosing to delay implementation for the procurement standards will need to specify in their documented policies and procedures that they continue to comply with OMB circular A-110 for one additional fiscal year which begins after December 26, 2014. Comment date: To be assured of consideration, comments must be received by OMB electronically through www.regulations.gov no later than midnight Eastern Standard Time (E.S.T.) on February 17, 2015.
      2 CFR Parts 1, 25, 170, 180, and 200