oversight

Grant Financial System Requirements (Exposure Draft)

Published by the Government Accountability Office on 1999-10-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                         Federal
                                         Financi.al
                                          j’ ....,.
                                         Maikgkment
                                        ,Systein
                                         Reqliirements


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                                        JFMIP-SR-99-13
                                        October 1999
        .’




W&                                                                                                   .,
i‘,’ isIFMIP?‘.
 The Joint Financial Management Improvement Program (JFMIP) is a joint and cooperative
 undertaking of the U.S. Department of the Treasury<the General Accounting Offrce, the Office of
 Management and ,Budget, and the Office of Personnel Management, working in cooperation with
 each other’and other agencies to improve financial management practices in government. The
 Program was given statutory authorization in the Budget and Accounting Procedures Act of 1950
 (31 USC 65). Leadership and program guidance are provided by the four Principals of the JFMIP--
 Comptroller General of the United States, Secretary of the Treasur): and the Directors of the Office
 of Management and Budget, and the Office of Personnel Management. Each Principal designates a
 representative to serve on the JFMIP Steering Committee, which is responsible for the general
direction of the Program. The JFMIP Executive Director, and a program agency representative
                                                                                                            ‘_

 (who serves for 2 years) are also on the Steering Committee.                                  :-           :.
                                                                                                             ).


                     ,:.                                                                        ‘.   1.!.,.-
The Program promotes strategies and guides financial management improvement across ‘.                    r’
government; reviews and coordinates central agencies’ activities and policy promulgations; and acts
                       .
as catalyst and clearmghouse
                    .,           for sharing and disseminating information’about’good financial     ‘.
management practices. This information sharing is done through conferences and other..                      1’
                                                                                                             ..
educational events, newsletters, meetings with interagency groups and agency personnel, and
through Financewet, -‘r; an electronic clearinghouse on the Internet.
The JFMIP has worked on interagency projects that developed a financial systems framework and.:; _’
financial systems requirements. For the future JFMIP plans to assist Federal a/$&&s in improving ,7
their financial systems through its Program Management Office. The Office will work on revising ,,
the Federal government’s requirements definition, testing&d ,i acquisition processes, the qrst.target ,.~-
of opportunity is core financial systems. The objectives ofthe Office&-e to,develop systems, :I ,; ’
requirements, communicate and explain Federal. and agency needs,&rovide agencies and vendors” 7
information to improve financial systems, ensure that products meet relevant system requirements,
and simplify the procurement process.
                               .I~’
                               ;a ‘X,,
Information on JF~Il?&&be found,at its,,website at
                                                 .:. , or call (202) 512-9201.
www.financenet.g&ifi~ancenet/fed/jfmip/jfr$p.htm

                       (‘,                                       ..;c.‘a
                                                                  :.,,/.
                            .,                        ._
  Jo IN T FINAN-              MANAGEMENT
       himovEMENT              PROGRAM




                                                                                          ‘.
                                                                                                     ,,              ‘:
                                                                                                                                                                                              ::

      441GSt~et~Rboih31il                                       1Date‘:        .October 19, 1999                i-
         FViAhgton, DC 20548
                                                                To:            Senior Financial OfficQl
Princ@h
Lawrence   H. Summers
                                                                From:          Executive Director,
Seaetary of the TreaSury                                                                                                                     .:                ,,‘:. ,;
                                                                                     ‘.                                                                             ‘.                  >
                                                                                               . .                                    :‘,          ‘.   s


David M. Walker
CompnoUer General of the U.S.
                                                                Subject:,. IJFMIP Grant ~Financial Systems Requirements                                                            ’ : : ,L

Jacob Lew                                                                                                                       ,,.            .,              .”        ,.        ,,
Director
U.S. Office of Management         and Budget                    The JFMIP Grant Financial Systems Requirements document
                                                                Exposure Draft,.&; attached; This update effort *as led by the
Janice R. Lachance
Director, U.S. Offkc of Personnel                               National Science Foundation (NSF), ML Albert Muhlbauer,
Management                                                      Deputy Chief Financial Officer, and reflects the efforts of his
                                                                governmentwide team. The effort was supported by the JFMIP;
Steenb. Committee                                    ’          Chief Financial .Officers Council FinancialSystems. Committee, .. : -
DonaldK       Hammond      (Chair)                              (FSC); Jnter-Agency Electronic, Grants Committee (JAEGC);
Fiscal Assistant Secretary
Department of the Trckuy
                                               ./,       .:I’   Office of Management.and,Budget (OMB); U.S General              ;  ..
                                                                Accotmting Office (GAO); and others;. The extensive vetting : j
Jeffrey C. Steinhoff
Actin Assistant Compaokr     General
                                                                process that occurred, revealed many changes that needed to be
U.S. 8 eneral Accounnng Ofke                                    included in the :Grant Fin’ancial Systems Requirementa document
                                                                to reflect:.
Sh$la Conley                                                                                                                                                                       ! ,Ti ;*
~~~~~:~~~~~~~~~~n~andBudget                                               .K                              ,!i             ,‘.               ’ :’            -k ‘:             1’
                                                                1. Statutory and regulatory changes, including OIB Circulars
J. Gilbert Seaux
                                                                   and Statements of Federal Financial Accounting Standards
Chief Financial Offker
U.S. Offk of Personnel Management
                                                                   (SFFAS No. 5);                                            _.

William B. Earl Jr,                                             2. Technological changes, including the use of Web-based
Chief Financial 0 8 leer
General Services Administration                                    technology; automated interfaces; and
Karen Cleary Alderman
Executive Director, JFMIP
                                                                3. JFMIP documentation changes, including the updated JFMIP
                                                                   Core Financial System Requirements document and issuance
                                                                   of the Framework for Federal Financial Management Systems
                                                                   document.

                                                                Please note that mandatory and value added requirements have
                                                                been addressedin the document and defined in the Glossary
                                                                Appendix. Please consider closely the Glossary Appendix and, if
                                                                needed, recommend additional terms that are shown in the
                                                                document that you believe need to be defined.

                                                                The attachment has been reviewed by representatives of the
                                                                JFMIP, FSC, GAO, OMB, IAEGC, Federal Accounting Standards
                                                                Advisory Board and others.
i




    The document is being circulated widely within the Federal government’s financial systems                                      _.-,
                                                                                                                                     .,
    community, private sector service providers, and other.major stakeholders. It is also being
    placed on Financenet at:                                                                                                       ‘,
                                        1’     I ,’
                  www.financenet.nov/fed/ifmip/ifmip.exp.htm
                                           .                 .+
    Please provide your comments by Friday, December 17, 1999. Comments are encouranged on
    any section(s) of the document. Responses will be more helpful if the underlying rational is
    provided. Respondents are requested to indicate thecapacity inwhich they are responding.,                                           :

    Comments should be sent to:
                             i              ,.                    z;,   i /                ., 2;.‘7                                             :
               III + Joint Financial Management Improvement ‘Program
                     ,441GStreetNW,Room3111                   a.-, .:                       ‘...
                      Washington, DC 20548          :
                 ,. ..     :           ‘,;‘, :
    Please be aware’that we are working.to relocate JFMIP by the middle of November, 1999. We
    are working closely with the.GAO, ‘where JFMIP is currently located, to ensure a smooth
    transition of U.S. Postal and electronic~mailservices; When the exact date of the relocation:is
    known, information ,will-be-posted,on the JFMlP Homepage at:          .:
                                       i                        II        ,.
                      ~www..financenet;:aov/fed/ifmip/ifmip.htm       ‘;* ..

    If you have any questions on any of these matters, please contact Dennis Mitchell via electronic                                        :
    mail at mitchelld.ifmir&~ao;~ov,     telephone at,202-5 12-5994, or fax 202-5 12-9593.
                                 ,. 2I- ‘)
    Attachment                                                                                  ‘.                                      ’




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                                                      Page 2                                                                                        --
Foreword
This is the first functional requirements document issued for grant financial systems for the U.S. Federal
government. It is one of a series of functional systems requirements documents published by the Joint Financial
Management Improvement Program (JFMIP) on Federal financial management systems requirements.

All of the JFMIP Federal Financial Management System Requirements (FFMSR) documents should be considered
together when determining how best to use information and supporting services to meet the financial management
needs of a Federal agency.

The FFMSR series addresses the goals of the U. S. Government Chief Financial Officers’ (CFO) Council, the
JFMIP, the Inter-Agency Electronic Grants Committee (IAEGC), and others, ,to promote t&efficient management
of assets,and to improve financial management systems government wide to provide useful financial information
on Federal government ‘operations.                                                                             ii
                                                                                                                    .‘-I
Agencies may develop additional technical and functional system requirements as necessary to suppo-rt unique
mission responsibilities. Agencies must also develop strategies for interfacing or integrating grant financial  ,:’
management systems with the agency’s core financial system.

We want to take this opportunity to thank the many agency officials and others in the financial and g&it  ‘.
management communities who contributed to this document. We value their assistanceand support. Special, : ..
thanks are also extended to the CFO Council’s Fellows Class of 1998/1999 who participated in the development
and formulation of this ‘document. This new JFMIP systems document was chosen as their classproject., With
continuing support from the numerous contributors to this project, we can confidently face the financial -.
management challenges in the new century.
                                                                                                     i:.     :,




                                                                Executive Director
                                                                                                                                                                             I




Tableof Contents                                                                                                                                ‘,
                                                                                                                                                     ‘,..              ‘>,




Foreword               :                                                              .,                 ‘,          I                                      ,.:,
                                                                   “,                                                                                          :
Acronyms
Illustrations
‘Introd&tion       . . . . . . I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,. . . 1
Federal Financial Management            Framework               . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
System Overview ., . . . . . . . . . ., . . . . . . . : . ._’ . . . . . ‘.1. . . . . . .I . . . . . . . ., . . ,. 7 ,                 ,,
                        _
IntrocluctiontoFunctionalRequirements.              . ; .-..‘i . :. . . . : . . :. ‘. . . .)J.:. : . . . :.-. : 9 “.                   I” ;
      :        ,:.r, .; ‘,,;
Commitments..             . . . . . . . . . . .‘. . . . . . . . .‘. . . . . . . . . . . . . . . . . . . ,. . 13       ‘.I                                   ., L-i
Decommitments.         . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
               ,’                                                                            -:<                 -: . . ‘.                            .            ‘*‘:
       ‘.. 1
Obligatlqes  . ..,:.,’.. . . . ._ : . ‘. . :. . . .,;. . . . . . . . ,. . . . . ., ,. ,. . . ., .. . . _.-. . . . . .. 18         :
Payments        . . . . . . . . . . . . . . . . . . . . . . . . . . ‘. ‘. . .-. : . ,;. j .‘; . , : . . . . . 20                      ,.                      ..“:‘+
Cost Accruals. . . ., . . . . . . . . . . . . . . . . . . . . . . . . . ‘. . . . ., .’ ._ i . ., . . . . . 25. i
                                                                                                                             ,
Fin&&l-Report%       . ‘. . . . . . : . . . . . . . . . . . . . . . . . : . . . ‘1 ; . . . .’ . ‘I’,. . . . -30, _
                ; .’                                             (                                                        ‘_
Interest&llections       .c:. . . . ,. :. -. .. . ..:;. . . . . . . . . . . . . . . . . . . . ‘. . . . . . ‘. . ‘. . . ‘33’                ‘-
Grant Closeout        . . . . . . . . . . . I. . . ‘. . . . . . . . . ; . . . . . . . ; . . . . . . . . .) ,.,,3.i            ‘,.I;
Records Retention.         . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
General Systems Requirements              ..................................                                             36
Information      Technology.    .....................................                                                    37
Appendix A: References/Authoritative    S.ources . . . ~.: . . . . . . . . . . . . . . . . . . . . . . 40
                         ..~.I       ,’ -‘.         ..!. .,.
Appendix B: Glossary/Data Dictionary .A. . . . : I. . . . . . . . . . . . . . . . . . . . . . . . 41
Appendix C: Contributors‘          . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Acronyms
ASAP    Automated      Standard Application     for Payment System            *   /   i,   ,I;   -I



CFO     Chief Financial Officer
DHHS    Department _.of Health and Human          Services
COTS    Commercial Off-the-Shelf
FASAB   Federal Accounting     Standards Advisory Board
                                                                                                       /   ,:   :        ,.,   l’.,”   .
FFMIA   Federal Financial Management          Improvement     Act
FFMSR   Federal Financial Management.System.Requirements
FLSA    Fair Labor Standards Act
FMS     Financial Management Service
GAO     General Accounting Office
GMRA    Government      Management     Reform Act
GPRA    GovernmentPerformance         and Results Act                 i. .;

IAEGC   Inter-Agency    Electronic Grants Committee
JFmp    Joint Financial Management       Improvement        Program
NPR     National    Performance Review                                                            ,’                ‘,


OMB     Office of Management      and Budget
OPM     Ofice of Personnel Management
PMC     Preside&s    Management      Council
PMS     Payment Management        System
SGL     Standard General Ledger
                                                                                                                                                       /


Illustrations                                                                                                                                      :
                                                                                                                                                       /


                                                                                                                                                       t




  1 Financial System Improvement                  Projects.           ...........                       : ................                    3
 2 Integrated Model for Federal Information                           Systems .......................                                         5
  3 Agency Systems Architecture                 . : ..........                         ; .....................                                6
 4 Grants Overview Process. ...................................                                                                              11
 5 Systems Interfaces Overview.                  ...................................                                                        12
 6 Process for New Commitments                      ...................                                          :. ......   ; ......       15 ”
 7 Process for Decommitments                 .............................                                                         ; ...   1 17
 8 Process for Obligations            ....................................                                                                  19
 9; Process for Advance Payments to Gr.antees. ...........................                                                                  23
10 Process for Reimbursement               Payments to Grantees. ......................                                                     24
11 Cost Accrual Estimate .....................................                                                                              28
12 Verification      of Cost Accrual Estimate                  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13 Financial Report Process. . . ‘ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
 As the world’s largest and most complex enterprise, the U. S. Federal government faces tremendous challenges in
 the area of gram-management. These enormous responsibilities involve the management of billions of dollars of
 resources, and. pose tremendous challenges as we rapidly begin the twenty-first century.
                     ,-                          ‘I
The Federal government has consistently recognized the importance of having high quality grant financial
management systems to support improvement of government operations and provide fmancial and related
information to program and financial managers. In response, the JFMIP began the process of defining financial
management system requirements by publishingthe FFMSR series of requirements documents. Reginning. with
the Core Financial System Requirements (FFMSR-1) document in .January 1988, JFMIP has issued-publications in
the FFMSR series. For additional.information, refer to JFMIP’sweb page at.                    :I         i..      I,
www.financenet.gov/fed/jfmip/jfmip.htm.                              .._                      .~                ,‘,’
                                                                                                                 1 .’
In addition to the basic JFMIP systems requirements documents, several Federal organizations and agencies
recognized the need for a comprehensive .document ,describing a variety ‘of general systems requirements .e;g.,
system integration, data stewardship, andinternal controls. Asa result, JFMIP published the Framework for,
Federal Financial Management Systems document in January 1995.                                      ? -           !

The Federal Financial Management Improvement Act (FFMIA) of 1996 mandated that agencies implement and
maintain systems that comply substantially with Federal financial management systems requirements,. applicable
Federal accounting standards, and the U.S. Government Standard General Ledger (SGL) at the transaction level.
The FFMIA statute codified the JFMIP financial systems requirements documents as a key benchmark that’agency
systems must meet, in order to be substantially in compliance with systems requirementsprovisions under FFMIA.
To support the requirements outlined in the FFMIA, JFMIP is updating publications which are obs.olete and is
publishing additional requirements documents. This is the first JFMIP Grant Financial System Requirements
document, that has been issued.                              >                                          I /
                                                                                                  :,
This Grant Financial, System Requirements document is intended to identify financial system requirements.
necessary to support grants programs. It does not intend to identify the full scope of functional program
requirements associated with grants management programs. ,This document is intended to assistsystems analysts;
system accountants; and others who design, develop, implement, operate, and maintain financial management
systems. This includes building or buying systems.

Increasingly, integrated financial management systems are necessary to support program managers, financial
managers, budget off&ls, and others simultaneously. Data and information supplied by systems to these
individuals are expected to be accurate, timely, and consistent across organizations, agencies, and the Federal
government.. Systems,and data are shared more and more by imultiple organizations, agencies, etc., with ‘common
needs.




Grant Financial System Requirements                                                                                 1
This document provides high level functional requirements for grant financial systems that will provide the
capability for financial managers and others to control and account for Federal grant resources as defined in
government wide and agency specific statutes, regulations, and guidelines. Appendix A is a listing .of.statutory and
regulatory references. This document is one component of a broad program to improve Federal financial
management which involves the establishment of uniform requirements for internal controls, financial systems,
financial information, financial reporting and financial organizations.

As shown in Illustration 1, standards and systems requirements assist agencies indeveloping effective and: efficient
systems.and provide a common framework:so that outside vendors or in-house programmers can provide software .,
more economically. Each agency shouldintegrate its unique requirements with these government wide standard
requirements to provide a uniform basis for the standardization of financial management systems as required by the
CFO Act of 1990 and the FFMIA of 1996.
                                                          :.,..l : I ‘:             .,’    .
                            ,          _!.; ./      1.’                          ”                         ::’
Financial management systems in the Federal -government must be designed to support the vision articulated;by the,
government’s financial management community which requires those systems.to support the partnership. between
program and financial managers and to assure information integrity decision-making and measuring performance.
This vision includes the ability to:
                      .’
       collect accurate, timely, complete, reliable, and consistent information;
        l



        l   provide for adequate agency management reporting;
        . %support government wide and agency-wide policy decision-making;
        l   support the .preparation and execution of agency budgets;
        l   facilitate the preparation of financial statements and other financial reports in accordance with Federal
            accounting and reporting standards;
    l provide informationto central agencies for budgeting, analysis, and government wide reporting, including
      consolidated financial statements; and                                                   ;
    . provide a complete documentation audit trail to, facilitate audits.

In support of this vision, the Federal government must establish government wide financial management systems
and compatible agency systems, with standardized information and electronic data exchange, to support program
delivery, safeguard assets,and manage taxpayer dollars.

It is,critical that financial management systemsplans, support the agency’s mission and hrograms, including planned
changes, and that financial management systemsplans are incorporated into the agency’s plans for information
technology infrastructure and information systems as a whole. Systems design efforts should also include an
analysis of how systems improvements, new technology supporting financial management systems, and
modifications to existing work processes can together enhance agency operations and improve program and
financial management. Reassessing information and processing needs and redesigning processes, procedures, and
policies are essential steps to meeting user needs.


Integrated         Financial Management           Systems
Financial management systems must be designed with effective and efficient interrelationships between software,
hardware, personnel, procedures, controls, and data contained within the systems. To be integrated, financial
management systems must have, as a minimum, the following four characteristics:


2                                                                                         Grant Financial ‘System Requirements
                                                                                                                         Federal Financial .Management Framework
                                                                                                                                            (


                                                     Financial; System Improvement,                                          Projects                    ;,.                   : ,


                                                                                                   Agency lmplementatl,on                      ._


                                                                         1
                       i Standard’ Reporting
                         Requireme-nts                                       _I
                                       ‘.                                                                                                                      :<-   ;   :         --,           .),        $                _




                                              ,.:                                 2 . Additional                                               :;‘Adaptation                                     ,:’            ‘,
                                                                                                                                                                                         I
                       . U.S. Government            Standard.                         Agency.,              ., .
                          General 1-edger                                             Functional
                         ;,                                                           dequ;;gmk;;s          ;’     c.
                                                                                                       <:                                      /_!          I ;..                        ‘ :,
                       . Core Financial     System
                         Requirements                                                                                                          . Prccedures                  ...          IY                             i


                       . Human Resdurces & Payrcil                                  . Additional
                         Systems Requirements                                         Agency                                                                                                 Q


                                                                                      Technical                                                . Training
                                                                                  ._ Requirements                       . Software      ,,._
                       . Travel System                                                    ,_-r
                         Requirements                                                                                     Sel,ecticn     j
                                                                                                                           ~, ‘I                    ‘.                                                 !.

                                                                                                                                               i Documentatton
                       . Seized Property and
                         Forfeited Assets System                                    . Integration
                         Requirements      :
                                                                                       Strategy‘
                                                                                                                                                                                                                     :
                       . Direct Loan System                                                                                                    . Conversion
                         Requirements


                       . Guaranteed   Loan System
                         Requirements


                       . Inventory System
                          Requirements
                                                                         I
                                                                         I
                    , . System Requirements              for
                           Managerial Cost
                           Accounting
                   ‘r--‘--‘-
                                                                     I
                   1. Grant System         Requirements,1
                   I    -m-m---                                 -I


                       . Other Standards




         --                                                                                    ,
         I     I        Subject of
                        this report
         1-l

                                                                                       wusrrarlon      i


Grant Financial System.Requirements                                                                                                                                                                                              3
Federal Financial Management ‘Framework



                l   standard data classificati&G(definitions.and   formats). estabiished and used for recording financial events;
                l   common processesused for processing similar kinds of transactions;
                l   internal controls over data entry, transaction processing, and reporting applied cqnsistently; and
            l       a design that eliminates unnecessary duplication of transaction entry.

The financial management systems policy described in the Office of Management and Budget (OMB) Circular
A-127 “Fin~ciaj Management Systems,))requires that each agency est+lish and maintain a single integrated
 financial management syst:m. Without a single, iritegrated financial management system to ensure timely and
 accurate financial data, p+r policy decisions,are more likely to occur, hanagers are less likely to be able to report
 accurately on.government:operations in a timely manner,;, scarce r&o&es are more likely to be directe-d toward the
collect.+ of information ‘&her than to delivery of the intended prd;&Gms;, and inodificatiqns tp finan‘& ‘,                    ;
management systems nec&ary to keep pace with rapidljr;‘~hanging~.~sei:requirements              cannot  be coor&a&d        and
                                                                                ‘.
managed properly. The basic requirements for a single, integrated financial management system are outl+ed in
OMB $ircular A-127;         c
                                                  ‘. .                     ‘,,., :-i
Having a single, integrated fmahcial managetient system does not necessarily mean: having only one sofnvare
application for each agency covering all finar$ial management syst!ms needs. Rather, a sihgle, integrated financial
manageinent system is a unified set of financial systems and the financial portions of mixed systems encompassing
the sofnvare, hardware, personnel, processes‘(manual and Automated), procedures, controls, arid data necessary to
manag< the financial operations of the aiienc);, and report on the agenCy’s
                                                                       ,.1         financial status to central agetic@, .,
Congress, and the public.
                                                i                                                                    :.
                             i::
Unified means that syster& are planned and managed       together, operated in an integrated fashion, and linl$d
                                                    ‘.
together electronically in an efficient and effeizlve manner to provide agency wide financial system support
necessary to carry out the agency’s mission and support the agency’s f&ncial management needs.                       1’::
                                                                                                                     :,
Integration means that the, system’s user is able to have one view into systemswhereby, at whatever level a,user is
accessing the system, the user can obtain the heeded information efficiently and effectivCly through ele&ronic
means. Integration does not mean that all information must be physically located in rhe same database.

Interfaces, where,one system feeds data to another system following normal business/transaction cycles such as
grant obligati& recorded in general ledger control aLcounts ai the time the grant awards are made, may be
acceptable as long as the supporting detail is maintained and accessibleto managers. In such cases,in+-face
linkages must be electronic unless the number of transactions is so small that it is not cost-beneficial to automate
the interface. Reconciliations between systems, where interface linkage? are appropriate, must be maintained to
ensure accuracy of the data.

To develop any integrated information system, it is critical that senior systems analysts and systems accountants
identifjr:

        l           the scope of the functions to’ be supported (processes),
                    how data quality will be assured (data stewardship),                                                  :’”
        l
                                                                                                                          :.,*
    I   l           the informhtion to be processed (management information),
        l           how systems hardware & software fit together to support the tinctions (systems architecture), and
        l           safeguards needed to ensure the integrity of operations and data (internal control).




4                                                                                                          Grants System Requirements
                                                                             Federal Financial Management Framework


All of these pieces must be
brought together in a model such             Intbgrated      Model .for Federal. Fintindal             Systems
as the one shown in Illustration 2;
 (page 6 ). These pieces must work
together to form an efficient
integrated information system. A
change to any part of the model
will require determination of the
implications on, other parts of the
model. For example, a neiv
reporting requirement may require
changes throughout the.entire’
model.


Agency Financial
Management Systems
Architecture
Agency financial management
systems are information systems
‘that track financial events and                                                    -<       I:
summarize information to support                                                       ;-jo: 7:
the mission of an agency, provide                                         Illustration 2
for adequate management                                                                     ,:a .
reporting, support agency level
policy decisions necessary to carry out fiduciary responsibilities, and suppo’rt the preparation of auditable financial
statements.

Agency financial managementsystems fall into four categories:

    l   core financial systems;
    .* other financial and mixed systems, including grant systems,
    l   shared systems, and
    l   departmental executive information systems (systems to,provide management information to all levels of
        management).

These systems must be linked together electronically to be effective and efficient. Summary data transfers must be
provided from agency systems to central systems to permit summaries of management information and agent)
financial performance information on a government wide basis.

Subject to government wide policies, the physical configuration of financial management systems, including issues
of centralized or decentralized activities, processing routines, data, and organizations, is best left to the
determination of the agency, which can determine the optimal manner in which to support the agency mission.
The physical design of the system, however, should consider the agent@ organizational philosophy, the technical
capabilities available, and the most appropriate manner to achieve the necessary single, integrated financial
management system for the agency.



Grant Financial System Requirements                                                                                       5
,Fede,ral,.Fi.nanciaI Man’agement: Framew0r.k.


The agency systsms~~~~,~tectureshoprfl,,in-Illustration .3, (page 8. ) provides a logical perspective identifying :the
relationships’~of various agency systems types. Although this does not necessarily represent the physical design of           I
the system, it does identify the systems types needed to support program delivery/financing and financial event
processing for effective and efficient program execution.
                                                                                                                     .,
Grant Systems           a3                                                                 : :.          ,.
                                                         .’
As shown in Illustration 3, (page 8 ) grant financial systems are an integral part of &total financial management
system for a number of Fed&a&agencies. Grant financial systems sul@ort programmatic objectives and interact, ’ li
with core financial systems to record advtnces, collections and disburs,ements in %,geneiJ ledg$#on$stent with
the SGL. validate funds availability; update budget execution data; and record other’grant, related transactions.
                                                                                                        ;:’
             ..,. ’         (.? , <:      : .’ .’.!
                                        %‘“’          __
           .                 . \                                         ‘., :
     i,,, +:                    ‘. ‘.




                                          ‘/I    .:
                                                       Illustration   3




6                                                                                     Grant Financial   System Requirements       ’
SystemOverview
The complexity, diversity, and size oigrant programs in Federal government agencies place unique demands on
managers that are responsible for those programs. The constantly changing requirements of grant programs has led
management to look not only at the functional capabilities of grant financial systems, but also the managerial
environments in which these systems aresupported and operated in.                                 /,    ‘, :I

All grant financial systems.that are. being designed and implemented, or are in.use, must operate in accordance with
existing laws and regulations. It is the responsibility of each agency to be knowledgeable of the legal requirements
governing its grants financial operations.                                     >

All grant financial systems must provide, as a m&mum, the follo&g                  qualities:
                                                                                                              ‘.
    l    Complete and accurate funds cpntl’ol;
    l   . Comple.te, accurate, and .prompt recording of obligations;.
    l    Cotiplete, accurate, and prompt patient         oigrantee pay&ent requests;
    l    Complete, accurate, and prompt generation and maintenance of grant financial records and’transactions;
    l    Timely and efficient accessto’ complete’and‘accurGe information, without extraneous material, to those
         inter&J and external to the agency who require the inforniation;  ’
    l    Timely and proper ir&raction       of the grant financial system with Core,financial systems and other                      ..
    l    existing automated
                      _’      systems; and
    l    Adequate, internal, co&rols to ensure that the grant fihancial system is operating as intended.

This document identifies functional requirements for grant financial systems. Although the document may be used
when developing new grant financial systems, or improving . or evaluating current systems, the document does not
provide a specific model for such systems. Functional requirements not mandated by law, regulation, or directive
must result in cost-effective systems that are in the interest of the government. .‘All possible alternatives for meeting
the requirements should be considered.                                ,’     ,” ,(, .:.,. :’

Functional requirements of Federal grant financial systems can be segregated into two general categories,
mandatory and value added. Definitions for these two categories of requirements are:

Mandatory - Mandatory requirements describe an&consist of the mi&mum acceptable hnctionality necessary to
establish a system, or are based on Federal laws and regulations. Mandatory requirements are those against which
agency heads evaluate their systems to determine substantial compliance wi+ systems requirements under the
FFMIA. These requirements apply to existing systems in operation.and new systems planned or under
development.

Value-added - Value added requirements describe optional features and may consist of any combination of the
following: (1) using state of the art technology, (2) employing the preferred or best business practices, or (3)
meeting the special management needs of an individual agency. Agencies should consider,value added%features
when judgingh,ia.‘.
              systems..ioptions. The need‘. for: these
                                                   +1 value-added features
                                                                   ..‘. ” - ,’in tagen2Lsystems
                                                                                           :, , .is..(I ,,left:, toG the
                                                                                                                       .-,1discretion
eaih’agency              L .,                            .,,.~                                                                *.      of


Mandatory requirements are identified in each chapter under the statement, “The system must...“. Value added or
optional requirements are discussed at various points throughout this document. The burden of demonstrating
that these value added or optional tinctions are cost effective and clearly in the interest of the government rests
with the CFOs of each agency. Further, each agency must develop an efficient, effective, and economical strategy
for interfacing its grants financial system with other systems that share or utilize data.

Grant Financial System Requirements                                                                                                       7
System Overview


All requirements listed in this document are mandatory, as indicated by the ‘“The system must...“. Other
requirements discussed in the document are value added.         ”
        ‘.                                                  :I



Functional requirements .of Federal grant fintincial. systemscan be segregated into two general categories,
mandatory and value added. Definitions for these two categories of requirements are:

    Mandatory     - Mandatory requirements describe and consist of the minimum acceptable functionality necessary to
     establish a system, or- are based on Federal laws and i-egulatiork.‘-Mandatory requirements are those against
     which agency heads evaluate their systems to determine substantial complirince’ with systenis,requirements
     under the FFMIA. These requirements apply to existing systems in operation and new systems planned or
     under development.                     ..: .r..                   ~I
     Value-added - Value added requirements describe optional features and may consist of any combination of the
     following: (1) using state of the art technology, (2) employing the preferred or best &sine& practices, or (3)
     meeting the special management needs of an individual agency:; Agencies:should cofisider value added feanires
     when judging systems options. The need for these value-added fea,cFes in agency systems is left,,to the
     discretion of each agency head.
                           :;                        I                                         .,..
Value added or optional requirements are discussed,at variqus points throughdut this document. The burden of
demonstrating that these value added or optional functions’ are cost effective atid clearly in’,ihe,interest of’;he
government rests with the CFOs of each agency. Further, each agency must develop an efficient, effec&e, and
economical strategy for interfacing its grants financial system with other systemsthat share or tit’ilize d&a:
                                                                                         ...I
Grant financial management activities can be further categorized based on types of activities within the okrerall
grants process. The remainder df this document prdvides functional requirements based on these categories as
follows :
                                                                                    .,I       :
    Chapter 1: Provides an overvievir of the &tire grants process.
    Chapter 2: bescribes the’ comn$tment process.
    Chapter 3: Describes the decommitment process.
    Chapter 4: Describes the obligation process.
    Chapter 5: Describes the payment process for advances and reimbursements.
    Chapter 6: Describes the initial cost accrual estimate and subsequent accrual verification.
    Chapter 7: Describes the financial repork process.
    Chapter 8: Describes the proce?s for interest collections.
    Chapter 9: Describes the closeout process for grants.
    Chapter 10: Addresses needs for records retention and historical files Discusses information technology.
    Chapter 11: Addresses general system requirements including general data stewardship, interface requirements,
    a&other hardware and, sofiware related requirements Addresses needs for records retention and l$storic.al files,
    Chaptef rd i ’ Discti&S ikfkk%ioh’techn&&       kddr&& general @teni requi~er&&including             gen&ral’&ta’ ’’
    stewardship, interface requirements, and other hardware and sof&vare related requirements.




8                                                                                    Grant Financial System Requirements
 Introduction
            to Functional
                       Requirements
                                        :.

 Definition
 A federal grant is a financial assistanceinstrument which, consistent with 31 U.S.C. 6304, provides, money and/or
 direct assistanceto the recipient to carry out a public purpose authorized by a law of the United States, instead of
 acquiring property or services for the Federal governments own use. Cooperative agreements may also be used for
 financial assistance,except unlike grants, substantial involvement between the granting agency and the grant
 recipient is anticipated. Some agencies.do process grants, cooperative agreements, and other cqntractual agreements
 may be processed at some agencies using the same administrative, accounting, and financial systems.
                                              :

 Guidelines                                                                                                    1. .’
                                                                                                                       ,‘.
 The OMB issues grants management circulars which are published in the Federal Register (administrative
 requirements, cost principles, and audit circulars) ., Federal agencies issue regulations implementing those OMB
 circulars and as needed publish other policy issuances that aid in understanding ,and complying with new         ’
 regulations.


 Scope of the Grant Business
Total grant funding for the U.S. Federal government is approximately $250 billion annually, involving
approximately 400,000 payment transactions annually. The Department of Health ,and Human Services accounts
for the majority of this grant activity, led by over $100’ billion in grants to states for .Medicaid. ‘&rants for food,
transportation, research, and other pubhc missions involve institutions and organizations throughout the U.S.
economy, underscoring the importance of efforts to improve grant financial management systems.                      :


Grant Life Cycle
The life cycle of a grant includes application, review, award, performance, payment, and closeout.

There are two major types of grants: mandatory and discretionary.

Mandatory grants include entitlement programs (e.g., Medicaid, Food Stamp Administration) block grants (e.g.,
housing), and formula grants (e.g., highway construction). Mandatory grants are awarded non-competitively to
eligible entities as long as those entities submit acceptable state plans or applications,

Discretionary grants are awarded under a wide range of specific programs, such as education and research.
Competitive proposals are submitted for funding under an announced program with a specific mission identified.

The discretionary grant process usually begins with articulation of a need through an announcement (or
solicitation) specifying the funding agency’s objectives and scope of program, relevant dates and deadlines, grantee
eligibility, and terms of the evaluation to determine awardees. Many agencies also accept unsolicited proposals.

The grants process calls for preliminary and/or full applications (or proposals) from organizations or individuals
desiring to participate in the agency program, describing their proposed work, project team, and budget
justification.


Grant Financial System   Requirements                                                                                        9
Introduction to Fu’nctional Requirements
                                                                                                                                 ‘_


                                                                                              :




Upon receipt of a grant application/proposal, agencies usually provide a status indication (by telephone, postcard,
or on-line web site) to the applicantpotential grantee pending completion of their review and final decision.
Discretionary grant review processes, usually based upon project quality and mission relevance, may re+ire an
outside peer review, although in some agencies the federal staff fill this role. This procedure results in priority
m&in&budget commitin&its, award decisibns, tid budget commitmknts. Notification of award (or declination)
ends this part of the grant process.

A mandatory or dikretionary award includes information on budget amounts, required repdi-ts (administrative,
financial, kid technical), regulatory requirements, and other instructions ati part of the grant’s terms and conditions.
                                                                          ,, /
On the basis of the award, the grantee may then proceed to perform as prescribed, incurring authorized costs and
requesting payment from the granting agency as stipulated. Payment requests must carry accounting information
sufficient to associate amounts requested with the specific grant(s), unless pooling arrangements have been made,
allowing delayed reconciliation of accounts.
                                     I.
Existing grants ofteq require kdification.   ‘Mod&&ions for which the grant finan& system must &count ,.
include changes in the dollar amount awarded and extensions of: the grant period.

All grants ultimately require closeout. Discretionary grants are generally awarded for discrete projects with .stated
completion dates. Their duration may be extended, but will eventually end. This is not the case for all mandator)r
grants, which generally continue unlesB the program statute is rescinded. Reviews, audits, and documentation for
financial, property, and technical matters are usually required for the successful closeout -of an award. This is the
final step in the grant life cycle.

Illustration 4, outlines the overall grant financial process described above.

Illustration 5, depicts how the grants fkncial system may interact and interface with other external (non gbatit)
systems and with or within the agency’s core financial system.                                                .




                                                            ‘1.                                                                                    :
                                                                  __’                                                                       ;-:,

      .     ,.,,                  ,.,Y.y                                     ._
                                            .;.   :,-,,:                                                   .‘Li   5:,   :‘   :
      ._                                                                i”        ”   ‘)‘^.                                            ‘.




10                                                                                                Grant Financial Syitem         Requirements
                                                                                                Introduction   to Functional Requirements



                                                                           Illustration # 4
                                                                      Grants Overview Process
                                                                                                         ,
                                                                     Announcements/Solicitation
                                                                     Funding Agency & Amounts
                                                                       Program Need & Scope
                                                                     Effective Date & Deadlines


                                                                         Ap$icationiProposal
                                                                    Performin~Organization Profile

                                                           /   .,       .~zgffz%+



                                                               v
                                                      Review
                                         Funding Agency Panel/Process                               Status Checking
                                       Technical Merit/Mission Relevance                           Applicant Queries
                                          Prioritization within Budget
                                              Funding Mechanism




                                            Receipt of Awards
                                     Terms, Budget, & Effective Date
                                         Accounting/Admin. Data
                                                   I




                                                                             1”
                                           Other Grantee Actions
                                       Perform Work/Incur Expense                             Other Funding Agency Actions
                                        Request Funds from Agency                                Provide Cash Payments
                                               Expend Funds                                            Cost Accruals
                                    Provide Financial/Technical Reports                               Review Reports
                                      Request Renewal as Appropriate                                 Initiate Closeout
                                            Disclose Inventions


                                                                                                          Closeout
                                                                                                Financial/Property/Technical




           Grant Financial System    Requirements                                                                                      11 ;
                                                                                                                                              I;
.-___-.-
Commitments




                                                                    Systems Interfaces        Overview

                                                                               Illustration   #5




        Grants
        Financial

        Process Flow




                                                                           Advances &z/or
                                                                          Reimbursements


        Core
        Financial
                            v                      v                                  I                   *         v        I
                                                                                                                                      v
        System
                           SGL                    SGL                               SGL                  SGL       SGL           t   SGL
                           Posting                Posting                           Posting              Posting   Posting       I   Posting


         NOTE: This illustration depicts examples of the information exchanges which take place
          between different Systems/Processes throughout the Grants Financial System Process.



12                                                           Grant Financial     System Requirements

                                      _
Commitments                                                                                                                   i

Detition                                                                        ::
A commitment is an administrative reservation of a specific amount of an agency’s available funds that provides for
a later issuance incurring of a grant award. and incurring of the related ,obligation.                                        E,




Commitment                       Process Flow (see Illustration         6)
Listed below are the major steps in the commitment process.                            :                    .,
The system must support the following major steps associated with processing a commitment for agencies with a
commitment process. %,                  .                .-I    ._.,,-            ‘/         ‘a._  :
                                                                      ,,  .‘,
      Decision to Fund a Grant - Occurs usually after a proposal application process (involving proposal receipt,
        l

      review, and selection) has been completed. The steps or procedures followed by an agency before the
      funding decision is made depend on the specific requirements established by an agency which are based on
      the nature of its grant programs.
        l   Initiate Commitment Request; Input Budgetary/Program                 Data into System - Data should include the
            following: if applicable:
                 l   System generated:
                          l   Commitment request identifier
                      l       Requisition date
                          . Corresponding proposal identifier
                 l   Funding dollar amount
                 l   Appropriation      Code(s)
             l       Budget Year(s) for funding being utilized
                 l   Name of the individual initiating the commitment
             l       Grant Purpose
             l       Object Classification
             l       Grantee Identifier
             l       Principal Investigator/Project    Director Identifier
             l       Grant Period of Performance
    l       Direct Requested Commitment to Approving Official - Approving official(s) have the authority to
            commit funds: They review and approve or reject the commitment request. As part of their review, thej
            must verify funds availability. Commitment requests should be transmitted to the. approving official(s) in an
            automated manner.
    l       Review Approved              Commitment     Request Against Edits; System Performs Following   Edit Checks
             l       Approved commitments are processed through a series of edit checks
             l       Verify Authority of Approving Official(s)
             t Validate Commitment Data Input by Requestor

Grant Financial System Requ,irements
 Commitments
                                                                                                                                         I



                  l   Verify Funds Availability                                                                                          j
                  l   Provide the capability to cite multiple funding sources                                                            I
                  l   Provide controls to prevent processing a duplicate document                                                        I
         l   Commit Funds and Post Trarkactions to Standard General Ledger (SGL) - Transaction recorded in
             Financial System as a commitment against the Budget Account; committed dollars are matched against
             budget being utilized.                                                                                                      /I

             The SGL entries are:
              l       Debit the Account Code 4610-Allotments      - Realized Resources
              l       Credit the Account Code 4700---Commitments       Available for Obligations                                         :
                                                                                                                                         1
     l       Notify Procurement/Grants Office to Start Negotiation of Grant with Potential Grantee - Outstanding                         i
             commitments must be reviewed and reconciled on a coqtinuous basis throughout the year to ensure that they             , i
             are converted to’valid,obligations or deconimitted no later thari funds expiration.




14                                                                                           Grant Financial System Requirements     ’
                                                                                                             Commi?ments
                                                                                                       _.   j   ,-’ / : .:


                                                          Illustration # 6
                                                Process for Commitments
                                                              - --.---
                                      Funding Decision
                                            1
                                         Initiate   COInmitment   Request          e-   Notify Requestor
                I
                          I                                                             of Disapproval with
                                            +                                           Comments; Request
                                       Direct to Approving Official, ’                  can be Changed &
                                                                                        Resubmitted     I ., :      :



             Not@
        I   Requestor


                                                    Yes

                                            v
                                                                                 Notifjl Immediately with
                                                                             Explanation of Rejected Request
                                      Edit Process           ’                       .1    A                 ,. >

                                                                                                 ;.:




                        ICommit Funds and Post Transaction to SGL

                            Notify Procurement/Grants Office
                            to Start Negotiation of Grant with
                          1          Potential Grantee         1



Grant Financial System Requirements
 ‘l.                        ,,.’



Dfkommitments
Definition

A decommitment is the act of reversing a commitment of hnds previously recorded in an agency’s financial system.


Decommitm&f                                  ‘Pr&~ss
                                              .’ :   Flow (see Illustratioti        ‘7)

Listed b&w                            are .the &aj& stjlepsin the .decommitm&t process.
                                          i,
The systein must sujp@rt &I following major steps associated with processing a decommitment.
                                    ..i                     ‘_.           .::
      Funds Committed - An individual with authority to dkcommit &ids hetermines whether a commitment
               l

      should be cancelled.
               l   Initiate the Decomrpitment Request - The decotimitment act& is initiated by the individual requesting
                   decommitment. This request should be transmitted to the prdper financial official(s) in an autokated
                   manner. Organization specific budgetary and program data is entered into the system regarding the request.
           l       Edit Process - Approved decommitments are processed through a series of edit checks;
                        l          Verify -authority of Approving Offlcial( s)
                                                           ,
                        l          Validate dai$ input by rec!luestor,
           l       Decommit Funds qd Post to SGL - Transaction recorded in financial :ystem as a decommitment against
                   the budgeted accounts. The following SGL entries are made:
                    l              Debit the Account Code 4700-Commitments         Available for Obligations
                    l              Credit the Account Code 4610-Allotments       - Realized Resources
       l           Notify Program Staff - Decommitments are reported to program staff.
       l           Outstanding Commitments - Outstanding commitments must be converted to valid obligations or
                   decommitted before the expiration of the f&ds committed._I




16                                                                                                         Grant Financial System Requirements
                                                                                                                 Oecommitments
                                                                                                                      -.- r-
                                                                                                                 r           .I,
                                                                                                                I.       ;.,     ‘.,



                                                   Illustration # 7
                                             Process for Decommitments            j          ,                   ,-         :             ‘,
    i                                       :: .;; ‘.~      .a     ;                                        .           !
                                          Funds Commited

                                                                       /                         0.

                                                                                            .Aotify h-b&&
                                                                                                                                . .
                                                                                                                                      ;
                                       Initiate Decommitment Request          4               with_ Ex
                                                                           ,’ ,       .‘.




                                              Edit Process




                                         Not@ Program Staff




Grant Financial System Require’ments                                                                                                  17       1
Oblighm
Definition                                                                     I,,,
An obligation occurs when an obligating official makes an award to an entity on behalf of a Federal awarding
agency, thereby, obligating that agency to fund a project that relates to a Federal grant program administered by
that agency.


Obligation                     Process Floyv(see Illustration          8)
                                       ~.             . ;_
Listed below are the major steps in the obligation l&&k.                                         .
The system must support’the following major steps associated with processing an obligation.
                                                             .^                 ”
      Gr&nt Proposal R,eviewed - The proposed grant action is reviewed. The grant is negotiated with the
             l

      grantee, and a contractual grant agreement contractual document is prepared.
      Direct To Obligating Official - Obligating official(s) have the authority to legally bind the Federal
             l

      government to provide funds for a specific project or purpose. They review and approve or reject the grant
      contractual grant agreement document.

                 Provide for approval or disapproval of grant obligation.
         l       Obligate funds - Record transactions into the grants financial management system. Provide for the
                 capability to maintain chronological order of.commitments, obligations, and payments.
                                                                                              ,
                 Include adequate controls to prevent recording an obligation thatexceeds    available funds.
                                                                                    ,
                 Provide the capability to cite multiple appropriations or other ‘funding sources.
                 Record obligations or Federal Funds authorized based on grant awards and liquidate related commitment(s).
                 Capture grant number, grantee or recipient name, grantee identifier, grant purpose, dollar amount, and
                 accounting classification data, such as appropriation, project, program, and object classification, tax payor
                 identification, and other pertinent information:     I
     l           Edit Process - Approved obligations are processed%through a series of edit checks;
                     Verify authority of Obligating Offkial(s)
                      l



                      l   Validate grant obligation against edits in the core financial system
                      l   Verify funds availability
                      l   Provide controls to prevent a duplicate obligation
     l           Obligate Funds and Post Transa&on to the SGL - Transaction recorded in the fmancial system as an
                 obligation against the appropriated funds.

                 The following SGL entries are made:
                  l Debit the Account Code 4700~Commitments
                  l       Credit the Account Code 4801---Undelivered        Orders - Unpaid

                          The funds that are obligated may be made available to grantees to perform cash drawdowns (advances) as
                          set forth in Chapter 5 below.


18                                                                                               Grant Financial System,Requirements
                                                                                                                                Obligations



                                                                      1’                        ,                  .



                                                            Illustration # 8
                                                        Process for Obligations



        .. )                ,,   .-                                 ,/.                             .   w&h Com+nts;.      .,  _
                                                    v,                     I                            Proposal can $e
                Not@                                                                                    Changed & Resubmitted’
                                            Direct to Obligating Official
           I   Reqtlestor
                                                                                            -                          t          _I*’    ‘-




                                                         Yes    ’                      ’
                                                .                                                                          ,.     “’
                                                    v                          ‘_ ‘,                      .:

                                        Obligate’ Funds;
                                    Post Transaction to SGL;
                                  Funds available to the Grantee
        . ,. ..A.       : “. ;. .” ;:. fdrPaymq$
                                           ,- .-.I          ,, .t.., ., ?,,,.-.;_     <.- rl   /.; ; ,a,,. y;,a,;,.,..’ ..,,“.i
         _      -..,     ~. I. ,,,.                                               ; /I;,     . . ,“,.I,, -,               -.l
                                                                                                    .,




                                                                                                                                               -1




Grant Financial System Requiremgnts                                                                                                      19         1
     ‘.      ,;‘:   :




Piyments
Funds are paid to grantees as either advances or reimbursements.


Definition
Advances are payments to a grantee in anticipation of expenditures the grantee has’yet to makefor program
purposes; Advance payments are the preferred method of funding a grantee’s program operations unless
circumstances warramtising alternative, more restrictive methods. Grantees shall be paid in advance, provided they
minimize the time elapsing between
                            ,       the ;transfer of funds and their disbursement.
            _.. .‘,
Reimbursementsto-g~~tees             are for work performed for which expenses are incurred
                                                                                      _...” ^.but not
                                                                                                   4 paid.           :.,.:
                                    <‘i.
                                                                              .,.                             I
                                                                                     -.._
Initiative              to S~eandh$, Grtit    Paymerit S&etih        ti. th& ~~~c$al *q.overnment             j ,,
                                                                       I,
In June 1998, the CFO Council endorsed three existing systemsfor use by the Federal government for grant
payments by October 1,200O. All Department of Defense organizations are to utilize the Defense Procurement
Payment System (DPPS). All civilian Federal departments and agencies are to use one of the following two
systems: the Automated Standard Application for Payment System (ASAP) provided by,,the Financial Management
Service (FMS) of the utSpkpartment    of the-Treasury and the Federal Reserve Bank of Richmond; and the
Payment Manager^ent,sy~t~~,‘(PMS;) provided by the Department of Health and Human Services (DHHS) .
                   _ .: ~ -- ‘- “:       .^
The Council’s systems endorsement resulted from an in-depth one year study and survey of existing Federal grant
payment systems by the Council’s Committee on Grants Management, Sub-Committee on Cash Drawdowns.

The Subcommittee’s goal was to signiticantly reduce the number of Federal cash drawdown systems used
throughout the Federal government. This would reduce the grantee’s workload and the costs associated with the
development and maintenance of multiple systems. In June 1998, the Subcommittee published its ;
recommendations in a report to the CFO Councjl., The CFO Council adopted all of the recommendations set forth
in the report. A copy of the report is available .at: ~~://www.financenet.gov/financen~t/fed/do/gr~~/cdO618.hun.
                                                                            : ,i,.
Key recommendations of the report are:

         l     There is an immediate moratorium on the development of.all new Federal department/agency cash
               drawdown systems to service grantees.
         l     The following two existing systems are designated for government-wide   use for grant payments (cash
               advances and reimbursements) : ASAP’and PMS.
         l    By l/1/99, all Federal civilian agencies to identify one of these two designated systems for use and to
              formulate a schedule for migration to the selected system. Waivers may be granted in accordance with the
              previously sighted committee’s report.                     ,. _.
     l        By 10/l/00,- each civilian grant making agency to implement ‘their-designated government wide selected
              system;.. Civilian agencies may continue to utilize operate their agency’s own proprietary systems in
              addition to the selected government wide system.; Wwhich system (i.e. Council’s designated system or the
              agency’s proprietary system) to use is the decision of the grantee. (Council’s designated system or agency’s
              proprietary system) to use is the decision of the grantee.
     l        DOD components are to utilize the DPPS.



20                                                                                        Grant.Financial   System Requirements
                                                                                                                                           Pay,menjs



                    l   By 10/l/02, all Federal departments and agencies to only use ASAP, PMS, or DOD’s system and to
                        d+continue.,use ofall proprietary
                                                    .:,   department/agency
                                                          ,                 systems.
                    l   Customer Advisory Boards are to be established for all three systems; the purpose of the board is to maintain
                        an effective service and support level and to facilitate communication and feedback.
                l       The Council’s Subcommittee on CashDratido&as                  is to monitor implementation of transition to selected
                        svstems.
                         ,
                l       Treasury :a.ndDHHS are to jointly develop a common front-end to ASAP, and PMS ,‘making the two systems
                                                                             :.          ’                 _. :.. 3i      ‘,
                        appear identical to grantees:      ”
                                                           I

The grant payment ‘processesfor .adv&es and ,rernbursements described below are intended to represent the basic
system steps required for @ocessing grant payments.~‘,These basic steps are included in’ the systems endorsed by the
CFO’Cou$l’ (ASAp, RMS, or Dipl?S)~,%is envisioned that’ future grant financial systemswill have’one’bf these
systems (ASAPj PMS, /,‘or DPPS)! included in their: grant
                                                      3; @yment,crocess.               ’ ‘I.:., ,,       ’ I_
                                                           .          .‘. ‘.          _.           ,.,
It should be stressed that the C&Y Council endorsed these.systemsfor the grant $ayment process only, individual
agencies may elect to utilize these systems for additional grant processes. -’ ’       -’            ’       .-’
                                                                                          /

Paymen! Process Flows (see Illustratioti 9 regarding                                           Advan& hq&knts               and’~Illudra~ion
10, regarding Reimbursement Payments)        :                                                    /  ! ‘i’ ;
                                                                                              .’ ‘.       ‘,         .,i..        :   ‘”
The system must support ,the following major steps.                                                                    .I’.,_                  >.
            l           Receive Payment Request f%om Gradee - The grantee submits a,request for cash. If the awarding agency
                        and the grantee have agreed to use a pooled payment ,procedure, the grantee requests a single dollar amount
                        covering all its grants with the awarding agency. Otherwise, the grantee identifies the amount of cash needed
                                                                                                .-        ,’                _:
                        for each grant.
        l               Optional Data Elements Requirements                 in’ ‘the Requed such as:             ’
                                                                                                  _I
                                 l   Grantee Name and Identifier
                                 l   Amount Requested;
                                 l   Grantee Official authorized to submit request
                             l       Authorized grantee’s information
                             l       Amount of funds authorized
                             l       Amount approved,
                             . Amount disallowedProgram Funding Codes
                             l       Appropriation   Code(s)
    l                   Review Request
    l                   Edit Process - Screen the request for missing data elements, clerical errors, internal logic (e.g. request not in
                        excessof Federal funds authorized).

                        Perform non-routine edit checks installed by the Federal awarding agency, such as:
                         l           Verify whether the grantee is delinquent in submitting financial reports.
                         l           Verify funds availability.

Grant Financial System Requirements                                                                                                                 21
                                                                                                                                     I
Paytients :,.                                                                                                                  --    I


                      l   Provide controls to prevent,processing a duplicate payment.                 ,    : .,    .,
     l        Record Flagged - The record may be flagged if the grantee is subject to sanctions requiring the wlthhoiding
              of payments.
                                                       .. ,.                             .I
              Verification of Work PerformedRequests for reimbursement are forwarded to the appropriate personnel for
              verification of the work completed.
     l        Transfer Cash tq Designated Payee and post 2)amactioqs to SGb - The Federal awarding agency
                                                                                                                                     )
              transfers the approved amount to the grantee’s ftiancial institution and the transaction is posted to the SGL.

           The values posted to these SGL accounts depend on whether the grantee :requested the, payment advance by   : .I
         : the pooling or grant-by:grant :method. If the grant-by-grant method was used, the. portion of the
           disbursement designated by the ‘grantee for each grant is posted to a’subsidiary account corresponding to that
           grant. If the grantee used the pooling me,thod,r the entire payment advance is distributed among ,grant       ,
           subsidiary accounts by algorithm. Regardless of which method is’used, additional operations must be
          ,.performed to further distribute the payment advance among the contributing sources on a reasonable basis
           for any grant funded by multiple sources.                                              ”
              The following SGL entries are made for an advance payment:
              ,   l       Debit the Account Code 140*-Advances       and Prepayments
                  l       Credit the Account Code lOlO-Fund      Balance with Treasury
              The following SGL entries are made for a reimbursement payments from appropriated funds for current
              operating expenses only:
                           l   Debit the Account Code 3 100IUnexpended’Appropriations
          ,
     ‘.                    0’ Credit the Account Code lOlO-Fund Balance with Treasury
                           l  Debit the Account Code 480liUndelivered  Orders -1Unpaid
                           l   Credit the Account Code 4902 - Expended Authority - Paid
                           l   Debit the Account Code 6100---Operating    Expenses/Program Costs
                           l   Credit the Account Code 5700--Appropriations    Used




22                                                                                             Grant Financial System Requirements
                                                        Illustration # 9
                                          Process for Advance Payments
                                                                   _._._...     to Grantees
                                                                         --.-_-.._-_-.-

                      Receive Request for Advance
                                   I

                               Review Request                                                         I
                                                                                        .I

                                                                                         I  Return to Grantee For
                                                                                         1 Correktioul Resubmission
                                                                 No
                                                                                    b

                                                                                                      t


                                  L       Yes
                                                                 ‘I                                   I



                          No




                 Transmit Funds to Desginated Payee and Post TranSaction to SGL




Grant Financial System Requirements                                                                                   23
                                / Illustritioli -- # 10
                Process for Reimburs&hentP~ym~nts         to Grantees




      _ Review
             _. Request

                                                                  Returnto GranteeFor
                                                                 Correction/Resubmission
                                                                           t
                                                                                                  I
                                                                    !.




            I      Yes




     No
                                                                    No




Transmit Fundsto DesginatedPayeeandPostTransactionto SGL




                                                                         Grant FirtanciabSystem       Requirements   r
 CostAkruals
 Overview
 Federal agencies are required to prepare financial statements in accordance with Federal Financial Accounting
 Standards. The standards for accounts receivable and accounts payable’ result in an accrual basis of accotinting for
 transactions. This basis of accounting records, expenseswhen incurred, whether or not they have been paid in cash;
 and records revenues as earned, whether or not cash has been received. In general, under the accrual basis of
 accounting, expenses and revenues may give rise to payable/liability or receivable/asset accounts when the timing of
 the recognition of revenues or expenses differs from the transfer of cash.

In accordance with Statement of Federal Financial Accounting Standards Number 5, “Accounting for Liabilities of.
the ‘Federal Government,” for federal non-exchange transactions, which include many grant and certain entitlement
programs, a liabil$y, an account payable to the grantee, should be r&ogtiized for any unpaid’amounts due as.tif ihe
reporting date. Generally, this is a two step.proCess. The first step is t6 recognize as expense and as a payable the. ~’
amount of allowable exbensd that ‘thi grantees have’ incurred as of the’ reporting date, the end of the period, but
have not collected from the agency. That amount may include amounts claimed by the grantee or amounts
incurred but not reported by the grantee. This will require that the agency estimate the amounts not reported to it
by the grantee but due the grantee. The second step occurs after the grantee has submitted financial reports gi&g
its actual costs. At that time, the agency should arrange for payment and make any entries needed to adjust the
expense amounts previously recognized.

In addition to accruing expenses, the agency may be required to accrue a receivable related to improper’payments.
In some, but not all, cases,agencies may reimburse grantees for amounts improperly expended.. For example,
recipients of federal aid may fiatidulently claim such aid.. Records may not support recog&on of .the amount and
estimates may be required.

Generally the grant accrual system should maintain various data such as 1) internal historical financial data, 2)
criteria/structure of agency programs, and 3) relevant external information on the timing and nature of recipients’
cash flows. This data should include the amounts disbursed to grantees during each year and the amounts actually
expended by the grantees. In addition, other data such as grant award amounts, and remittances should be
included in this information database.

The grant accrual process may entails the use of infortiation           from both the grantor’s and grantee’s databases to
estimate the unpaid amount.

The grq? system should maintain the amounts disbursed to grantees during each year and the amounts actually
expended by the grantees. In addition, other data such as grant award amounts, and remittances should be
included in this information database. ,

The system must:

        l   Have a format structured to facilitate accrual accounting in accordance with 31e..U.S.C. 3512(d).
                                         .
        l   Pe~it.adjustm~nts for any, differences bcmeen,the initial iran; accrual amount and .$& && cost    ...1
                                                                                                 ., li
            subsequently rtported.
        l   Provide for narratives explaining variance rates in excessof & 5 percent.

When faced with the dilemma of estimating year-end accruals, one of several methods may be used as follows:

    l       Poll all grantees as of September 30 of each fiscal year.


Grant Financial System Requirements                                                                                          25
Cost Accruals
                                                                                                                             :        .;.


         l   Take a statistical sample of grantees and base projections on the sample.
         l   Perform a linear regression or other appropriate statistical analysis as of the end of each fiscal year, using ”
             amounts disbursed, to grantees vs. amounts expensed expended in.previ0u.s years to arrive at an algorithm to
             estimate current ,y&r-end StahlS of accrual&
         .F Forecast the fourth quarter expenditures using a forecasting model such as the auto-regressive forecasting
            model or the exponentially weighted moving-average forecasting model.
                              _.,                                                   I.                    ‘_
                                                                                  .J
Definition                             .‘..,,                                      .,                          .’                    , v, -
Accrual &&ntin~     is theiriethod of accounting in yliich an entity’s finan& position-&id operating results ilre
measur$l by the fldti ‘of e&&&c resources. Transactions Tre r&rded iti $e accoutitini’heriod in iYhich ‘they-
occur or -whose opei-atidns they benefit, regardless o;f when
                                         .“.               _,, the
                                                                “’ related
                                                                      ,:: ‘caih receipts. an&disburstiments take pJac%.
                                                                                   .’                         /’
                                                                                                          I.        2~
                                                                                                                                 _


AC&+                          hocesq     #lo&s    (see Illustrati&      I1 and 12 )         ’             .,




                                                                                                                         ,                    ‘:

The system must support the following major steps. Process steps:
     .       Illustration              11 - Initial Cost Accrual Estimates              ,
                          l   Tnitiaie the Accrual ‘@robs - The accrual process (&I?) has’to have the -ability to:     ”
                                                                     ‘, .).                 .:                 .
                              Review electronic files of gi-ant and grantee records including program and financial files.Review
                              electronic files of grant and grantee record. This includes program and financial files.
                                                     .h                                  : ‘^         .-, ;.
                         Select and retrieve specific items (data) ‘from,these files and c&pare eat data <&data stortd in othei
                        programs.To select and retrieve specific items (data) from $h&e fil&s a;ld to compare,that data;.\,to
                                                                                          ,‘,, i                /‘,         f ,,data
                        tilr&dy storedin’the AI’. ..
                                                                                                              I
                      9 Update AZ) Program Accrual File - Data available for selection selected by duiing the AP accrual
                       _-process should include the grantee’s identif+ion     number, types.of grants received, grant numbers,
                        dollar amounts, time periods, grantee’s fmanclal history by fiscal quarters, and other data considered
                        pertinent to the Agency.
                      l       Run Al? Progiam Accrual File - The accrual process uses the informtition collected to recognize
                              liabilities foi- any unpaid amounts due project a grantee’s ending cash balarice at a specific point in time;
                              i.e., the end of a month, quarter or fiscal year. A negative cash balance-If granfee liabilities exceed
                              advances, this indicates a receivable to the grantee and an accounts payable to the agency. A positive cash
                              balanceIf advances exceed grantee liabilities, this indicates a payable to the grantee and an accounts
                              receivable to t&e agency.
                  l           Review iApprove Program Results/Approve , - The information produced from the Apaccrual process
                                                  .r...., .i,i . ,.estinitf.the amo~~iit:ijf~~ds,li~~~da~s~dn~ad~~ci: ~~‘g~~~~~~s~~~i~h
                              ~ijws,iifi agate to reasonably
                              should be expensed and the amount of unreported grantee expenses to record ai ‘2 liabihty ai thg’&d of a
                              fiscal period.
     .       Post the Grant Accrual Amount - The following SGL entries are made to post the grant accrual amount:
                                           :
              l Debit the Account Cod& 6:100--- Operating Expenses/Program Costs
              l               Credit the Account Codes 1400--Advances       and Prepayments and/or Credit the Account Code
                              2 1lo--Accounts Payable

26                                                                                                      Grant Financial System Requirements
                                                                                                          Cost Accruals
                                                                                                                 --.--      ;



               * Debit the Account Code 3100--Unexpended        Appropriations
           l     Credit the Account Code 5700--Appropriations      Used                                                     I
           l     Debit the Account Code 4801--Undelivered       Qrders - Unpaid
                                                                                                                            i,
           l     Credit the Account Code 4902:-Unexpended       Authority - &id
                                                                                                                            k

Illustration         12 - Verification    of Accrual    Estimates
        . Verification J?rd@s Begins - The verification process begins after the grantee’s financial reports, for the end   I
          of the fiscal period involved, are received and the data from these reports has been entered into the agency’s
          files.                                                                                                            I
                                                                                                                            Lid
    l     Review /Approve Program Results/Apptidve - The APagency analyzes<thedata input from these reports,
          and compares it to the projected expendituresbalances projected by the Al? and posts the SGL entries posted
          to the grantee’s files. After comparing the projected expendituresbalances with those of the financial report
          the Aprequired adjustments are calculateds the adjustments needed to make the projected
          expendituresbalances equal the actual estimated expendituresbalances.




Grant Financial System Requirements                                                                                   27    I
Cost Accruals



                                                   ‘.




                                             Illustration # 11
                                       Initial Cost Accrual Estimate



                              L-J
                                 Initiate
                                Accrual
                                Process
                                _ ._




                                   RIUl
                                 Program
                                 Accrual
                                   File



                                                                         Re-examine
                                                        No             Historical Data’
                                                                                &
                                                                         Recalculate
                                                                            4
                                    1 Yes         Post Grant
                                 Accrual
                                                    Accrual                                    A
                                 Program    -+      Amount                                 0
                                 Results
                                                  to the SGL



                0
                A   Go to Step A when the Grantee’s Financial Reports are Received




                                                                                Giant Financial System Requirements   ’
                                                                                             Cost Accruals




                                                             Illustration
                                                                        --- # 12
                                                 Verification of Cost Accrual Estimate
                                      clA
                                  Open
                                 Accrual
                                 Program



                                                  -..
                                Data Files


                              -A-
                                                  1
                               Search Grant
                                 Files for
                               Desired file




                              0Select Data




                                                                      Data Program


                                                                  i     Post SGL




                                                                                         .       r .-,
                                 Store                 Yes
                                             4
                                 Data




Grant Financial System Requirements                                                                      29
FinancialRep&Is
Overview
Grantees are required to submit one orboth of the following reports on their grant(s) activity: the Federal Cash
Transactions Report (FCTR) or the Financial Status Report (FSR) . Either report,may be required quarterly;
however, the FCTR may be required monthly. In exceptional cases,a program-specific report approved by the
OMB may be required in lieu of the FSR. Grantees submit financial reports in accordance with OMB Circular
A-110, Grants Management Common Rule, or program regulations as applicable.OMB Circular A-110,
Attachment G, “Financial Reporting Requirements” prescribes uniform reporting procedures for grant reporting.


Financial           Report Process Flow (see Illustrations              13)
The system must support the following major steps associated with processing financial reports.
                                                                                :                                                  i
Process steps from initiating the financial report process through sending, financial reports (FR) to grantees are not
applicable to agencies which do not prepare the FR(s) . Their systems begin with the step “Receive Financial
Report”.

Listed below are the major steps in the reporting process.


Process Steps:                                                                                                                     I
     l   Initiate     the Financial   Report   Process   - The financial report process (FRP) must have the ability to:
           l   Review electronic files of the grant and grantee. This including program and financial files.
                                                                                      I-
           l   Select and review specific items (data) from these files.
           l   Compare the selected data to data previously stored in the FRP.           ‘.
     l   Update   the FIW File - Data selected by the FRP should include the grantee’s identification number, types
         of grants received, grant identifying number, dollar amounts, time periods of performance, grantee’s financial
         history by grant, and other data considered. pertinent by the granting Agency.
     l   Run   FRP File/Prepare    Financial   Report - The FRP uses the information collected to prepare financial
         reports for the grantees at a specific point in time; i.e., the end of a month or a quarter.

         The FRP must have the ability to prepare the reports in both electronic and ,hard copy formats.
     l   Receive      Financial      - Financial reports received electronically from the grantees should feed
                                  Report
         automatically into the grants financial report process.

       Reports received in a hard copy format will have to be manually input to thef! report process.
     . Edit Process - Revie\lv the report and verifyfor;        i ,.>        :    :, *
        . Completeness                                                                                                             1
           l   Mathematically correctness
           l   Validity of information such as grant numbers and award numbers
           l   Proper certification
           l   Assurance that aAmounts reported as expenditures do not exceed the balance of funds available.

30                                                                                           Grant Financial System Requirements   :
                                                                                                    Financial,Reports
                                                                                                        .               ~


        Provide controls to prevent processing duplicate reports.

         Reports failing the edit process are returned to the grantee.
                                                 :                 ..                                                   1
    l   Transactions Prepared and Posted to SGL - Federal departments/agencies that utilize other agency                ;.
        systems for processing grantee’s financial reports (e.g. DHHS’s Payment Management System) must have a          ii
        reconciliation process in place between the other agency’s financial systems and the agency’s SGL.

        The following SGL entries are made to expense advance payments:
             l   Debit the Account Code 3lOO-- Unexpended Appropriations
             l   Credit the Account Code 1400--    Advances and,,Prepayments
             l   Debit the Account Code 4801--    Undelivered Orders - Unpaid
             l Credit the Account Code 4902--     Expended Authority - Paid
             . Debit the Account Code 6100--      Operating Expenses/Program Costs
                                                                                            L
             . Credit the Account Code 5700--      Appropriations Used ’

        Entries are made to the following SGL accounts to adjust for differences between the grant expenditures
        previously posted to theses accounts when reimbursement payments were made to the grantees and the
        grant expenditures reported on the grantee’s financial reports. The SGL accounts are listed as if the grant
        expenditures had been underreported when reimbursement was requested. If the expenditures had been
        overreported, the entries would be reversed.

         l       Debit the Account Code 4801~--Undelivered Orders - Unpaid
         l       Credit the Account Code 4902 - Expended Authority - Paid
         l       Debit the Account Code 6100~--Operating    Expenses/Program. Costs
         l       Credit the Account Code 5700--Appropriations    Used




                                                                                :   :’




Grant Financial System Requirements
Financial Reports



                                                  Illustration    # 13
                                                            - __----_
                                              Financial Report
                                                            - ____-_Pro&s

                               Initiate Financial
                                Report Program
                                                                                                           ‘.
                                                                                                       :




                     Search         Search                 Search
                    External       Internal           -. Last .Report
                      Data           Data                 Received             :.                               ‘.



                                                                               ’:
                                                                               i




                                      v
                                                                                        :         ,’

                                Update FRP
                                   File
                                          I
                                      +




                               Run FRP file
                               Prepare FR(s)

                                      4
                                 Send FR(s)
                                to Grantees

                                     4
                                 Receive
                                 Financial
                                  Report


                               Process Edit
                                                  I------t




                                                                   i-7    Return to
                                                                         Grantees for
                                                                          Correction
                                                                        Resubmission




32                                                                                          Grant Financial System Requirements
  InterestCollections
 Overview
 Interest earned on advances of Federal funds must be handled in prescribed manners in accordance with
 administrative requirements based-on the cost principles established for the grantee organization involved.        The
 system must support ,the following major steps.                                          ‘

       .,                                      :’    ._      ,_( b              ,’                                             :
                                                                                        ‘.                                .I
 State! Gckernmenfs             ‘.    ‘.   ;              ’ I’
                                                    -,
 Interest-earned on advances of Federal funds’by-state agencies, instrumentalities,. and fiscal agents isare, subject to 11
 the terms of the Cash Management’Improvement Act‘(CMIA) TreasuryState agreements pertaining to their                    ‘-‘;r
 organizations established under the Act, (Pub. L. 101-453). State organizations and/or representatives not subject
 to the CMIA and it’s implementing regulations are treated as “Other Organizations”, as listed below.


 Other Organizations                                                            i

Interest earned on Federal kdvances by other grantee organizations is subject to OMB Circular A-1 10, &ants
Management Common’Rule, or ~rograik regulations as applicable. In accordance with Those subject to Section .22
of QMR’Circular A-110 svhich earn interest earned on Federal advances that exceedsin excessOf $250 per year in
the aggregate must be remitted annually to the Department of Health and Human Services (DHHS), Payment
Management System, Rockville, Maryland 20852. This office acts as the government-wide agent for all collections
of interest generated from grant advances.                                                    _’




Grant,Financial   System   Requirements                                                                                   33
GrantCloseout
Final Financial        Reporting

Grantees are required to submit a final Financial Status Report,(FSR). to the agency. The grtitke is also,required
by some agencies to submit a final accounting of cash disbursed ori the Federal Cash Transactions- Report (FCTR),
A third requirement is for the grantee to maintain records afier the grant p&f&mance period expires. The
organization is obligated to return any refunds, corrections, audit disallowance amounts, interest or any other funds
that must be returned to the awarding agency. As a general rule tThese reports must not contain any unliquidated
obligations and must represent the final accounting of all federal funds provided under the terms;ofthe award.,
Additionally, mostthe grantees areis required to have an annual audit by an independent Certified Public
Accountant, accour$qg, firm, or a State auditor. The Federal +d$.Cl~u-&ghouse will- notify all fed:@ agencjes of
any adverse findings that require .+tion by.th,e awarding agency:                   i. ‘b             .:.a,
                                                                                                        ^ : _J., .i
                 ,1                                                                                   ,,      ‘I
                           ,.                        \               I            ‘. .        .’ .,t,:.
Financial      Processes

The system must support the following major processes.                                                  ,__,
                                                                                                          .:T .: ‘.:.,
     l    Financial Status Report (FSR) Ck$ng Process - The+amount reported as ?xpeyse must ;fgree,wi@ the .,
          cash disbursed 6n the FcTR. Any unobligated. ,balancesmust be deo,bligq:Fd,m t$e ac@untmg  ‘.       s)rstem. A
          closing transaction is recprdcdissue’d to close o& the grant in the accounti?g system. :JLIJIstresacflion ii, %
          posted to DHHS’s Payment Management System.(PMS) for those us&g&+! @tern... l%o<ed~r~s shou&l be i
         .established to monitor grantees who are delinquent in submitting final reports.            ‘.     :. -. ,’ : ,.,
     l   Federal Cash Transaction Report (FCTR) Prckess - The granting agency must mo&tor ~+&~hti that
         have expired grants and have not been reported closed by the recipient. Agencies must track open grants
         funded from appropriations that are expiring within the next 12 months. Those organizations serviced by the
         DHHS PMS must provide for reconciliation between the l?MS and their agency’s accounting system.
     l   Post Closing Collections - Agencies must have accounting procedures to collect receivables and liquidate
         payables’due after the close out of the grant.




34                                                                                     Grant Financial System Requirements
 Records
       Retention
 Agency systems must maintain, store, and permit ready retrieval of grant financial data. The time frames for
 various parts of this requirement differ depending on the subject matter. The system must be sufficiently flexible to
 retain and purge data consistent with varying record keeping requirements.

Per 36 C.F.R. 1228, the National Archives a&Records Administration (NARA) must approve the Ddestruction
of records created within the Federal government. must be approved by the National Archives and Records
Administration (NARA), per 36 C.F.R 1228. Expenditure Accounting Records are currently authorized for
disposal by General Records Schedule 7, Expenditure Accounting Records, and General Records Schedule 20,
Electronic Records are the current authorities. for disposal of Expenditure Accounting Records. (Copies may be
obtained from your agency’s records officer or from NAM.)         For expenditure records not covered by this
authority, or for any questions regarding .the dispos$ion,of,federal .records;please contact:              ,,:
                                                                                               I     ,J’ .,..:
       National Archives and Records Administration (NARA)
       ‘7th Street and Pennsylvania Avenue NW : ..          \
       Washington, DC 20403                                                        : -..
       Phone number - (2q2). 501-5400             ,,                   ” ,




         b




                                                              :




Grant Financial System   Requirements                                                                              35    :
General
     SystemRequirements
System Interfaces

The grant financial system, at the standard and/or agency-level, must be able to accept, process, anti report on
transactions with other internal and external systems. The system must record and track such transactions and
related information in order to provide the basis for central control. .This may require a custom interface to
properly identify and format the transactions. The system must:
                                                                                                1,
     0, Provide system flexibility in accepting data input from multiple: media so that it CA recognizes the ;&&e
        dita input requirements of interface. systems.          r
         l   Subject all transactions from interfacing Systemsto the standard grantfihancial system edits, validations, and
             err&correction procedures.
         l   Provide system capability to customize data input, processing rules, gh edit criteria. Provide flex&&       in
             defining internal operational procedures and in supporting agency requirements!        ,
         l   Provide the capability to identi+ and process information from other systems that enter tid update the
             standard grant financial system.
     l       Provide system capability to allow users to customize output for reporting and providing interfaces to other
             systems necessary to meet agency requirements for external processing (e.g., general ledger posting, budget
             formulation, budget reconciliation and budget execution).
     l       Capture the transaction dates in order to ensure compliance with the Cash Management Improvement Act.


Other General Systems Issues

A variety of general systems requirements, including data stewardship, systems architecture, systems integration,
internal control, and others are contained in the JFMIP FFMSR-0, January 1995, entitled Framework for Federal
Financial Management Systems. The Framework document along with all other JFMIP requirements documents
can be found at: www/financenet.gov/jfmip/jfmip.htm




                                                                                                                                 -.

36                                                                                       Grant Financial System   Requirements
 lnformatikTechnology
                   in theGrantsProcess                                                                        .,
 Introduction

 This section describes a framework for introducing information technology (IT) into the external grants process.
 The framework comprises the federal grant-making agencies, working under a single c‘umbrella” interagency
 committee structured to reflect the concerns of major customer groups, and, motivated by common goals to
 streamline and improve the grants process and to develop a common face with agency grantees. This section also
 describes a work-in-progress, developed within the framework and updated as of the issue date of this document,
 that exemplifies the benefits of using IT and provides some guidelines for future cooperative effort.

                                        :!.                      :;



 Organizing      to Employ        Information    Technology

The federal grant enterprise is conducted in 23 major grant making federal agencies (See the Federal Grants
Management Handbook at http://www.thompson.com/tpg/fed_gts/granml).                             Depending on the
mission of the agency and the target recipient community, administrative requirements vary from agency to agency
and even program to program within agencies. The 1997 National Performance Review (NPR) report, Access
America, identified federal grant distribution as an area ripe for the ap.plication of electronic commerce solutions.
In response to that report, the GSA Electronic Commerce Program Office (ECPO) established and sponsors the
Inter-Agency Electronic Grants Committee (IAEGC), an interagency organization, to coordinate, promote and
facilitate the effective use of electronic commerce throughout the federal grants community. I

The IAEGC has focused’on development of common face solutions for electronic grants. Efforts to achieve a
 common face.have culminated in the concept’of the “Federal Commons” . The Fe,deral Commons project is a
collaboration of the 33 Federal grant-making agencies that are members of the.IA.FGC, and functions as one of
three IAEGC subcommittees. This project is supported by activities in the two other subcommittees: State, Local,
Non-Profit and Other (S&L) Subcommittee; and the Research and Related (R&R) Subcommittee. The S&L
Subcommittee, comprising federal agencies that award grants primarily to state and local governments and
non-profit organizations, was formed to ‘better serve the needs of its diverse customer base. The R&R
Subcommittee, more commonly known as the Federal Electronic Commerce Committee (ECC), deals with grants
to research entities such as universities and laboratories. Charter, plans, meeting agendas and minutes, reports, and
roster for the IAEGC and its subgroups may be reviewed at www.financenet.gov/iaegc.htm.


Applying      Information       Technology      within   the Framework

The ECC was formed by research-sponsoring agencies to develop a means to transmit a research grant application
(proposal) electronically rather than by paper, using a data element dictionary of all information transmitted in the
application. This effort, completed in 1994, resulted in the first electronic standard for grant applications, now
known as the American National Standards Institute (ANSI) Xl2 Transaction Set 194,

(See the Federal Electronic Data Interchange web page at SNAD.NCSL.NIST.GOV/FEDEDI)                    The ECC sets
priorities -and.publicizes,itsef&tq:by publishing a Project Plan, currently in its third versiqn, ,,This,plan des,cribes
further work of the ECC, including

    l   expanding EC technologies to include the World Wide Web,for data exchange;
    l   expanding electronic business transactions to include awards, solicitations, trading partner registration and
        profiles, and progress reporting;


Grant Financial System   Requirements                                                                                      37
 Information Technology in the Grants Process


 increasing the number of participating agencies; and

         l   introducing the Federal Commons concept as a means of exchanging data among federal agencies and~grant
             recipients.

The S&L Subcommittee grew out of work in the ECC to develop a common web site for grant transactions. This
group achieved a working prototype site for ‘a wide .range of grant transactions, providing software for download
by the potential grantee using Java applet technology. This system requires little or no grantee investment, and is
designed for state and local governments with limited IT budgets and capabilities. This group has -developed a
Business Plan outlining subsequent efforts, including

     l       enlarging the IAEGC data dictionary to include additional data elements that are required by state and local
             governments, non-profits, and other organizations; .p.
     l       promoting the widest possible use of common electronic commerce processes throughout the federal grants
             community;
     l reaching out to trading partners with information about electronic
                                                                       . options, and providing opportunities for
       questions and feedback; and                                                                 ‘7
     . supporting development and implementation of the Federal Commons concept.


The Federal Commons                 Project

As proposed, the Federal Commons will provide a governmentwide electronic commerce approach to grants
management. The Federal Commons is envisioned as a coordinated network of federal grant administration systems
and databases. One means of accessto the Federal Commons will be a Web-based interface. This Federal
Commons Web Site will enable ,grantee organization users (universities, research institutions, small businesses,.state
and local governments) to become more familiar with grant activities ongoing in the participating agencies. In
addition, the Federal Commons Web Site will include interfaces designed to support secure transmission of
administrative information for pre-award and ,post-award grants business processes. For each business process, users
will be provided with technological options as to how such information can be formatted, transmitted and/or
received. In response to the extensive burden that would be placed on agencies to support every technology option,
the Federal Commons employs the concept of service centers. An agency that assumes responsibility for the
deployment of a specific technology associated with various grant business processes would become a service center
for that technology.

The Federal Commons, therefore, begins the transition from agency independent electronic grant administration
initiatives toward a common government electronic grant administration business model ,that provides
technological flexibility for grant recipients. It employs a concept of lead agency responsibility in the deployment of
technologies associated with various grant business processes. The Federal Commons will provide flexible
technological alternatives, support for the entire grants life cycle, a single point of entry for grantees to all
participating agencies, and secure interfaces.
                       8.                                                   .‘,’     ,,        ,I               !
The Federal Commons has a rich leggcyin ,the technical implementations and data &mdards-development both of,
federal agencies and grants recipient organizations. It leverages the work of the Federal Electronic Commerce
Committee in the development of grants business data standards such as the ANSI Xl2 194 Transaction Set (grant
proposals/applications) and the corresponding grants data dictionary. It builds on the technology used.in agency
systems (e.g.,, Fastlane from the National Science Foundation’s (NSF) , Commons from the National Institute of
Health (NIH), US Electronic Grants Project from the Department of Transportation (DOT) and Paperless
Voucher System from the Office of Naval Research (ONR)).

38                                                                                      Grant Financial System Requirements
                                                                      Isformation Technology in the Grants Process


Toward the realization of this concept, the Federal Commons Subcommittee began meeting in 1998 to support the
initial stage of software development, including formalizing user requirements as well as defining system
requirements. With such specifications defined, a proof of concept system is under development. The proof of
concept will provide four types of grant administration activity as described below.

User Registration - This activity enables an individual to register as a Federal Commons user. A user can specify
identification parameters (i.e., a user name, a password, and a unique identifier). These parameters will be stored in
a central repository. When a Federal Commons user accessesthe Federal Commons Web Site or that of a Federal
Commons agency, the identity of the user will be validated against these parameters. In addition, the Federal
Commons will facilitate the linking between the unique identifiers of Federal Commons users and the internal data
structures of participating agencies.

Status Query - This activity enables a Federal Commons user to log into the Federal Commons Web Site and query
application/proposal and/or award status. The user can select which federal agencies to access,and the Federal
Commons Web Site will coordinate the retrieval ,of status information from the appropriate agencies.

Organizational Profile Submission - This activity enables a Federal Commons user to log into the Federal
Commons Web Site and create/modify.an Organizational Profile (OPF) for the grantee organization. The user can
select which Federal agencies are to receive the OPF, and the Federal Commons Web Site will communicate the
OPF to the appropriate agencies. The web site will also submit the profiles to an interagency repository. Federal
Commons agencies will be able to query the profiles from this repository.

Professional Profile Submission - This activity enables Federal Commons users to log into the Federal Commons
Web Site and create/modify their biographical information as contained in a Professional Profile (PPF). The user
can select which Federal agencies are to receive the PPF, and the Federal Commons Web Site will communicate the
PPF to the appropriate agencies.

The Federal Commons homepage www.fedcommons.gov will have links to agency Web sites and a demo version
of the approach to common business processes. During the first half of 1999, the first common grant modules:
user registration, status query, organizational profile and professional profile, will be deployed. Following the
initial deployment, an assessmentreport will be written. The report will address the following topics: key
technology acco,mplishmenrs, results of testing with customers, recommendations regarding architecture and
software tools, and future tasks.


Conclusions

The Federal Commons concept and its preliminary design have been presented to the Federal Agency Information
Architechu-e Working Group of the Chief Information Officer Council’s Interoperability Committee, for
coordination and possible assistance in design enhancement and implementation. As the design is tested and
refined within the grants community, its flexibility and convenience should increase its applicability to a wide range
of agency programs through stable data dictionaries, leveraged technologies from federal agencies, and common
electronic forms and accessibility.

Working within the framework of the grant-making community, members of the IAEGC and its subgroups are
developing IT solutions for grants process problems experienced by the grantee community. Current information
is available at the IAEGC and Federal Commons web sites.




Grant Financial SystewRequirements                                                                                  39
Appendix
      A: References/Authoritative
                            Sources
             . OMB Circular A-11, Preparation and Submission of Budget Estimates (Part 1)
             l   OMB Circular A-34, Instructions on Budget, Execution
             l   OMB Circular A-l 10, Administrative Requirements for Grants and Agreements with Institutions of Higher
                 Education, Hospitals, and- Other Non-profit Organizations    1             .,
                                                                                       ,~
         l       OMB Circular A-1~2,‘Grants.and Cooperative Agreements with State and’“Loca1 Governments
         l       OMB Circular A-127-Revised,      Transmittal Memorandum No. 1
         l       OMB Circular A-123, Management Accountability and Control’                               :
         l       OMB Circular A-130, Management of Federal Information       Resources
         l       ,oMB Circular A-133, Audits of States, Local Governments, and Non-Profit’Organizations                    ”
                                                                        .’ ‘.
         l       OMB Circular A-134,. Financial Accounting Principles andStandards              ! ’ j ,.’     :                    j/
         l       FFMSR-1, JFMIP Core Financial System Requirements
                                                            .      ,.
         . FFMSR-0, JFMIP. Framework for Federal ‘Financial Management Systems                       “. I     ;                _
     l           Statements of Federal Financial Accounting’ Standards (SFFAS) ‘No. 5
                                                                                                                    _,‘;
     l           U.S. Government Standard General Ledger
     l           U.S.C. Sections 1301,1341,1534,3512(d)                                               .
                                                                                                                                          -.



                                                                                                              .’




                                                                                                               ‘,




40                                                                                          Grant Financial System         Requirements
Appendix
      B: GlossaryllattiDictionary
Accrual Accounting     The method of accounting in which an entity’s financial position and operating.results are measured by
                       the flow of economic resources. Transactions are recorded in the accounting period in which they occur
                       or whose operations they benefit, regardless of when the related cash receipts and disbursements take
                       place.                                                                                         -.
                                                                                                            I
Advance                A payment made to a grantee upon its request either before the-grantee has made outlays or through the
                       use of predetermined payment schedules. (A-l 10, sec. -.2(d))      Ad vances_. re p resent cash drawdowns
                       made by the grant recipient to meet immediate cash needs.
                                                                                                                ,         ‘,.
Allotment              & subdivision of funds below the apportionment-level;  usually, at the office level within the organization.

Apportionment          A distribution made by OLMB of amounts available for obligation in an appropriation or fund account
                       into amounts available for specified time period, activities, project, objects, or combin;itions thereof. The.>
                       amounts so appqrtioned limit,the obligations that.may be incurred. (4:34,l?art II, Section 21.1, p&l).
                                            :                                                 ,_      ‘,”     ~
Appropriation          One of r;he basic forms of budget authorit)i. Statutory authori      that allsws federal agencies to incur
                       obligations and to make payment out of the Tceasury for specified.pu$oses.           An appropriation act is the
                       most common means of providing budget authority, but in some cases the authorizing legislatidn itself
                       provides the budget authority&+34,       Part II,-Section 21.1).                ;’
                                                                                                          i
Appropriation   or fund account’
                      A summary account established inthe Treasury for each appropriation and/or fund showing transactions
                      to such accounts. Each suclch account provides the framework for establishing a set of balanced accounts
                      on the books of the agency concerned. As used in A-34, this’ phrase refers to general fund expenditure
                      accounts, special fund expenditure accounts, public enterprise revolving funds, intragovernmental
                      revolving funds, management funds, trust fund expenditure accounts, and trust;revolving ftind accounts.
                       (A734, Part II, Section 21..1, p. 11-4and 5). :

Approving Authority    I n d’IW‘d ua I s d esignated by their institution    to have the authority to approve a given action.

Approving   Official   Same as an “Approving         Authority”     above.

Award                  Financial assistance that provides support or stimulation to accomplish a public purpose. Awards include
                       grants and other agreements in the form of money or property iri lieu of money, by the Federal
                       Government to an eligible recipient. The term does not include: techtiical assistance, which provides
                       services instead of money; other assistance in the form of loans, loan guarantees, interest subsidies, or
                       insurance; direct payments of any kind to individuals; and, contracts which are required to be entered into
                       and administered under procurement laws and regulations. (A-110, sec. - .2(e))

Block Grants           Grants issued to government units to support a variety of actiyities within a broad area of responsibility
                       instead of focusing on a specific activity. Examples include block grants for social services, maternal and
                       child health, and transportation.

Budget Accounts        The lower level budget allocation of a given budget appropriation; usually, for budget execution
                       purposes, agency appropriations are allocated/distributed     to lower levels within arLorganization; budget
                        accounts represent the lowest level at which funding is controlled.
                                                                                                                     .;       ,,j
                                                                                                                          ,“.‘.   -1I,.:   ‘..f


Budget .Authority      ,AuFhority,provided,by-law,    including joiht:re@&ions     makirlg,Continuing.apro,pri&ions
                                                                                   maki@ontinuing.appro,pri&ions       (also known as
                .,     ciintinaing resolutibns),‘and becomifig
                                                        becoming available during fhe year td incur obligations. The basic forms of
                       budget
                        ^_ - authority
                                 auihority are appropriations, authority to borrow,
                                                                             borr&, and
                                                                                      aid contract authority.
                                                                                                      autho&y. (A-34, Part II, Section
                                  .. ^.
                       21.1, p.ll-5).

Budget Year            The fiscal year forwhich the funds are appropriated for by Congress; “budget year” is also known as
                       “‘funding year” or “program year”; note .that an appropriatiori for a given “budget year” may be available
                       for use (obligation) over multiple “fiscal years”; the time period for utilization is stipulated in the
                                   .
                       appropriation. ._-             - .         .      ._
Grant Fin,anciaI System Requirements
Appendix B: Glossary
                                                                                  : -I,                         ,,-
                                                                         _:. .”                     ,:_    :’          : ;             ;   .‘-_..

Closeout                  The process by which a Federal awarding agency determines that all applicable administrative actions and
                          all required work of the award have been completed by the recipient and Federal awarding agency.
                          (A-110, sec. 2.2(g))     .’                                                        ;

Commitment         of Funds
                          The amount of allotment or lower level authority committed in anticipation of an obligation. (SGL,
                         /definition of account 4700). Commitmentis        the act of reserving appropriated funds for an eventual
                          obligation/award action by an organization.        i !I               ‘.                     _.
                                                                    ‘.                 1
Commitment         Request
                /         The requesting action within an organizational entity, which eventually leads to a commitment of funds
                          for a given purpose.
                            ,.     i    s                                                           I          ‘I            .., .c’
Core Financial System ”                                   ”  ;  ‘                   ,,          .‘:      ,- .,.
                          The financial system which supports the financial functions.of an organization which are required to track
                          financial events and provide significant financial information to management, and/or required for the
                          preparation of financial statements: Core financial systems are combined with’the financial portion of,. ;”
                          mixed systems to,form the. Financial Management System of an ‘organization.
                             ,I i                   ,, .,   I( b -1;;                    .:           ‘:
Disbursement              1. The transfer of cash from the U.S.Treasury to a grantee, generally by deposit-to the grantee’s account
                          with its financial institution.
                                                                                                                          ,:
             I_           2. The expenditures (disbursements) reported by grant recipients for the current and previous years. The
                          actual funds a recipient spent to carry out a program that is supported by administer a grant award. The
                          term is synonymous with expenditure.                                           ._        ii.
                         L.                                               1”                    ,.                .’ ,
Discretionary Grant Award                 i:,
                          A grant awarded for a project of fixed duration that supports the purposes stated in the program’s
                          authorizing statute, regulations, and announced awarding agency priorities. Within these parameters, the
                          awarding agency determines’ which projects will be funded; which applicants will receive awards, and the
                          dollar amount of each award. Such determinations are usually made through a competitive process.
                                                                                   .:.,   ,,
Drawdown                  The process of requesting a payment from the recipient’s grant award and receiving the payment into the
                          recipient’s depositor account at the recipient’s financial institution or bank.
                  .i’,    i
Expenditure               The actual funds a recipient spent to carry out a programthat is:supported by administer a grant award.
                          (See disbursement.)

External Program Data
                   This data represents specific program criteria for various types of grant programs including research,
                    block, formula and discretionary grants, and recipients such as states and local governments, institutions,
                    and individuals. This external data will help the agency develop trend analyses on how the recipients draw
                    and spend grant funds.

Federal Awarding Agency                                                                                                        .: .,        ‘,’
                   A Federal agency that awards a grant to a grantee and provides funding for grant purposes.

Federal Funds Authorized
       :          j ,. .The..tot+mount.of  Federal funds obligatedby the:Federal. Government for tise:by~the
                                                                                                     tise:bythe recipier& ‘This+
                        amount may include anv
                                           any authorized carrvover
                                                            carryover of unobligated funds from prior funding periods when
                       permitted by agency regulations or’agency
                                                       or ‘agency implementing instructions. (ALllO,
                                                                                              (A-ll0, sec. -*- - .2(P))
                                                                                                                  2(p))

Financial System      An information system, comprised of one or more applications, that is used for any of the following:
                                I_                       i .,         :     .> !
                      l collecting , processing, maintaining, transmitting,    and reporting data about financial events;
                                                       ,
                      l     supporting   financial   planning   or budgeting   activities;

42                                                                                            Grant.Financial     System     Requirements           i
                                                                                                                                             Appendix B: Glossary


             ;,..         I                                          . .       .,

                    :,           l           aicumuiating akd’reportibg.cost information* ! or,: ,I
                                 l           supporting the preparation of financial statements                             ,’     ,’
                                                                                                                                                                        1
                                 (A-127 Revised, Item 5 - “Definjtions”)
                                                                                                                                                                        I
  Fiscal Year                    The twelve month period, October 1st through September 30th, for a given year:

  Formula Grant                  A grant where the funds are awarded based upon a formula defined in the program statute or agency’s
                                 regulations.    :                                                                 ‘.
                                                                                                                      :::
  Funding period                 The period of time when Federal funding is available for obligation for use by the recipient.
                                 (A-110, set? -.2(r))    ,,                                                                          .

  Grant Period                  ,The period established iti the grant document during .which Federal sponsorship begins and ends and
        ‘,                       repres&ts the grant’s period of perfprmance...                                   ,--

  Grant                          k contractual relationship between a Federal awarding agency and a non-Federal entity (the grantee), in
                                 which the awarding agency agrees to tr,insfer money or something of value to the grar&ee. Thegrantee
                                 agrees to use such resources in carrying out a public-purpose of support or stimulation ailthorized by law.
                                 Neither party envisions substantial involvement by the awarding agency in carrying out the grant. A
                                 grant contrasts with a cooperative agreement, in which the,awarding agency does-become substantially
                                 involved in the Federal sponsored activity, and with a procurement contract, which a Federal agency uses
                                 td obtain goods and services for its own use (31 USC 6304).
                                                                                                                                     .‘,
 Historical         Data         The amounts disbursed to grantees during each year and the amounts actually expended by the grantees.
                                 In addition, other data such as grant award amounts, and remittances should be included in ,this
                                 infor.pation store. ’

 Information             System The organized collection, processing, transmission, and dissemination of information in accordance with
                                defined procedures, whether automated or mar@. Information systems include non-financial, financial,
                                and mixed systems. (A-127 Revised, Item 5 - “Definitions”)

 Internal Program Data
                     This data represents specific program criteria for the various types of grant programs such as block grants
                     versus formula or discretionary grants. This data would also include grantee’s identification numbers,
                     period of availability for each grant, number of grants, and authorizations.

Mixed System                     An information system that supports both financial and non-financial functions of the Federal
                                 government or components thereof. (A-127 Revised, Item 5 - “Definitions”)

Object Classification A method of classif+g obligations and expenditures according to th, nature of services or articles
                      procured, e.g., personal services, supplies and materials, and equipment. Obligations are classified by the
                      initial purpose for which they are incurred, rather than for the end product or service provided. OMB
                      Circular A-11 provides.current object classifications for reporting budget estimates to OMB. Many
                      agencies ,have defined lower levels of object classification for internal use. (A-l 1, Set 35.1) (From JFMIP
                      FFMSR-19195;       p. 54)
                                     .   .      1      :.        ,         ’         ;.
                                                                                                   .              ,I,.,.     -.,        .
Obligating           Official   :IndividW.            ;l:lt??(zpize*d.tc!.!egall.y bind. the, Fede”ral,Gowmmcnt       ti piov$e.fu-+        for a specific project or
                                 purpose.

Obligation                       Obligations are amounts of orders placed, contracts awarded, services received, and similar transactions
                                 for bona fide needs existing during a given period that will require payments during the same or a future
                                 period and that comply with applicable laws and regulations. Such amounts,will include outlays for
                                 which obligations had not been previously recorded and will reflect adjustments for differences between
                                 obligations previously recorded and actual outlays to liquidate those obligations. (A-34, Set 21.1, p.
                                 11
                                 LL-/).
                                        -I\

Grant Financial System                       Requirements
Appendix B: Glossary                                                                             __


Pooled Payment           A consolidated advance payment to a grantee to cover anticipated c.ash needs for all grants the grantee has
                         with the Federal awarding agency making the payment. The grantee identifies it; cash needs collectively
                         rather than by individual grant.                                 :

Pooling                  A process whereby a recipient (university or othernon-profit) l&h multiple many awards from one
                         agency may request advances/payments based on a single estimate of immediate cash needs for all of the
                         recipient%awards.

Principal Investigator    (PI)
                         The individual,   designated by the grantee, who will be responsible for the,scientific or technical direction
                         of the project.
                                                                                                          .‘,               .,’
Program                  Generally defined as an organized set of activities directed toward a c,ommon pilrpose, or goal, undertaken
                         or proposed by an agency in order to carry out its responsibilities. In practice, however, the term
                         program has many uses and thus does not have well-defined, standard m&&gin            the legislative protess.
                         Program is used to describe an agent)% mission; progra@ functicins, activities, ser+ices, projects, and
                         processes.
                                        ,I                                                              I
Program Income           Gross income earned by the grantee that is directly generated:by a supported activity or earned as a result
                         of the grant (see exclusions in paragraphs: A-110, -.24     (e) and (h). (A-110, set: -.2(x))

Project                  A planned undertaking of something to be accomplished; produced, or having a.finite beginning and
                         finite end. Examples are aconstruction project’or a research and development project. (SGL p. IV-7).

Project period           The period established in the award document during which Federal sponsorship begins and ends.
                         (A-110, sec. -.2(z))                                                          .,

Recipient                An organization receiving financial assistance directly from Federal awardirig agencies to carry out a
                         project or program. (A-110, sec. -.2(cc))

Remittances              Grant funds on deposit with the grantees, which the Federal awarding agency must recover. These
                         amounts consist of unexpended fimds and balances previously advanced to the grantee. Remittances           ma!
                         result from overpayments and audit disallowances.

System Requirements
                         JFMIP systems requirements      are either mandatory or value added. The definitions of these two categories
                         are:                ”

                         Mimdamy     - Mandatory requirements describe what the system must do and consists of the minimum
                         acceptable functionality necessary to establish a system; or are based on Federal laws and regulations.
                         Mandatory requirements are those against which agency heads evaluate their systems to determine
                         substantial compliance with systems requirements under the FFMIA. These requirements apply to
                         existing systems in operation and new systems planned or under development.

                         Value-added - Value added requirements describe-features or characteristics which are considered to be
                         optional or additional functionality to a system and may consist of any cotribination of the following: (1)
                         using state of the art technology, (2) employing the preferred or best business practices, or (3) meeting
                         the special management needs of an individual agency. Agencies should consider value-added feahires
     .>     i,   :..     whenjudging systGms options. -The ~need,fortliese.vaiue:a’dded featuresmini-agency systems gi left+oithe ** .I
                         discretion of each agency head.

Standard General Ledger (SGL)
                    The uniform chart of accounts issued by the U.S. Department            of Treasury that are required to be used b)
                    all Federal Agencies to record accounting transactidns.




44                                                                                                Grant Financial System   Requirements
                                                                                                            Appendix B: Glossary


 Unliquidated   Obligations
                         For financial reports prepared on a cash basis, they are the amount df obligations incurfed by the recipient
                         that have not been paid. For reports prepared on an accrued expenditure basis; they represent- the amount
                         of obligations incurred by the recipient for which an outlay has not been recorded.




                                            .,




Grant Financial System   Requirements
Appendix
      C:Contributors
JQbt Financial Management Improvement                      Department     of Transportation    0IAEGC         Co-Chair
Program f JFMIP) Steering Committee
                                                           J. Ann Fisher
                                                           ProBrana Ann&t,    Office of the Secretary
Donald     77.    Hammond,     Chair
 U.S. Department of the Treaswy
                                                           Ofice of Naval Research C? UEGC              Co- Chair
Karen Cleary Alderman,
 Ekecu the Director, JFMIP                                 L. Bradley Stanford
                                                           Special Assistant to the Chief Injkvv~atiol2 Officer fm Electrovaic
William B . Early                                          Commerce
 General ServicesAdvnimhration

Jeffrey C. Steinhoff                                       Chief Financial    OfSicer Council’s Fellows Prodram
 U.S. General Accowvrtin~ Office
                                                           Richard A. No11
Sheila Conley                                              Defense Fivaance apadAccotlntivag Service/National Science
 Office ofManagement          arzd Btjdget                 Fowvahtion Felhv (Team Lender)

J. Gilbert Seaux                                           Ralph Beaty
  Office of Personnel iMam~eme9zt                          U.S. Departlnent ofA~ric~ltwre/NntiovaalAeronawtics           and Space
                                                           Admivaistratiova Fellav

                                                           Chandler B. Gardiner
Former Members                                             General ServicesAdw~ivaistratiova/U.S. Depav?-ment OfAflricultwre
                                                           Fe&v
Norwood          J. Jackson
 O@e ofMana/jeement and Budget                             Willa R. Green
                                                           U.S. Department of Labo$ZS.        Departmevat bfAgicwltwre Felhv
Thomas R. Bloom
 General Smites Ad~vhaistratiova                           Thaddeus L. Kontek
                                                           U.S. Em~ironmental Protection Agevacy/v.S. Department of Labor
Gene L. Dodaro                                             Felhnv
 U.S. General Accowntivg Ofice
                                                           Margaret     M. Myers
                                                            VeteravasAfairs/ Gevaeral ServicesAdntinistration       Fellow
Joint Financial               Management     Improvement   Debra E. Watson
Program                                                    Natiovaal Science Fowvadation/i?ational Aerovaawticsand Space
                                                           Adw&aistratiova Felknv
Karen Cleary Alderman,
 Executive Director,JFMP                                   Betty G. WeLxr
                                                           U.S. Department of the Awny,NatiovaalAeutics     and Space
Dennis S. Mitchell,                                        Administration Fe1lowjU.S. Departvnent ofArmy Felhv.
 SystemsAccotlntant
                                                           Betty J. White
                                                           Joint FivaancialMavaagevnevathprovement         Prgram/U.S.
National         Science Foundation                        Evavironmental Protection Afiency Fellow
Albert J. Muhlbauer
 Deputy Chief Fivaavacial Officer (Project Chair)

Richard A. No11 (Team Leader)




                                                                                        Grant Financial System       Requirements
                                                             Appendix C: Contributors


Department       of Edwation

Paul V. Gilbreath
Pmject Director fw EDCAPS                                                                    ii-
                                                                             ;i

General Accown tirg Office

Gloria Jarmon
Dire&r, Health, Edwation 69 Htlwarz ServicesAccowatiqg and
Financial MYanaJement Issues

Chinero N. Thomas
Assistant Directs, Health, Edtication &Human Services
Account& and Financial Mitnagemerzt Issnes.

Cheryl Driscoll
Audit J4anaJer, Health, Education 0 Htlman Sewices
Accounting and Financial Malent       Issues


National     Institutes    of Health

J. Wayne Berry
 Depwty Ash-tant Director         for Finance

U.S. Department           ofAgriculture

Christopher M. Lipsey
StaffAccountant, Gra&s Mnnapenzent Division, Food and
Nutrition Service


U.S. Environmental           Protection Agency

Alan B. Lewis
 Chie$ Las Vepx Financial Management             Cefater




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