[Code of Federal Regulations]

[Title 7, Volume 4]

[Revised as of January 1, 2006]

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

[CITE: 7CFR277.6]



[Page 889]

 

                          TITLE 7--AGRICULTURE

 

    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE

 

PART 277_PAYMENTS OF CERTAIN ADMINISTRATIVE COSTS OF STATE AGENCIES

--Table of Contents

 

Sec. 277.6  Standards for financial management systems.



    (a) General. This section prescribes standards for financial 

management systems in administering program funds by the State agency 

and its sub agencies or contractors.

    (b) Responsibilities. Financial management systems for program funds 

in the State agency shall provide for:

    (1) Accurate, current, and complete disclosure of the financial 

results of program activities in accordance with Federal reporting 

requirements.

    (2) Records which identify the source and application of funds for 

FNS or State agency activities supporting the administration of the 

Program. These records shall show authorizations, obligations, 

unobligated balances, assets, liabilities, outlays and income of the 

State agency, its sub- agencies and agents.

    (3) Records which identify unallowable costs and offsets resulting 

from FNS or other determinations as specified in Sec. 277.16 and the 

disposition of these amounts. Accounting procedures must be in effect to 

prevent a State agency from claiming these costs under ongoing program 

administrative cost reports.

    (4) Effective control and accountability by the State agency for all 

program funds, property, and other assets acquired with program funds. 

State agencies shall adequately safeguard all such assets and shall 

assure that they are used solely for program authorized purposes unless 

disposition has been made in accordance with Sec. 277.13.

    (5) Controls which minimize the time between the receipt of Federal 

funds from the United States Treasury and their disbursement for program 

costs. In the Letter of Credit system, the State agency shall make 

drawdowns from the U.S. Treasury through a U.S. Treasury Regional 

Disbursing Office as nearly as possible to the time of making the 

disbursements.

    (6) Procedures to determine the reasonableness, allowability, and 

allocability of costs in accordance with the applicable provisions 

prescribed in appendix A to this part.

    (7) Support and source documents for costs.

    (8) An audit trail including identification of time periods, initial 

and summary accounts, cost determination and allocation procedures, cost 

centers or other accounting procedures to support any costs claimed for 

program administration.

    (9) Periodic audits by qualified individuals who are independent of 

those who maintain Federal program funds as prescribed in Sec. 277.17.

    (10) Methods to resolve audit findings and recommendations and to 

follow up on corrective or preventive actions.

    (c) The standards in Sec. 277.6(b) apply to subagencies or 

contractors involved with program funding.