[Code of Federal Regulations]
[Title 45, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR74.21]

[Page 202-203]
 
                        TITLE 45--PUBLIC WELFARE
 
                           AND HUMAN SERVICES
 
    PART 74--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR AWARDS AND SUBAWARDS 
 
                   Subpart C--Post-Award Requirements
 
Sec. 74.21  Standards for financial management systems.

    (a) Recipients shall relate financial data to performance data and 
develop unit cost information whenever practical. For awards that 
support research, unit cost information is usually not appropriate.
    (b) Recipients' financial management systems shall provide for the 
following:
    (1) Accurate, current and complete disclosure of the financial 
results of each HHS-sponsored project or program in accordance with the 
reporting requirements set forth in Sec. 74.52. If the HHS awarding 
agency requires reporting on an accrual basis from a recipient that 
maintains its records on other than an accrual basis, the recipient 
shall not be required to establish an accrual accounting system. These 
recipients may develop such accrual data for their reports on the basis 
of an analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for HHS-sponsored activities. These records shall contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and other assets. Recipients shall adequately safeguard all 
such assets and assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data. (Unit cost data are usually not 
appropriate for awards that support research.)
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the recipient from the U.S. Treasury and the 
issuance or redemption of checks, warrants or payments by other means 
for program purposes by the recipient. To the extent that the provisions 
of the Cash Management Improvement Act (CMIA) (Pub. L. 101-453)

[[Page 203]]

and its implementing regulations, ``Rules and Procedures for Funds 
Transfers,'' (31 CFR part 205) apply, payment methods of State agencies, 
instrumentalities, and fiscal agents shall be consistent with CMIA 
Treasury-State Agreements, or the CMIA default procedures codified at 31 
CFR 205.9(f).
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the provisions 
of the applicable Federal cost principles and the terms and conditions 
of the award.
    (7) Accounting records, including cost accounting records, that are 
supported by source documentation.
    (c) Where the Federal Government guarantees or insures the repayment 
of money borrowed by the recipient, the HHS awarding agency, at its 
discretion, may require adequate bonding and insurance if the bonding 
and insurance requirements of the recipient are not deemed adequate to 
protect the interest of the Federal Government.
    (d) The HHS awarding agency may require adequate fidelity bond 
coverage where the recipient lacks sufficient coverage to protect the 
Federal Government's interest.
    (e) Where bonds are required in the situations described in 
Sec. 74.21 (c) and (d), the bonds shall be obtained from companies 
holding certificates of authority as acceptable sureties, as prescribed 
in 31 CFR part 223, ``Surety Companies Doing Business with the United 
States.''