[Code of Federal Regulations]

[Title 45, Volume 4]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 45CFR1235.3]



[Page 89-90]

 

                        TITLE 45--PUBLIC WELFARE

 

       CHAPTER XII--CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

 

PART 1235_LOCALLY GENERATED CONTRIBUTIONS IN OLDER AMERICAN VOLUNTEER 

PROGRAMS--Table of Contents

 

Sec. 1235.3  Statement of policy.



    (a) Expenditures of locally generated non-Federal contributions 

required by the Director as matching funds must meet the requirements 

specified in ACTION's Grant Management and Program Operations Handbook, 

ACTION Order 2650.2, as amended, and the Domestic Volunteer Service Act 

of 1973, as amended. Copies of ACTION's Grants Management and Program 

Operations Handbook, ACTION Order 2650.2, as amended, are available at 

ACTION, 1100 Vermont Avenue, NW., Room 9200, Washington, DC 20525.

    (b) All expenditures by the grantee of Federal and non-Federal funds 

(including expenditures from excess locally generated contributions) in 

support of the grant are subject to ACTION authorized audits.

    (c) ACTION will not restrict the manner in which locally generated 

contributions in excess of the required



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match are expended if these expenditures are not inconsistent with the 

Domestic Volunteer Service Act of 1973, as amended.



      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.



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