[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: 32CFR34.11]



[Page 207-208]

 

                       TITLE 32--NATIONAL DEFENSE

 

              CHAPTER I--OFFICE OF THE SECRETARY OF DEFENSE

 

PART 34_ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH 

FOR-PROFIT ORGANIZATIONS--Table of Contents

 

                    Subpart B_Post-award Requirements

 

Sec.  34.11  Standards for financial management systems.



    (a) Recipients shall be allowed and encouraged to use existing 

financial management systems established for



[[Page 208]]



doing business in the commercial marketplace, to the extent that the 

systems comply with Generally Accepted Accounting Principles (GAAP) and 

the minimum standards in this section. As a minimum, a recipient's 

financial management system shall provide:

    (1) Effective control of all funds. Control systems must be adequate 

to ensure that costs charged to Federal funds and those counted as the 

recipient's cost share or match are consistent with requirements for 

cost reasonableness, allowability, and allocability in the applicable 

cost principles (see Sec.  34.17) and in the terms and conditions of the 

award.

    (2) Accurate, current and complete records that document for each 

project funded wholly or in part with Federal funds the source and 

application of the Federal funds and the recipient's required cost share 

or match. These records shall:

    (i) Contain information about receipts, authorizations, assets, 

expenditures, program income, and interest.

    (ii) Be adequate to make comparisons of outlays with budgeted 

amounts for each award (as required for programmatic and financial 

reporting under Sec.  34.41. Where appropriate, financial information 

should be related to performance and unit cost data. Note that unit cost 

data are generally not appropriate for awards that support research.

    (3) To the extent that advance payments are authorized under Sec.  

34.12, procedures that minimize the time elapsing between the transfer 

of funds to the recipient from the Government and the recipient's 

disbursement of the funds for program purposes.

    (4) The recipient shall have a system to support charges to Federal 

awards for salaries and wages, whether treated as direct or indirect 

costs. Where employees work on multiple activities or cost objectives, a 

distribution of their salaries and wages will be supported by personnel 

activity reports which must:

    (i) Reflect an after the fact distribution of the actual activity of 

each employee.

    (ii) Account for the total activity for which each employee is 

compensated.

    (iii) Be prepared at least monthly, and coincide with one or more 

pay periods.

    (b) Where the Federal Government guarantees or insures the repayment 

of money borrowed by the recipient, the DoD Component, 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.

    (c) The DoD Component may require adequate fidelity bond coverage 

where the recipient lacks sufficient coverage to protect the Federal 

Government's interest.

    (d) Where bonds are required in the situations described above, 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.''