The following 17 management control areas provide grantees with guidance for ensuring their existing accounting and personnel policies and procedures (P&P) include the necessary controls. The guidance is also used by SAMHSA to complete Financial Capability Reviews (FCRs) of new and prospective grantees.
1. Cash Management
The P&P must require drawdowns under Department of Health and Human Services (HHS) awards (the HHS Payment Management System [PMS] permits grantees to drawdown funds in advance for expenditures to be made within the next 72 hours):
- Be limited to the minimum amounts needed to cover allowable project costs
- Be timed in accordance with the actual immediate cash requirements of carrying out the approved project
- Not be made to cover future expenditures
2. Annual Audits
The P&Ps must require:
- Audits be performed in accordance with §s 200 and 320 of the Office of Management and Budget (OMB) Circular A-133 (PDF |172.1KB) for fiscal years (FYs) with expenditures under federal awards of $500,000 or more
- Reports on these audits be submitted to the Federal Audit Clearinghouse (FAC) within the earlier of 30 days after receipt or nine months after the fiscal year's end
Grantees must submit audit reports and Standard Form SACs electronically to the Federal Audit Clearinghouse.
3. Accounting System
The P&P must include a detailed description of the accounting system, including:
- Its ability to report revenue and expenditures separately by federal program
- Its chart of accounts
4. Bank Statements
The P&P must:
- Prohibit the individual reconciling the bank statements from opening them
- Require bank statements be opened and reviewed by a grantee official that is not authorized to sign checks (i.e., treasurer, president, etc.), but familiar with its financial activities
- Require bank statements be reconciled in a timely manner by someone not authorized to sign checks
- Require the reconciliation be approved by a grantee official outside the payment process but familiar with the financial activities
- Define timely (i.e., within 14 days, etc.)
The P&P must require:
- Documentation be maintained to support all disbursements and describe how
- Disbursements be pre-approved and indicate by whom for both small and large dollar purchases
- Expenditures be reasonable and explain how this should be accomplished (bids, quotes, etc.)
- Blank checks be safeguarded and define how
- Segregation of duties over creation of vendor accounts/making payments via Electronic Fund Transfer methods and define how
- Two signatures on all checks over $1,000 and designate the organization officials authorized to sign checks
6. Matching or Cost-Sharing Contributions
The P&P must include the requirement that matching or cost-sharing contributions (including cash and third party in-kind) be:
- Verifiable from the recipient's records
- Not included as contributions for any other federally assisted project or program
- Necessary and reasonable for proper and efficient accomplishment of the project or program objectives
- Not paid by the federal government under another award (except where authorized by federal statute to be used for cost sharing or matching)
- Allowable and provided for in the approved budget
7. Consultants and Contractors
The P&P must:
- Describe the nature and scope of services that may be outsourced
- Require in-house capabilities be evaluated before obtaining external assistance
- Describe the selection process
- Describe the method for ensuring all procurement transactions are conducted in a manner to provide full and open competition to the maximum extent practical
- Ensure objective contractor performance and eliminate unfair competitive advantage: contractors that develop or draft grant applications, or contract specifications, requirements, statements of work, invitations for bids and/or requests for proposals, shall be excluded from competing for such procurements
- Describe the method for ensuring costs and fees are reasonable
- Require that, prior to selecting a new consultant or contractor, the Excluded Parties List System, within the System for Award Management, be checked to ensure the individual or entity is not prohibited from receiving federal funds
8. Expenditure Analysis
The P&P must describe how:
- Actual and budgeted expenditures are to be analyzed
- Significant variances between actual and budgeted expenditures are resolved to ensure total costs do not exceed the amounts budgeted for the grant period
9. Indirect Costs
The P&P must either describe:
- Existing or planned indirect cost rates and the type of rate used as well as both the content of pooled expenses and the type of allocation base used, or
- If all costs are charged direct, the method used to allocate costs benefiting multiple cost objectives to each cost objective.
10. Credit Cards
The P&P must:
- Describe how credit card use is controlled
- Require all expenditures be pre-approved
- Limit individual amounts and types of expenditures that may be incurred
- Prohibit personal expenditures
- Require all receipts be submitted for review and comparison with credit card statements
The P&P must require:
- The distribution of salary and wages charged to federal awards be based on actual employee activity as reflected in personnel activity reports (timesheets), prepared after-the-fact, that include the total activity for which employees were compensated
- Timesheets be certified as accurate by either the employee or a supervisor familiar with the employee's activities
Non-profit organizations cannot charge salary and wages to federal awards based on budget estimates. However, states, local, or Indian Tribal governments may allocate salary and wages charges to federal awards based on budget estimates, other distribution percentages, or use a substitute system if certain conditions are met in §s 8.h(5) and 8.h(6) of OMB Circular A-87.
The P&P must:
- Require travel other than local mileage be pre-approved
- Require all travel be reasonable and describe how this is determined
- Limit mileage, meals and incidentals, and lodging charged to federal programs to the rates published in the Federal Travel Regulations, unless otherwise justified
- Limit airfare to coach and car rental to mid-sized, unless otherwise justified
- Reimburse travel costs based on expenditures reports or the like listing each cost individually along with original receipts
13. Property Control
The P&P must require:
- Property records be maintained that include a description, cost, purchase date, source of funding, location, and condition of each property item
- Periodic physical inventories be taken and reconciled to the property records no less than every other year
- Property purchased with government funds be tagged
- Property be safeguarded to prevent loss or theft and describe how
Reference the Changes, Property, and Subawards section in Subpart C of Parts 74 and 92 in the e-CFR.
14. Conflict of Interest
Grantees must establish P&P to prevent employees, consultants, members of governing bodies, and others involved in grant-supported activities from using their positions for purposes that are, or give the appearance of being, motivated by a desire for private financial gain for themselves or others, such as those with whom they have family, business, or other ties. The P&P must:
- Address the conditions under which outside activities, relationships, or financial interests are proper or improper
- Provide for advance notification of outside activities, relationships, or financial interests to a responsible organizational official
- Include a process for notification and review by the responsible official of potential or actual violations of the standards
- Specify the nature of penalties that may be imposed for violations
Reference pg. II-7 of the HHS Grants Policy Statement (PDF | 1.32 MB).
15. Drug-Free Workplace
The P&P must include the following:
- The unlawful manufacture, distribution, dispensing, possession, or use of controlled substances is prohibited in the workplace.
- Employees must notify management, as a condition of employment, in writing within five calendar days, if they are convicted of violating a criminal drug statute.
- Appropriate personnel action must be taken, within 30 calendar days, against any employee convicted of violating a criminal drug statute up to and including termination, or require the employee to participate satisfactorily in a federal, state, local, or law enforcement-approved drug abuse assistance or rehabilitation program.
- Federal agencies must be notified in writing, within 10 calendar days, if any employee engaged in the performance of an award is convicted of violating a criminal drug statute.
Reference the Government-wide Requirements for Drug-Free Workplace, §s 82.3 and 82.4 of 45 CFR Part 82 (PDF | 172.6 KB).
16. Allowability of Costs
The P&P must address the allowability of costs as follows:
- To be allowable under a federal award, costs must be reasonable, allocable, and adequately documented.
- A cost is reasonable if it does not exceed what a prudent person would incur under similar circumstances.
- A cost is allocable to a federal award to the extent the goods or services benefited the program.
- A cost is adequately documented if it is supported by accounting records and source documentation, such as purchase orders, vouchers, invoices, payroll allocation reports, payroll summaries, timesheets, etc.
17. Program Income
The P&P must limit the use of program income relating to projects financed with federal funds to one or more of the following:
- Furthering the eligible project or program objectives
- Financing the non-federal share of the project or program
- Deducting it from the total federal share of project or program allowable costs
Grantees must review the terms and conditions of the Notice of Award to determine which applies.