[Code of Federal Regulations]
[Title 34, Volume 1]
[Revised as of July 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR74.21]

[Page 107-108]
 
                           TITLE 34--EDUCATION
 
PART 74_ADMINISTRATION OF GRANTS AND AGREEMENTS WITH INSTITUTIONS OF 
 
                    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.
    (b) Recipients' financial management systems shall provide for the 
following:
    (1) Accurate, current, and complete disclosure of the financial 
results of each federally-sponsored project in accordance with the 
reporting requirements established in Sec. 74.52. If the Secretary 
requires reporting on an accrual basis from a recipient that maintains 
its records on other than an accrual

[[Page 108]]

basis, the recipient shall not be required to establish an accrual 
accounting system. These recipients may develop accrual data for its 
reports on the basis of an analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for federally-sponsored activities. These records shall contain 
information pertaining to 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 
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.
    (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) govern, 
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 Part 205--Withdrawal of Cash from 
the Treasury for Advances under Federal Grant and Other Programs.
    (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 Secretary 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 Secretary may require adequate fidelity bond coverage where 
the recipient lacks sufficient coverage to protect the Federal 
Government's interest.
    (e) Where bonds are required under paragraphs (a) and (b) of this 
section, 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.

(Approved by the Office of Management and Budget under control number 
1880-0513)

(Authority: 20 U.S.C. 1221e-3, 3474; OMB Circular A-110)

[59 FR 34724, July 6, 1994, as amended at 60 FR 6660, Feb. 3, 1995]