[Code of Federal Regulations]

[Title 32, Volume 1]

[Revised as of July 1, 2006]

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

[CITE: 32CFR33.20]



[Page 182-183]

 

                       TITLE 32--NATIONAL DEFENSE

 

              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE

 

PART 33_UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE 

AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents

 

                    Subpart C_Post-Award Requirements

 

Sec.  33.20  Standards for financial management systems.



                        Financial Administration





    (a) A State must expand and account for grant funds in accordance 

with State laws and procedures for expending and accounting for its own 

funds. Fiscal control and accounting procedures of the State, as well as 

its subgrantees and cost-type contractors, must be sufficient to--

    (1) Permit preparation of reports required by this part and the 

statutes authorizing the grant, and

    (2) Permit the tracing of funds to a level of expenditures adequate 

to establish that such funds have not been used in violation of the 

restrictions and prohibitions of applicable statutes.

    (b) The financial management systems of other grantees and 

subgrantees must meet the following standards:

    (1) Financial reporting. Accurate, current, and complete disclosure 

of the financial results of financially assisted activities must be made 

in accordance with the financial reporting requirements of the grant or 

subgrant.

    (2) Accounting records. Grantees and subgrantees must maintain 

records which adequately identify the source and application of funds 

provided for financially-assisted activities. These records must contain 

information pertaining to grant or subgrant awards and authorizations, 

obligations, unobligated balances, assets, liabilities, outlays or 

expenditures, and income.

    (3) Internal control. Effective control and accountability must be 

maintained for all grant and subgrant cash, real and personal property, 

and other assets. Grantees and subgrantees must adequately safeguard all 

such property and must assure that it is used solely for authorized 

purposes.

    (4) Budget control. Actual expenditures or outlays must be compared 

with budgeted amounts for each grant or subgrant. Financial information 

must be related to performance or productivity data, including the 

development of unit cost information whenever appropriate or 

specifically required in the grant or subgrant agreement. If unit cost 

data are required, estimates based on available documentation will be 

accepted whenever possible.

    (5) Allowable cost. Applicable OMB cost principles, agency program 

regulations, and the terms of grant and subgrant agreements will be 

followed in determining the reasonableness, allowability, and 

allocability of costs.

    (6) Source documentation. Accounting records must be supported by 

such source documentation as cancelled checks, paid bills, payrolls, 

time and attendance records, contract and subgrant award documents, etc.

    (7) Cash management. Procedures for minimizing the time elapsing 

between the transfer of funds from the U.S. Treasury and disbursement by 

grantees and subgrantees must be followed whenever advance payment 

procedures are used. Grantees must establish reasonable procedures to 

ensure the receipt of reports on subgrantees' cash balances and cash 

disbursements in



[[Page 183]]



sufficient time to enable them to prepare complete and accurate cash 

transactions reports to the awarding agency. When advances are made by 

letter-of-credit or electronic transfer of funds methods, the grantee 

must make drawdowns as close as possible to the time of making 

disbursements. Grantees must monitor cash drawdowns by their subgrantees 

to assure that they conform substantially to the same standards of 

timing and amount as apply to advances to the grantees.

    (c) An awarding agency may review the adequacy of the financial 

management system of any applicant for financial assistance as part of a 

preaward review or at any time subsequent to award.